Introduction Historical Perspective Jeffrey Bezos, the founder and current CEO of Amazon.com, initially started the company as an online bookstore in 1994. Within several months, Amazon spread its operation to all 50 states and abroad. Presently, customers from over 45 countries buy at Amazon. Over a short period of time, the company expanded sales to electronics, video games, software, CDs, DVDs, MP3 downloads, food, furniture, apparel, jewelry, and toys. Today, the company even produces its own products such as the Kindle series. Also, Amazon.com is one of the major providers of cloud computing services. Currently, the company is the largest global online retailer responsible for 20% of online retail market share. Key Success Factors and Strategies The key strategies and distinctive competencies that have led the company to success and its present position of a world leader in the Internet sales can be identified as follows. Firstly, Amazon.com employed the cost leadership strategy by offering products and services at lower costs than competitors. The key to making this strategy successful were the economies of scale that allowed the company to offer the largest range of products to its customers. Secondly, Amazon.com expanded internationally, pursued strategic acquisition and bought new firms to bring new services, assets, capabilities, services, and skills. Thirdly, the company is committed to delivering superior quality of products and services. It earned a reputation of a convenient and reliable brand that offers the lowest prices, one of the fastest and lowest shipping, widest selection of goods, and many additional features with its services. The fourth key factor was efficient logistics and distribution that allowed sprea... ... middle of paper ... ...viding convenience, innovations, and low prices. References Amazon.com. (n.d.). About Amazon. Retrieved from http://www.amazon.com/Careers-Homepage/b?ie=UTF8&node=239364011 Chaffey, D. (2012). Amazon.com case study. Smart Insights. Retrieved from http://www.smartinsights.com/digital-marketing-strategy/online-business-revenue-models/amazon-case-study/ Eule, A. (2013). It’s time for Amazon to open its black box. Barron’s, 93(42), 37. Forsyth, W.R. (2013). Citizen Bezos? Barron’s, 93(32), 7-8. Mirov, M. (2005). Seminar paper on strategies to achieve market leadership: The example of Amazon [PDF file]. (Unpublished paper). Technical University, Berlin. Retrieved from http://preibusch.de/documents/PreibuschS_FleckensteinM_Amazon.pdf Tsuruoka, D. (2014, January 9). Amazon’s third-party retailers sold over 1 billion items in 2013. Investor’s Business Daily.
Amazon has grown to become the largest internet-based retailer in the world by total sales. It began as primarily an online bookstore and soon began to sell more and more electronics and then over time began to sell pretty much anything. In 1998, Amazon earned about 0.6 billion dollars, it held a steady growth from 1998-2006 (“Amazon.com”). From
Jeff Bezo’s began Amazon in his garage in July 1995 with three Sun workstations setting on wooden doors for tables and extension cords running from everywhere (Academy of Achievement, 2010). Right from the beginning he was a visionary leaving his well paying job as a senior vice president with D. E. Shaw to begin Amazon.com (Academy of Achievement, 2010). Being the visionary that he is he saw an opportunity prompted by the huge growth rate of internet use in a single year and ran with it never looking back. Jeff realized that the internet had “no real commerce to speak of” so he began researching possible businesses (Academy of Achievement, 2010). “After reviewing 20 mail order businesses and deciding which could be conducted more efficiently over the internet than by traditional means he decided on books” (Academy of Achievement, 2010). He thought books were perfect because attempting to send huge catalogs for all the available books would be expensive and cumbersome, but an online resource database that was easy to navigate would provide customers with easy access and a single point from which to shop. “In 30 days, with no press, Amazon had sold books in all 50 states and 45 foreign countries, obviously by the success of Amazon he was right (Academy of Achievement, 2010). In a case study written by Javad Kargar called “Amazon.com in 2003” he stated that “Amazon's online store was a big hit, with about $5 million in the first year of operations” (2004). This huge success so quickly would have confirmed for Jeff that his idea was viable and drove him to continue to strive for more. Jeff Bezo’s charismatic-visionary leadership is the key to his and Amazon’s success.
This strategy can benefit the company and its employees by direct and strict policies, in which it will relay to the employees to work harder and keep improving. In addition, this hard work and constant progress can result to the employees deeply appreciating their work and become more confident about themselves. If both the employee and managers are pleased about the performance and outcome, then the customers too will appreciate the service and product they receive. Also, a customer who becomes satisfied with their service will most likely become a loyal customer. In turn, the company will gain growth in profits and recognition from other customers. A successful business model or strategy like Amazon’s should be adapted by other companies to ensure the success and development in both the company and its employees. Just like what David Rockefeller said, “Success in business requires training and discipline and hard work. But if you’re not frightened by these things, the opportunities are just as great today as they ever
Saunders. R (2001) Amazon.com way – Secrets of the world’s most astonishing web business, Capstone
Technological factors. This is very important factor for Amazon therefore the success of the business depends on that. Amazon has to face a lot of technological challenges and to find a way to be ahead of the competitors.
