Business Analysis: Amazon: Case Study Of Amazon

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.

Amazons primary industry is electronic commerce. At its core Amazon is an electronic commerce retailer. But over the years the brand has developed into something grander. Originally the company started out as an online bookstore but now has diversified its inventory to include dvds, software, video games, electronics, furniture, apparel, food, toys, and jewelry. Amazon has also become a producer of their own brand of consumer electronics, most notably their line of Kindle e-book readers, Fire Tablets, Fire TV, Fire phone, and is now a leading provider of cloud computing services. Now Amazon

Amazon.com was founded in 1994, it started by selling books online. As it grew, the company started offering various products and services. Some goods include: DVDs, videos, electronics, camera and photography, clothing apparels, shoes, and so forth. Other retailers have merged with Amazon.com to offer diverse quality of items based on different degrees of usage, such as new, refurbished, and used items. The company 's headquarter is in Seattle, Washington. It has six global websites that serves customers that are based in the United States, the United Kingdom, Germany, France, Canada, and Japan. Their website features: e-mail order verification, customer review on products, and one-click shopping.

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.

‘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).

The basic Amazon sales channel is the web store front- end which serves as their core business. Customers go to the Amazon.com website, browse products, and place orders. Amazon is responsible for all front-end customer relationships and back-end logistics in this model. Once an order is placed, Amazon decides which internal distribution center or drop shipper should be responsible for shipping the order to the customers. After that, Amazon will responsible for coordinating the fulfillment of the order. When products are sourced from its internal distribution centers, then Amazon start to picks, packs, and ships the order. When products are sourced from a drop shipper, such like a book distributor, the distributor packages the products by using the Amazon box delivers it to the customer (Maltz et al., 2004). This model requires Amazon to maintain or purchase inventory for immediate selling. In this model, Amazon owns the customer relationship, provides the technology, owns or purchases the inventory, and executes the logistics as well.

Amazon stated its marketing approach in its 2011 annual report as “we direct customers to our websites primarily through a number of targeted online marketing channels, such as our associated program, sponsored search, portal advertising, email marketing campaigns, and other initiatives.”(Petro, 2017). Being the leader of the ecommerce industry, Amazon maintains that

The presence of strong as well as effective leadership in today’s organization imposes a great responsibility to the organization’s team and management networks as leadership implies the overall capacity of the organization’s performance like for instance, in terms of operations and research development. It can be said that Amazon’s resources and capabilities can be divided in the management of the company specifically their leader which is Bezos, the ability of the management to effectively use strategic supply chain management and aligning it with their business process and information technology, their competitive advantage in the online market, and the financial resources that it gains through its successful approaches.

Every company has their own supply chain in order to sort or produce goods. However, the company needs to manage supply chain to maximize its highest benefits. By having effective supply chain management, the company can ensure that the right product or service will be available at the time to the right place and at the right price (Kamal 2007). Amazon is one of the companies that have best supply chain practices in order to respond high level of responsiveness for the customers. Thereby, this paper explains about Amazon Company, analysis of Amazon’s supply chain, recommendations and barriers to implement will be discussed.

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.

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 operates using a web-based platform to sell books.  The web-based model targets a global market, has reduced overhead costs and a shorter operating cycle as compared to brick and mortar businesses such as Barnes & Noble and Borders. Amazon’s online model has a superior inventory

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.