Case Study: a Strategic Analysis of Amazon.Com in 1997 Essay Example

reputation for reliability and trustworthiness. Haddad ; Sheth (2001) note that since its inception, Amazon.com has been consistently building its brand and has become the leading online retailer.

According to Wikipedia (2006), Amazon's range of products has expanded beyond books to include DVDs, music CDs, video games, electronics, furniture, apparel, food and more. The company has also established separate online stores in the United Kingdom, Germany, France and Japan with global shipping available for select products (cited in Haddad & Sheth 2001). In addition to this growth and expansion, Amazon has entered new industries such as MP3s and movie production. Currently funding a film project and establishing dedicated websites for Canada and China demonstrates its continuous evolution.

Since the 1990s, improvements in computer technologies have driven rapid growth in the Internet and World Wide Web populations. Consequently, many businesses have launched online, resulting in a diverse range of product sales. The pace of online purchasing has accelerated significantly, presenting great potential for success among internet-based enterprises. Nonetheless, this also intensifies competition and threats from other companies that have joined the digital marketplace (University of Texas at Dallas).

Amazon has become a corporate partner and is now responsible for hosting and powering multiple websites such as Borders, Waldenbooks, Virgin Megastores, CDNOW, and HMV. (Om n. d.)

According to Wikipedia in 2008, Amazon.com runs the e-commerce sites of several companies including Target, Mothercare, Lacoste, the NBA, Sears Canada, Sears UK, Benefit Cosmetics, Bebe Stores, Timex Corporation, Marks & Spencer, and Bombay Company. The book retail industry is thriving with significant barriers to entry and minimal supplier power over booksellers.

According to the American Booksellers Association in 2002, the internet

has caused significant changes in the book industry, including increased competition, stronger bargaining power for buyers, and more substitutes. The United States represents the largest book market. In the past, book publishing was fragmented, and a high percentage of sales were made through wholesalers. However, the rise of superstores such as Barnes & Noble and Borders.com has led to a decrease in this percentage, as they now receive direct supply of over 95% of their books from publishers.

By eliminating intermediaries like wholesalers, superstores can offer products at lower prices, leading to a growth rate of 71% compared to non-superstores' 4% sales growth. They claim a monthly growth rate of 25-35%, leading to the closure of many independent stores. This poses a threat to the success of Amazon.com, as reported by the American Booksellers Association in 2002.

Remaining competitive in the market requires relevance and convenience.