Analysis of Amazon.com Essay Sample

to larger industries. However, Amazon does not fall into this category as its consumers come from all segments of society. Most of these consumers are educated individuals who have access to the internet and computers.

The Internet has made it easier for people to shop online, leading to an increase in online shoppers. This advancement has simplified the shopping and purchasing process for consumers. Additionally, consumers now have the ability to compare prices from different retailers, enabling them to find products at lower costs compared to brick-and-mortar stores. The bargaining power of consumers is dependent on the competitive strategies employed by companies in the industry. Consequently, if a company sets higher prices than its competitors, consumers can challenge and pressure it into lowering its prices in order to stay competitive.

The industry's consumer base is varied, primarily consisting of individuals with higher education and internet connectivity. Online shopping has recently witnessed substantial growth due to its convenience and the ease it offers in shopping from one's own home. The internet has simplified consumers' ability to access online platforms and complete purchases.

Consumers have the tendency to compare prices among various retail leaders, allowing them to purchase products at much lower prices in comparison to physical retail stores. The consumer's capacity to negotiate relies on the competitive strategies employed by each company within the industry. As a result, consumers can confront one company for charging higher prices than another, ultimately pressuring the competing company into lowering its prices. It is clear that well-established companies are hesitant to sacrifice their profits.

Despite the potential for new competitors entering the industry easily, incumbent companies with high incomes consistently attract attention. Therefore, profitable

companies in accessible industries are continuously pressured by new rivals. The most lucrative sectors are characterized by significant barriers that hinder other firms from entering, such as exclusive access to raw materials.

The online bookshop industry that Amazon.com has pioneered in was at first a demand for monolithic investing in engineering or patent protection, anything that gives the officeholder an unjust advantage.

It was very challenging to overcome various obstacles such as the capability to handle and the diversity of options available. Amazon, as the pioneer in online retail, effectively tackled these complex factors. They set the standards for the industry due to their early entry into the market. Some factors that could diminish these barrier strategies include a wider range of choices and the option to visit a physical bookstore for book exchanges or returns.

This web of "actual" retail infinites facilitates the consumer's ability to return or exchange unsatisfactory merchandise. These limitations faced by Amazon led to the emergence of online book retail giants Barnes and Noble and Borders in the industry.

Menace OF Substitutes

This threat is similar to the threat of new entrants. If customers can find a similar product that serves the same purpose, they will not accept excessive profits in an industry. For example, if oil producers began charging too much for gasoline.

The popularity of biking instead of driving cars is increasing as individuals look for places without other options. For Amazon and other online bookstores, physical bookshops like Barnes and Nobles and Virgin Megastore act as replacements.

Small mom-and-pop stores like Tower Records and Sam Goody will not be significantly impacted by the growth of online retail.

There are certain consumers who prefer to

try out or inspect their purchases before buying, as well as those who enjoy the overall shopping experience. Barnes and Lords have ventured into online retail and successfully expanded in the new e-commerce industry, with a main emphasis on selling books, music, magazines, prints, and posters.

The company has used the Barnes ; Noble brand's reputation and value to become the second largest and one of the fastest-growing online books distributors. Their competitive edge over Amazon is their strong brand name and customers' ability to visit physical retail stores for exchanges and returns.

Boundaries, a multi-media retail store, has branches in major cities across the country. It originated as a small bookstore in Ann Arbor, Michigan - nestled in a college town - and has since expanded to become one of the top bookstores.

Boundary lines was acquired by the Kmart group in 1992, expanding the company into a Multi Media Giant. This led to a diverse selection of Audio, Video, and Books being available throughout the United States. The Online Bookstore industry has become highly competitive, with price reductions being a major aspect.

Competition is vital for determining the success or failure of rival companies within an industry. The level of competition greatly impacts industry outcomes. In industries where all companies vigorously compete for customers, it is less attractive compared to those where firms are content with their current customer base. The latter type of industry offers a more stable position and allows for sustainable profits in the long term. Amazon's primary rivals include Barnes and Noble and Borders.

Barnes and Noble, a nationwide retail company, sells books and CDs in their physical stores. They also have

an online store established in 1997, which has become the fourth largest e-commerce site. While Amazon is famously known as "Earth's biggest anything store," Barnes and Noble now faces competition from not only online book retailers such as Borders and CDNOW.com but also from the online auction house EBAY.com.

