What are the strengths and weaknesses of the e-business Amazon (you may choose to focus on Amazon.com and/or Amazon.co.uk
Category : Amazon Case Study Examples, Amazon Examples, E business
Amazon.com: its Strong Points and Pitfalls in the e-Business Environment
The transmission of the internet has revolutionized the business arena. The use of the Internet is changing high-tech marketing overnight while different industries have been trying to use it as part of their marketing strategy. It does not only reconfigured the way different firms do business and the way the consumers buy goods and services but it also become instrumental in transforming the value chain from manufacturers to retailers to consumers, creating a new retail distribution channel ( 1999). Website development is a powerful tool used by different business organizations around the world. It is defined as the process of achieving business objectives utilizing electronic communications technology.
Internet has change the way of life of many people worldwide. With the advent of such technology, it brings convenience and easy mode of information transfer among people of diverse locations. The Internet, as one of the most popular form of new mass communication technology, has long been of full use and advantage to all sorts of businesses especially those who are in need of efficient and wide market reach on which to channel their promotional messages. Business, information and entertainment have been communicated with ease through such technological revolutions. These technological advancements have brought people especially those in the business world to utilise a strategy that would be helpful in enhancing the business value of any organisation ( 2003).
Today, the business sector uses Internet predominantly. It serves as the infrastructure for electronic commerce (e-Commerce) and electronic business (e-Business) ( 2002; 2002). Within a single-button-click, various data will appear in a significant time allocation. Speed may be considered as one of Internet’s feature in the e-Commerce and e-Business. Through the speed, it enables business to automate many operations and create worldwide products, 24-hours per day at low cost. Increasing competition worldwide, demands made by customers, and rapid pace of change in technology are force companies to review the way they do business, kinds of products and services they offer, and speed with which they release products to market. Internet empowers customers to e-Shop from corner to corner of the globe and enhances their array of product choices and preferences and information about prices (2003; 2002; 1999).
In addition, the Internet has brought about many changes to the world, particularly on how contemporary businesses are being operated. Due to this technological progress, product development became faster and better and business processes are more systematized. Indeed, the introduction of the internet to several industries has paved the way for greater progress in the future. Such efficiency of the said medium paved its way to the penetration in the process of book publishing. Traditionally, books and other manuscripts are printed in the printing office using the conservative methodology and equipment. But now, the revolutionary changes brought about by modernisation and globalisation renewed and redefined book publishing.
This paper aims to discuss several strong points as well as weak point of on of the world’s leading online publishing service provider – Amazon.com. The subsequent accounts contain facts and observations elicited from researches and personal analysis and interpretation.
Amazon.com: a Brief Overview of the Company
Amazon.com is an on line retailer of books and was established as a micro enterprise in the United States during 1994. It is among the most south-after online product/service provider. The company has applied the disruptive technology because of the fact that it has rapid expansion in the aspects of its operations such as business turnover and a spectacular rise in share value since public floatation in 1997 ( 2003).
Moreover, Amazon.com is essentially an information broker and sells through the use of on line process. It is a disruptive technology since it holds a small, though increasing and inventory and that outsourced most of the aspects of its operations. The company can best manage a disruptive innovation as well as technology by means of an active communication channel between the alliances and partnerships with their respected publishers as well as other on-line retailers and technology providers as a strategic notion. Even though there are a couple of online bookstores that emerged before Amazon.com, it holds the distinction among the first major pioneers in American as well as worldwide online retailing. Today, the ambition of Amazon.com is to amicably become a premier online retailer through leveraging on its brand and model in business.
Amazon.com is an established company. This is considered as strength for the company since consumers are more inclined to trust a more established company than those who are new in the market. This will give the company an edge compared to those competitors who are newer in the market. In addition to being established, the fact that the company is a million-dollar company makes the consumers feel that their services/products are worth it and their money is safe. It creates an impression among potential customers that the company will not swindle them into giving them a lesser-than-what-is-expected product.
Another advantage of Amazon.com is the fact that they are engaged in the four-activity type in marketing operations. Proven and tested, it excels and competent enough in such activity-types. The ultimate proof on this claim is the fact that it considered to be one of the best e-retailers in the world. (2001) believes that it is more difficult to classify as online retailer because of utilising generic marketing strategy type.
