xperiences, interact with each other and gain from their interaction. Amazon also benefits from the use of these tools when the customer continues to visit their site for future purchases. In addition, there is a lower investment and better customer reach in this virtual online community. Once the customer places their order over the Internet from the convenience of his/her home, the order is sent to the online book retailer, which is then electronically forwarded to a wholesaler or directly to a publisher. The books are then shipped from the wholesaler directly to the customer, thereby eliminating the need to have a physical inventory of books5. Although there are numerous advantages to this, there is also a disadvantage in that the online bookseller must pay the middle man for their services. In order to cut costs, Amazon decided to distribute its own inventory of books, some of which are purchased directly from publishers, in addition to utilizing rapid fulfillment from major distributors and wholesalers. Therefore, Amazon expanded its warehouse capacity and rented a 300,000 square foot distribution center in 1999 to reduce the companys reliance on overnight delivery services. As a result, their inventory turnover is 10 times greater than that of rival Barnes and Noble thereby lowering inventory-carrying costs5. To this end, Amazon utilizes automated interfaces for sorting and organizing its orders to enable the most rapid and economic purchase and delivery terms possible. The companys proprietary software selects the orders that can be filled via electronic interfaces with vendors and forwards remaining orders to its special orders group. The electronically-ordered books are shipped by the distributor within hours of receipt of an order from Amazon.com5. The primary advantages of this distribution network are the reduced handling costs of inventory for Amazon and the ease of ordering and price discounts for the customer. Honing ...
