Amazon is such a successful company because of the fact that it truly represents two of the three generic business strategies very well. Amazon is known for its competitive prices. Amazon sells their products for less money than their competitors. They focus on their overall cost leadership strategy. Amazon sells their products at a retail price, which usually is a much lower price then their competitors' prices. Amazon also has a very wide range of merchandise and products. This helps to fulfill the needs of anyone who wishes to use Amazon's website. Amazon offers competitive prices to customers, by putting a lot of effort into connecting with wholesalers in order to be able to offer the lowest price to a customer. Despite the low price that they offer, Amazon makes sure that the product is the same quality as any other product. Amazon also uses the business strategy of focusing on their customers. Their "focus" is helping, and more importantly interacting with their customers, by becoming familiar with their likes and d
islikes, and learning about their customers needs. It provides high customer service, contains easy searches, has e-mail confirmation, and always adds useful information related to product being bought. It also provides a safe and reliable payment system to the customer. All of these contributing factors help the customer to feel comfortable and satisfied, which makes them in the long run return to the website and purchase more.
PORTER'S FIVE FORCES:Porter’s Five Forces Model include buyer power, supplier power, threat of substitute products or services, threat of new entrants, and lastly rivalry among existing competitors. These forces help businesses understand the relative attractiveness of an industry and the industry’s competitive pressures. Amazon.com’s strongest force is that of having low threat of substitute products or services. Buyer power is higher when buyers have many choices from whom to buy, and low when their choices are few. Supplier power is higher when buyers have few choices from whom to buy, and low when their choices are many. Therefore, Amazon’s main objective is to increase their supplier power, thus reducing their buyer power. Businesses with many alternatives to a product or service will have high threat of substitute products or services. Threat is much lower when there are much fewer alternatives to choose from. An organization is most profitable when they are the supplier in a market with few substitutes for the products or services they offer. Amazons’ success is due to the fact that they do exactly that. Threat of new entrants will be higher when it is easy for competitors to enter a market, and rather low when there are significant entry barriers to entering a specific market. Porter’s final force is the rivalry among existing competitors. Rivalry is higher when competition is fierce in a market and lower when competition happens to be more complacent. Porter’s Five Force Model is most advantageous in helping you to better understand the positioning of your organization within its industry.
Amazon.com has drastically reduced their buyer power by creating a competitive advantage by making it more attractive for customers to buy from them then from their competition. Amazon is known to have some of the cheapest prices placed on highly wanted goods. In recent years, online textbook purchases have skyrocketed. This is mainly due to Amazon offering some of the cheapest priced options, in which consumer’s value much more than what most competition may even try to offer. Over time as you purchase from Amazon, a unique profile is developed with your shopping and purchasing habits through their collaborative filtering technique. When you return to Amazon, products are offered to you that have been tailored to your needs. If you further choose to do your online shopping elsewhere, Amazon’s switching cost comes full circle. They reduced their threat of substitute services, in a market of many substitutes by tailoring offerings personally to you as the consumer making customers reluctant to switch to another product supplier.
MAJOR BUSINESS INITIATIVES:Everyone knows that Amazon is the worlds largest and most successful on line retail establishment. The major business initiative that is being used by Amazon is supply chain management. Through software providers such as Microsoft and SAP, Amazon has the ability to make amazing transactions. The inventory that Amazon sells such as books, toys and games sits on shelves in the many different warehouses that Amazon has across the nation, until; through supply chain management, and advanced computers, the product reaches the buyer. Since supply chain management focuses on squeezing every penny out of the supply chain process, this can be described as bottom line initiative.
It is clearly stated which IT organization is used within Amazon, but it is most likely that Amazon uses a Matrix approach, which is having a separate IT department or function, but the goal is to maintain IT personnel within the IT department but matrix them across the other functions, such as budgeting, project management, marketing, and finance. Through a decentralized philosophical approach, Amazon empowers employees throughout the organization to try new and emerging technologies.
E-COMMERCE:Electronic commerce, is commerce, but it is commerce accelerated and
enhanced by IT, in particular the Internet. E-commerce enables customers, consumers, and companies to form powerful new relationships that would not be possible without the enabling technologies. The kind of e-commerce that Amazon uses is the selling of products such as books, movies, music, clothing, computers, consumer electronics, health and beauty products, and home and garden products.
INTERNET BUSINESS MODELS:Amazon primarily uses a business to consumer Internet business model, which occurs when a business sells products or services to customers who are primarily individuals. Amazon, is one of the most well known business to consumer businesses out of hundreds of other e-commerce businesses selling books, movies, music, clothing, computers, consumer electronics, health and beauty products, and home and garden products.
MARKETING MIX:The marketing mix deals with the way in which a business pursues marketing objectives to reach consumers. There are four parts of the marketing mix. The first is advertising, where the company markets their company to consumers by using online ads, such as pop ups or banners. The second part is viral marketing which passed around by word of mouth. It usually travels from one person to another through communication between customers. The third part is registering with search engines, such as Google or Yahoo. Lastly, the fourth part of the marketing mix is affiliate programs, which is an arrangement made between two E-commerce sites that directs viewers from one to another. Amazon uses advertising by having pop ups come up, as well as viral marketing. People enjoy using Amazon's easy to use, and very cost efficient website, which allows the customers to tell others to check their website out also. By word of mouth people become familiar with Amazon and they start to purchase things from them. Also, they are registered with search engines as well, such as Google. So if someone is looking for something and Amazon has it, when they type it in to Google, Amazons website will appear.
