Chapter 7. Amazon: An Empire Stretching from Cardboard Box to Kindle to Cloud

Which statement is true of Amazon? - Its cloud computing business is one of the largest players in that category. - Amazon made profits from the first year of its operation. - Amazon concentrates more on its quarterly results and is inflexible on details about its vision. - It took 5 years to get out of debt. - Its profitability has remained constant over the years and analysts continue to predict profits for the firm's future.

cloud computing business is one of the largest players in that category

Money owed for products and services purchased on credit to be paid at a later date is known as _____. - gross profit - net profit - accounts payable - pre-paid expense - debt

accounts payable

Which strategy was followed by Amazon's founder? a) He focused more on Amazon's yearly results. b) He postponed profit harvesting. c) He built e-commerce operations only for Amazon's customers in the United States. d) He reduced warehousing capacity. e) He consciously ignored cloud computing platforms.

b) He postponed profit harvesting.

Amazon has combined _____ and _____ to outperform sky-high expectations and become one of the most innovative firms in history.

technology and strategy

_____ refers to efforts that pay referring websites a percentage of revenue earned from a referral.

affiliate program

Jeff Bezos invested in which of the following firms? - Uber - Twitter - The Washington Post - BlueOrigin - All of the available options are true

- All of the available options are true

Allowing third-party sellers to list their products on Amazon is controversial. Why would Amazon allow products sold by others to appear on its site? - Amazon's brand is reinforced as a first-choice shopping destination. - Although products are sold by third parties, Amazon gains valuable data on things such as customer browsing habits and sales. - All of the available options are true. - Selection attracts consumers. - A network effect competitive advantage is created where more buyers attract more sellers, which helps Amazon gain an advantage over any rival attempting to create a similar marketplace.

- All of the available options are true.

Which statement is true of Amazon? - Bezos framed the "three pillars" of the firm's business as "large selection, convenience, and lower prices" - Amazon concentrates on niche customers, low brand assortment, and higher prices to gain competitive advantage. - Amazon only recently became more popular than eBay for basic goods. - The firm was spun out of eBay's auction business. - Amazon's early warehousing was a model of efficiency and was critical to the firm being profitable from the start.

- Bezos framed the "three pillars" of the firm's business as "large selection, convenience, and lower prices"

Identify each statement as true or false concerning reasons that a retailer would consider selling through Amazon using Amazon fulfillment services. - New customers acquired through Amazon wouldn't have to create additional account information if they already had an Amazon account - Amazon will warehouse products - Products can be searched for and discovered on the Amazon website - Products will be available for free Prime shipping

- New customers acquired through Amazon wouldn't have to create additional account information if they already had an Amazon account - Amazon will warehouse products - Products can be searched for and discovered on the Amazon website - Products will be available for free Prime shipping

Which of the following factors likely contributed to the failure of the Fire phone? Select all possible correct answers.

- Rivals benefited from significant customer switching costs - Amazon was late to the smartphone market. - Amazon lacked network effects for its new system

Which statement concerning pricing is true? - Wholesale pricing is illegal. - Agency pricing is illegal. - Wholesale pricing is also known as seller pricing. - In agency pricing, sellers pay publishers for titles and then sell those titles at whatever price they wish. - Rivals colluding to set prices is illegal.

- Rivals colluding to set prices is illegal.

A firm's period between paying suppliers for products and collecting funds from customers who purchase these products is referred to as the _____. - earnings cycle - liquidity period cycle - turnover cycle - trade cycle - cash conversion cycle

- cash conversion cycle

A firm can _____ and _____ to improve its cash conversion cycle in a way that benefits the firm.

- lengthen its accounts payable period, - increase its inventory turns

The phrase _____ refers to a randomized group of experiments used to collect data and compare performance among two options studied.

A/B testing

Amazon's fastest growing business is

Amazon Web Services

Which of the following is an example of agency pricing? - The local government sets the maximum price for a certain product that retailers cannot exceed. - A department store gets a cut on the selling price of a product, which is set by the product's manufacturer. - A retail store purchases merchandise from a manufacturer and sells the merchandise at whatever prices it wishes to charge. - A manufacturer and a retailer work in a collaborative manner to decide the price of the final product. - The government of a country sets the minimum price for certain agricultural products to cover the costs incurred by the farmers.

