Convenience

486
Part 5:
Controlling
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Software, of course, is an important part of Ama-
zon’s operations because better systems hold down
labor costs, increase accuracy and speed, enhance the
customer experience, and support effective planning.
Supply-chain software, for example, uses a complex
formula to choose which goods should be carried in
distribution centers and which should be drop shipped.
Yet another algorithm constantly recalculates item
popularity ratings to choose which goods to store in
the most highly frequented sections of warehouses.
Amazon is also a pioneer in the development of
several operations technologies:
• “One-click” buying allows customers to make final
purchases with a single mouse click. (The process is
patented and licensed to other companies.)
• Amazon was one of the first online retailers to let
customers post online product reviews, which not
only boost sales but also contribute to a sense of
community among users.
• Customers can review their order histories, create
wish and favorites lists, share information with
friends, receive personalized recommendations and
gift-giving reminders, and tag items with custom-
ized category data.
Amazon’s operations software is so popular with
other firms that the company has launched a feature
called Amazon Web Services, which allows indepen-
dent programmers and merchants to access Amazon’s
library of software and adapt it for their own use. The
library is free unless the “borrower” intends to sell
through Amazon, in which case there’s a 15 percent
commission on each sale. The service has proven so
popular that 30 percent of Amazon’s sales are now
conducted by other merchants. In February 2009, as