An Evaluation of Amazon.Com

Many companies which embarked in e-commerce had failed especially during the period of the “dot. Com bubble”. The failure of these dot-comes were due to the fact that many of these companies do not have a viable business model and they were focus mainly on increasing their market share at the expense of their bottoming. Amazon. Com is one of those companies which had survived and grown to become the world’s biggest online store. Several critical success factors have been identified which had played an Important role In Amazon’s achievement. These can be summarized under Turban et. L’s major SF, of which developing a good technical infrastructure and user friendly web interface, cultivating customer acceptance and Improving the level of trust between buyers and sellers through constant focus to satisfy customers’ needs and expectations, understanding the market situation and competition and finding ways to overcome these external threats stands out amongst others as being practiced by Amazon. Amazon’s success story can also be attributed to their adopting of Eisenhower and Gull’s (2001) second strategy of nurturing and leveraging on unique resources and competencies.
There is also an element of the first strategy recommended by Eisenhower and Soul lee to establish a position (build a fortress) and defend it. Amazon has managed to create a global brand name within the e-community, to the extent that whenever anyone wants to purchase any goods through the web, they will seek out Amazon’s website without any hesitation. The burst of the dot. Com bubble that started on March 10, 2000 to October 2002 had wiped out $5 trillion in market value of technology companies and caused the failure of many e-commerce companies.
Amazon. Com had managed to survive due to the strategies adopted, especially their strategy to nurture and leverage unique resources and competencies as recommended by Eisenhower and Soul. Other critical success factors of Amazon. Com are as listed by Turban et al (2000), which states that for e-commerce to succeed, companies should provide user-friendly web interface, ensuring customer acceptance and high level of trust between buyers and toys sellers, creating new partners Ana alliance, mass customization.

Amazon Ana always placed priority on ensuring customer satisfaction, and due to this are constantly reengineering their processes in marketing, sales and order management, customer service and procurement in order to provide the best value to customers. The fall of internet-based companies during the era of the dot. Com bubble can be attributed to the fact that many of these companies were not guided by proper strategies to succeed in e-commerce. Many do not have viable business models in place but were focused mainly on increasing their market share at the expense of their bottoming (Wisteria’s article on “Dot. Mom bubble”). While Amazon had remained frugal, many of these failed dot-comes had spent lavishly and used up most of their investor’s funds for advertising and promotion purposes. Too much emphasis was placed on increasing stock-valuations and going public, instead of building a sound business that focus on strong customer relations (Gleaners, 2000). When the returns on their investments were low or not attractive enough, the investors started to pull out causing the collapse of these companies. I would like to take the example of Boo. Mom as one of the famous dot. Com failures. Boo. Com was launched in the Autumn of 1999, to sell branded fashion wear online. Within a short p of 18 months, the company had been placed into receivership after spending $188 million of venture capitalists’ funds. The fundamental problem was that the company had been too ambitious and embarked on an extremely aggressive growth plan which is not sustainable. The company targeted itself to become a global company and simultaneously launched in multiple European countries.
Its founders had relied on the ready availability of venture capital money to see the company through the first few years of trading until sales caught up with operating expenses. From the 2nd quarter of 2000, such capital ceased to be available after dramatic falls in the NASDAQ and this affected the company very badly Boo. Com failed to follow the most important critical success factors recommended by Turban et. L ii to provide a user-friendly web interface and technical infrastructure. According to Wisped, the boo. Mom website was “widely criticized as poorly designed for its target audience, going against many usability conventions”. The article went on to elaborate that “The site relied heavily on JavaScript and Flash technology to display pseudo-AD views of wares as well as Miss Boo, a sales- assistant-style avatar. ” Its interface was also very non user friendly, and required the user to answer four or five different questions before revealing that there were no products in stock in a particular sub-section. The same basic questions then had to be answered again until results were found.
During that time, dial up internet connections was the norm and when the web pages take too long to load, or too cumbersome to navigate on the site, visitors will be discouraged from visiting the site. Another critical success Doctor Is tenure must De a level AT trust Detente Dryers Ana sellers. Rejection and return rate of products sold was high. Although delivery for return of goods was free, confidence level of customers became low and affected the sales for the company. Due to the lack of confidence, customer acceptance is badly effected.
Severe competition is another factor faced by many BBC companies and affected their chances to survive. Competition for market share is stiff amongst these dot- comes, and they also had to compete with existing brick-and-mortar companies which already had a dedicated and loyal customer base and trusted store names (Duncan, 2000). Things worsened when the brick-and-mortars started going online. Robbing (2001) added that the dot-comes then had to spend more on advertising in order to gain brand recognition and this further strained their financial resources and caused their downfall.