Amazon currently dominates the online retail industry, holding a 40% market share. Its global business has experienced significant growth in recent years, resulting in an expansion of its market dominance. Despite competition from rivals such as Barnes and Nobles and Borders, Amazon remains the leading online retailer by strategically timing actions and continuously investing in inventory and distribution systems.

Due to being the industry pioneers, this company has gained a significant advantage over its competitors. Their experience and reputation have played a major role in this advantage. The company's primary goal is to improve international delivery systems and become the leading online retailer. Moreover, they have also ventured into different retail sectors such as marketing, inventory management, and distribution systems to ensure their position at the forefront of the industry.

Amazon has leveraged its name recognition and callback feature to establish a sustainable competitive advantage, contributing to its long-term profitability and success in the highly competitive online retail industry. The company understands that significant investments in research and development are necessary for improving operations and distribution systems, thus maintaining its position as the market leader in online retailing.

According to the Value Chains perspective, Amazon opted to establish its own warehouses with the aim of enhancing the speed and dependability of its online order delivery. Amazon perceives that augmenting value in sales and fulfillment procedures is an essential proficiency (Amit

& Zott 2001).

However, investing in new installations to enter new markets or increase capacity has been costly for Amazon. As a result, the company has closed some under-utilized installations. Recently, Amazon has taken a more flexible approach and also acts as a marketplace for other Sellers who supply additional goods and services. It even offers lower prices from other providers on products it sells. Naturally, with greater analysis and experience in these markets, Amazon has discovered that serving markets in large quantities is beneficial.

Although disintermediation has occurred, there has also been reintermediation. Amazon and similar companies have had to create new distribution capabilities that are not cheaper than traditional methods. Despite facing competition, Amazon's biggest challenge comes from substitutes. Even though they have invested heavily in online sales, some customers still prefer shopping at BN bookstores and interacting with other book enthusiasts.

The perils of new entrants are also evident. As Amazon rapidly diversifies its business into products beyond books, it becomes a new player in those markets and struggles to gain significant brand recognition. However,

There are numerous new competitors attempting to imitate Amazon's business model and capture some of its market share. The competition between existing rivals is becoming more intense, as smaller e-sellers are forming alliances to compete against the dominant market leader, as well as the rapidly growing Buy.com. The bargaining power of customers is not a pressing concern in this context, while the bargaining power of suppliers is quite strong.

Amazon is unable to achieve significant price reductions due to low inventory and the nature of small retail orders. Despite the presence of competitors like Barnes and Nobles and Borders, Amazon.com has maintained

its position as the top player in online retailing. Their success can be attributed to two factors: timing and continued investment in inventory and distribution systems. As the first of its kind, Amazon has a significant advantage over its closest competitors because of its experience and reputation as an early adopter.

Their focus is on improving efficient delivery systems across borders and building brand recognition as the number one retailing company on the Internet. They have also expanded into various retail options to maintain their leading position. Marketing, innovative inventory and distribution systems, and brand recall have been instrumental in helping Amazon develop a sustainable competitive advantage.

Question 3: Explain how Amazon.com provides value to its customers. Factors contributing to Amazon.com's acceptance and success can be grouped into four categories:

-Monetary value: Competitive prices are offered.

-Web Design: The website has a straightforward design and user-friendly interface.

-Convenient Payment: A convenient payment system is available.

-Shopping Experience: The shopping experience on Amazon.com is unique.

1. Monetary value: Amazon sets itself apart by offering the same quality products as other companies, but with noticeably lower prices.

In addition, sellers do not incur any fees for product listings and there is no cost until the product is sold. Amazon.com is making significant efforts to connect with wholesalers and rely on external resources for scalability instead of expanding its internal physical presence. The online bookstore enables easier expansion and overcomes geographic limitations, as emphasized by John Jordan.

Amazon's prices are about 10% lower than those of physical retail merchants, thanks to cost savings from larger order sizes. Independent sellers or affiliates make up about 40% of Amazon's total sales and play a major

role in selling products. Amazon is widely recognized as a dominant leader in online shopping, thanks to its well-designed website with organized visual hierarchy and page organization.

