Problem Description
This paper recommends approaches that Amazon can apply to increase revenue in the industry. Implementation will take place within 90 days of approval. Expanding Amazon services to emerging economies, focusing on electronic commerce, and reducing its spread too thin will result in improved sales, reliability, profitability, productivity, and reduced costs. Sales manager Mr. Chuck Stefanelli and finance manager Rakesh Ganesan concur.
Background
In 1995, the giant online retailer Amazon launched its website platform for selling books. The owner’s objective was to provide an extensive inventory store, enabling customers to conveniently access various materials at a relatively low cost. Following the implementation of its business strategy, Amazon expanded its sales operations to encompass movies, music, general merchandise, and electronics. It was immediately followed by incorporating other well-developed business dealers to use its system to sell their commodities in the market.
Bezos’ investment in Amazon Web Services (AWS) has proven significant for the firm’s growth, as it enables other companies to utilize cloud-computing services. The platform enabled the business organization to meet its technology infrastructure needs at a low cost and enhance its ability to evolve according to the requirements of its operations. The strategy generated a massive $45 billion in revenue for the corporation. This implies the AWS idea is crucial and profitable for Amazon’s growth.
The introduction of ‘Prime’ as a business strategy led the company to realize an improvement in the number of subscribers to its services. The idea guaranteed members two-day free delivery for a yearly subscription fee of $79 (Gupta & Rodriguez, 2021). The launch of a music streaming platform for ‘Prime’ users escalated the rate of membership, which increased Amazon’s annual cost by $99. In addition, the start of ‘Prime Now’ services in the US became essential for subscribers and motivated them to shop with the company.
The launch of ‘Fire Phone’ in 2024 did not yield much for the company, which prompted it to withdraw. After a short time, Amazon had to take approximately $170 million in inventory write-offs to recognize the item’s zero value. Similarly, the Dash-button technology for Prime consumers did not sell well in the market, which caused the organization to end its production.
Amazon’s 24-hour delivery system, user-friendly online platform, and reduced prices enabled it to take advantage of the US wholesale and distribution market. Its services were reliable, which made most business clients opt for it. The tactic increased the company’s catalog more than that of W.W. Grainger, the market leader before Amazon’s entry.
Recommendation
Amazon should focus its resources on electronic commerce, where it has a proven track record in the US. It should expand its operations into various countries to increase its market share in the industry. This strategy would enable it to succeed in the industry and mitigate potential failures that could impact its financial performance.
Basis for Recommendation
- Amazon should continue investing in AWS and expanding its services to other countries to increase its customer base.
- To attract more subscribers, the ‘Prime Now’ technique should be introduced to other nations.
- There are limited restrictions on entering developing economies.
Discussion
To increase profitability and lower the competition rate in the market, Amazon should consider effectively offering its services in other places, such as Africa and Asia, where there are digital market opportunities to explore. The ‘Prime Now’ service should be offered across the locations where the company has a subscriber to lure more members. Membership charges should be reduced to enable clients to access the firm’s services.
Next Steps
The new management of Amazon, led by Andrew Jassy, can present the recommendation to the company’s board of directors for final approval to allocate funds and other resources for the expansion of the business into other emerging markets. Thorough research should be conducted to determine consumers’ preferences and identify potential economies.
Table 1 – Expansion Timeline
Reference
Gupta, S. & Rodriguez, M. L. (2021). Amazon in 2021. Havard Business School.