Page 76 - Electronic Commerce

Introduction to Electronic Commerce

message back into English. Write a short memo that compares the problems you antici-
pated with those that occurred in the automated translation. The business messages are 51
the following:
a. The flight has been delayed due to weather and your shipment of components will be
delayed by one day.
b. We want to bid on your proposal, but we will need you to send us the drawings of
subassembly #24 and the supervising mechanical engineer’s quality control report by
next Thursday.
c. Our company offers the latest and greatest hot deals on wheels. We would love to
send you a brochure that explains why our brakes, wheels, and enhanced suspension
components will meet your needs effectively and economically.

Cases

C1. Amazon.com
In 1994, a 29-year-old financial analyst and fund manager named Jeff Bezos became intrigued
by the rapid growth of the Internet. Looking for a way to capitalize on this hot new marketing
tool, he made a list of 20 products that might sell well on the Internet. After some intense anal-
ysis, he determined that books were at the top of that list. Although Bezos liked the name
Abracadabra, he decided to call his online bookshop Amazon.com. Today, Amazon.com has
more than 100 million customers and sells billions of dollars’ worth of all types of merchandise.
When he started, Bezos had no experience in the bookselling business, but he realized that
books had an ideal shipping profile for online sales. He believed that many customers would be
willing to buy books without inspecting them in person and that books could be impulse pur-
chase items if properly promoted on a Web site. By accepting orders on its Web site, Bezos
believed that Amazon.com could reduce transaction costs in the sale to the customer.
Several million book titles are in print at any one time throughout the world, and more than
a million of those are in English. However, the largest physical bookstore cannot stock more
than 200,000 books and carries even fewer titles because bookstores stock more than one copy
of each title. Having a wide selection was important because Bezos believed it would help cre-
ate a network economic effect. People would visit Amazon.com whenever they wanted to buy a
book because it would be the most likely store (physical or online) to have a particular title. After
becoming satisfied customers, people would return to Amazon.com to buy more books and
would eventually stop looking elsewhere.
The structure of the supply side of the book business was equally important to
Amazon.com’s success. Music CDs, which were second on Bezos’ list, were produced by a few
major recording companies who could easily control Amazon.com’s supply. In contrast, there
were a large number of book publishers, none of which held a dominant position in the book-
selling marketplace. Thus, it was unlikely that a single supplier could restrict Bezos’ supply of
books or enter his market as a competitor. He decided to locate his firm in Seattle, close to a
large pool of programming talent and near one of the largest book distribution warehouses in the
world. These supply factors were important because Bezos wanted to develop efficiencies that
would allow Amazon.com to reduce transaction costs for its purchases as well as its sales
transactions.

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