Amazon.com's website has a user-friendly interface and layout, creating an enjoyable experience for navigation and shopping. The company prioritizes its customers by providing them with personalized shopping experiences, including recommendations and summaries tailored to their interests and past purchases. Moreover, Amazon.com securely handles all payments made on the site.

eBay and Paypal sellers now have the option to use a single payment account. Additionally, Amazon.com provides customers with a convenient "1-click" ordering feature, making online checkout easier and eliminating the need for alternative payment systems. As a result, shoppers can enjoy a unique and hassle-free shopping experience, accessing a wide variety of products exclusively found online.

Amazon offered access to approximately 1.5 million new books and around 1 million used ones, equivalent to a bookshop at the mall that is 100 times smaller in scale. Additionally,

Amazon has expanded into various categories beyond media. One great feature is the easy access to the catalog via web services through the "search inside the book" option, which helps users search for keywords within the text. Amazon has collaborated with approximately 130 publishing houses for this service. Customers can rate products and leave reviews, which serves as an important and highly influential tool. With the new "EDoc" feature, customers can view their documents electronically on screen without having to pay for shipping or handling. The website also offers a rich amount of online support and an FAQ system to assist with customer service and support during the purchasing or selling process.

Question 4: Provide a description

of Amazon's evolving business strategy and discuss the reasons behind Amazon.com's decision to change its strategy. Amazon.com was established with the aim of revolutionizing book purchasing by leveraging the power of the Internet for a seamless and enjoyable shopping experience. Its ultimate goal is to become the world's largest e-commerce company, offering an extensive range of products on their website for customers to browse and purchase.

Amazon puts a great emphasis on being friendly to their customers, and they also strive to personalize their services. Their policy revolves around personalization and customization at their bookshop. Amazon offers useful browser tools that make it easy and quick for customers to find books and other products on the Internet through their platform, which helps expedite the delivery process. Additionally, Amazon provides personalized services and discounts to their customers.

Customers have the ability to find and discover anything they may want to buy online. The most crucial strategy is competitive pricing, as discounted prices entice customers to both purchase and continue buying from Amazon. With Amazon Marketplace zShops and Auctions, businesses and individuals have the opportunity to sell virtually any product to Amazon's vast customer base.

Amazon.com Payments allows sellers to accept credit card transactions, eliminating the complications of offline payments. Amazon utilizes innovative technology to streamline the online purchasing process and deliver products to customers, enhancing their confidence and spending habits. They have a distinctive relationship with the supply chain.

The key is aligning your ends so that if one participant does well, the other does even better; this way, Amazon believes you have to create a financial win-win for both parties. Due to fierce competition in this industry, online book

sales are likely to increase in the coming years. Amazon.com has been using the cost leadership strategy by offering books at lower prices. If they continue with their discounted and lower pricing system, more customers will take advantage of these savings. However, pricing cannot and probably will not continue to be a central competitive point because now many online book sellers offer their products at very low costs. Amazon.com forced traditional physical world brick and mortar retailers in the book industry to change the way they target the industry's consumers and thus epitomized Business-2-Consumer e-retailing. Although.

Amazon.com initially began as an online bookshop. The concept of integrating both brick and mortar stores with the online world is based on the idea that a successful approach for e-commerce involves combining the strengths of physical and digital realms. This approach can benefit traditional retail businesses transitioning to the internet as it allows them to effectively expand their existing infrastructure and complement their physical stores. Among retailers, those who have embraced a proactive strategy towards the Internet, such as Amazon, have been the most successful. As the e-commerce market continues to evolve, the bricks-and-clicks model is gaining momentum.

Many retail merchants have recognized the importance of conducting business online. This realization has come about because of the success of fast-paced dot-com players like Amazon.com Inc., eBay Inc., and eToys Inc. These companies have successfully carved out their own market niches. As a result, businesses are now establishing independent online units that have the freedom to develop their own marketing and selling strategies.

Amazon has the freedom and flexibility to capitalize on opportunities
Toys “R” Us Inc. stumbled when it chose to

protect its stores and only offer a limited selection of products on its website
This created an opportunity for eToys and Amazon.com to gain customer loyalty and rapidly increase sales, while Toys “R” Us struggled to catch up

The market is shifting towards a system where it no longer solely relies on the internet or physical stores. Amazon's strategy is not focused on where the business used to be, but rather where the opportunities lie. Amazon.com has used its expertise in the internet to successfully compete against traditional book retailers like Barnes & Noble and Borders. Similarly, Price line has utilized its e-commerce patents and business model to challenge the established travel agent industry. As a result, this is what prompted Amazon to change its strategy. Internet-focused companies have a strong advantage in utilizing the internet to surpass their established competitors who are tied to physical stores.

