Amazon Distribution Network

During 1995 to 1998, Amazon's procurement strategy relied on the partnership with wholesaler ---primarily Ingram Book Company and Baker & Taylor--to build its online book catalogue and source its vast selection.

In 1999, to decide how many DCs Amazon should have and where to locate them, Amazon started adding new product lines and features at a fast pace. They turned to outside experts and used i2 Technologies' Supply Chain Strategist software package.

At that time, Amazon also added new high-tech equipment into new DCs. Their operations team decided to take advantage of some of the latest materials-handling technologies for its warehouses. Each DC was equipped with a "pick-to-light" system, which employed lights that were sequentially illuminated to show workers which and items to pick next, and how many. In addition, the DCs were equipped with radio-frequency technology, which directed workers to warehouse locations via radio signals sent to the worker's handheld terminal. Voice technology, which allowed computers to "verbally" communicate instructions to workers, was tested in a trial phase.

In August 2000, Amazon partnered with ToysR'Us and created a co-branded online store selling toys and baby products. Amazon maintained the on-line "store" and handled the order processing, order fulfillment, and customer service; ToysR'Us managed merchandising, buying, and owned the inventory, which was housed in Amazon's distribution facilities. This model allowed Amazon to transfer the financial risk of toys inventory obsolescence to its more toy-savvy partner.

In Europe market, Amazon had to establish relationship with hundreds of publishers and distributors. And they also relied on national postal service carriers in Europe to deliver its domestic as well international orders.