Internet commerce is continuing to grow in the past years, and with over 500 million websites actively providing something or product, the competition among rival businesses is intense. However, there are many companies, like Amazon, which have had tremendous market growth and success over the Internet. A whole lot that, not only is Amazon one of the most significant book and retail stores in America, additionally it is one of the major websites on the globe, regularly placing within the top 20 of Alexa's internet rankings. The business has at this point reached millions of customers in over 150 nations. The web site offers millions of DVDs, music discs, books, and videos as their staples, and has slowly added a myriad of supplemental products as well. Expanded offerings include household goods, electronics, apparel, cosmetics, drugs and more. Amazon has maintained competitive advantage through many years of product expansion, employing and utilizing progressive strategies along the way in a continuing effort to outgrow rivals like eBay and Overstock. com, and stay ahead in the market of online shopping.
The model idea of online shopping was adopted by Jeff Bezos, founder of Amazon in July 1995, and operated rather seamlessly with a tiny workforce right away. Amazon as a web commerce entity has popularized the context of online shopping by getting the largest sheer quantity of products, and finally creating success through their progressive use of the supply chain model. Their innovative business strategy and use of the supply chain, put products in numerous self-owned warehouses, as well as, distributing products through partnering suppliers, which significantly reduced the necessity to stockpile products in a single central location, and Amazon's managing duties (Bradley, 1999). Although the business had not been started expecting a guaranteed profit, their innovated uses of the supply chain model integrated with the web, gave Amazon an enormous reduction in overhead costs which really is a main factor in their overall success.
Limitation of Study
This paper commenced with a brief synopsis of Amazon's measured success. It'll continue with research carried out with a considerable amount of effort and consideration, in the collecting of text books, Business Journal resources, browsing the Amazon website, and other online language resources regarding Amazon's marketing success. However, the research should not be considered all-inclusive because the study has some limitations due for some unknown factors and matters of opinions. This paper is not predicated on field research and relies strictly on secondary sources, which limit the range of data to some extent. Therefore, this is a limitation of the study involved. Additionally, the paper must be type written in an APA format, a minimum of 12 pages long with a maximum amount of 15 pages, excluding the title page, and reference page.
Definitions of Terms
DVD can be an abbreviated term for a digital video formatted disk that has high storage capacity.
(Competitive advantage) A superiority gained by a business when it provides the same value as its rivals but at a lower price, or can charge higher prices by giving greater value through differentiation. Competitive advantage results from matching core competencies to the opportunities (businessdictionary, 2012).
(Online marketing strategy) An organization'sstrategy that combines most of its marketing goals into one comprehensive plan. An excellent marketing strategy should be drawn from general market trends and concentrate on the right product mix in order to attain the maximum profit potential and sustain the business. The marketing strategy is the foundation of an marketing plan (businessdictionary, 2012).
(Distribution Channel) The path by which goods and services travel from owner to the buyer or payments for those products travel from the buyer to the vendor. A distribution channel is often as short as a primary transaction from the vendor to the consumer, or may include several interconnected intermediaries along the way such as wholesalers, distributors, agents and retailers. Each intermediary receives the item at one pricing point and movies it to the next higher pricing point until it reaches the final buyer. Coffee does not reach the consumer before first going right through a channel relating to the farmer, exporter, importer, distributor and the retailer. Also called the channel of distribution.
(Marketing mix) A well planned mixture of the controllable components of a product's marketing commonly referred to as 4Ps: product, price, place, and promotion. These four elements are adjusted until the right combination is available that serves the needs of the product's customers, while producing optimum income. Sometimes the first P (Product) is substituted by presentation. See also marketing and mega marketing (businessdictionary, 2012).