However, this is not necessarily true for all industries. If a business can update its business model and supporting organizational infrastructure, it can successfully leverage the Internet just as effectively. From a global strategy perspective, Amazon's strength internationally lies within its networks in major ports and cities around the globe. Amazon initially began in Seattle, but as soon as they established a niche market, they opened stores all over the country and in cities like London.

Berlin, The Hague, Paris, Tokyo, Singapore, and many other cities overseas are improving their delivery services to reach a larger consumer market. Amazon's main goal is to constantly change its strategy in order to stay ahead of its competitors. By staying one step ahead, they can maintain their market share. Additionally, by expanding

their portfolio to include more diverse offerings, they are able to reach a wider and new market. Recently, Amazon made its biggest acquisition ever by acquiring Zappos, as announced on Wednesday by the companies.

Zappos, located in Henderson, Nev, is worth approximately $900 million at its current level. It possesses 10 million portions of Amazon stock.

a private company, established 10 years ago, has gained popularity by offering perks such as free transportation and personalized service. This company is currently the leading player in its market. Amazon, despite its efforts, has struggled to enhance its shoe products due to competition from Zappos since 2007.

Zappos introduced a separate site, Endless.com, to sell shoes and handbags. However, while Zappos received 4.5 million visitors in June, Endless.com.

According to comScore, com got 777.000. This strategy of competing in a certain market and surpassing rivals is necessary for companies like Amazon to achieve their goals of reducing costs and improving customer service. Question 5: Can Amazon continue to be successful? Please explain your answer. If one were to compile a list of the top 10 companies of the decade, it would be incomplete without Amazon.com.

The company is regarded as one of the leading players in the e-commerce sector and has achieved remarkable success. Its journey towards success and continuous growth has been monumental, demonstrating the immense difficulty of competing in the e-commerce industry. Amazon.com emerged as a key catalyst in the e-commerce revolution, with one of its most significant advantages being its low operating costs. The company initially focused on online book sales, where it was widely recognized for offering comparatively lower prices.

It is both easy and inexpensive to transport, which helps

to reduce the cost of sales. Additionally, unlike other bookshop models that rely on physical stores, this one sells directly from the warehouse, saving on operating expenses such as inventory costs.

Despite being a multimillion dollar business that employs 110 people, there is still no physical store and a very limited inventory. Additionally,

For both e-operated companies, like Amazon, one of their main advantages is being able to handle many client jobs online. Merchandising online also offers the convenience of everything being delivered right to your doorstep, with just a click of the mouse. As Bill Gates stated, "I purchase all my books at Amazon."

I prefer using Amazon.com because of its convenience and wide selection. They have always been reliable. One of Amazon's main features is its extensive range of choices. They pride themselves on having every book available in stock and offer a price reduction of 10% to 30% on most books.

According to Bezos, it is a huge mistake not to offer discounts as many online businesses fail due to underestimating the value proposition (Fortune, p. 170, 1996).

Amazon's reliable service involves providing consumers with control and offering a high-quality next-day service, which is especially important as customers still prioritize deals on the internet. While Bezos has not revealed specific revenue figures, analysts project that the company's earnings for 1996 will exceed $10 million.

Although he mentioned that the company orders books based on the clients' agreement to purchase and has a return rate of less than 25%, he did indicate that it is the most important aspect.

30% for the overall industry (ibid). Amazon's ability to track customer preferences and purchasing habits is highly valued by publishing

houses, as this type of information would be extremely useful for forecasting demand. So far, Bezos has been reluctant to share this information too freely.

The frequency with which FactorBook purchasers return to Amazon is increasing, gradually allowing Amazon to gather enough information to make personalization effective. According to Bezos, orders have been growing by 34% each month this year, with 40% of Amazon's sales coming from repeat customers. By developing a relationship with these individuals and treating their data as an asset, Amazon gains valuable information about people who shop online. It is common for people to purchase multiple books on the same subject.

