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Amazon Case

In: Business and Management

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Mighty Amazon by Fred Vogelstein

The story of how he started Amazon is now legendary. While working at Shaw in 1994, he read a study that predicted the Internet would explode in popularity. He figured it wouldn't be long before people would be making money selling over the web. After researching a host of items that could sell online, he settled on books. Almost every book was already catalogued electronically, yet no physical bookstore could carry them all. The beauty of the model, Bezos thought, was that it would give customers access to a giant selection yet he wouldn't have to go through the time, expense, and hassle of opening stores and warehouses and dealing with inventory. It didn't work out that way. Bezos quickly discovered that the only way to make sure customers get a good experience and that Amazon gets inventory at good prices was to operate his own warehouses so he could control the transaction process from start to finish.
Building warehouses was a gutsy decision. At about $50 million apiece, they were expensive to set up and even more expensive to operate. The Fernley, Nev., site sits about 35 miles east of Reno and hundreds of miles from just about anything else. It doesn't look like much at first. Just three million books, CDs, toys, and house wares in a building a quarter-mile long by 200 yards wide. But here's where the Bezos commitment to numbers and technology pays off: The place is completely computerized. Amazon's warehouses are so high tech that they require as many lines of code to run as Amazon's website does. Computers start the process by sending signals to workers' wireless receivers, telling them what items to pick off the shelves; then they crunch everything, from which item gets plucked first to whether the weight is right for sending. Along the way the computers generate reams of data on everything from misboxed items to chute...

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