PAYMENT SYSTEMS:There are different types of payment systems in E-Commerce. They consist of smart cards, financial
cybermediary, electronic check, digital wallet, and
EBPP. The smart card cont
ains a embedded chip, such as the American Express
Blue card. It is much more advanced
than a credit card.
Paypal is an example of financial
cybermediary payment. Electronic checking is sending money from your checking or savings account to another persons.
EBBP sends bills over the Internet and provides an easy-to-use mechanism to pay them. All of these methods are very
efficient and help to make the paying process very easy. Amazon uses the digital wallet system. It provides security for transactions. It also saves the information that the customer puts in the first time, so they
don't have to keep typing it in and be
hassled by it. Customers can pay using the same
log in information, shipping address, and payment information they already have on file with Amazon. This process allows the customers to feel secure and comfortable with paying for their goods that they are purchasing. It is an easy and quick way to pay for the goods, and it is very convenient.
Amazon will now begin selling e-books for apple buyers to read on their iPhone and iPod Touch screens. These apple devices can download a free aplication of the service, which is a kindle for the iphone and the ipod touch from the apple store online. The software will give them access to 240,000 e-books on amazons website. Amazon just started shipping out the updated verison of the kindle reading device. This signals the comany to be more interested in being the top retailer of e-books than in the top manafacturer for reading devices. He said for apple users that if using this on the iphone might have them buy the kindle in the long run since it has better battery life and a better suited screen for reading. Amazon will create bookmarks on the e-books so that a user can stop reading a book on one device and pick it up on another at the same spot that you left off. This is a great thing for amazon to do with apple and it will work in the long run for both companies.
Throughout this blog assignment, the members of group two have gained a tremendous amount of information about Jeff Bezos, and the business structure and organization of Amazon.com. we found most interesting, considered a pioneer in online retailing, Amazon.com, expanded during the late 1990s to offer the "Earth's Biggest Selection" of books, CDs, videos, DVDs, electronics, toys, tools, home furnishings and housewares, apparel, and kitchen gadgets. Throughout the 1990s, the popularity of the Internet and World Wide Web swept across the world, and personal computers in most businesses and households got hooked up in some form or another to Internet providers and Web browser software. As use of the Internet became more prevalent in society, companies began looking to the Web as a new avenue for commerce. Selling products over the Internet offered a variety of choices and opportunities. One of the pioneers of e-commerce was Jeff Bezos, founder of Amazon.com.
Amazon is a fortune 500 company. It is an American electronic commerce company which is located in Seattle, Washington. It is now Americas largest online retailer, with nearly 3 times the internet sale of second place Staples incorporation. Amazon was founded in 1994, by Jeffrey Bezos, and was officially launched online in 1995. This site is considered the pioneer of online retailing and offers many products that a lot of sites don’t offer. The selection that they offer are books, Cd’s, videos, DVD’s, electronic toys, home furnishing, and many different selling gadgets that you could think of. They also sell many items through 3rd party retailers. Some of these retailers include, Toys R Us, Target, Circuit City, etc. Amazon has also established many different websites globally around the world. Some countries include Germany, France, China, Japan, Canada and the United Kingdom. The Company began as an online bookstore which was named “Cadabra.com”. This was quickly removed because it sounded like “cadaver”. Bezos then renamed the company “amazon.com”, after the biggest river in the world. Amazons logotype is an arrow that leads from A to Z that represents the customer satisfaction being great and a goal to have every product that they sell in the alphabet. In 1994, Bezos left his job as a vice president of a top Wall Street firm and moved to Seattle to work out a business plan to start Amazon.com. The reason he chose to make the headquarters in Seattle was because it has a large hi-tech work force and its proximity to a large book distribution in Oregon. He made several list of what he could sell on his site and then narrowed it down to about 30 products. He felt that the 5 most promising items would be: compact discs, computer hardware, computer software, books, and videos. The web sited debuted in July of 1995, and was quickly rated the number 1 book site on the web. The company offered a good discount on most book titles, which made it affordable for the buyers. In May of 1997, Amazon went public. It was the first internet retailer to reach one million customers. With customers in all 50 states and all around the globe, the company that started in a garage is now making 147.8 million a year in sales. In 1998, Amazon enters the online music and video business. It had around 125,000 music titles available. In 1999, bezos expands the firm into selling, toys, electronics, tools, and hardware. Also Bezos was named by Time magazine “Persons of the Year”. In 2001 sales grew to about 3.12 billion. During the fourth quarter it got to its highest peak at 5 million in profit. In 2002, the company launched an apparel store, which included clothing from many top brand companies. Amazon is growing and launching new items everyday and having more customers come to their website. Amazon.com employees should always act lawfully, ethically, and in the best interests of Amazon.com. This Code of Business Conduct and Ethics sets out basic guiding principles. Employees who are unsure whether their conduct or the conduct of their coworkers complies with the Code of Conduct should contact their manager or the Legal Department. Employees may also report any suspected noncompliance as provided in the Legal Department's reporting guidelines.
