Introduction
The success secret of the Amazon e-commerce business according to the academics is the business model which they have applied and implemented in the internet retail market. The other reason which is also considered to be the relevant to business model is changing the model by every market change which had taken place since the amazon started its business. The product line of the amazon is sufficiently suitable with the nature of their online business which the consumer prefers not to handle first while making the purchase. The product line have also been evolved along with their business model with every change which happened in the market. Started it with the handling of books which is buying and purchasing them and later on they included the DVDs and music media products. They provide the preference on the details rather the products. The buying behavior of those customers who when making it in regards to music and books looks for the information. Amazon introduced for the first time the feature of reviews and recommendation on the products they are offering online. Tis featured have also able to make them extra profit on the sale of each purchase because buyers are willing to pay extra amount on the quality products which were influenced by the recommendation and positive reviews. Lately, the prices were brought to low possible level by the amazon due to competition and market scenarios but they following the practice of adopting change modify their business model to supply the quality products in the least possible prices (Amazon.com, 2018). Furthermore, the analysis on the business model along with the positioning of a competitive advantage will be done.
Description
The shift of market focus which had made the amazon to change the business model which were focused on the low prices with quality products have further evolved the business practice of amazon. The further evolution which made them secured the competitive edge in market in the field of e-commerce despite of growing competition. Amazon turned into even more diversified when it comes to the number of products which were being offered and widen the variety by further addition of product line. The initial preference on the product portfolio turned into the focus on the customer by giving them variety of products in one place. It was 2001, when Amazon included further range of products which includes the kitchen and electronic appliances (Aversa et al., 2015). The market trend has also influenced the Amazon product margin which made them include the magazine and computer with all the accessories and subscription services. The first retailer partners of Amazon were the circuit city and Target in form of strategic partnerships. In 2002, after the strategic partnership Amazon launched further online stores to reach as the number of customer and products increased. Those online stores were Old Navy, Nordstrom’s, Osh Kosh, Eddie Bauer, The Gap, Land’s End, Cole Hahn and Spiegel including several others who will deal on behalf of Amazon. This move is considered to be the diversification in the business model of the Amazon and made them able to access the majority of online customers along with market capitalization which were accepted in the market. This move made them the world’s most famous and leading retail store online which proven to be the reason of market competitive edge (Bohnsack, Pinkse and Kolk, 2014).
The other significant move which was under took by the amazon to provide convenience to its customer is providing the range of advanced features. Those features includes the option of Instant order update which helped the customer to assess the one order and product twice through the message of warning not to make the mistakes by providing guidelines. During that time, Amazon set the aim to become the most customer centric business and claims the same in their marketing campaigns. The significant reason of standing out from other online businesses are their business model which is divided into three sections. The first section of their business was online store where the customer makes purchases directly to Amazon, the second section provides services to collaborate between the buyers and sellers by giving the opportunity to customers that can sell their products. The third section focuses on the collaboration with other business holders who can sale and purchase through amazon platform. This business model which involves the three sections providing them opportunity to secure maximum profit. The small businesses who needs the mean to sale their products use the amazon and the other reason was that amazon gave the hosting services by selling it to clients (Bohnsack, Pinkse and Kolk, 2014).
The strategic alliances which had created as mentioned earlier is the integral part of the Amazon growth which build the business model with the customer centric approach. In the start they had created alliances with the limited number of businesses which can work on behalf of Amazon to keep the image of the business secure. The alliances of the amazon were different in nature with number of businesses and customers. They also spent minimal amount of investment in the startups and later on created the agreement by Amazon on their terms so that the aim of Amazon could be achieved easily. The scope of agreements which amazon created varies from the services, to products and even the co-branded opportunities were given in form of agreements to several other stores. Amazon further created alliances with big corporations with the aim of increasing the product line. All the agreements were built to further add the products with different in nature. Most of the alliances were created to those business which share similar business nature (De Jong and van Dijk, 2015).
