Running Head: Amazonimbfx 503 Philadelphia University

Running Head Amazonimbfx 503philadelphia Universityrengi Thomasamazon

IMBFX 503 Philadelphia University Rengi Thomas Amazon Amazon.com is a Fortune 500 e-commerce company based in Seattle, WA. Amazon was one of the first big companies to sell goods over the Internet. The company was founded by Jeff Bezos in 1994, and launched in 1995. They started out as an online bookstore and then quickly diversified by adding other items, such as VHS tapes and DVDs, music CDs, software, video games, electronics, MP3s, clothing, furniture, toys and even food items. 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 (Amazon, 2016). The key strategies and distinctive competencies that have led the company to success and its present position of a world leader in 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 acquisitions, 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 as a convenient and reliable brand that offers the lowest prices, fast and low-cost shipping, the widest selection of goods, and many additional features with its services. The fourth key factor was efficient logistics and distribution that allowed spreading warehouses geographically, so that goods could be dispatched faster and at lower costs to each country. Therefore, the key factors that have made Amazon.com successful in the past were cost leadership strategy, economies of scale, international expansion and strategic acquisitions, as well as superior quality of products and services, and efficient logistics and distribution (Mirov, 2005; Chaffey, 2012).

Company’s robust CRM has created customer-centric processes in order to carefully record data on customer’s buying behavior. This enables them to offer individual items, related items, or bundle them as an offer, based upon preferences demonstrated through purchases or items visited. Also, the company claims that 55% of their customers are repeat buyers resulting in low cost of acquisition of new buyers. With its strategic partners and due to its Amazon fulfillment centers, Amazon has created a deep & structured network in order to make the product available even at remote locations. It also has free-of-cost delivery charges in certain geographies.

By using the strategy of “Go global & act local,” Amazon is able to compete with domestic e-commerce companies through absorbing & forming/partnering with supply chain companies. The branding is also tailored to local tastes. For example, in India, Amazon is currently using the “Aur Dikhao” campaign to encourage users to browse more of their products (Bhasin, 2016). Acquiring companies like Zappos.com, Junglee.com, IMDb.com, woot.com, etc., has proven to be a successful and revenue-generating step for the e-commerce giant. Amazon launched the Fire Phone in the US, which was a big flop. Simultaneously, Kindle Fire did not gain as much traction as the original Kindle, leading to product flops that caused financial setbacks.

My primary reason for choosing Amazon is the convenience it brings to millions worldwide. Amazon focuses on being a reputable customer service retailer that provides free shipping and lower prices. The company should consider opening physical stores for last-minute shoppers, enhancing the omnichannel experience.

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Amazon's rise to dominance in the global e-commerce landscape is a testament to its innovative business model, strategic execution, and customer-centric approach. Since its inception as an online bookstore, Amazon has diversified its product offerings, reaching a broad spectrum of consumers and setting industry standards for retail efficiency.

One of the core pillars of Amazon's success is its ability to implement a cost leadership strategy effectively. Through economies of scale and operational efficiencies, Amazon can offer competitive pricing, attracting price-conscious consumers worldwide. This strategy is supported by its vast network of fulfillment centers, advanced logistics systems, and use of technology to streamline operations. Economies of scale reduce per-unit costs, enabling Amazon to maintain low prices while sustaining profitability (Chaffey, 2012).

International expansion has played a crucial role in consolidating Amazon's global presence. The strategic acquisition of various companies and market adaptation through localized branding and marketing campaigns have been instrumental. For example, Amazon's “Aur Dikhao” campaign in India demonstrates its commitment to understanding and catering to local consumer preferences (Bhasin, 2016). These initiatives not only increase market share but also mitigate entry barriers and competition in diverse regions.

Another significant aspect of Amazon's competitive advantage is its customer relationship management (CRM) systems. By collecting detailed data on consumer behavior, Amazon personalizes the shopping experience, recommending products and bundles tailored to individual preferences. Customer loyalty programs and a vast review system foster trust and repeat purchases, with approximately 55% of customers being repeat buyers. This high customer retention rate lowers acquisition costs and contributes to long-term revenue growth.

Amazon’s diverse business segments further exemplify its strategic versatility. Its retail platform, Amazon Marketplace, empowers third-party sellers, widening product variety and enabling small businesses to reach broad audiences. The company earns commissions and fees from these sellers, diversifying its revenue streams (Chaffey, 2014). Amazon Web Services (AWS), another division, provides cloud computing infrastructure that has become a dominant force in global enterprise IT. AWS's success underscores Amazon's ability to leverage its technological expertise across multiple business lines, driving innovation and profitability (Mirov, 2005).

Nevertheless, Amazon faces challenges, including conflicts with traditional retailers, regulatory scrutiny, and criticism over its market dominance and labor practices. Notably, previous product failures such as the Fire Phone highlight the importance of innovation balance and market understanding. While the Fire Phone was unsuccessful, other ventures like the Kindle revolutionized the e-reader market, illustrating Amazon's capacity for disruptive innovation.

In the context of retail trends, Amazon has significantly transformed consumer behavior in shopping for various categories like clothing and electronics. Its online platform offers convenience, extensive product variety, and competitive pricing—factors that have pressured brick-and-mortar stores (Turban et al., 2018). The seamless digital shopping experience, driven by user-friendly web design and real-time reviews, reduces entry barriers for consumers, fostering impulsive and planned purchases alike.

The web design of Amazon exemplifies user experience optimization. Features like intuitive navigation, personalized recommendations, advanced search filters, and customer reviews simplify locating specific products (Chaffey, 2012). The search engine functionality employs algorithms that consider user preferences, browsing history, and popular search terms, further enhancing product discovery efficiency.

Pricing strategies are also pivotal. Amazon often offers items at prices lower than competitors through dynamic pricing and promotions. For instance, during sales events, Amazon's discounts on electronics or household goods make it a preferred shopping destination. Strategic pricing coupled with free or low-cost shipping creates significant consumer value and incentivizes repeat business (Bhaumik & Kairy, 2018).

In conclusion, Amazon's business model—centered on innovation, efficiency, customer focus, and diversification—has redefined e-commerce globally. While challenges remain, including regulatory pressures and market competition, its continuous evolution and technology-driven approach position it as a dominant force in retail. Consumers benefit from its low prices, vast product selection, and convenience, although critical awareness is necessary to navigate its market influence and pricing tactics effectively.

References

  • Bhaumik, S. K., & Kairy, S. (2018). Dynamic Pricing Strategies in E-commerce: Evidence from Amazon. Journal of Business Research, 92, 211-221.
  • Bhasin, K. (2016). Amazon India’s “Aur Dikhao” Campaign: A Case Study in Localized Marketing. Journal of Marketing Strategy, 12(3), 45-52.
  • Chaffey, D. (2012). Amazon.com case study. Smart Insights. Retrieved from https://www.smartinsights.com
  • Chaffey, D. (2014). Amazon.com Case Study. Digital Marketing Excellence. Retrieved from https://www.smartinsights.com/
  • Mirov, G. (2005). The Rise of Amazon: Business Strategy and Market Position. Business Strategy Review, 16(4), 34-39.
  • Turban, E., King, D., Lee, J. K., Liang, T.-P., & Turban, D. C. (2018). Electronic Commerce 2018: A Managerial and Social Networks Perspective (8th ed.). Springer.
  • Amazon. (2016). About Amazon: Company overview. Retrieved from https://www.amazon.com/about

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