Offline vs. Online Retail Efficiencies Turnover –3 times / year –avg. book in store 121 days –Book on shelf 68+ days after paying suppliers Inventory –shelf & warehouse stock –30% returns Turnover –16 times / year –avg. book in house 22 days –avg. 28 days of float / title Inventory –all warehouse stock –few returns
Capital Efficiency – Negative Operating Cycle (Float) Day 0 Product Received Product Shipped Customer Payment Supplier Paid 222553 28 Days Inventory Turns for Full Product Line, 2004 Amazon = 16 B&N = 3, Home Depot = 5, Best Buy = 5, Wal-Mart = 7
Amazon’s Warehouse Network 5 facilities, > 4 million sq. feet Extremely diverse product mix Mixed Automation & Manual Sorting and Conveyance Direct to consumer fulfillment Photos: blog link provided by the San Jose Merc News
captures early demand & improves inventory forecasting
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