(Boston Consulting Group Portfolio Analysis) Business portfolio analysis technique utilized by large companies with decentralized profit centers called Strategic Business Units (SBU). The firm locates the positioning of every SBU over a four cell (quadrant) table formed by causing a cross with four equal sides, each cell having a specific name and description predicated on its market share and type of market: (1) The low left cell (labeled 'cash cows') contains SBUs that generate more cash than they consume because of their dominant shares of slow-growth markets. (2) The low left cell (labeled 'stars') contains SBUs that may not generate a cash surplus but are likely to become cash cows for their high shares of high-growth markets. (3) Top of the right cell (labeled 'question marks') contains SBUs that consume large amounts of cash to stay viable for their low shares of high-growth markets. (4) The low right cell (labeled 'dogs') contains SBUs that could generate enough cash to continue existing, but hold no promise of ever becoming winners for their low shares of low-growth markets. Developed in 1970s by the consulting firm Boston Consulting Group (BCG), the purpose of this analysis is to identify which SBUs to get into, which to sell off, and which to shut down. Called also growth share matrix (businessdictionary, 2012).
(SWOT Analysis) Situation analysis where internal strengths and weaknesses of an organization, and external opportunities and threats faced because of it are closely examined to chart a technique. SWOT stands for strengths, weaknesses, opportunities, and threats. See also PEST analysis.
(Five Forces Analysis) A model introduced in 1979 by Michael Porter and used by companies for industry analysis and corporate strategy development. The five forces include competition, supplier strength, customer power, the potential for new companies joining the industry, and the risk of substitute products (businessdictionary, 2012).
Review of literature
Amazon: Inside the Beginning
The internet was new and uncharted water at that time Amazon was launched, and many pragmatic and logical business minds were against the idea of launching a business online, and warned Amazon's owners against it.
The founder of Amazon, Bezos, knew that any business starts slowly, and in order to make that company successful, the organization needs to prepare yourself and determined to complete it. In effect, Bezos started the business without the assurance to be profitable. However, Bezos' company saw its first profit by the end of 2002. From the idea that the company turned its first profit, the business has had the opportunity to sustain its competitiveness in the web market.
Amazon: Success in Internet Commerce
The success of Amazon Corporation is revealed in its profits. The environment and accomplishments of the Amazon Corporation according to a classic style of standardized marketing combined with ground breaking networking and selling platform facilitated by the web environment demonstrates a strategy that Amazon. com is rolling out to position itself as a respected online retailer, offering its range of products that includes books, apparel, electronics products and do-it-yourself products through the web website, www. amazon. com. Amazon's reach is increasingly global, as Amazon operates in North America, Europe and Asia.
The profits and growth represent specific indicators of the strengths of this company. The growth and proportional profit to growth can't be overlooked or underestimated. The headquarters in Seattle, Washington employs 33, 700 people, including full-time as well as part-time employees. Amazon reports its revenues earned in 2010 2010 at $34, 204 million during the financial year ended December 2010 (FY2010), a rise of 39. 6% over FY2009. The operating profit of Amazon was $1, 406 million in FY2010, a rise of 24. 5% over FY2009. That is a business that keeps growing. The financial benefit is the web profit that shows at $1, 152 million in 2010 2010, a rise of 27. 7% over FY2009 (Amazon. com Inc, 2012).
As far as potential weaknesses competitiveness is not one of them. There could very well be no other store like Amazon. In the stock market, Amazon (AMZN) has had much success in overcoming the most common constraints of the retail market by offering goods and services online at affordable prices (Woodburn, 2012). The selling platform mechanism has been improved by developing unique products of their own, like the Kindle e-reader and Kindle Fire market, which have made them competitive with electronics stores. This new market entry, combined with Amazon's Strategic Intent business design, brought about by Amazon resulted in what research claims is putting competitor Best Buy in the positioning to "develop very little margin on the merchandise that they sell in competition with Amazon. com Inc" (Woodburn, 2012). This is due directly to the fact that Amazon will not seek to make profits on its electronics, as Amazon makes sufficient profits from their selling platform. Actually, Amazon sells the Kindle at company cost while profits are made on digital goods purchased for those products such as e-books, videos and music. That which you see here is a powerful window for concerted name recognition of Amazon through Kindle at no cost to Amazon the company. The Kindle devices merely serve to encourage use of the Amazon technology, effectively securing brand recognition, while Amazon makes its profits from the complementary products utilized with or through Kindle, so that Best Buy cannot mark up their similar electronic goods for just about any profit or their prices will cease to compete. To this, CEO Bezos says, "We want to generate profits when people use our devices, not when people buy our devices" (Woodburn, 2012).