Marketing Strategy
The other integral part of the business model is their marketing strategy which had really boosted their sales and secured maximum number of customers. The main aim of marketing is to broadening and strengthen the name of Amazon, increase the number of customer on their website, loyalty of customer, encouragement provided to customers to do purchases consistently and services provided to them. However, the goals of their marketing strategy was achieved through using number of medium as their marketing tool. Both of the approaches were used in the marketing strategy traditional and modern. The activities of business development and direct marketing were undertook by the amazon. Also, the traditional method of using television, radio and billboard advertisement were being used to promote the services of the amazon. The most significant mean of marketing which they used as the Associate program. This program consist of promoting amazon on all the associated website to mention and give credits to amazon for the services customer is using. There was 700,000 websites in 2001 which started displaying the amazon on their website to promote the name of business (Pedersen, Gwozdz and Hvass, 2016).
Location Strategy
Many people perceive that the amazon have no physical office and their whole business is being undertaken through internet which is partially the case. However, the virtual operation is being supported by several of the administration task and for this purpose they had establish number of offices in different states of America. After the expansion of business internationally they also build several offices in UK, Canada and Germany. The biggest warehouse which is owned by the Amazon is located in United States of America comprises of four million sq. ft. They had hired number of people as the staff which undertook all necessary duties. Including the most important task of keeping check and balance to those partners who are doing business on the behalf of amazon. Because Amazon main concern always is to keep the name of Amazon free from all the scandals and provide break free service to its customers (Nejad, Amini and Babakus, 2015).
Use of Technologies by Amazon
Businesses which are operating through the medium of internet involves the use of advanced technological tools in order to achieve the income and customer satisfaction. Amazon being the market leader of e-commerce using the advanced technology which mostly focuses on the customized features while keeping the customer satisfaction. This is another significant reason of customer loyalty towards the amazon because of their user friendly features which provides the customer ease of making any kind of purchase. In the growing technology and changing rapidly the scope of market towards the internet, all the businesses must have to gain the understanding and give the customer the ease of accessing the products and services electronically. Online businesses in recent years secured the position in the market because customer finds it more convenient to purchase online rather physically visit the stores. It is the challenge to all the businesses operating online or not to gain the access of extensive knowledge of technology and adopt these methods. However, amazon is ahead of all the business especially to those who are competitors of amazon. The use of advance technology even the adaptation and implementation on those features make them able to achieve the position for further coming next 10 years. The coming technology will give them the edge in the book business (Rayna and Striukova, 2016).
The recent acquisition which took place between amazon and Booksurge for the printing of books along with the MobiPocket for the eBook have given the edge to amazon. The analyst are claiming it will bring revolution in the field of publishing and access of the eBook around the world. The main aim is to provide the services to the customer for on demand printing of their required and favorite book. This will keep the balance between demand and supply by offering the required product and services to customers. This will not only help the business but it will provide the solution to the problem of keeping the stocks in the warehouses which wastes the place. Also, the other significance is that the wastage of material will not be done and it’s an environmental friendly approach. Not only it will give the benefit to book stores and publishers but it will create the strong relationship among many other leading businesses to amazon. This technology is known as POD which will start by the Amazon and further it will soon be adopted by all the other businesses for the efficient and effective results (DaSilva and Trkman, 2014).
Now using the advance technology Amazon is on the road to cut the cost as much as possible by using different approach. All these approaches will make the amazon the first one to use such approaches which had never been used before. The restructuring is being done in the amazon for cost cutting and making the operational activity advance and efficient. In the past, amazon took the similar actions and achieved the goals of efficient work by cutting cost and redesigning the structure of business. Not only this, they had also provided the benefit to workers with new roles and increased the scope of their work (Labes, Hanner and Zarnekow, 2015).
