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Technology Stocks : Amazon.com, Inc. (AMZN)

AMZN 247.35

+0.4%

Jan 9 9:30 AM EST

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To: Glenn D. Rudolph who wrote (36974)	1/26/1999 9:21:00 PM
From: Lizzie Tudor	Read Replies (2) of 164684

Glenn, I think custom automation at Amzn is way up there in terms of complexity, about as hard as Dell (not harder). For example heres what Im thinking.... Just an example. Say you have a publisher in NYC. You get a bunch of orders from the east coast for this book + its a regular that you stock. If you could drop ship 50 books directly to the east coast customers and ship the other 50 to the regional wh, you would save money (assume the regional wh is in Virginia or something). But your ERP system knows the name and addr of the customers which need to get to Fedex and then Fedex needs to get the Airway bill # back to you along with delivery info. In addition, Amzn needs to code a decision system that evaluates when it is cheaper to go direct vs indirect through the regional wh (since drop shipping is more $$ overall unless its a short distance) - example say the customer is in Maryland, its not obvious which is the better way. No company really sells this software. Fedex has some stuff but they want to take over your entire business and then there goes the competitive advantage right out the door. The ERPs have nothing really in distribution so you are pretty much on your own. Efficient location and movement of product can shave 1-2% off the cost of sales and in this case that would give your competitors headaches. Of course B&N is not standing still. BTW Amzn has an edge with this sales tax issue over B&N - any news on that front? Shipping and sales tax are about the same expense in the heavily populated states.

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