Amazon.com, Inc. is an international e-business organization that has its headquarters in the United States of America. Currently, it is the largest online retailer in the world. The company has various retail websites for different countries such as the United Kingdom, Japan, United States, Germany, France, Italy, Spain, and China among others. Amazon serves its customers mainly through its retail websites.
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They deal in numerous products such as books, electronics, toys, software downloads, music, games, household products, industrial products, shoes, jewelry and clothing, health, and beauty products and it also manufactures the kindle e-reader. The company offers service to its customers focusing on choice, convenience, and pricing. Customer sellers have the opportunity to sell their products either on their websites or on their websites (Sherman, 2001).
E-business model used by the company
The main type of e-commerce business model employed by Amazon is the Business to Customer model. The online sales transaction system uses an online catalog and a shopping cart transaction system. However, its revenue model is a mix of Business to Business, Business to Consumer, and Consumer to Consumer models. It has, over the years received many titles from its customers and followers. The company has so far been very active in the market and has grown in terms of market capitalization due to its strategies and competent management team. Although the company mainly carries out its operations online, human capital is regarded as a valuable resource.
From its inception, the company had a model that was intended at selling a vast array of goods. It started as a bookselling company but now it has expanded to deal with the sale of different products.
Amazon does not have or operate any physical stores as all its sales are made online through its Website. The company is employing the use of technology to provide its customers with a personal experience that is aimed at assuring their satisfaction. The company avails all the customer reviews and recommendations to buyers who read can then them. The strategy can be compared to a salesman offering advice to a customer on what to buy.
Besides, they have integrated systems that can give an analysis of the customer traffic, the number of site visitors, what pages they click on, and even for how long. This information is used to evaluate the effect of sales promotions and advertising as well as the buying and selling patterns of their customers. The company has a comprehensive strategy to retain its customers. They have incorporated web site features such as 1-click ordering, a brilliant establishment where customers have a one-stop-shop to purchase anything they want online. What is more, their website offers other features such as personal recommendations and online customer reviews. Through their z-shops, Amazon.com auctions, and the Amazon.com Marketplace, the company is determined to achieve customer satisfaction (Hultmark, 2002).
The company has a built proposition that comprises four elements the four priorities in the establishment of the online business were selection, exceptional customer service, price, and convenience. Amazon has a database that keeps all the records of all previous transactions, items that have been purchased, shipping details, and payment information such as the credit card detail. The customer, upon accessing the website is greeted by name, and a list of recommended purchases is displayed based on previous searches.
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The move ensures that sales are increased without the need for actual sales representatives. It is safe to mention that, this, by any means, is the definition of personalized service. The website has also has integrated a shopping cart technology whereby the customer has the option of adding to or reducing the number of items they want to purchase in a virtual shopping cart. The auction site is regarded as one of the most secure trading environments on the web. It offers various ways of selling items to millions of Amazon customers. Items in the auction category range from cars, jewelry, industrial goods to music.
Sources of revenue
Amazon has several sources of revenue. The main source is sales revenue from the many products they sell. However, the company also makes affiliate revenue. A person who does not work for the company is also allowed to place a link or site on the Amazon site on condition that a fee is paid each time a potential customer clicks on it. The company also makes revenue from sponsorships (Snyder, 2011).
Besides sponsorships, which are rather conspicuous, there are other sources of revenue for Amazon that include pop-ups, pop-overs and pop-unders, text box advertising, and links with content. Amazon provides a platform on which the respective companies can advertise their products for which they pay fees. The collection of demographic and psychological data represents a very valuable source of revenue for Amazon. Clients browsing history can also be used to link him or her with related products that the consumer prefers. It is without a doubt that information is particularly useful to advertisers.
Amazon recognizes the intense competition it faces in the market. It views its main competitors as All the physical world retailers, publishers, distributors, catalog retailers, distributors and manufacturers of the products they sell either by direct marketing, mail order or through the Internet, Media companies, and comparison shopping websites, web search engines and web portals that are either directly or indirectly in collaboration with other retailers.
Online e-commerce sites
These are companies that provide e-commerce services such as website development, third party fulfillment, and customer service. In this respect, e-bay can be regarded as one of the major global competitors of Amazon. Its main competitive strategy is the development of the Customer Customer business strategy. E-bay recognized its strengths in the specific area and channeled its resources towards development in the auctions field. The concept behind this is to simply link like-minded buyers and sellers in return for a commission.
The fee is usually based on the amount of exposure the seller wants for their item. Higher fees are demanded if one wants their product to be among the featured auctions and even higher if the seller wants their item to be on the website homepage among the featured items. The company also makes use of different types of online auctions. Virtual communities interact through e-mail groups, discussion forums, or chat rooms. The operations are mainly consumer-driven and opportunities are made available to meet all kinds of consumer needs.
Unlike Amazon, e-bay does not deal with shipping or handling of goods but merely serves as a liaison between a buyer and a seller. This has brought about companies that exist and survives merely on e-bay. Due to the high cost of downtime to any online business, the firm has made investments in high availability computing and continuous availability computing. So far, E-bay has been the most successful auction site due to the array of opportunities they offer their clients (Wilkinson, 2006).