A department store gets a cut on the selling price of a product, which is set by the product's manufacturer.

Which statement is true of the Kindle? - By the holiday season of the product's second year, the number of Kindles sold began to decline steadily. - The Kindle is only about digitally reading books and not about linking customers to other physical products offered by Amazon. - It is not easy for a person to put books on their Kindle if the book was not purchased through an Amazon publisher. - Amazon today sells fewer electronic books overall than their print counterparts. - Amazon priced early Kindle products so low that the firm did not intend to make money off hardware sales.

Amazon priced early Kindle products so low that the firm did not intend to make money off hardware sales

Which of the following Amazon products was discontinued in 2019 due to declines in usage and, most likely, the low profit margin it provided? - Dash - Alexa - Echo - Kindle

Dash

Identify each statement as being true or false concerning benefits that Amazon has gained by using robots in its warehouses. - lights-out distribution centers where no one works on the warehouse floor - faster stocking of shelves when products arrive at the warehouse - faster order fulfillment times - increased storage in warehouses

False - lights-out distribution centers where no one works on the warehouse floor True - faster stocking of shelves when products arrive at the warehouse True - faster order fulfillment times True - increased storage in warehouses

Amazon also created a FreshDirect-style grocery, called Amazon - Fresh - Instacart - Peapod - FreshDirect

Fresh

Amazon _____ allows customers to scan a phone app and enter then pick whatever they want and be billed automatically when they leave the store.

Go

Which of the following is considered one of the three 'pillars' critical to Amazon's business success? - Long-lasting technology - Dynamic pricing - Firm-owned brands - Niche customers - Large selection

Large selection

The virtuous cycle of buyer-seller growth is a two-sided _____ effect, which is a source of competitive advantage. - Structure - Grid - System - Network

Network

Amazon _____ is Amazon's first consumer-facing brick and mortar facility.

Purdue

AWS is known as Amazon Web _____, which allows firms or anyone with a credit card to rent industrial-strength computing capacity on an as-needed basis.

Services

Identify each statement as true or false concerning why Amazon allows third-party firms to offer products through its site. - It reinforces the appeal of Amazon as a first-choice shopping destination - It allows Amazon to maintain the customer relationship and acquire data, even if it sells products from others - Amazon earns revenue from the sale and fulfillment of third-party products - It increases the firm's accounts receivable period

True- It reinforces the appeal of Amazon as a first-choice shopping destination True - It allows Amazon to maintain the customer relationship and acquire data, even if it sells products from others True - Amazon earns revenue from the sale and fulfillment of third-party products False - It increases the firm's accounts receivable period

Which of the following is true of Amazon's warehousing process? - When stacking shelves in its warehouses, Amazon ensures that no two similar products sit next to each other. - Amazon made its own robots, which are in charge of building an order from a warehouse's inventory without any human intervention. - Amazon's items that produce the most sales volume are stocked on shelves, alphabetically, to speed selection and packing. - Amazon's systems stamp names and addresses on boxes so they can be filled by pickers directly from shelves. - Amazon's items that are heavily discounted and about to be written off as 'unsellable inventory' are dropped in an area called 'mass land' in one last-ditch effort to move under-performing warehouse stock.

When stacking shelves in its warehouses, Amazon ensures that no two similar products sit next to each other.

Reports suggest that Amazon cargo jets - are inefficient; packages often have to be rerouted. - often fly only partially full in an effort to make shipping faster. - are always fully loaded and use more fuel than average. - fly full but with lighter loads, cutting fuel costs.

fly full, but with lighter loads, cutting fuel costs

Firms that cannot generate cash quickly enough are referred to as having _____. - stock problems - high-inventory turns - stock-outs - vertical integration problems - liquidity problems

liquidity problems

How much human contact does Amazon's order process involve? - Human workers can complete the entire order process in 3-5 hours. - The order process involves about one minute of human contact. - Human workers and robots collaborate to complete an order process in an average of fifteen minutes. - None; the process is entirely automated and fulfilled by robots.

order process involves about one minute of human contact

Showing ads for products and services from a site that a user has previously visited is known as

retargeting

Amazon weighs products prior to shipping

to identify improperly completed orders.