innovative Inventory outsourcing
In early 2001 Amazon decided to outsourcing its inventory management though it knew that it was a
huge risk. When Amazon managed its own inventory, it had earned the reputation of providing
superior customer service, which was its biggest strength. Now, the company wanted to
concentrate on its main activities and outsourcing inventory management in order to earn more
profits. However, Amazon was apprehensive that this move would damage the hard-earned
reputation of the company. Nevertheless, it decided to go ahead with the decision to outsourcing its
inventory
Amazon did not stock every item offered on its site. It stocked only those items that were popular
and frequently purchased. If a book that was not too popular was ordered, Amazon requested that
item from its distributor who then shipped it to the company. In the company, the items were
unpacked and then shipping to the respective customers. So, Amazon basically acted as a trans-shipment centre and ensured that the entire process of shipping from the distributor to the customer was done very efficiently.