MEMORANDUMDate: 04/03/07To: Professor From: Tue 7.15 PMSubject: "Amazon.com: Exploiting the Value of Digital Business Infrastructure" Analysis.
1) If Amazon has helped usher in the "New Age of Retail" how has it used its technology infrastructure to make this happen? Do not recount extensive details from the case. But consider how Amazon moved from vision to infrastructure and how the infrastructure has evolved to lead, enable or address changes in the business model. But what specific steps enabled Amazon to lay claim to being a new age retailer?Online retailers have a set of advantages comparing to brick-and-mortar ones: brand flexibility, product selection, cost structure, information access. This is particularly apparent in product categories where customers may want more information about the product (like reviews and comments), wider selection and doesn't require immediate delivery. Books and music were ideal first categories for Amazon to start their e-commerce venture. They started building their infrastructure from there, but their ultimate goal was to create system that allows them to undertake any new product category without incurring start-up costs over again.
It was not easy - their vision of growth led to big initial overcapacity. They achieved leadership by huge investments in technology and developing necessary expertise in e-commerce.
When infrastructure for their model was in place, company gained significant advantages over offline businesses - they have flexibility to expand into new market faster and at a lower cost. Amazon's ICT is that differentiating factor that allowed company to have minimal start-up costs. On the other hand they raced ahead of the Internet crowd by creating superb physical back-end operations with their distribution, order fulfillment and customer service centers. They realized the model Porter was emphasizing on - integrating virtual and physical activities.
The configuration allowed them to expand into new categories without the...