Case Study 3 109 (l np 4 3-11. If a brick-and-mortar retailer were to use FBA. w
ID: 367106 • Letter: C
Question
Case Study 3 109 (l np 4 3-11. If a brick-and-mortar retailer were to use FBA. what information systems would it not need to develop What costs would it save? 3-9. Summarize the advantages and disadvantages for brick-and-mortar retailers to sell items via Amazon. com. Would you recommend that they do so? If a brick-and-mortar retailer were to use FBA, what business processes would it not need to develop? Rs. If a brick-and-mortar retailer were to use PBA. how would it integrate its information systems with Ama zon's? (To add depth to your answer. Google the term Amazon MWS.) 3-10. 12. What costs would it save? TMExplanation / Answer
Ans. 3-9)
By now, everyone knows that Amazon is amazing. If someone doesn’t agrees to it, then its high time for them to know that Amazon is the future. Amazon, with its customer-centric approach and consistently high service quality, has revolutionised the retail industry. It is often termed as the most customer-centric company in the world. And rightly so, Amazon has time and again proved that it lives by the “customer is the king” philosophy. Amazon has relentless focus on improving the lives of the consumer, not the retailer, not the distributor, not the seller, but the consumer. The good news is when an organisation is strongly dedicated to serve its consumers, its an opportunity for the whole ecosystem to thrive and join the bandwagon.
Brick and mortar retailers too can make use of this opportunity and become a part of the Amazon value chain. Brick and mortar retailers refers to an organisation or business that has a physical presence in a building. It may or may not be a marketplace. Amazon’s ideology is straightforward, it focuses on making the customer satisfied. And, if its not able to do so in the first place, it does something so extraordinary that it leaves the customer delighted. Now, if a brick and mortar retailer wants to become a part of amazon’s growth story, there are numerous advantages/benefits that the retailer can derive, although there are some, negligible though, disadvantages as well. These are summarised as below:
Advantages of Selling on Amazon:
1) The first and foremost advantage for any brick and mortar retailer to sell on amazon is the penetration and reach of the Amazon. Retailers get immediate access to huge customer base of amazon, to a marketplace that is beyond retailer’s geographical boundaries. By becoming a seller on amazon, the retailer can market and sell their products in diverse parts of the country and even to the International markets. Their products now can be discovered by thousands of potential customers.
2) Becoming an amazon partner gives them access to world class technical infrastructure. The retailers can make use of the useful tools and applications provided by Amazon. It makes it possible for the retailer to access the significant data concerning their business and with the use of analytical tools, retailers can strategise to reach out to more potential customers. The backend infrastructure and support of amazon is beyond excellence.
3) For new businesses, it is easier for them to earn immediate credibility and trust among the customers. This is because customers trust Amazon and there is more probability for a customer to make a purchase on Amazon than on any other unknown/lesser known website.
4) When a retailer chooses the FBA i.e. fulfilled by amazon facility, they do not have to worry about storage anymore or about fulfilling of the orders. The retailer’s inventory is stored at Amazon’s warehouses and any order that the retailer receives, is fulfilled from the Amazon’s end. This reduces significant overheads of the retailer and most of the activities in the supply chain are now taken care by Amazon.
Disadvantages of Selling on Amazon:
1) With access to amazon’s world class facilities and infrastructure, retailers also have to pay significant fee to Amazon. There are different type of costs involved when selling on amazon. Some of these include transaction fee, handling charges, warehouse rentals, etc. Because of these fees, the profit of the retailer gets reduced by a noticeable percentage.
2) The retailers selling on amazon often find themselves in a price war situation with other retailers. No matter at how much low price the retailer is selling its product, there is always someone who can match or even beat their prices. This kind of competition hurts the bottomline of the retailers and their brands just become a commodity.
3) Brands or manufacturers, if they are not well known or established, gets little or no recognition from the prospective customers. The brands selling on amazon often do not enjoy brand loyalty and customers instead of making their purchase decision on the product attributes and features, give more importance to the price of the product.
Although, selling on amazon may have its own set of disadvantages, there is no confusion that amazon has disrupted the retail industry and has won a significant share of customer wallet and is continuing to do so. Having customer-centric approach to its core, it makes sense for the brick and mortar retailers to accept amazon and adapt their business model where amazon becomes one of their important sales channel.