Starting out as solely an online bookstore, Amazon has become the largest online retailer in the world.
A cost leadership strategy is where that the price is similar or the lower rate from the products of the other companies so that Amazon can achieve the success in the competitive market. By adopting these strategies company need to know that where they want to focus, which type of services they have to increase and for the products and the services Amazon create its value for the lower cost of the product in the competitive market (Wong and Karia, 2010). Amazon have to sell the products at the low price from the other companies and the services which are provided by them they are good and the customers are satisfied by them. Then only enterprise can achieve the success in the competitive market and achieve the targets which are per decided by the entity. Amazon has doing the business in partnership with the Morrison by that company make a new products and increase their consumers. Now the Amazon has entering in the grocery retail market has also put the pressure on their supermarkets to setup their e-commerce business. Amazon has the capabilities to establish any type of business whether it is of grocery or selling the different products. It increases the profit of the company by selling the new products and increases in the consumers (Kindström, 2010). Amazon uses the different strategies is more a cost leadership with compared to the one or more retailers. Amazon give the different and better facilities to their consumers and having a capability which gives the physical economies of the scale. Amazon provides the advantage of the cost and provide the different services so that entity can attain the success. Amazon have to take a feedback from the consumer about their products that the company provided those products by that consumers are satisfied or not. It spread the consumer focus
Amazon began in 1995, founded by Jeff Bezos in 1994 in Seattle, Washington. Starting out in book sales over the internet, they sold their first book, “Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought, by Douglas Hofstadter”, in July of 1995. Since then, Amazon has expanded their sales beyond books to other various products, growing into one of the world’s top e-commerce businesses.
When Amazon.com first began in 1995, as strictly a book retailer, Bezos knew he had discovered an excellent company. After all, a physical bookstore cannot stock anywhere close to the number of books Amazon can offer online. Within a year, the company had a customer base of approximately 340,000 consumers and daily site visits were huge as well. But Bezos wanted to expand the company to offer music and DVDs, because he realized there was little or no barrier of entry. In the next years Amazon would emerge as a marketplace, expanding the company globally offering products from toys to kitchenware. Because of the relatively cheap prices Amazon was offering and also the growing number of online shoppers, the company was doing tremendous amounts of sales and creating profits.
Amazon has been able to maintain sustainable competitive advantage based on three operational strategies. These are low cost-leadership, customer differentiation and focus strategies. Low cost-leadership is pursued by Amazon by differentiating itself primarily on the basis of price. By offering low prices to customers Amazon ensures its future success. Partially modifying the costs of lowering prices over time through achieving higher sales volumes, negotiating better terms with suppliers, and achieving better operating efficiencies. Amazon makes sure that it offers the same quality products as other companies at a considerably cheaper price. Another strategy that Amazon has is its fast delivery service and there are many delivery services that one can choose from. With Amazon Prime, there are certain, but many products that have free two-day shipping. Also, with Amazon Prime, there are many offers specifically for people that have Amazon Prime. For example,
In conclusion, Amazon has embraced innovation. The company has not had worries with the use of innovation. They use innovations as measurements and end up with flourishing business ideas. They experiment, learn through outcomes and try new ways of doing things. They have put the customer as their first priority. Everything that the company does gears towards attracting customers through quality of services, availability of products, assurance of delivery and addressing customer feedbacks. These factors have helped the company become a multinational and a multimillion company where customers flock everyday.
Amazon.com was a venture into an emerging market of internet and had to face hidden and unexpected hurdles in order to survive and excel in the market. Therefore, Amazon.com kept modifying its strategies with their focus on enhancing customer experience of online shopping and to delivery exceptional services with complete convenience to their customers. One of the major strategic decisions was to compromise on cost saving stragegy when Amazon.com started to maintain its own warehouses in different countries in order to ensure timely and accurate delivery to their customers
Diversification-moving away from core competence- At the beginning, Amazon’s focus was selling books online and they have now moved onto difference ventures. While branching out helps the company to grow, they may be doing too much and losing their strategic advantage. If they don’t focus in on what made them successful, they could get lost in the shuffle and open themselves up to
Another part of Amazon’s retail strategy is to serve as the channel for other retailers to sell their products and take a percentage of cut of every purchase. Amazon does not have to maintain inventory on slower-selling products. This strategy has made Amazon a ‘long tail’ leading retailer, expanding its available selection without a corresponding increase in overhead costs.
In 2002 Annual Report, Amazon has made numerous attempts so that they will remain ahead among its competitors in the industry. Among those efforts includes store personalization that cater for each customer, show customer reviews on its offering products and wide selection to the customer by placing used products next to the new products.