Amazon: Online Shopping and Amazon.com

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.

Amazon can benefit from lower transaction costs. In the past, many firms did not want to price discriminate because it was time consuming, difficult and expensive to collect information about how each customer reacts to a change in price. However, recent advances in computer technology have pushed the transaction costs

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

One of the companies that exploits opportunities and business ventures to create growth and sustainability is Amazon, Inc. Amazon was founded in 1994 and since then it has opted to take its business online and thus develop a global strategy that has paid off and turned the company into a technological business hub that serves consumers by offering an assortment of products and services in a noteworthy customer service. These strategies have made Amazon one of the leading online retailers with a revenue of US$ 88.988 billion as of 2014. This paper thus seeks to describe Amazon’s grand strategies of product development, market development, and concentration as part of its long-term growth strategy.

2. What is the main business model adopted by Amazon? How has this model changed since the business was created? (10 marks)

How did the Amazon.com business model evolve from the company’s launch in 1995 to early 2001?

The company I have chosen to write about is Amazon. Amazon, was launched on July 16, 1995 by founder Jeff Bezos in his two-car garage in Bellevne, Washington. When Amazon first launched as a website that only sold books, but Jeff Bezos wanted Amazon to be much more than a bookstore, he wanted it to be an everything store. This paper will answer the required questions listed below:

Amazon’s margins are shrinking because of the continuous lowest price war and extensive delivery networks that keep customers satisfied (Bhason, 2017). This includes the “same-day shipping,” “next day shipping,” and “Amazon Prime” these services may force Amazon as a whole company to take a loss on overall profits. Amazon is known to be worldwide and has become successful globally, however, in some developing nations Amazon is “struggling” meaning, they are not generating as much profit as they do in their developed areas. These small profit margins affect the overall profitability of the group which can result in high debt (Bhasin, 2017). Lastly, Amazon has suffered from more than a few product flops, such as the “fire phone” as well as the “Kindle fire.”

One of America’s greatest start-up success stories is Amazon. Jeff Bezos launched the website in 1995 and he is now having revenues of $61 billion. At the start of e-commerce, Amazon was an innovator of delivering supreme customer service, which at that times was very rare. Amazon is an illustration of massive organising skills, the company sells an enormous range of products, all day, every day, for 365 days a year and is able to maintain over 80 warehousing and fulfilment centres.

The company’s business strategy is as simple as a napkin sketch (Exhibit B) drawn by Bezos 15 years ago. As seen in the diagram, Amazon’s strategy is a closed loop. They are focused on the customer experience, not the profits. This means that what really matters in a company structure like this is cash flow. Amazon’s cash flow numbers are so impressive that they list operating cash flow and free cash flow as the two first figures in their earnings press release. An analysis of Amazon’s free cash flow (Exhibit C) indicates that their operating cash margin (OCM) has been rather stable throughout the decade but free crash flow (FCF) has fallen because of the increase in capital expenditure (Capex). (Evans, 2015) With rapid revenue growth, Amazon has become a business that is capex intensive. From 2011 to 2015, the company has increased its capital expenditures by 250% to 4.59B. For every dollar of revenue more is spent on capex, which goes back into the business to makes investments in

Founded in 1994 by Jeff Bezos, the company went online on the World Wide Web in July 1995.Amazon focuses on increasing its market share and revenues in the long term and maintaining competitive costs of profit margins and dividends paid to its shareholders in the short term. Amazon’s sound business fundamentals include its core business and essential revenue sector of e-commerce, a new focus on media independent of Kindle, improved profit margins from Amazon’s Web Services (AWS) as well as the management of a negative cash conversion cycle (Samonas, 2015).

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.

This case analysis serves the purpose to provide an analytical framework to evaluate Amazon.com from an internal and external perspective, and to provide strategic direction based upon the internal and external evaluation. The case will begin with an introduction to Amazon.com.

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.

Determine the impact if Amazon.com had split up and become a family of brands (for example, “Amazon” for books, “Supertoys” for toys, etc.), each with a different public face but all run by the same parent company.