Amazon.com do have low prices and with lots of discounts being offered to their consumers. The management has been very innovative in coming up with various strategies that reinforces their strong and obvious market standing. According to (2001) the constant creation of innovation continues. This includes site development on specific aspects, extension of coverage into other retail categories, and a trial to venture on a unique yet related line of service/product offer such as CDs.
Accordingly, they have also been innovative in nurturing alliances with other online booksellers (2001). Their perfect usage of branding served as one of their distinguishing features. Branding is considered to be very important because it helps in the attraction and retention of potential consumers. Since they are one of the world's best-known e-brands, it is expected that their market coverage will continue to flourish.
Meanwhile, another strength that the company possesses is that their stocks reach to approximately 10,000 items of various sizes. With its users numbering to millions, transacting everyday, pooling their items for sale, it offers a wide array of choices. This will ensure the consumers that if they have problems with the products that they have ordered the company will surely replace it with newer and better ones. Also, it will assure the consumers that the products they ordered will reach the destination in time depending on the geographic situation.
Amazon.com is also adept in their channel management. It is very important to maintain a good channel management because customization and personalization of their site are among their trademarks. Though the "Hello [Name]" welcome is popular to almost all online retailing services, they are one of the first companies who have that familiar greeting when the customer revisits. Additionally, the site contains a personalized customer profiles that are generated to offer assistance in book selection. The superior channel management strategies of Amazon.com are completely supported by appropriate capabilities by the people involved in the overall management.
They also have a “prompt delivery within the USA”. This vital mechanism is mandatory since “the entire site was designed on a basic five-step process that was meant to make the consumer shopping experience convenient and helpful” (2001). To further reinforce the increasing demand for speedy delivery within the USA, they have built additional warehouses and built up excellent alliances with suppliers.
The sustainable competitive advantage of Amazon.com is primarily related to superior relationship in marketing. The Amazon.com experience highlights the dynamic nature of competitive strategy. That is why it seeks to provide and adapt to new marketing environments, as well as developing their own growth trajectory. Pioneer firms in particular are likely to enter markets with an innovative strategy, but this can evolve into some other generic strategy as conditions change.
Given the specified strength of Amazon.com, it does not preclude the need for tight focus on one or two areas. With the general focus of the management on four-activities in marketing, there is a call for focus. It is a general belief among business authors and researchers that there is no single organization that can run full steam in four different directions at the same time. Tradeoffs and priorities are needed to effectively manage the organization's scarce resources ( 1996). Nonetheless, there is always an exemption to some rules as argued by (2000) when they specified that some companies have successfully employed a combination of two generic marketing strategies.
The fact that the company has no representatives to meet with the customers is a drawback of the company. Since, consumer relation is necessary to every business, it is vital that the management should think of a certain way that will establish good relationship with the customers. This will give the consumers the feeling that they really are important to the company because the company is making the extra effort to know what their needs and are, as well as their concerns with regards to the service or the products which the company delivers. It is a given fact in a business that the customers are always to be put at the top priority. The business exists to cater to the needs and wants of the customers and so the customers are the ones who make the company. They can break the company if they find certain things that are being ignored. In this case, that is service and customers’ satisfaction.
Since, Amazon.com expanded its operations; one weakness that needs further attention is the fast delivery to customers outside the USA. The geographic distances between the USA and other countries that are not covered by its operations must be considered. Though there are several specific sites for users like Amazon.co.uk, it is still a problem when it comes to remote areas that wanted to avail the services/products offered. Although Amazon.com reached the height of its current marketing dominance, it has been recognized that it lacks to use customer-responsiveness. There is no customer relation just after using the service. It is recognized that customers’ feedback is a convenient way to maintain its returns policy that will also nurture their own loyal base of customers.
During the pioneering stages of the company, an innovation generic strategy was certainly critical. The theory and practice of Internet selection and online purchase of books was novel in the early 1990s and the company considered and implemented a new-fangled technique of doing business. After 2-3 years of operation in the market and became popular, they were encouraged to try a combined branding and channel management generic strategy. Conversely, channel management is vital to the company so there is indeed a call for refocusing and redeveloping of its existing edges. Though they possess innovative means of channel management, Amazon.com must put emphasis on simplicity, helpfulness, convenience, reliability, trust, memory of past habits, and customer-relationships generally evoke a powerful image of a customer-driven organization.
