Defining Amazon’s ability to overcome bottlenecks and stay ahead of the game
Over the past few weeks of blog posts Amazon has been a common topic of discussion. Their unparalleled control of operations and widening footprint across supply chains has allowed them to become the exemplar for developing companies. But what part of their business process is it that truly makes them stand out amongst competitors? Some attribute it to Bezos and his ability to identify and eliminate bottlenecks in every part of his multi-layered business model, while others point to Amazon’s inventory management and lightning fast distribution systems. Both strategies have been instrumental in attributing to Amazon’s success, but I think the core determinant is the company’s ability to analyze processes, find their constraints, and fix/ improve them at a speed others aren’t capable of matching. Exposing and repairing bottlenecks is a key process that determines whether or not companies are able to unlock sustainable growth and Amazon has come close to perfecting this.
The very first bottleneck Amazon faced was earning the trust of consumers to buy online. They made the process of uploading credit card info easy to do and easy to understand. They were even able to support it with flawless customer service if and when something went wrong. By solving this initial bottleneck of building trust, they became the gold standard of reliability for online buyers. In my experience, people will usually pay more for products from Amazon than direct from the manufacturer because they genuinely trust the company’s dependability and have faith in their system.
In terms of the most recent acquisition of Whole Foods, their biggest bottleneck was making the experience for shoppers as smooth and consistent as possible. The execution of this idea so far has included implementing Home Delivery, incremental price cuts, pop up stands displaying amazon gadgets, and order pick up lockers. Although it may seem like Amazon hasn’t fulfilled all of the objectives they promised at the beginning of the procurement, they are relying on a strategy of slow, cumulative installments to avoid constraints and manage capacity at a sustainable rate. Bezos and the rest of management has done an incredible job evaluating their operations and adhering to the six sigma methodology to keep their business processes consistent and progressive.
My questions for you guys are these:
What do you think are the next bottlenecks for Amazon to overcome as an online company or as a proprietor of Whole Foods?
What course topics have we covered so far that you believe can be referenced towards Amazon’s progressive operations?
Lastly, what do you believe are Amazon’s greatest strengths? What part of their business strategy do you believe separates them from the field.
https://www.fronetics.com/supply-chain-impacts-amazons-whole-foods-acquisition/
https://medium.com/@joshualong/jeff-bezos-the-ultimate-bottleneck-breaker-176b75337ff8
I definitely think that Amazon’s competitive advantage is the speed in which they are able to improve and analyze their processes. The company is always at the forefront of the creation of these new innovations. Amazon is so successful because they are able to see these inefficiencies within their processes and adapt accordingly in record time. I believe Amazon takes a lot of pride in their innovation and has capitalized to make this one of their competitive advantages.
In regards to Whole Foods, it will be interesting to watch how the company overcomes these constraints and bottlenecks within their processes. With the company’s acquisition of Whole Foods, Amazon has recently implemented a new method for managing their inventory, the order to stock method that we have previously discussed in other blogs. Amazon has a commitment to continuous improvement (or kaizen) and does not shy away from new potential growth opportunities. It is seen that Amazon has a lot of confidence in their innovation capabilities, which allows them to be so successful worldwide.
I am confident that Amazon will sufficiently enter the grocery industry and analyze their processes with strict detail. The company has proven throughout its history that it can enter a new market and improve efficiency to meet great returns. Amazon is utilizing a well-organized new inventory system in their Whole Foods stores, proving that they immediately desire to make an impact and achieve longevity in the industry.
I agree with Andrew. I have full confidence in Amazon and its project management unit. I am a firm believer that with its purchase of Whole Foods this past summer, Amazon has revolutionized the grocery industry. When Amazon figures out how to deliver groceries cheaply and fresh (similar to UberEats or other third party food delivery services), I will jump on board. Rather than spend time to go to the grocery store, I will use a few clicks on my computer mouse and not have to worry about it.
I agree I think Amazon is doing a spectacular job analyzing their processing and finding new ways to improve them. It interesting that you brought up gaining their customer’s trust as one of the first bottlenecks they had to overcome. This is not something that I would normally consider an Amazon bottleneck, but I have taken for granted the fact that we have grown up in a very online-shopping heavy era. Those who Amazon was mainly focused on are older generations, such as our parents and grandparent. My mom is adamant that online-shopping is too much of a risk, so she never devolves any personal information online. But recently she has been slowly adapting to a new favorite website. It’s Amazon. It’s interesting to see how perspectives and actions change when a company gains trust. And as you mentioned, I think Amazon did this through their immaculate customer service department and there easy to understand checkout and shopping options.
Amazon’s acquisition of Whole Foods is a great start to showcasing their ability to also operate in a brick and mortar setting. I think their biggest order winner is the slashing of many prices by as much as 50%. This gave Amazon/ Whole Foods the ability to entice more money conscious people who may not have been able to afford Whole Food prices before, but can now buy healthy food at amazing lower prices without giving up any quality. I am also a fan of the Prime Exclusive deals that Whole Foods now offers. Amazon is definitely increasing the value their members get from subscribing to Prime. Lastly, I think Amazon is also attracting customer through their new Ad campaigns and their “Everyday Savings” logos.
http://money.cnn.com/2018/02/09/news/companies/amazon-whole-foods-changes/index.html
I believe that Amazon has already met its most challenging bottleneck yet. Delivering to customers in rural areas can be costly and presents numerous logistical challenges, particularly for a company that offers free guaranteed 2-day delivery for its paying prime customers. It is no wonder why Amazon has invested so much money in developing Autonomous drones and cars to better serve their customers. While the companies refines these upcoming concepts, they have invested heavily in “Shipping with Amazon”, a division speculated to rival FedEx and UPS. So far, the company has utilized its own container ships to get items from overseas suppliers to the United States, as well as hiring couriers to deliver packages locally from distribution centers.
However, these solutions will not fix Amazon’s rural problem. The cost or logistics issues likely will not be solved until an entirely new method of delivery is introduced. The highly coveted Amazon drone could present a possible solution to this dilemma. There are a number of barriers before this type of commerce can take flight, but once it does Amazon just might have a solution. After all, Amazon has pioneered one of the most logistical distributions in history.
The increasing competition in the grocery delivery market makes for some interesting discussion. A lot of different elements in the supply chain make the delivery process inefficient and lose quality due to the bottlenecks the process creates. For example, the amount of gasoline used by delivery drivers back and forth from Whole Foods to someone’s home can be problematic for Amazon. The inefficiency comes from the problem that hired drivers are delivering groceries to individuals and then returning to Whole Foods for their next shipment. A solution to that inefficiency is one of Amazon’s great strengths that Izzy mentioned in the article – they have consistently been able to innovate new, creative solutions at a high level like the quality customer service or the excellent inventory management.
The key here for Amazon and Whole Foods is to act fast because of competitors like Wal-Mart and Target. The one solution they have, the Amazon Go brick and mortar store, only addresses the segment that likes to quickly browse and leave without worrying about human interaction. My recommendation for them is to really think about launching grocery pickup instead of delivery. This option makes things more convenient for the consumer and limits the amount of fuel usage by all the drivers that go around delivering groceries to consumers. Wal-Mart currently engages in this program, and has left consumers very satisfied (see review: https://www.clarkscondensed.com/everything-else/product-review/walmart-grocery-pickup-worth/). I have faith that Amazon, with their already great operations management system, can test a program like this and hopefully integrate it into all Whole Foods stores worldwide.