Company Overview

Like the river for which it is named, Amazon.com is a powerful force in the world of online retailing. Jeff Bezos’s creation, which started out as the world’s largest bookstore, has become the world’s largest virtual department store, selling not only books, CDs, and DVDs, but also consumer electronics, drugs, clothing, and nearly anything else you can think of. Like Dell with computers, the direct model gives Amazon.com amazing velocity. By reducing time in inventory, the company reduces inventory costs and losses due to obsolescence. Additionally, the elimination of retail outlets reduces the company’s capital requirements.

Amazon touts inventory turns of nearly 20 times per year—twice that of Costco, three times that of Wal-Mart, and quadruple that of Home Depot. (source: Amazon Analyst Presentation). Additionally, Amazon.com has leveraged its infrastructure to host third-party stores, more recently in the category of gourmet foods and syndicated stores, such as Target. It has linked its virtual third-party stores to their brick-and-mortar counterparts.