Product and service offerings
Amazon uses the e-business model strategies to learn more about the customers and improve as well as maintain a competitive edge. The company has achieved success in the competitive field by developing its technology internally. This has been met with challenges given the standardized content management. Besides that, it is making significant investments in the development of technology. This has been one of their main areas of focus recently.
Apart from the current strategies used by the company, it is currently focusing development efforts on continuous innovation by creating and developing the specialized software that is unique to the business. Moreover, to acquire or license commercially developed technology for new applications whenever they are developed. They have invested in several other areas of technology including their seller platform. They have implemented many features and functionality that greatly improve and simplify the shopping experience, enable the sale of third party products, and generally improve customer service operations.
Considering that some fundamental e-business activities may infringe on patents, Amazon took the advantage of the patents being awarded for intellectual property.
The one-click program allows customers to purchase goods without the need for using a shopping cart. The company home page is designed for easy use and flexibility. It has several pods or slots which call web services for features. This eases the task of changing either the location or content in these pods on the screen. The design gives them an advantage over other business sites.
Amazon’s use of technology is undoubtedly an advantage in all respects. Their systems can support more standard e-retail services. Applications used by the company accept and check for the validity of customer orders, place orders with suppliers, ensuring proper shipments to clients, and management of and assigning inventory to customer orders. The systems handle millions of items and allow customers to receive either single or multiple shipments based on availability while tracking the progress of every order. Payment methods such as credit card acceptance and charging are also carried out by applications developed by the company.
The campaign calendar used to be manually managed but has since been replaced by an automated email measurement and optimization system. The benefits derived from the shift include reduced costs as it was rather expensive to schedule and use the old system. The new system automatically optimizes content in a bid to improve customer experience, avoids sending email campaigns that have low click-through or high rate of unsubscribers, incorporates box management hence evading the problem of sending multiple emails in a short duration of time, and has a library of automated email programs that factor in recommendations and new releases.
The impact of various developments in the global market
Consumer awareness is one factor that has mostly influenced Amazon as an online company. This has prompted them to focus on customer satisfaction metrics. Each of their sites is keenly monitored with the use of standard service availability monitoring, availability of the site, and update facilities. Amazon, therefore, recognizes the importance of recognizing all its customers. It defines and recognizes three consumer set customers, seller customers, and developer customers.
Members are encouraged to join Amazon Prime. A program that is fee-based in which members benefit from discounted or free shipping in certain countries. Competitive forces have forced the company to monitor the levels at which free shipping is set as this is critical to the profitability of the company. They encourage an increase in basket size by the use of free shipping offers to customers who have spent beyond a certain amount of money.
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The current world economy and business environment are inclined towards trading blocks, globalization, and mergers. This global shift of how to carry out business is one of the reasons for Amazon’s partnerships with other companies. As the company has grown over the years, by its share growth, it has been able to partner or acquire companies in different industries and sectors. The company has partnered with companies such as pets.Com and living.Com. In most instances, their strategy has been to acquire a stake in a company to have a share in their success. Similarly, Amazon also charges fees to the partners for placements on their website.
In addition to the development, communication, and delivery of very strong propositions, the company has managed to stay strong in diverse sectors through partnership arrangements and the use of technology to facilitate the promotion and distribution of products via the partnerships. Improvement in the communication channels has prompted various amendments to the communication strategy used by the company. The aims are now to create awareness of the products and services offered by the company. Promote repeat purchases by offering improved customer service. Increase customer traffic to the company websites. Develop incremental service and product revenue opportunities.
The use of mobile phone and tablet applications is fast becoming a new marketing tool. The company has developed several apps to be used on the different mobile operating systems such as Apple IOS and the Google android platforms. This has garnered a favorable response from the market and mobile users find it very convenient. As a result, customers can shop from any place and at the time of their convenience, be it in bed or on a lift. There is no more need to carry a heavy laptop or be near a desktop (Shih, 2011).
The paper has outlined the e-business strategy of Amazon in use in its functional areas. Even though the company has faced many challenges in its path to success in the market, the implementation of its ever adaptive strategies has ensured its survival in the competitive market. The business model adopted by the firm is the underlying basis of its huge success story and is an exemplar of success in the modern business environment. The company has worked tirelessly to diversify its revenue source which is one of the main objectives of doing business. This has been the best strategy to cope with the changing dynamics of the online market.
Hultmark, C. (2002). Internet marketplaces: the law of auctions and exchanges online. Oxford: Oxford University Press.
Sherman, J. (2001). Jeff Bezos: king of Amazon. Brookfield, Conn.: Twenty-First Century Books.
Shih, C. C. (2011). The Facebook era: tapping online social networks to market, sell, and innovate (2nd ed.). Upper Saddle River, N.J.: Prentice Hall.
Snyder, L. (2011). Online business education. Reston, VA: National Business Education Association.
Wilkinson, J. (2006). EBay (3rd ed.). Hoboken, N.J.: Wiley.