Amazon.Com in China - Brief Analysis on Its Supply Chain Management Strategy & Proposed Recommendations

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Chen Nanyou
Du Huanhuan
Gao Yilei
Guo Jing
Hong Jingqing
Ker Qian Yin
National University of Singapore

Part 1: Introduction to Amazon China’s Background and its Supply Chain Amazon was founded by Jeff Bezos in 1995, started as an online bookstore with a vision to become the Earth’s biggest bookstore. It was soon diversified into selling DVDs, software, video games, electronics, and etc while the company’s positioning changed to the Internet’s No.1 retailer. In 2001, Amazon set a new goal as the Earth’s most customer centric company. Ever since, building up a customer-centered service business enterprise is the development direction of Amazon. Soon after gaining a firm footing in Europe, Amazon eyed on China as its next expansion target with huge market and great potential. In 2004, Amazon acquired Joyo.com, one of the largest online shopping malls in China located in Beijing, as its subsidiary in China. Joyo.com domain was officially renamed to Amazon.cn in 2007 and its Chinese name was changed to Joyo Amazon. It expanded rapidly and constructed new Distribution Centers (DCs) all over China to build up the infrastructure of Amazon’s B2C business. In 2011, Joyo Amazon was renamed to Amazon China which signified great important attached from Amazon headquarter, as well as its determination of long-term investment and support to Amazon China. As a B2C e-commerce online shopping enterprise, Amazon China currently has approximately 2.6 million types of commodities in 28 categories. There are three typical logistics models of B2C e-commerce: the third-part logistics model, the self-run logistics model and joint distribution model. Amazon China adopts a combination of self-run model and third-part logistics model. This is to minimize the risks, costs and delivery time to meet to unique demand of Chinese customers, which is to be able to receive the product they ordered within one day. Mostly Amazon China would use its own logistics to deliver the goods, the third-part logistics are involved only during festivals and busy periods when a big surge in order is expected. Hence, Amazon China now maintains 11 operating centers (OCs) in Beijing (2 in Beijing), Tianjin, Suzhou, Guangzhou, Chengdu, Wuhan, Shenyang, Xian, Xiamen and Kunshan. The OCs are mainly responsible for receiving goods from suppliers, warehousing, inventory control, order shipping, return of goods, sending back to manufacturer, ensuring product quality and safety and etc. Moreover, Amazon China has its own distribution teams as well as customer service centers to provide fast and convenient delivery services and after-sales support system. The enormous amount of investment in Amazon China’s OCs has already made some significant result: enabling goods received with the same day of the order for 17 cities and good received on the next day of the order for 53 cities in China.

Figure [1]
Despite the rapid expansion and building up operation centers all over China, the current market share of Amazon China ranks 4th in the B2C market in China as can be seen in Figure [1]. We also observe a clear decrease in market share from the beginning of 2010 to now. The success of some local B2C companies such as Tmall.com (Tmall) and 360buy.com (Jingdong) might be attributed to their competitiveness, government support, market conditions, public acceptation and probably the comparative advantages developed by different firms such as lower price, more extensive marketing efforts and etc. This report will first take a closer look at several Amazon China’s competitors and then study problems faced by Amazon China in its B2C and C2C e-commerce supply chain, followed by some in-depth recommendations on how to further enhance its supply chain by addressing those problems faced by Amazon China. Part 2: E-commerce Supply Chain’s Current Status in China

Although the e-commerce is developing in an amazing speed in China nowadays, its corresponding supply chain development...
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