Despite the upward trend that Amazon.com is observing, there are some aspects of the company that needs to be focused on. One such aspect is the limited understanding of some of the management team of the technology needed to keep the business running. They are too dependent on computer and internet technology. This means that their human resources personnel must have at least a certain degree of familiarity to the technology being used. Otherwise, their will be difficulty in assessing the needs of the company presently and in the future. It is also the case that problems, especially those brought about by technological difficulties may not be immediately resolved.
Basing it to my own experience, Amazon.com is unable to provide their consumers with a much faster feedback with regards to their orders. As was stated above, the customers of the company was not given the much needed feedback as to the status of their order, whether the item they had ordered was out of stock or delayed for a time. This is a weakness since consumers prefer companies that are able to provide them with excellent service as well as much needed feedback so they could change their orders if the item is unavailable at the time. It still boils down to the quality of service which companies were able to provide for their clients.
Another weakness is the difficulty that customers have in reaching the companies order clerks. Even though the click-the-mouse pattern is there, there are special instances that customers need immediate answers to queries that affect them. Due to this difficulty, it would push the customers to order their products elsewhere. It all boils down to the kind of service the company is able to provide to its clients.
Internet is also dynamic and decentralized. This technology brought shopping to consumers with innovative types of market for information. In click of a button, consumers will have a wide choice of products to purchase. It provides very satisfactory global marketing application. e-Business like Amazon.com enthusiasts are aware of the technical and financial advantages of e-Commerce using the Internet as the infrastructure. Internet-based commercial activities offers opening up of markets, improving information provisions about products, including non-corporate information. This makes the Internet as efficient in e-Business aspects. The Internet allows consumers much greater access to information, opening up the market and undermining monopolies. It is expected to be fast, cost saving, convenient and simple for consumers. The presence of existing technology today allows consumers to focus their resources and make decisions through a series of self-interaction with the Internet.
e-Business is large and speedy using Internet as the main infrastructure ( 2002). Thus, the business environment worldwide depart with the traces of traditional marketing instead they engage in contemporary marketing experience that include e-Commerce in banks, telephone companies, Internet-based firms and hardware suppliers in order to go along with the challenges of the more competitive and diverse global market. In lieu to publishing, Amazon.com potential as an effective medium need further probes that will truly validate its initially positive effects and at the same time lessening the negative consequences of the said medium.
New technologies and the expansion of existing technologies will increase competitive pressures on all online retailers which enable customers to quickly compare prices offered by different retailers and in order to remain competitive, Amazon.com needs to continue to enhance and improve the responsiveness, functionality and features of the online store. Amazon.com has a continuous program to add additional software and hardware and further develop and upgrade its existing technology, transaction-processing systems and network infrastructure. This need is particularly acute given the increasing traffic on its Web site and expanding sales volume through its transaction-processing systems. The company recognizes that any inability to do so may cause unanticipated system disruptions, slower response times and degradation in levels of customer service, impaired quality and speed of order fulfilment and or delays in reporting accurate financial information.
To quote (2001),
“Reliability, flexibility and convenience would seem to be the hallmarks of the excellent channel management firms. Convenience rather than low prices is the most critical need of consumers in the new world of e-marketing and the more that the e-marketing strategies reflect this, the more successful they are likely to be.”
E-commerce is thought to better facilitate consumer decision making than traditional markets. The increased amount of product information available to consumers could lead to better alignment between consumer preferences and products selected. Moreover, the greater ease with which consumers can compare products across retailers is thought to mitigate some consumer switching costs. To the extent that these effects are realized, Internet retailing could lead to greater market efficiency and, thus, consumer and total welfare ( 1999).
Many believed that the strength of Amazon.com lays on its distinct internal and external culture, which is based on trust, autonomy, empowerment, respect and equality. It focuses on the needs of the people who use their services. The company was able to maintain this kind of culture through their communities because the culture is very similar to that of the online culture.
Amazon.com perfected the application of the dual generic marketing strategy – the combination of branding and channel management. These strategies helped them to be in an extremely strong position worldwide in connection to the line of the industry they belong. It was also shown that they support their market position with high performing, relevant capabilities, such as communication and technology. But then again, there are still significant factors to be considered that will serve as reinforcement to fully exercise the effectiveness of the medium.