Amazon.com

Introduction

Amazon is the globe’s leading firm within the online retail industry. Amazon offers products as well as services that present value to the clients whilst sustaining a prestigious image that is crowded by innovation. Amazon is an extraordinary firm doing business within the web in real consumer based method. Amazon is the principal online retailer of services and products which inspire, educate, inform as well as entertain. Accessibility of information is regarded as the most invaluable marketing tool; Amazon has made it very much easier for its clients to enhance their knowledge and power via the innovative instruments. Amazon is known by almost every internet oriented user. Internet users can find a lot of things they would want to purchase online within Amazon’s website.
Competitive Advantage strategies used by Amazon

Amazon made internet history to become the first largest large-scale retail firms to perform its business over the web; its competitive advantage can be witnessed by the profits the firm makes. In the year 2004, Amazon’s profits hit $4 billion over online revenues and amazingly in the year 2006 the company’s revenues amounted to $10 billion. However, the real considerable aspect is innovation within business strategies as well as information systems. The business innovations of Amazon are steered by huge investments upon information systems (Amazon, 2014).

The product differentiated customer offering of items makes Amazon remain at the top of its business. For instance the company offers a virtual bookstore whereby readers are able to “touch and feel” the book prior to buying it, this is done through provision of synopsis as well as tables of contents. An additional competitive advantage of Amazon regards its attractive pricing strategies. Amazon is at times able to charge its products lower than those offered within stores. Researchers have indicated consumers are at times influenced by pricing (KNTU, 2009). This enabled Amazon maintains its competitive advantage along with increasing its revenue. Amazon is able to sustain good prices since it maintains very minimal of its own inventory. A further competitive advantage strategy employed by Amazon is the provision of superior client service via e-mail as well as telephone consumer support, online tracking along with shipping information as well as the capability to pay for purchases using a single mouse click by the credit card. The single click express shopping makes shopping greatly efficient. In 1998, the company began selling music DVDs, CDs as well as videos; this was seen as a major step in transforming its business strategy becoming the ultimate pace to find, purchase and discovers services available online. To increase and sustain its competitive advantage Amazon has since grown to its offerings to toys, electronics, video games, home improvements, travel services jewelry, apparel and personal care.

Figure 1: Amazon’s strategy

Additionally, the company has introduced auctions equivalent of those offered by e-Bay along with zShops also referred to as internet small retailers storefronts. The introduction of these services made Amazon expand its warehouse significantly in addition to distribution capabilities this move was coupled with hiring a huge number of knowledgeable employees. Between 2001 and 2002, the company introduced an ambitious strategy that greatly differentiated it from other companies (Amazon, 2014). This strategy entailed considerably reducing prices, providing free shipping in addition to leveraging its infrastructure technology. Amazon’s Merchants@ along with Amazon marketplace permits other business to wholly incorporate their websites into and within Amazon’s website; this enables these companies sell their branded goods utilizing Amazon’s fulfillment as well as payment systems (KNTU, 2009).

These companies include The Gap, Nordstrom and Target stores; they have the opportunity to offer their products to consumers afterwards paying Amazon commission along with fees. This makes the company’s website a dominant brand through which clients from other companies have an opportunity also to browse through Amazon’s products. Thus, the company enjoys a very traffic of its own customers and customers to other companies. This has majorly contributed to its ever rising profits and revenue. The company also maintains its competitive advantage by collaborating with other companies. This is among the very few companies which offer their website for other online companies to place their products (Amazon, 2014). For instance, Amazon has permitted e-Bay to place its new, as well as old items the website. It thus creates a collaboration that other online companies lack. Through this strategy, it becomes a link to other websites; thus an individual will initially visit Amazon and is later directed to other websites.

Amazon Marketplace program people are encouraged to dispose off their new or used goods through Amazon’s website. People can offer products even similar or competing to Amazon’s products. This strategy of allowing individuals post goods similar to Amazon’s is seen as one of the most extraordinary factors. No single company has ever tried this kind of strategy; this makes Amazon a uniquely placed company. Indeed this is an exclusive competitive advantage. Presently sales by third parties take up to over 25 percent of the company’s revenue. Amazon has turned out to be and remains the most profitable online retailer developing the rate of greater than 60 percent on an annual basis. Additionally, the company penetrated into the grocery goods business within 2006 again expanding its goods offering variety. The future of Amazon of Amazon has a dream of continuing to introduce innovative IT-enabled services. In order of coping with increased competition from Yahoo and Google, Amazon plans to introduce fresh offerings, for instance, digital mapping service using street level photographs and offering short stories online. These strategies are geared towards enhancing customer as well as shopping experience.

