The document discusses options for consolidating Amazon's distribution network across Europe. It considers creating a centralized European Distribution Network (EDN) and discusses how that would affect inventory placement, customer experience, staffing, and other factors. The main recommendations are to: 1) adopt centralized operations management with the EDN and a UK-based management office; 2) create cross-docking warehouses in Southern Europe; and 3) leverage techniques from Amazon.com to manage inventory and shipping costs across Europe.

1. Horizons Team

2. Amazon International
 What should be consolidated to
the Europe level? What should remain
localized by country?
 How should the distribution
network be configured to support
growth?
 Should a European Distribution
Network (EDN) be created? How will
inventory placement, the customer
experience, staffing, etc. be affected by
these changes?

3. Europe: An Aggregate Of Regional Markets
Items displayed online are unique to each country
Country laws
Customer Service Representative localized to each country
Fixed and control Pricing
Payment options

4. Options Considered by Amazon
1. Keep three locations using them as backup alternatives when
the primary country location cannot fulfill an order.
2. Selectively group inventory by categories at certain locations,
reducing inventory costs.
3. Fully integrate all locations with a centrally managed European
Distribution Network.

5. Wholesalers
Amazon.com (US Division) has choices for suppliers and only uses
wholesalers as a backup
In Europe: Lack of wholesalers demands relationships with
hundreds of publishers and distributors  Expensive direct
contracts
Difficult and limited EDI penetration
Difficult to maintain low costs for customers

6. Three Independent Distribution Centers
 They have unified many of the operations of the subsidiaries,
including marketing, and customer service, and yet still keep three
independent operations
 Each country has access to different kinds of products
 Repetitive Inventory at different locations.
 Excellent postal services for local shipping but unreliable cross-
border logistics
Future expansion will amplify these problems

7. Recommendations
 Adopt Centralized Operations Management
Implement European Distribution Network (EDN)
 Centralize management office in the United Kingdom where
most operations take place.
Use strategic order fulfillment to minimize lead time
Use strategic inventory distribution to reduce cost

8. Recommendations
Create Cross-Docking enabled warehouses
 Preferably in Southern Europe where Amazon faces higher
demand
 Amazon’s Infrastructure is already established for
communication between the DCs
 Using the existing DC would be more cost efficient

9. Recommendations
Leverage some Amazon.com techniques
Drop shipping: May increase price but customer service level
will remain high
Pick profiles: Multi item orders may need to be fulfilled by
more than one location
Technology investments: “virtually” centralized inventory in a
single system, EDI internally and externally

10. Recommendations
Manage Shipping Costs
Continue free shipping for local products, extending the use of
Postal Injection for some high demand products
 Full truck loads from DCs to major cities
Reduce postal service charges, maintain low shipping cost and
offer free shipping in some new places

11. Questions?
?