Greetings Class,

please find below, representative answers for the extra credit CASE STUDY on Amazon. Review the representative answers and reflect on your learnings. If you didn't submit the extra credit assignment last week, please just review the CASE STUDY, walk through the representative answers, and share your thoughts about the CASE STUDY.

REPRESENTATIVE ANSWERS

1. Summarize the advantages and disadvantages for you as a company to sell items via Amazon.com. Would you recommend that your company do so? You could sell items via Amazon.com and gain access to the huge number of shoppers that use that site. It would have to do business following Amazons rules, however. In addition, you may lose customers to Amazon, especially if you want the customer to think of you as the the place to go for your product. You may want to keep customers coming to your web site rather than lose the customers to Amazons site.
2. For items that you sell yourself, compute your cost of using FBA to process:
   1. An order of 10 sets of bicycle pedals weighing a total of 25 pounds.

      Order Handling (per order):	$ 1.00
      Pick & Pack (per item): $1.02 * 10 items	$10.20
      Weight Handling (per pound): $1.34+$.34 * 25 lbs	$9.84
      Total*:	$21.04

      *Assumes no storage costs due to immediate repackaging and shipping after the order is received at the Amazon warehouse.

   2. An order of a single set of bicycle pedals weighing 2.5 pounds

      Order Handling (per order):	$ 1.00
      Pick & Pack (per item): $1.02 * 1 item	1.02
      Weight Handling (per pound): $1.34+$.34 * 2.5 lbs	2.19
      Total*:	$4.21

      *Assumes no storage costs due to immediate repackaging and shipping after the order is received at the Amazon warehouse.

   3. A cycling shirt weighing 10 ounces.

      Order Handling (per order):	$ 1.00
      Pick & Pack (per item): $1.02 * 1 item	1.02
      Weight Handling (wt < 1 lb): $.46	.46
      Total*:	$ 2.48

      *Assumes no storage costs due to immediate repackaging and shipping after the order is received at the Amazon warehouse.

   4. An inventory of 1,000 sets of bicycle pedals stored for 3 months (using your own assumptions). Assuming the items are stored in January, February, and March, and assuming a box containing a set of bicycle pedals requires one cubic foot of storage, 1,000 boxes would require 1,000 cubic feet of storage space. For three months of storage, this would cost $1440 (1000 cu ft * $.48/cu ft * 3 months).
3. If you were to use FBA, what business processes would you not need to develop? What costs would that save? You would not need to develop business processes for receiving, repackaging, and shipping. It would save on labor costs associated with these processes, plus it would no longer need warehouse space for these processes.
4. In your opinion, does it make sense for your company to use FBA? Justify your answer . By no longer needing to have warehouse space set aside for the fulfillment of the customers orders, you could benefit greatly. Utilizing Amazons existing fulfillment capabilities and warehouse capacity should deliver significant savings in your cost structure.