Case Study: A Strategic Analysis Of Amazon.Com In 1997

Case Study: A Strategic Analysis of Amazon.com in 1997

Amazon has grown admirably from its initial beginnings as a small online bookseller to a giant superstore company. During this process of rapid growth, it has incurred significant losses and it becomes more expose to a greater competition and threats. Cutting costs and achieving profitability remain Amazon's greatest challenges. However, there are key factors such as a strong brand, providing customers with outstanding value and a superior shopping experience, massive sales volume and realizing economies of scale which contribute a lot to the success of this company.

Amazon took advantage of the growing market by capitalizing on a concept covered in the book by Kim Warren, entitled Competitive Strategy Dynamics, rivalry. Amazon used various tactics covered in Warren’s version of rivalry. Amazon began during the dotcom boom initially selling just books, but slowly expanding to more items. This demonstrates how they began to capture new customers, especially in growing markets. Not many companies offered purchasing services online so Amazon seized the opportunity and capitalized on it. This leads into the second type of rivalry stated in Competitive Strategy Dynamics, stealing customers from competitors, especially in mature markets. Amazon started doing that with the book market then slowly ventured into other markets. For example, CDNow.com was the CD purchasing website that was doing well, but perhaps not doing as well as they could. Amazon saw this and began a simpler and more convenient way to but CDs online and eventually bought out CDnow.com, becoming the premier site to buy CDs.

Founded as Cadabra.com by Jeff Bezos in 1994, Amazon.com was launched in 1995. It is an American electronic commerce company based in Seattle, Washington (Wikipedia 2006). It is one of the first major companies to sell goods over the Internet and one of the most recognized and respected online businesses. It has become the number one online retailer by steadily building its reputation and brand, beginning its operation in July of 1995 (cited in Haddad & Sheth 2001).

Moreover, it has expanded from its existing business of selling books to selling a wide variety of products such as DVDs, music CDs, computer software, video games, electronics, apparel, furniture, food and more (Wikipedia 2006). Similarly, Amazon aside from its domestically shared market also set up four other separate online stores in the United Kingdom, Germany, France and Japan, thus shipping globally on selected products (cited in Haddad & Sheth 2001).