Amazon Essay

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3) Suppose BN decided to better integrate its Internet and physical channels. What would be the advantages of better integration? What would be the operational challenges to achieve that integration? 4) What are Amazon’s prospects going forward? 1) What operational advantages and disadvantages does Amazon have relative to BN’s superstores? 2) Compare costs at BN with Amazon for 1996. Does Amazon’s operational advantage outweigh its operational disadvantage? Does the situation change based on the year 2000 forecasts in the case? How does the situation change based on actual performance data provided in the Excel file on Blackboard? 3) What are the processing and delivery costs to fulfill average order at Peapod? (These are the key components in Peapod’s cost-to-serve. The question requires some detective work and estimation, given that all the data is not available) Conducting some secondary internet search, I found that the average basket size is over $157 and that customers typically shop twice a month. Reference: http://www.peapod.com/site/companyPages/our-company-info-for-students.jsp From table 13.3 of the case, the COGS accounts for 70% of the revenue of Peapod. Applying this cost to major activities that the company is involved in, the following chart can be tabulated, Clearly, the majority of activity costs are spent in Order Picking and Order Delivery to customer homes as this involves the most resources and can be used as a strategic differentiator for companies to beat competition. However this result is intuitive, this is subject to the assumption of $157 average basket size and this is sensitive to this assumption. 4) What is the shortest path to profitability if one exists? Determine the profitability of an order and break out its key drivers. What specific action would you recommend to increase the profitability of

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