JANICE HAMMOND

Amazon.com’s European Distribution Strategy

In January 2003, Tom Taylor, Amazon.com’s Director of European Supply Chain Operations, sat in his office in Slough, United Kingdom, and pondered what changes Amazon needed to make to sustain its growth in Europe. Established in the fall of 1998 through the acquisitions of two on-line booksellers, Bookpages.co.uk in Britain and Telebuch.de in Germany, Amazon Europe had developed into three strong, independently run, country-based organizations in the UK, Germany, and France. Amazon International, comprising Amazon Europe and Amazon Japan, now represented 35% of Amazon revenues and was the fastest growing segment of the company (see Exhibit 1). To sustain its growth, Amazon Europe faced multiple expansion options: it could replicate the broad array of product lines Amazon offered in the US, launch new Marketplace1 activities, or expand into other European countries. In addition, Amazon Europe had to decide which of its activities it should coordinate or consolidate at the European level. Tom Taylor had been transferred from Amazon US to Europe in June 2002 to address some of these issues and, in the words of his then boss, Senior VP of Operations Jeff Wilke, help Europe “catch the US in five years.” Taylor felt that a lot had been accomplished since his arrival six months earlier. His team had managed to standardize and improve supply chain processes across Europe in the areas of vendor management, sales and operations planning, customer backlogs, and inventory management. Taylor believed that Europe would exceed Wilke’s growth expectations; he expected Europe to surpass the US in revenues as early as 2004. However, many decisions were up in the air. A particularly pressing issue that Taylor had to analyze was how to configure the distribution network that would most appropriately support Amazon Europe’s