The mission gives one a common sense of the chance that Amazon sees, in seeking to "offer the Earth's Biggest Selection and also to be the Earth's most customer-centric company, where customers can find and discover anything they may want to buy online" (History, 2012).
The real key to Amazon's ongoing strength comes from the deals forged back the first days of the internet, the 3rd party agreement format where the "Earth's Biggest Selection" of books, CDs, videos, DVDs, electronics, toys, tools, furniture and house wares, apparel, and kitchen gizmos was offered through Amazon, selling products from prominent retailers such as well-known retailers including Toysrus. com Inc. , Target Corporation, Circuit City Stores Inc. , the Borders Group, Waterstones, Expedia Inc. , Hotwire, National Leisure Group Inc. , and Virgin Wines. Insurance agencies these others selling their items through Amazon, even at a discounted rate, the Amazon name remains all over every transaction. This is the same operating principle by which they sell the Kindles at no profit, so the name will be all over the machines, and the Kindle will maintain a competitive edge in its digital sector, with a marketing principle at Amazon which has remained a simple element of its success through techniques and operating principles that stayed with the business as a cultural cornerstone because the initial achievement of its first net profit during the fourth quarter of 2001 (History, 2012).
"Bezos then worked to improve funds for the business while also working with software developers to create the company's web site. The website debuted in July 1995 and quickly became the number one book-related site on the net (History, 2012). "
The rest is history, or at least relegated to the sources for now (History, 2012).
The notion of focusing just on the method of selling, as opposed to the area or price, was an early on core element of the Amazon operating culture and business design, as evinced through the establishment of the pattern of sales that emphasized Amazon the selling vehicle instead of Amazon the original product, using the Amazon presence and vehicle and system to sell to as well as for others, while not keeping large amounts of stock under one's own care or responsibility. Unlike its opponents in the book market, Barnes and Nobles and Borders, Amazon did not bother keeping much stock in their own warehouses. Instead, the stock that they sold was orders that they manually processed, but that the customer was actually placing with other wholesalers and publishers, eliminating the necessity for Amazon to maintain a warehouse using their own products.
Amazon did keep some stock, about 2, 000 titles in its Seattle warehouse. When an order came in, training of his garage Bezos would order the books from the other sources, then ship these to the client. By initiating this activity with the advent of the full-scale use of the internet, the theory and the business caught fire in the unique time in which such a little venture could realize such a broad scope so quickly; within a month of launching the net publisher, Bezos and Amazon. com had filled orders from all 50 states and 45 other countries (History, 2012). All because the price was low, which Amazon can keep low because they had no overhead costs, and would pass the savings along to the customer. This fulfilled a larger purpose for Bezos and Amazon, because while all of this buying activity took place in the quest for better deals on high demand products, the Amazon name was placed on the minds of all those excited buyers who had been now buying products without the middlemen and retailer price hikes, and directly and rapidly getting their preferred titles. So through low overhead and focus on name recognition as opposed to profits, Amazon could apply classic principles to the context of the environment Bezos was employed in, to grow the company name to the stage where the Amazon name was its strongest and formidable strength.
As far as a Boston Consulting Group Portfolio Analysis approach can be involved, the cash cow in the case of Amazon is the look of the selling vehicle: a completely open arena for selling. Online commerce while growing rapidly keeps growing slowly with regards to Amazon, because Amazon has created an environment where even vendors can sell in the Amazon environment, and the consumer or individual seller are de-prioritized and only amicable relations between manufacturers and Amazon, even though we prefer to think of the marketplace as open to every individual, or a new frontier here.
The only question remaining is whether exertion of too much control over the market changes one's advantage for the worse? Or at what point? The question might be when will Amazon's boom cycle out (Armstrong, 2012)? In age the internet, the cycle down is undetermined and has yet to be observed, as the internet is relatively new, and we must continually evolve and function at higher degrees of understanding and awareness to enable our corporations to adapt and mature. The market will not mature or progress uninterrupted. The sheer bulk amount of items out there being sold and the countless retail store outlet not online will be the two market forces that ensure Amazon's sustained existence and competitiveness, and really should motivate Amazon to continue to adapt and update its services. The merchandise cycle for Amazon would appear to be unlimited, where in fact the niche that Amazon created will continue to grow without cycling down unless the economy collapses completely, a continuing risk of doing business in this day and age. However, until now, all indicators point to a status quo where while the global economy staggers along in real time, the internet economy is still vibrant. The money cow in cases like this is not the competitive nature of the merchandise, however the automation and adaptation of the vending model to the web environment, where conveniences such as devoid of to get into stores or pick up the telephone save customers more time and money in support of adds value to the convenience that Amazon offers in its vending model that represents the money cow.