The greatest part of Amazon’s competitive advantage is its e-book industry sold positioning in addition to new strategies being implemented to sustain their competitive advantage (Amazon, 2014). The company enjoys continuous innovativeness which holds its competitive advantage; for instance initially the company used to sell only books but currently it is offering millions of many other products which include cameras, video CDs as well as DVDs, coffee machines et cetera, in short the company is offering everything for everyone. Amazon gives its clients a selection of resources that enable them to choose products in a better way; these resources include customer reviews and feedbacks as well as personal recommendations. Amazon was the first website to allow clients to write their reviews as well as post their recommendations. The clients are also given the opportunity to get feedback directly from the author. Very few companies offer a client a service close what Amazon offers. The client is thus through the feedback from the author, and other reviewers are able to make informed decisions. A quick glance at Amazon’s website one notices its mission is to maintain the top position of being the most consumer-centered firm. The appealing nature of its website is among the competitive advantages Amazon retains.

The major principles that Amazon uses to operate in order to achieve its goals as well as maintain its competitive advantage are; to begin with consumer-focused service, as aforementioned Amazon offers almost types of products. The clients are able to carry out their shopping at single online stop. From books to music videos house items and many others. The interactive feature within its website extends client satisfaction (KNTU, 2009). Even if a client is unaware about the contents of, for instance, books there are able to read the reviews of other readers. Another feature that is very unique about Amazon is the rating section of the site where the client is able to rate a product. I think this gives the client an insight of the best performing product choice.

The second principle is innovation; Amazon previously used to offer only a handful of items mostly books. Presently it is has evolved into offering many other items, this forms part of the innovation strategy of the company. The introduction of one-click shopping method is considered among the mainly innovative aspects of Amazon, this is because it has made it much easier for the clients to shop. Amazon was among the very first innovative, as well as mainly victorious B2C e-commerce model; this represents a perfect example of management innovation (Amazon, 2014). This innovation is then blended in with a vision and goals as presented in the figure 2 below.

Figure 2: amazon’s innovation, vision and goals

Strategic issues presently facing Amazon

Amazon being the first e-reader brand identity is looking forward to making major improvements for its Kindle to allow a greater reduction of prices. The company also plans to improve its web access through making it much more efficient as well as effective by enhancing the speeds of the wireless network on the Kindle (KNTU, 2009). On the side of e-books, the company seeks to sustain its competitive advantage through establishing relationships with many more publishers to acquire bigger selection of e-books. The company additionally plans o improve its text to speech feature by making the sound more human as well as adding the option of using either a man’s or woman’s voice. Additionally the company plans to add more languages in the text-to-speech feature so as to increase its target market worldwide. The company has additional goals geared towards offering more products on its website in future such as machinery. The company additionally plans to improve its distribution system through partnering with more effectual and prompt delivery companies (Amazon, 2014).

Amazon plans to engage their staffs in vigorous training to enable them get well adapted to the changing consumer needs as well as enhance their knowledge in the future products to be offered (KNTU, 2009). This training will be mainly geared towards improving their knowledge on ways in which the company makes its revenue. This will enable the staffs be able to sustain Amazon’s competitive advantage. Further, the company intends to acquire better hardware that will operate on optimum pace. This will increase the websites capacity thus fostering customer experience. The company has also started an ambitious project of improving site security which is aimed at preventing web attacks as well as other online security flaws. The strategy also involves educating consumers via online seminars to sensitize customers on issues relating to company’s products as well as online security. The company also plans to initiate live online customer support.

References

Amazon., 2014. Amazon.com Investor Relations: IR Home. Retrieved from http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-irhome

KNTU., 2009. Strategic Information Systems for Competitive Advantage. Retrieved from http://wp.kntu.ac.ir/kazerooni/ch03.pdf