Business strategies and activities play a very crucial role in the future development of the organization. These strategies become more important, in case of e-business organization such as Amazon.
Every organization uses different business strategies in order to remain in business. Some adopt customer- centric strategies; some uses strategies to maximize their profit. For a long time, many organizations have made quality as their selling point.
The goal of this report is to analyze the Amazon's e-business strategies and activities. This report also discusses the result of strategies adopted by Amazon and how far it has been successful.
Introduction
According to the definition of Whatis.com "E-business (electronic business), derived
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Amazon has been changing its business model according to market conditions.
One indication of a smart company is to continuously change its business model; it is an indication of smart company and ultimately the smart management team. It is also an indication that the company is learning and adopting itself to the external and internal environment.
For the first time in year 2000, Amazon management has set its focus of making profit. Again, it is an indication of nothing but smart, opportunistic management that utilized its strength to grow. It is very clear that Amazon management team is very focused.
In order to meets its future targets, Amazon has implemented a restructuring plan. It will allow Amazon to reduce operating costs, reduce employee staff, and strengthen some of its fulfillment and customer service operations. According to the quarterly report released by amazon.com for quarter ended September 30, 2004 "There has been a steep decline in operating costs."[2] This has improved the performance of the company.
Amazon Business Strategies
Since its beginning, Amazon has adopted various e-Business model to increase its customer base and recently set its focus on making profit. Given below are the strategies adopted by Amazon.
Expertise and scaling
Amazon has a track recording of first gaining expertise in the market and then scaling into other areas. For ex. Amazon started with a web-based bookstore
Amazon understood firsthand that the competitive advantage of a company originates immediately from how distinctive the organization's resources and competencies are. Amazon is able to both engage in production at a lower cost and generate a superior product at a standard cost. This is accomplished mostly via Amazon's strategy of having a wide variety of goods and competitive pricing. Customers know they can find basic products at slashed prices or high quality goods at standard prices and this is all achieved via the enormous range of products and product brands and types available on their massive marketplace. For example, the depiction displayed in the case study which shows how growth was related directly to: lower cost structure- lower prices customer experience traffic sellers -selection and convenience. While this is a grave oversimplification of the Amazon business model, it demonstrates how many aspects of the strategy reinforced one another.
Jeff Bezos, an entrepreneur, created Amazon.com in 1994; the business was originally run out of his garage in Washington. With the additional investments from Nick Hanauer and Tom Alburg, Bezos was able to create the more user-friendly website that we are used to. As Amazon.com’s customer base began to grow Bezos realized that he was going to have to add variety to the products Amazon.com offered. Bezos hit on a successful idea when he added the feature that allowed customers to write their own book reviews. In 1997, Amazon.com went public and it continued to increase its product lines to include CDs, movies, and toys to its inventories. Amazon.com was
Amazon and Ebay are two well-known brands of online shopping sites. They have evolved and grown from small firms to the giants of e-commerce today. In this essay, a comparison would be made between the two firms.
As of January 2010, Amazon.com has three times the Internet sales revenue of the runner up, Staples. By offering a large amount of varied categories through its website and other international ones (Amazon.co.uk, Amazon.co.fr, and so on), it has managed to grow to a customer based company with over 30 million people. In addition, the online retail format enables the company to reduce costs of managing inventory (Amazon.com; online bookstore, 2008).
Amazon.com Inc. was initiated by Jeff Bezos in 1994 after realizing the rapid rate at which the internet and websites were growing in popularity among business organizations and individuals. In 1995, the company started operating its website for selling books, videos, compact discs, computer software and computer hardware before being incorporated in1996 as an e-commerce company (Reuters, 2015). Apparently, the company offers may products and services for sale; these products include merchandise for resale products offered by third parties. In this regard the
Amazon.com, Inc., on May 28, 1996, started offering a range of products and services through on-line webpages. This new company began to offer products including merchandise and content that was purchased for resale from multiple vendors and sellers ranging from lots of third-party ways. The Amazon.com business has three different segments within its operating environment: Amazon Web Services, North America, and International make up the operating areas. The North American area for Amazon has segments that focus on the sales from retailers of consumer items or product from sellers through its website Amazon.com.