As far as SWOT analysis can be involved, we have established that Amazon is already a profitable procedure going forward. Amazon profits have been steady and steady in their rise since 2005, after many years of substantial losses (David, 2008).
The company also offers an amazing set of HR techniques, Customer Relationship Management (CRM) and IT (IT). Using comprehensive data models, Amazon records data on customer-buyer behavior, reflecting on their lifestyle and future needs from Amazon, an organization that can adapt its distribution as it sees fit. This makes customer service more effective, where the glut of unused overhead Amazon has access to even makes bonuses of gifts and cosmetic gifts simple options for pleasing the client that shops cannot offer.
The name recognition of Amazon is, the burkha reason behind its powerful position, and this diversification of product lines will be the only direction for expansion, and is already the foundation for the reason why Amazon is a huge global brand. It is recognizable for just two main reasons. It was one of the original dotcoms, and over the last decade it is rolling out a customer base of around 30 million people (David, 2008). Early on Amazon harnessed technologies for gaining a niche in e-commerce, and learning to be a one stop online wholesale retailer. The books that Bezos based Amazon on as a startup now have fully diversified into product categories. So far as cost management goes, the business may sooner or later need to reconsider its strategy of offering free shipping to customers. It really is a fair strategy since one could search for a more local retailer, and pay no costs. However, it is rumored that shipping costs could be up to $500m, and such a higher figure would undoubtedly erode profits (David, 2008).
There remain opportunities for expansion, comprising the main opportunity for Amazon. However, growth has to be targeted and well-managed, as appropriate to the changing times in terms of anticipating the precise demands of consumers in the global age, and the rapid shift in cognitive development of human beings therefore of interaction with the computer. At this point, unique opportunities for Amazon include the knowledge and expertise that Amazon displayed in reaching their online status. Unique ventures are occurring between Amazon and other major store group retailers that are exemplified by the unique nature of the deals being forged. For instance, British retailer Marks and Spencer has announced they are discussing a special online user agreement with Amazon to market its products and service online. This is actually the latest in a wave of unique agreements forged by Amazon, in addition to other recent agreements with Target, Toys-R-Us and the NBA (David, 2008). Further, Amazon has expanded its offices for a new European headquarters. Amazon's new Luxembourg-based division aims to provide tailored services to retailers as a technology service agency in Europe, in an adaptive service process funneled by Amazon, that has shown perhaps the most efficient adaptive powers in the annals of business.
In addition to these private sector agreements, research highlights that Amazon might be able to build collaborations with the public sector as well. That is predicated on previous moves by Amazon, like the deal with the British Library, London, in 2004 enabling customers to find rare or antique books, that formerly could have been available only in the stacks, where books and information of old or sensitive or rare composition are specifically housed for protection. The deal with the British Library is usually that the library's catalogue of published works is currently on the Amazon website, meaning the British Library in London has published its database to provide to the public via Amazon details about the more than 2. 5m books on the website (David, 2008).
More global expansion opportunities are obvious in the 2004 move by Amazon into the Chinese market, of which point Amazon bought China's biggest online retailer, Joyo. com, for approximately $75m (40m) (David, 2008). The venture was relatively seamless and particularly appropriate due to the fact that Joyo. com, like Amazon, retails books, movies, toys, and music at discounted prices. It really is safe to say that in horizontal expansion, Amazon is most beneficial equipped to address expansion opportunities through buying prominent discount retailers in each country who have similar business models to Amazon's own. Buying these outlets is ways to expand to a clientele that is already familiarized with and interested in one common portal for buying all consumer products via what amounts to Amazon's one stop shop approach.
