The current concept of Amazon is linked with growing its business through electronic commerce operations. It possesses a significant number of storages, covering the U.S. and other countries, providing a possibility of prompt two-day delivery. Nonetheless, the number of direct sales does not show sufficient growth. The paper is dedicated to the study of Amazon’s long-term goals and analyzing its strategies for future development.
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The Future Strategy of the Company
E-commerce is a low-margin business, and Amazon now takes control of around 50% of online sales in the United States (Kumar, 2016). Even though the online sector is Amazon’s strong side, it has to develop offline facilities to be successful in the future. Currently, revenues in e-commerce make just around 10 % of the $5 trillion spent by the Americans, and share of online groceries purchase is just 2% (Dyer, Godfrey, Jensen, & Bryce, 2016). Thus, Amazon has to discover new channels of selling products to secure the future of the company. Even though the company is constantly working on developing customer habits to shop online, consumer behavior in certain sectors remains inflexible. Hence, at the moment, Amazon loses a significant part of its potential clients in spheres where its competitors provide excellent offline experience. Offline giants, such as Walmart, make more than 50% of their revenues selling groceries, and one of the future goals of Amazon is to win a part of their market share (Garner, 2018).
Another important field where Amazon might compete with Facebook and Google is advertising. It is one of the strongest tools of e-commerce, with a potential of opening a huge stream of revenues. Having a strong infrastructure, Amazon plays a significant role in the cloud computing sector. This is a very profitable industry, and experts claim that Amazon’s revenues in this area will triple already by 2022 (Kumar, 2016). Thus, even though offline retail forms a significant opportunity, it makes only one of the many important factors, providing growth of the company.
Resources and Techniques Required for Competitive Advantage Over Time
The strategy of Amazon is in shifting the traditional behavior of users to adopting more innovations, more advanced than primitive discount systems. The structure of user satisfaction has now changed from availability (coverage) and pricing policy to commodity, shifting the offline shopping experiences to the past. Thus, Amazon is entering a traditional offline market, claiming a heavy share of its revenues in the future. Amazon already possesses a big database of clients, unifying information obtained from Amazon Go, Fresh, Prime, Alexa, and Whole Foods. The integration of the information will provide commodity in conventional grocery shopping. The main focus of the company is to provide a possibility to save time doing shopping on-the-go, buying regular groceries, and making purchases being flexible in time. Providing a positive customer experience in all these three sectors will make Amazon an invincible player on the market (Dyer et al., 2016).
Amazon’s Cost and Differentiation Advantages
Differentiation advantage of Amazon is that it pursues cost leadership strategy, compared to traditional bricks and mortar type of retailers. The company possesses a vast network of warehousing facilities, as well as processing infrastructure, giving a big advantage in the form of a physical economy. Amazon company is extremely focused on customer satisfaction, and one of the main competitive advantages of the company is related to its customer focus. The company immediately reacts to the facts of customer complaints, which encourages clients to make more purchases. Thus, the differentiation of the company is linked with its successful marketing (Dyer et al., 2016).
Company’s Corporate Strategy
Concentric diversification builds up the core of Amazon corporate strategy. It is linked with supplying easier access to technological innovations for businesses, in order to promote its success. At the same time, Amazon pursues cost leadership concept, the goal of which is to offer the best value at the lowest price. Final stage is providing coverage, which satisfies customers’ shopping needs (Kumar, 2016). Thus, it can be said that the company is highly focused on providing a flawless user experience.
Amazon’s Vertical Integration
The company has been extremely focused on vertical integration from the very beginning. Its founder, Jeff Bezos, had an idea of giving orders to the publishers or distributors, making them send the ordered books to the clients. In a while it has become clear that their infrastructure fails to deliver the orders on time, causing customer complaints. This was the reason to build an efficient web of warehouse facilities, providing operational promptness. After the system was built, the company gave opportunities to the partner companies to use this infrastructure for storing their products. Eventually, Amazon’s focus covered fresh groceries delivery, for which transport and employees needed to be found. Next stage which allowed to perform business scaling was providing these integrated services to the other companies. Next stage will probably include the options of drone delivery and distribution robotization (Garner, 2018). It turns out that Amazon has reinvented the whole logistics due to the company’s focus on vertical integration.
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The Importance of Strategic Alliances
In order to break the line separating online and offline shopping experiences, Amazon works on encouraging product manufacturers to build strategic alliances. Such companies as Whirlpool, Brother, and Brita have already become Amazon’s partners as a part of DRS (Dash Replenishment Service) program, the aim of which is to implement innovations into household appliances. Such collaborations are designed to build a stronger connection of Amazon with its customers and to spread the e-commerce market. Alliances of Amazon with other companies are based on a win-win strategy, strengthening relations between the company and its suppliers, at the same time providing exceptional products and services to the customer (Garner, 2018).
Detail the Company’s Competitive Advantage
Amazon’s competitive advantages include brand’s positioning, unique user experience, customer policies, user reviews, personalized approach, low prices, reinforcing activities, a wide range of products, a system of distribution and warehousing, loyalty programs, and other aspects. Brand positioning covers the fact that Amazon not only has become a leader in its category but also makes its customers acquainted with a vast range of new categories of products (Kumar, 2016).
Organizational Chart of the Company
Amazon has a hierarchical organizational structure, where the senior management team is represented by two CEOs, three Vice Presidents, and a Worldwide Controller. The team is responsible for the most important aspects, reporting to the Chief Executive Officer Jeff Bezos (Garner, 2018). Despite the fact that Amazon is a business giant, the company shows high flexibility and adaptation to changes.
In a course of two decades since the company was founded, Amazon managed to incorporate itself in the life of every American, having ruined the standards of conventional bricks-and-mortar retail trading. A while back online shopping was know-how, giving flexibility and even exclusivity, nonetheless, now online retail has traces of applying limitations on business. Expanding to the offline market and modifying it gives a way to provide the highest standards of customer experience.
Dyer, J. H., Godfrey, P., Jensen, R., & Bryce, D. (2016). Strategic management: Concepts and cases. Hoboken, NJ: Wiley.
Garner, B.A. (2018). Amazon in the global market. Journal of Marketing and Management, 9(2), 63-73.
Kumar, R. (2016). Strategic financial management casebook. London, England: Elsevier.