| Electronic Commerce |

HOW AMAZON.COM FULFILLS ORDERS
(CHAPTER 11, P580) 1. Executive summary
With the brick – and – mortar or e – commerce (EC) companies, when they provide to customers goods and services, the problems of “How to fulfill orders?” always are difficult things that caused headaches for managers. As we known, order fulfillment is a main EC support service along with security, payments, infrastructure and technology. So, in this paper, we will see how the world’s largest e – tailer like Amazon resolve its problems related to enhancement productivity of order fulfillment. 2. Case summary
The Problem
With traditional retailing, the problem is not enough delivery destinations to ship large quantities of goods. With e – tailing, the maintaining an inventory of items is necessary to fill customer’s needs immediately, so this leads to the problem of maintaining and shipping products cost. When Amazon.com launched in 1995, it was a book online retailing with “virtual retailing” business model, it operated as an intermediary; it took order from customers and received payments, and then let others fill the orders. However, this model would not work for the large e – tailer.
The Solution
Firstly, Amazon changed their business model from no warehouse, no inventory, and no shipments to handling its own inventory and logistics. They spent $2 billion to build warehouse and outsourced the shipment to UPS and USPS.
Secondly, to fulfill many millions of orders each month, Amazon implemented a process with seven steps:
Step1: A computer program checks the location of the items ordered online, and then it transmits the order to the appropriate distribution center or vendor after it identified where will fulfill the order.
Step 2: A “flowmeister” receives all orders and assigns them to specific employees.
Step 3: Red lights in bins show employee