Factors that will help us analyze sources of barriers to entry are the supply in economies of scale, distribution system, prices in the market, cost advantages, and brand recognition. Amazon is in an industry where the threat of entry is weak. Amazon carries a unique distribution system, which cannot be easily imitated. This enables them to provide a variety of products, services and delivery channels. New entrants would require high capital investment to compete against large companies such as Amazon. High economies of scale that enable Amazon to set low prices for its products create barriers to entry for new entrants. Creating brand awareness is an important tool to bring customers to a business. Amazon has created a brand that is recognized by its customers as being the fastest and most convenient way to shop. Maintaining a positive image that represents a business requires time, resources, and good reputation. Amazon is a company that has a well-established brand recognition, making it hard to compete against.
Supplier Power: With Amazon and their other competitors relying on suppliers for their business model, supplier power is high. With many avenues for suppliers to reach the company, these suppliers can sell through not only Amazon but also multiple other retailers at the same time. As a group, these suppliers are the basic backbone for these companies to operate. Not one supplier has any major influence off the other suppliers but as a group they
Amazon.com operates in the Online Retail Industry. The sector is one of the fastest growing globally and is outperforming the ordinary retail marketplace. It was created after 1995 and it was only the Internet that made it possible for such an industry not only to be established but to become one of the most flourishing sectors in the business environment. What is interesting is that Amazon.com, together with eBay is the pioneer in the field. Both companies were launched in 1995 and are still extremely successful. The creation of e-mail in 1996 had a huge impact on the development of online retail by introducing a fast and easy way to communicate with customers. For this two-year period Internet usage
In the article, “Amazon.com is a 21st century Deal with the Devil” the author Amy Koss makes her piece an argumentative writing. She tries to persuade the reader that the company, Amazon, is cruel and untrustworthy. The author states,”They’re offering deals and deeper discounts, closing branches, consolidating staff, trying to fend off the inevitable. According to the feds, there have been 60,000 retail jobs in just the last two months.” I disagree with the author’s statement and believe that Amazon is just doing what they have to do, so they can make money and build a stronger business. It isn’t exactly Amazon’s fault that other businesses are closing making people loses their jobs. The other businesses must have their prices very high, making
Amazon is a Fortune 500 e-commerce company based in Seattle, WA. It is one of the top companies that sells the most goods over the internet.
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.
How would you define Amazon’s industry? What difficulties do you encounter identifying primary competitors and key lines of business?
Jeff Bezos, founder, chief executive officer, president, and board chairman of the mega Internet store Amazon.com is considered one of the most innovative entrepreneurs of the e-commerce industry. At the age of 31, with just a computer science degree, little funding from his family, and a challenging idea, Bezos set out to pursuit his entrepreneurial vision of a internet bookstore which had turn into the biggest online retailer of our times (Jeff Bezos, 2007).
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 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).
Amazon the online retailer has been able to overcome the tax law issues by becoming more efficient and effective in their marketing approach. In the article, “Welcome to the Amazon” the author explains the prior advantage that Amazon enjoyed had being able to avoid sales tax for many years. Prior to 2013 this retail giant, “Previously, Amazon led internet retailers in maintaining tax-free sales by aggressively avoiding the creation of a "substantial nexus" with outside states. Amazon operated remotely, from at most a handful of states, engaged in entity isolation” (Tehrani, 2014, para.2). Based on this advantage, Amazon developed a large customer base that when this tax change occurred they were not affected very much because of their established
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.
The threat of substitutes for Amazon is high. With the exception of its patented technology, there are quite a lot of alternatives to Amazon’s products and services. In addition to physical presence, most companies have an online store as well. Amazon’s products can be purchased all over the internet and they are just spread out among different web sites. The companies operate in brick-and-click mode providing the similar product categories and competitive prices have become the biggest threat for Amazon. However it is extremely difficult for Amazon to establish physical stores or launch price
Amazon continues to grow, expand, and improve the goods and services the company provides through strategic mergers and acquisitions. In recent years Amazon has focused on acquiring a variety of companies that bring with them technologies from fields such as: robotics, education, voice recognition, and e-reader displays. One of Amazon’s most significant recent acquisitions came in March 2012 when Amazon purchased Kiva Systems, a Massachusetts based robotics company. The deal worth $775 million dollars was made in hopes that Amazon will be able to improve profit margins though the use of the robotic packing system produced by Kiva System’s. The robotics created by Kiva allows companies to manage inventory and streamline the order
Jeff Bezos, the founder of Amazon.com, was born in Albuquerque, New Mexico in 1964. His mother, Jackie, was in her teens when he was born and she was only married to his biological father for about a year. She married Mike Bezos when Jeff was four years old. Mike was a Cuban who escaped to the United States when he was fifteen. He put himself through college in New Mexico and eventually became an engineer at Exxon.
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