Many readers also purchase all books by a specific author. Amazon's extensive database makes it difficult for businesses to predict future customer demands based on past purchases, as these demands are constantly changing. Morgan Lozier, a senior usability specialist at Modalis, states that "Amazon provides users with the most efficient online shopping experience through added benefits such as personalized recommendations and quick checkout." Many companies are now trying to emulate Amazon's success, including Jeff Bezos himself.

com, striving to be just as profitable as Bezos and Amazon.com, is exemplified by eBay.com, an online web auction site, allowing individuals to profit from cleaning out their attics. Additionally, Barnes and Noble is striving to catch up with Amazon in their pursuit of profitability.

Based on the information provided, I believe that Amazon can achieve success by embracing and implementing the strategies it has outlined. In regards to Question 6, Amazon effectively utilizes technology to conduct business with suppliers and customers. Technology alone is not the sole driver of economic value; true wealth creation occurs when companies

merge technology with innovative business practices. Utilizing technology allows companies to optimize fixed assets by breaking them down into reusable components, measuring their usage and charging for it in smaller increments, resulting in cost-effectiveness.

Information and communications engineering enables the management of tracking and measuring crucial to the new models, making it possible to have effective allocation and capacity-planning systems. One example is Amazon.com, which has extended its business model to allow other retailers to use its logistics and distribution services. It also provides independent software developers with opportunities to purchase processing power on its IT infrastructure instead of buying their own. Amazon's primary value chain includes purchasing/sourcing and selling.

distribution and after-sales services, such as returns and exchanges for dissatisfied clients, are the main focus for this company. They primarily concentrate on purchasing and sourcing goods, as well as distributing them to consumers. Their investments are directed towards warehouses in key areas of countries with high consumer demand, and they strive to provide an efficient delivery and distribution system for all their customers.

Thus, Amazon dominates its distribution system that extends across borders. The figure 3 of the value chain model demonstrates examples of systems for primary and support activities of a firm, as well as its value partners who contribute added value to the firm's products or services [source: Porter's value chain model]. A firm's value chain is interconnected with the value chains of its suppliers, distributors, and customers. A value web is a collection of independent businesses that utilize information technology to coordinate their value chains and produce a product collaboratively. Value webs are adaptable and can adjust to changes in supply and demand. The

value web figure illustrates a networked system that can synchronize the value chains of business partners within an industry in order to quickly respond to changes in supply and demand [Porter's value web]. Online retailers possess several advantages compared to brick-and-mortar ones, including brand flexibility.

Merchandise choice, cost, and construction information are important factors for customers, especially when they want more details about products such as reviews and comments. Additionally, a wider selection and the ability to delay delivery were particularly advantageous for Amazon when they first entered the e-commerce market, making books and music an ideal starting point for their venture.

They began building their foundation from that location, but their ultimate objective was to create a system that enables them to venture into any new product category without incurring startup costs again. Although not simple, their growth vision resulted in significant initial overcapacity. They attained leadership through substantial investments in technology and the development of essential expertise in e-commerce.

When the substructure for their theoretical account was established, the company obtained significant advantages over offline businesses. They were able to expand into new markets quickly and at a lower cost thanks to Amazon's ICT. At the same time, they excelled in their physical operations by establishing efficient distribution, order fulfillment, and customer service centers. They effectively integrated virtual and physical activities, following Porter's model. This configuration enabled them to expand into new categories without expertise and minimize the risk of building inventories by partnering with other companies in various sectors.

Amazon offers its technology to unlimited partners without charging them, allowing for limitless opportunities in the vast and ever-expanding world of virtual real estate. As it expands

into various categories, Amazon becomes a comprehensive store, providing a convenient shopping experience for customers and making it unnecessary for them to look elsewhere. This advantage poses a significant challenge for competitors. By offering superior e-commerce technology and opening it up to others, Amazon secures itself with the potential to achieve profit margins as high as 90%.

The increasing significance of third-party sales is a significant aspect of their business. They also need to consider the potential negative consequences, such as the risk to their reputation from allowing others to fulfill orders on behalf of Amazon's customers. Additionally, their vision of creating a comprehensive customer portal enabled them to successfully integrate non-revenue generating portals (such as credit cards, reference books, and calendars) into the organization.