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Amazon Case Breakers
Amazon Case Breakers
Amazon Case Breakers
Case Study 1
The $600 billion U.S. grocery market segment is large and complex. Consumers
now shop for grocery products in a variety of retail environments. Conventional
supermarkets and grocery stores capture 52% of the market segment. Discounters
like Wal-Mart and Costco capture 27% of the market segment. Convenience formats
like c-stores and drug stores capture the remaining 21%.
No channel is dominant today because no one retail format does it all.
Supermarkets offer one-stop-shopping convenience and fresh food quality
advantages, but at full margins. Discount formats offer better prices, but often at
the expense of brand-selection and convenience. And convenience formats are
easy to get to, but high-priced with very limited assortment.
In response to this complex retail landscape, the typical consumer now shops the
full of range of formats, with surprising frequency. Trying to balance the competing
needs of great prices, my familys brands, and easy to get to, the typical
consumer goes grocery shopping 3.3 times per week! Against the backdrop of
increasingly time-starved lifestyles, this continuous grocery shopping solution is
becoming less satisfying and less sustainable.
Figure 1
U.S. Consumer Grocery Shopping Behavior
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French
VCPC matrix
Phone
Phone
Onshore Internal
$6.50
$3.01
$8.91
$4.12
Offshore
Internal
$4.50
$2.10
$5.72
$2.71
Offshore
Outsourced
$4.12
$2.01
$5.42
$2.45
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English
French
EDR matrix
Phone
Phone
Onshore Internal
1.3%
5.4%
1.5%
5.4%
Offshore Internal
2.8%
4.6%
3.3%
5.2%
Offshore Outsourced
2.6%
4.7%
3.3%
5.8%
The Capacity Planning team has forecasted the following contact volume:
Contacts Forecast - mix by medium
25000
20000
15000
No of contacts
10000
5000
0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov Dec
Sep
Oct
Nov Dec
10000
5000
0
Jan
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Feb
Mar
Apr
May
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Jun
Jul
Aug
French
Phone
Phone
Onshore - Internal
6,000
2,000
9,000
3,000
Offshore - Internal
5,000
5,500
1,000
2,000
Offshore - Outsourced
Flexibl
e
Flexibl
e
Flexibl
e
Flexibl
e
Phone
Onshore - Internal
1.0%
0.3%
Offshore - Internal
3.3%
1.0%
Offshore Outsourced
4.5%
2.0%
Assume that all sites have unlimited capacity and all agents can handle any contact
related to Fresh.
Q1. What percentage of email contact volume should be outsourced to offshore
sites?
Q2. What percentage of phones and email contact volume should be handled inhouse and in North America?
Q3. John intends to launch Chat after 3 months. Who should handle this volume?
How will this be distributed (percentage)?
Q4. What should be the contact distribution strategy for Amazon? Please discuss
your rationale.
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Case Study 2
Amazon is known for its established online business for book, media, electronics,
shoes, apparel and many other categories but Amazon Fresh is their first venture in
handling perishable goods. Considering the nature of the business and product
offering Fresh would require a dedicated website and robust logistics and
transportation infrastructure.
Being a category of very low shelf-life it requires faster information processing for
new products to be launched on the website and it is equally important is that any
kind of errors in ordering, dispatching, pricing should eliminated or reduced to
minimum. Amazon business operates with the following strong principles:
1. First get the customer experience right. Operational efficiency and
profitability will follow.
2. Customer Experience is improved through trip elimination and selection
expansion. It is maintained through short click-to-deliver time plus high
perfect order rate.
3. Get it up and running fast. Amazon believes to learn more in a week of
running a pilot than a month of analysis.
4. Provide widest selection at the lowest cost.
The Retail Selection department (RSD) group is an integral part of Amazon online
product lifecycle and buying operations. The team is designed to ensure Amazon
remains competitive in the online retail space with the best price, wide selection
and good product information. The teams primary role is to create and enhance
retail selection/products on the worldwide Amazon online catalog. The main goal is
quickly add new items on the catalog with good quality. The tasks handled by this
group have a direct impact on customer buying decisions and online user
experience.
