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Amazon.Com’s European Distribution Strategy

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Submitted By Shijing
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Amazon.com’s European Distribution Strategy

Name: Shijing Zhao
Date: February 23, 2013

Introduction and Problem Definition
To best support its growth, Amazon Europe was considering building a European distribution network (EDN) where the location of inventory would be strategically determined. Among all issues to be considered, the most important one was to evaluate the three alternatives to design the EDN and choose one of them.
External Analysis (See Appendix 1 for full listing)
For opportunities, the first thing worth mentioning is the fast growth of international markets. Worth only $381.1 million in 2000, the Amazon International’s revenue reached at $1,168.9 million in 2002. That means the international market environment was fairly optimistic for Amazon and it should expand into other countries such as China and Korea. The second important opportunity is the large potential of European online markets and book markets. For example, Italy holds the third largest book sales of € 4,130 million in 1999 and the fourth largest online spending of €701 million in 2001. Amazon could consider Italy or other Europe countries with large potentials as its future target markets in Europe.
For threats, the biggest one is the low EDI penetration among book, music and video distributors in Europe. EDI enables Amazon to get the information about the item ordered from the US supplier quickly. It would be difficult for Amazon to know details about the item ordered without EDI, which could seriously slower the order fulfillment process. The second important threat is the lack of domestic postal competitors or pan-European carriers in Europe. Since the national postal service carriers couldn’t offer quick and reliable pan-European services, Amazon’s fast delivery model was severely interfered. It’s also hard to lower the shipping cost or improve the shipping standard

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