The Core of Amazon is not the website, but the warehouse
[blockquote]
“This is when Amazon drastically expanded the number of warehouses to more than 10 around year 2000 and started stocking most products that it sold. The focus shifted to a business model built around excellent delivery performance and efficient logistics. Customers were amazed at how quickly their orders arrived on the doorstep.
“Amazon did not stop reinventing its business model here. In 2006 it went further and unveiled a program called Fulfillment by Amazon, whereby independent sellers could use Amazon’s warehouse network to fill orders and delegate to Amazon their logistics-related decisions.
“Under this new model, Amazon essentially became a wholesaler of goods sold by many much smaller virtual storefronts. What the distributors and publishers, in the aggregate, were to Amazon in its early days, now Amazon was to the participants in its fulfillment-for-hire program. What used to be outsourced became the core proposition and strength.
“Amazon’s recent decision to further develop its fulfillment capabilities (by spending close to $14 billion to build about 50 new warehousing facilities) to bring a large fraction of the US population in the same day delivery catchment area reflects that, for Amazon, the Internet retail model has now come full circle.” [/blockquote]
Amazon Constantly Audits its Business Model : Karan Girotra and Serguei Netessine, 15 November 2013, Harvard Business Review Blog Network