Amazon.com spends a substantial amount on Web advertising and marketing. The firm spent over $340,000 for the first half of the 1996 and ranked 34th in Web ad spending. Since then, however, these expenses have gone up significantly. Also, the firm invested much on their warehouse and state-of-the-art distribution center in New Castle, Delaware. Amazon.com turned its inventory 150 times a year. This make the firm have a lower cost structure than physical stores. Their marketing and operation cost kept the firm a deficit. By August 1996, sales were growing at 34 percent a month. The firm posted revenues of $147.8 million for 1997, an 838 percent increase over the previous year. However, the net loss for fiscal 1997 was 27.6 million, compared to a net loss in fiscal 1996 of $5.6 million. The firm claims to have exceeded expectations and has made its business plan more aggressive.
The global marketplace is changing at an unprecedented pace. Driven by the evolving technologies, business organizations should be on the lookout, or else their competitive advantages might be surpassed within a blink of an eye. This report has comprehensively discussed the digital marketing activities executed by Amazon Corporation, a company that is well recognized globally for leading others in the area of e-commerce. In addition, this report has also evaluated the effectiveness of the company’s digital marketing activities with respect to their impact on its competitive advantage, after which recommendations are also proposed.
The effectiveness of Amazon’s financial management can be seen in the performance over the last 5 years. Largely investor confidence has been very high throughout the 5 years analyzed. This can be seen in the increase of 4 times the stock price. Stock prices were at an all-time high the end of 2013 at price of $405USD each (Morningstar, 2014). Through analysis of the financial statements and history of stock prices it can be determined that the financial management team at Amazon is doing a great job.
As discussed in the case study, the advertising and marketing strategy of Amazon have been focusing on how the products would gain interest from their target market and how they can be able to generate sales with their products. This is Amazon’s stronghold where it continues to yield strong sales revenue by leveraging off its excellent online shop in different locations, such as in UK and other country, strong brand name and excellent reputation among customers. Amazon has also been continuing to create affiliate websites to expand their business market among various consumers.
Amazon’s core competencies are in its ability to effectively use and develop technology to drive site traffic and enhance the customer experience. Their distinctive use of website real estate coupled with their ability to leverage their brand and effectively use that leverage to deliver low prices and high quality products, makes them a leader in online retailing. Their partner brands and their ability to adapt and recognize deficiencies enable them to effectively cut out the middle man, or at the very least, partner with them.
Amazon has grown rapidly since their inception. The company experienced a surge is sales of 313% until 1998, supported by 8.4 million customer accounts in over 150 countries, of
16 years ago, in 1999, Amazon started its business as an online bookstore. After its success as an online bookstore, Bezos diversified his business to other areas. Diversification can be defined as a management strategy that involves a company having multiple different business areas. The two main types of diversification is
Amazon today was not as thriving and robust as it was in the beginning. Amazon originally was set to market compact discs, computer hardware, computer software, videos, and mainly books. With the use of Information Technology, Amazon was able create a new business model using the Web as a place for transactions. As consumers learned it was easier to purchase goods with via the web rather than physically going to the store, Amazon created ecommerce and e-business models that generated massive profits for the company. This paper will discuss primarily on how IT aided in Amazon’s strategies involving their ecommerce business as well as their Web Services business.
Amazon.com is a Fortune 500 company that has revolutionized the retail industry. In recent years, Amazon has faced increased competition in the highly competitive online retail space as competitors invested heavily in their online storefronts and infrastructure. Positioned in a highly fragmented industry, Amazon must find solutions that can sustain its long term profitability and maintain its market share. To that end, Amazon should grow the Amazon Prime membership base and expand on its media and mobile offerings.