Amazon is among the most successful companies globally, and its investment decisions address all five types of engineering economics decisions. Recently, the company invested $15 billion in the development of its platform for third-party sellers and for promotion through the free delivery day. In regards to equipment and process selection, Amazon decided to invest in improving the sales of third party shops that use this platform.
As such, the $15 billion investment targeted different digital tools and delivery processes, which would improve the sales of those third parties. Since Amazon is a digital company, equipment replacement in its case may relate to the introduction of new and more efficient online tools for shops that sell through Amazon.
New product or product expansion is associated with the company’s decision to invest in the development of services for small and medium-sized businesses that sell on Amazon. As such, Amazon expended the tools that were already available to sellers, helping them reach their target audience more efficiently.
Cost reduction is associated with Amazon’s new inventory management program. As part of this investment, the company provided a Prime free shipping day to its customers, which allowed it to sell some of the inventory and reduce costs associated with maintenance, in accordance with the program’s objectives.
Improvement in service or quality, in this case, relates to the investment in the platform for third-party sellers who work with Amazon. Since the latter receives a commission from sales, one can argue that Amazon benefits from an increase in sales for third-party sellers. Thus, the introduction of 225 tools for these small businesses is a significant improvement in quality when viewing Amazon as a platform provider for small online shops.