Amazon Web Services Essay

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.

Through selling more in a lower price, Amazon can achieve economies of scale, which in return can increase their bargaining power over its suppliers and partners.

Also, Amazon has emphasized on building “several distribution centers around the world to hasten deliveries”(Hof and Himelstein, 1999). Coupled with its software it provides a “laser-like focus on the buying experience”(IT Business Edge, 2012). Such a system and service is what draws customers towards Amazon and subsequently retains them.

Amazon.com has successfully managed to make its customers to feel that anything they could possibly want could be found on their website. Additionally, its products are marketed at a competitive price. Another important factor is their speedy delivery with their usage of UPS and FedEx (United States) and Royal Mail (United Kingdom). The company also caters for people that prefer online shopping with extra services such as Amazon Prime - a service with a yearly payment, customers are eligible for free next day delivery. Even though Amazon.com is known to be an online seller of most things, it still excels in its original market of book selling. Evidence of such is

Amazon’s fulfillment centers are valuable, rare, costly to imitate, and organized to captured value. Thus, they attribute to Amazon’s competitive advantage. Amazon Prime and 1-Click are also valuable to the organization. However, they can be replicated. Walmart launched a membership program to compete with Amazon’s Prime Service. With Walmart’s membership program customers receive free two-day shipping when they spend $35 or more on orders. Amazon Web Services is valuable, rare, costly to imitate and the organization has capture the value of it. Therefore, AWS has contributed to Amazon’s sustainable advantage. Amazon’s brand name and reputation have also given the company sustainable advantage. Amazon acquired enormous brand valuation in a short period of time. It is

In the process of developing its network to support its services, Amazon.com has built out an infrastructure that includes 145 warehouses around the world (84 in the United States, 29 in Europe, 4 in Canada, 10 in Japan, 15 in China and seven in India) that together account for more than 40 million square feet of space. Additionally, Amazon has made significant investments in material handling systems, including the acquisition of Kiva Systems for $775 million in 2012, which is working now as an Amazon subsidiary designing robots, developing software and other hardware that has been used in the distribution facilities of companies such as The Gap, Office Depot, and Staples (Lieb, 2014).

Many times you see these companies bragging about how they worked with big Fortune 500 companies. Also, you hear about how Amazon dominates the cloud market

Amazon Web Services is a cloud computing platform which was to provide online services to websites (Rouse, 2014). Amazon is comprised of software development and customer service centers around the world (Rouse, 2014). At Amazon, workers are encouraged to tear apart one another’s ideas in meetings, toil long and late and held to unreasonably high standards (Kantor & Streitfeld, 2015).

‘We believe that the principal competitive factors in our retail businesses include selection, price, and convenience, including fast and reliable fulfilment. Additional competitive factors for our seller and enterprise services include the quality, speed, and reliability of our services and tools, as well as customers’ ability and willingness to change business practices’ (Amazon10-K report 2015).

It would be virtually impossible for a new company to reach the magnitude of inventory and status that Amazon maintains. When visiting Amazon, the number of products and services it offers is mind-blowing. Amazon has been in the internet marketplace for about thirteen years now; it would be extremely difficult for a start-up company in the industry to raise enough capital to even compete with Amazon on a lower level. The experience of enjoying low pressures from new entrants make Amazon believe that their absolute competitive advantages in patented technology, such as 1-Click ordering, operational model and “sell anything” mission could be directly copied and even leveraged in the foreign markets where the online retail industry have not developed or matured.

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.

Retailers have adapted to the online marketplace out of necessity and opportunity. The great recession placed many retail companies in financial hardship and while some failed, others innovated and became some of the largest companies in America such as Amazon. A recent trend is consumers are buying more products online than ever before. As a consumer, I enjoy shopping in the convenience of my home and having the items delivered to my doorstep in 48 hours or less. Global internet access continues to increase, with mobile devices and affordable internet for the home, consumers will continue to shift and buy products online rather than in retail brick and mortar locations. Online sales in the United States have increased over 250% in the last ten years, accomplishing $250.0 billion in 2012 (Tehrani, 2014). Therefore, Amazon is in a solid market position to capitalize on the future trends and booming ecommerce

The company has many strengths. First, Amazon is the world’s leading online retailer. According to the 2016 Annual Report, Amazon had total net sales of US $135, 987 million in 2016. These total net sales include three segments which are North America, International, and AWS. Second, in comparison to many companies, Amazon has a superior logistics and distribution system, which allows the company to actualize improved customer fulfillment. Third, with its prolonged strategic drive on low-cost, differentiation, and focus, Amazon offers a wide range of product at low prices to customers. Fourth, Amazon enjoys global recognition from its customers. As stated earlier, Amazon built a strong brand in very little time. Finally, the

Amazon strives in a rapidly evolving and intensely competitive industry. Amazon competitors include publishers, vendors, distributors, manufacturers, physical world retailers and producers. Other competitors include media companies, web portals, shopping websites, online and mobile e-commerce sites, web search engines, and social networks, either directly or in collaboration with other retailers. Any company that provides e-commerce services, including website development, fulfillment, customer service, and payment processing is considered as a competitor by Amazon. Even Yahoo Inc. is also part of these services now with its new framework for providing easy e-commerce website development and payment processing services. Additional competitors include companies that provide information storage or computing services or products, services related to Cloud Computing, including infrastructure and other web services, companies that design, develop, market, or sell consumer electronics, telecommunication, and electronic devices. The competitive factors in retail businesses include selection, price, convenience, fast and reliable fulfillment. Additional competitive factors for Amazon seller and enterprise services include the quality, speed, and reliability of our services and tools. Many of the current

Amazon web services provides a highly reliable, scalable, low-cost infrastructure cloud that powers thousands of businesses in 190 countries around the world, with data centers in US, Europe, Singapore, Japan, and Australia. AWS offers both private and public cloud computing.