Amazon’s Subscribe and Save Pricing and Supply Chain Impact

An article in the New York Times (March 5, 2011) describes Amazon’s Subscribe and Save service in which consumers get 15 % off and no shipping for committing to deliveries of select products with a certain frequency .  The article claims that manufacturers join Amazon in providing discounts because they like this consumer commitment to consumption.  So inventory gets built up by consumers and could potentially influence their consumption. But such programs do not exist in physical stores that can only incent consumsers using volume discounts for each purchase.  It got me thinking  How much can Amazon.com, the manufacturer and retailer save across the supply chain with consumer commitment to a steady rate of consumption for specific products ? Can the consumer commitment be used to smooth out deliveries, given that the replenishment window accuracy is a week ? How will these schemes be replicated by physical stores  – will it be printed coupons at checkout and an email reminder or will consumers be prompted to buy products when they enter the store and record their loyalty cards ? Are these bulk packages delivered by Amazon.com less or more environmentally friendly than driving to retail stores and picking up product with less packaging ?

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About aviyer2010

Professor
This entry was posted in Operations Management, Service Operations, Supply Chain Issues, Sustainability and tagged , , , . Bookmark the permalink.

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