Pricing Strategy
The amazon pricing strategy is specially designed for giving the benefit to consumers by them the first preference. The effective marketing communication which is adopted by the amazon through their pricing strategy proven to be benefited. When the customer is receiving the low price quality product they will praise the amazon which further increase the number of customers. This strategy not only is proved to be more profitable but also they are able to save the cost of marketing. This pricing strategy is also being adopted by the small online retailers which are offering the products and services through amazon. The gain the positive remarks on providing the quality product in low price which further help both the small retailer recommendations and amazon is achieving their aim of customer centric approach. The future of amazon by providing such customer centric approach have been secured and the small business which are becoming part of the amazon helping in building the business strength by focusing on the customer. There are several of the other business which are rising in the market as the competitor of amazon through same approach as amazon is using but the amazon adopted approach of technological services in the field of retail business on the internet is far too achievable by any other organization. The use of patent of the nature of business amazon is operating giving them further leverage to compete other similar organizations and firms. The era of amazon and e-commerce business is still under the influence of amazon and despite of all these amazon is working on behalf of customer (Huicho et la., 2017).
Conclusion
In conclusion, this report is being done through going through several articles, journals and website information provided by amazon. The extensive research provided the significance result which is based on the success of amazon as an e-commerce. The use of advance technology yet again proven by the practical example of amazon that market trend adoption and changing involve the success. They provide the preference on the details rather the products. The buying behavior of those customers who when making it in regards to music and books looks for the information. Amazon introduced for the first time the feature of reviews and recommendation on the products they are offering online. Tis featured have also able to make them extra profit on the sale of each purchase because buyers are willing to pay extra amount on the quality products which were influenced by the recommendation and positive reviews. Lately, the prices were brought to low possible level by the amazon due to competition and market scenarios but they following the practice of adopting change modify their business model to supply the quality products in the least possible prices. The market trend has also influenced the Amazon product margin which made them include the magazine and computer with all the accessories and subscription services. features includes the option of Instant order update which helped the customer to assess the one order and product twice through the message of warning not to make the mistakes by providing guidelines. The significant reason of standing out from other online businesses are their business model which is divided into three sections. The first section of their business was online store where the customer makes purchases directly to Amazon, the second section provides services to collaborate between the buyers and sellers by giving the opportunity to customers that can sell their products. The third section focuses on the collaboration with other business holders who can sale and purchase through amazon platform.
They also spent minimal amount of investment in the startups and later on created the agreement by Amazon on their terms so that the aim of Amazon could be achieved easily. The scope of agreements which amazon created varies from the services, to products and even the co-branded opportunities were given in form of agreements to several other stores. Amazon further created alliances with big corporations with the aim of increasing the product line. The marketing strategy which had really boosted their sales and secured maximum number of customers. The main aim of marketing is to broadening and strengthen the name of Amazon, increase the number of customer on their website, loyalty of customer, encouragement provided to customers to do purchases consistently and services provided to them. The biggest warehouse which is owned by the Amazon is located in United States of America comprises of four million sq. ft.
They had hired number of people as the staff which undertook all necessary duties. Including the most important task of keeping check and balance to those partners who are doing business on the behalf of amazon. In the growing technology and changing rapidly the scope of market towards the internet, all the businesses must have to gain the understanding and give the customer the ease of accessing the products and services electronically. Online businesses in recent years secured the position in the market because customer finds it more convenient to purchase online rather physically visit the stores. It is the challenge to all the businesses operating online or not to gain the access of extensive knowledge of technology and adopt these methods. The analyst are claiming it will bring revolution in the field of publishing and access of the eBook around the world. The main aim is to provide the services to the customer for on demand printing of their required and favorite book. This will keep the balance between demand and supply by offering the required product and services to customers. This will not only help the business but it will provide the solution to the problem of keeping the stocks in the warehouses which wastes the place. The key to their success is not only the use of advance technology but their focus on the customer which aims to place them first and after that change with every market trend.
References
Amazon.com. (2018). Amazon.com: Online Shopping for Electronics, Apparel, Computers, Books, DVDs & more. [online] Available at: https://www.amazon.com/ [Accessed 21 Mar. 2018].
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