Threats to Amazon would just be competition, with investment worldwide being made in similar models to Amazon's to harness the untapped potential of overstock and unused stock of retail company needs. Research says that a proliferation of 1 stop outlets would dilute Amazon's distinct brand; while this is true, it might be hard to dilute the dominance of the Amazon name; the large global customer base that has retained is inclined to type out the Amazon URL in search of deals or components of significant or uncommon interest that they might not exactly be able to find on their home soil in local retail shops. It could take fairly massive projects by competition by means of joint ventures, strategic alliances and mergers to seriously challenge Amazon by any means (David, 2008). So the potential for threat will there be, however the actual likelihood far-fetched for the time being.
As far as five force analysis, the rivalry among competitive companies barely exists, since there is no organization close to challenging Amazon, in volume or name recognition. Amazon's specific brand is books, where people will continue to come to find, whilst Amazon branches out into other areas or product categories. Typical competitors maybe viewed as eBay, which is actually not really a retailer, nor does it, have corporate vending agreements with retail outlets. A comparison of Amazon to E-bay brings about the real competitive strengths of Amazon, where Amazon retains a core selling presence, and eBay has no price setting, merely selling on the voluntary basis to the highest offer or highest bidder. Amazon does not have any auction function.
As far as the next force of potential entry of new competitors, we've just discussed the large scale merger type projects which would be necessary to even challenge Amazon or make Amazon take heed or notice. The competition could intensify, but Amazon can react and adapt with quite a head start between them and any competition of the current or potential closest pursuer. Simply put, Amazon has an excellent market position and such dominant branding that the entry of new competition is not going to challenge the existence or competitive position of Amazon at all, not for a long time.
As far as the actual development of substitute products, this is hardly applicable because Amazon has so many product categories, the fundamental service it includes is the template of selling for shops, an idea which is self-evident but the ability to effectively implement remains the task of any competitor thereof. Amazon's brand is its product at this point, and anyone endeavoring to contend with Amazon is introducing an "Amazon style" business method of the web environment. Any variations in that model or upgrades would be conceptually and publicly seen as innovations to the prevailing online vending model that Amazon has perfected and cornered until recently.
The bargaining power of suppliers is also not a conflict, because the suppliers' willingness to extend to Amazon merchandise to market, and Amazon's willingness to keep their own share low, means that while Amazon pursues name recognition instead of sales percentages. The suppliers will stay pleased with the model. Amazon has such a cooperative relationship using its suppliers, where supplier are benefiting tremendously from the Amazon platform, which represents a platform for overstocked merchandise that could otherwise remain unsold, that there surely is no bargaining taking place between Amazon and suppliers. It's all profit, and offer relationships are covered under cooperative vending agreements with large retailers.
The bargaining power of consumers remains significant because Amazon must continue steadily to provide convenience as well as attractive pricing for consumers who are fully conditioned to the Amazon experience. The truth is that the satisfactory interaction between Amazon and the public will probably continue, because Amazon remains the most well-liked choice for selling off retail outlets overstock, and the public they are most likely to possess influence over knows that Amazon can and should be able to keep prices low. Amazon can be an online environment however they are not eBay. Their emphasis is not on used deals, but retail sales straight from the factory. The costs on the merchandise governed under agreements with retailers remain retail prices, and the merchandise are still completely new and unused, with the amount of quality that user/customers can rely on instead of the inconvenience of entering retail outlets physically.
Amazon has set up a good foundation because of its existence. It can need to adapt a component of business inevitably gravitating to a far more global scale, where Amazon will not only be finding outlets in the US to market for, but globalizing functions so that atlanta divorce attorneys country Amazon should seek out either an internet company that best matches Amazon's services prevailing in their country of expansion, or find the bulk suppliers who could best use their services. Amazon has nothing left to do in development but expand globally, and do it would represent the very best form of expansion that that effectively integrates both the business climate and cultural knowing of each country which it expands into. Global markets present diversity and cultural awareness, both main components that Amazon may choose to develop and adapt into its organization which is heavily rooted in virtual environments, but needs to qualify with diversification adaptation at work environment to the external culture of the united states and economy it is expanding into. This requires cultural awareness and development according to the needs and background and culture of the country Amazon is expanding into thereof. Thus the culture of diversification of product and service now needs to incorporate diversification of vending and corporate culture in order to adapt to global retail environments, mergers, and customer needs.
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