From its inception, Amazon. Com had in place various strategies which have helped it survive the dot. Com bust. In many ways, we can relate the strategies adopted by Amazon to the three distinct ways to compete in the marketplace as recommended by Eisenhower & Soul. In fact, Amazon has adopted a good mix of all the three approaches. Its first strategy was to establish a clear vision, ‘e to be the world’s most customer-centric company and to establish a place where customers could buy anything.
They have managed to build a fortress and positioned itself as the world’s biggest online bookstore, and eve now become the world’s most popular online store for almost any type of goods. Another strategy was to leverage on available resources especially from their technology standpoint. As the company had already incurred high fixed costs to develop the software for their online storefronts, it makes sense to expand into other product categories in order to reach out to a wider market, and share out the costs amongst the various product segments.
By offering a bigger variety of products, the company can tap into a bigger market, while spreading out its risks as well as their axed costs amongst a large category of products, in order to generate more profits. In this instance, it has an advantage over specialty stores like Pets. Com, an online pet supplies store. It may not be practical to order products like pet food or other needs and have to wait several days for the goods to arrive, or in the case of Furniture. Com which sells basically furniture items, it does not make sense when the shipping costs may be more than the cost of the item itself.
Amazon. Com was also mindful of the critical success factors expounded by Turban et. L by forming powerful alliances with other companies in order to increase their market share. Examples are their collaboration with rival Borders, the introduction of the Amazon’s Associates and Affiliates Program, and partnerships with many other companies. I Nell alma to tall inelegance In e-commerce as tenet performance goal (Eisenhower and Soul) was evident from the numerous partnerships and strategic alliances formed with other BBC enterprises.
In order to attract customers, the website must be user-friendly and easy to navigate, which Amazon had taken action to ensure. This is another critical success factor commended by Turban et. Al which Amazon had taken heed of, which makes them succeed where Boo. Com had failed. Amazon also offer personalized shopping recommendations, which add value to customers’ shopping experience. On the other hand, Boo. Com operated a complicated Web site which relied heavily on JavaScript and Flash, and their web page was very slow to load. This became a distinct disadvantage especially during the time when Internet connection was usually dial-up.
For many of the failed companies, the focus was not on creating value for customers but more to establish the company’s worth. Amazon on the other hand placed priority on enhancing customer experience and trust which ultimately will translate to customer loyalty and repeat purchases. This strategy has always been in place since its early days and is articulated in their annual reports. According to their tradition, the annual reports will always carry a reprint of their 1997 Letter to Shareholders, in which they had stated their commitment to this mission.
As Jeff Bozos stated in their 2008 Annual Report, their pricing objective is to earn customer’s trust (Appendix – Message from Jeff Bozos to shareholders of Amazon. Com). Amazon. Mom has already established its dominance in the BBC sector and is now one of the biggest and most popular online store in the world. Their success can be attributed to the fact that they have strong strategies in place. In order to maintain their position as the leader in e-commerce, Amazon must ensure that all these strategies continue to be adopted and further enhanced.
Amazon will have to constantly upgrade their website to keep abreast of technology development. Amazon has one of the most easy-to-use e-commerce platform in the world. They are constantly improving on their technology base with the aim to enhance customer experience and meet customers’ expectations. They are able to provide personalized recommendations for customers, based on feedback provided by the customers on their likes and dislikes, tracks customer’s browsing history and viewing records.
They even track a visitor’s recently viewed items even though the person was not a member at that point in time, or signed on to the account earlier. That is how customer-centric the company is, and how they make use of technology to enhance customer experience. Another example of the use of technology to meet customer needs is their launch of Kindle 2″, which is an improved version of Kindle, a wireless reading device that is capable of holding 1,500 books and weighs a mere 10. 2 ounce.
Digital books purchased are delivered within 60 seconds, and customers can enjoy their reading anywhere, anytime wilt ten mainly module evolve. Having learnt from the experience of those failed dot-comes which did not possess viable business models unlike Amazon, new players in e-commerce must now ensure that they draw up an effective marketing strategy so that they can attract customers to their site to generate sales. To become successful, companies embarking in the BBC business must reengineering their business process to suit the needs of the changing environment and business rules.
While a viable business model is important, its successful implementation can only be possible through process re-engineering that covers various aspects of the value chain. The fundamental area that needs to be targeted for process reengineering is in Sales and order management. In Amazon’s case, customers can track the delivery of their orders, and this creates a sense of trust in the customers when they know the exact location in the shipment of the goods ordered. Amazon has always placed priority and strong values on developing top class customer service so that customers remain loyal to them, as this will generate repeat orders.
Customer satisfaction can be achieved when the company is able provide a variety of products and services that meets their expectation. While the company expands its coverage and market reach, it must be able to develop a good distribution channel so that customers can expect to receive their goods in the shortest possible time. This will be possible through leveraging on the network of suppliers, business customers, partners and even their competitors. Amazon. Com has now become an icon of the e-commerce community.