Vendors send the information to RSD for NIS item setup but not the 100% volume
gets resolved by RSD immediately. A part of the volume gets processed by RSD but
a part goes for further query to buyers and vendors. A small part of the Buyers
volume goes further to vendors and then come back to RSD with clarifications
(Process steps are in attached excel sheet). Similarly for Prob Rec , process requires
multiple layers of clarifications before issue resolution. Currently RSD uses email
communication to get these queries resolved but voice channels could also be
explored. These multiple layers of clarifications from stakeholders spread across
geographies make NIS/Prob Rec time consuming processes. RSD has worked with
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Vendors
Vendors are the product suppliers to Amazon.
FC
FC stands for Fulfillment centers. These are Amazon warehouses. They receive the
inventory from the vendors and dispatch it to Amazon customers based on the
customer orders. In case of any problem related to purchase/purchase order
receive, FCs inform RSD about the issue. RSD further takes help of concerned
buyers/vendors in the course of issue resolution.
Case Study 3
With Amazon Fresh, the challenges faced in supply chain by Amazon increased
because the products now had expiry dates. In addition to that, Amazon strives to
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All customer orders placed till 3 pm in the afternoon are processed for 2 hours
(same for farm and dairy products) in each of the FCs. At 5 pm, trucks carrying
customers orders leave for delivery.
To maintain the freshness of the products, they are sourced from the suppliers so as
to reach the appropriate FCs by 3 pm. Multiple trucks can be run between SF and
SD to each of the FCs to have the most fresh item received in the FCs. Consider the
age of the product, when the truck departs from the supplier as 0 hrs.
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From
SF
1
2
3
4
5
6
From
SD
2
3
4
5
6
7
After the processing on the products (as mentioned above), the trucks depart the
FC. They take the following time to reach the destination, as per the distance:
Outbound time
(hrs)
up to 10 km
11 - 20 km
21 - 30 km
31 - 40 km
41 - 50 km
above 51 km
FC1
FC2
FC3
2
2
4
4
5
5
1
1
2
2
2
3
2
3
3
4
4
5
Based on the above data and the map, answer the following questions:
1. Which FC should cater to demand of North, South, East, West, Central city for
the items to remain freshest (least old) under following conditions?
a. Separate trucks for inbound for each O-D
b. From an origin FC to a destination Demand Center, the trucks fulfilling
farm and dairy products' orders can be separate - if necessary.
c. 1 Demand Center can be catered by only 1 FC for any kind of product. i.e.
FC1 and FC2 cannot deliver dairy products together to Demand North.
2. What is the minimum number of total trucks which will depart from the FCs if
same truck can be used for delivery of Farm and Dairy products?
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DN
1
4
DS
3
2
DE
4
2
DW
4
5
DC
2
3
Demand from each center is 2000 kg and 2000 ltr of farm and dairy products
respectively.
What is the cost of providing best customer experience i.e. deliver the
freshest products?
Case Study 4
Amazon uses three carriers A, B and C for shipping packages to the customers. Amazon further
offers its customers with two SLAs which are 1 day delivery (package is delivered on next day
from customer placing the order) and 2 day delivery (package is delivered on second day from
the day when customer places the order). There is a certain defect rate associated with the two
SLAs for each of the carriers. At the same time there is a limited capacity that the carriers can
manage for each SLA. The rates offered by the three carriers, their defect rates and their
capacities for the different SLAs is as follows,
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Cost of defect incurred by the company is $10/package. The total number of packages that we
need to ship in a week is 5000 with 1700 for 1 day delivery and 3300 for 2 day delivery. There is
also a minimum volume guarantee that we give the carriers which is 1200 for A, 1000 for B and
1300 for C.
Keeping in mind the core principles of Amazon, devise the best combination of carriers and
services to service the 5000 packages. Answer the following questions based on your adopted
strategy.
1.
2.
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