Founder jeff Bezos

Internet based business plan

his approach was agnostic as to which product line or business model to employ as
his entry point into the burgeoning Internet marketplace. Bezos observed that
online book sales offered unique advantages over traditional brick-and-mortar
bookstore retail operations. A key advantage for online book sales is the searchable
online catalog. Once Amazon achieved a critical mass of available inventory, it
could offer consumers a breadth and depth of titles that far surpassed anything that
could be physically stocked in a local bookstore or retail book chain. This “long-tail”
approach plays to the strengths of Amazon’s centralized distribution system that
offers rapid the fulfillment to consumers at low cost.
Amazon took note that most states charging sales tax did not require vendors to
collect the sales tax on behalf of their customers — as long as the vendor was out of
state and did not have any physical location ( or nexus) within the state.
Consequently, Amazon, in its early days, deliberately chose to place its distribution
centers in those states which either did not charge sales tax or in states with
smaller populations which could efficiently service nearby states with large
populations in order for those consumers to shop tax-free.
 In round numbers, tax-free shopping on the Internet was equivalent to a constant
10% discount on Amazon’s already low book prices. State governments cried foul as
they saw their sales tax dollars evaporating as a result of Amazon’s aggressive
approach (in their view) to state sales tax avoidance
California argued that Amazon had hundreds of “sales affiliates” within the state.

Presently, there are seven types of distribution centers which service

Amazon’s growing customer base:
1. Large Sortable Fulfillment Warehouses: Processes items which
can fit into a large box.
2. Small Sortable Fulfillment Warehouses: Processes items which
can fit into a small box.
3. Non-sortable Fulfillment Warehouses: Processes items too large
for box shipment.
4. Replenishment Warehouses: Transfer center to move goods from
manufacturers to other fulfillment centers.
5. Customer Return Warehouses: Returns for damaged, missing,
unsatisfactory or incorrectly shipped items.
6. Specialty Items Warehouses: High dollar items such as jewelry or
specialty apparel.
7. Grocery Item Warehouses: Dry goods and Perishable items, like
meats, dairy, vegetables

There fulfilment process is manual as there employees receive

shipments manually and unload unpack inspect and place all the
 shipments at proper location that recorded in computerized
central inventory system.
The need for so many manual pickers may be reduced significantly in the
future as robot technology enters the field. In 2012, Amazon purchased Kiva
Systems, a warehouse automation company. Kiva promises its integrated
robot and ‘pod’ hardware and software solutions will speed up cycle times as
consumers increasingly demand next day or even same-day delivery. They
also promise to handle some of the particular issues facing operational
teams at warehouse distribution centers. These include:
 Need to improve pick accuracy to avoid losing a customer who is
inadvertently sent the wrong product.
 Increase flexibility and scalability to handle unexpected surges in
consumer preferences as well as traditional seasonal shopping effects
(winter coats versus bathing suits).
 Address efficient storage of long-tail inventory.