uses as its sales volume grows? Amazon initially tried to run their entire book business with no warehousing facilities, instead relying on other distributors to carry their entire inventory. Next, Amazon ran their business out ofa single warehouse in Seattle and discovered it wasn ’t feasible; the trade-off of responsiveness and cost was causing excessive delays in getting products to customers. Now Amazon uses a hybrid of these two systems, carrying items that it knows will sell in its own warehouses and letting others carry items that have greater demand uncertainty. As Amazon ’s business grows, it should continue to establish warehouses to spread its facilities closer to pockets of new customers, thus achieving better levels of responsiveness while still maintaining its cost advantage.
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