Over 20 years in online retail, Amazon has become a household name for the place where one can purchase a variety of products and services with only a few clicks. From the perspective of the sales-related processes, Amazon’s structure is rather simple. As Figure 1 below shows, the company uses a five-element framework that helps get the end product to the target customer in a manner as efficient and expeditious as possible.
Figure 1. Sales Structure (eBay vs. Amazon, 2015).
E-Commerce as the Primary Tool
Providing services related to purchasing products on the Internet, Amazon operates only in the online environment. Because of the nature of its services and the environment, in which the firm operates, it does not need to be represented by a retail store. Consequently, e-commerce should be viewed as the primary sales channel of Amazon.
Omnichannel Companies as Threats
However, the lack of presence in the traditional retail area poses a threat to the company’s well-being and competitiveness rates. Seeing that most of its rivals are represented in the retail department, Amazon may lose some of its audience to the above competitors. The framework, in which the latter operates, and which is known under the title of multichannel fulfillment (Panigrahi, 2013), implies the incorporation of retail shops into the sales channel along with the popular e-channels (Rowell, 2013).
The omnichannel model supported by a range of organizations is a serious threat to Amazon’s success in the target market. The ship-from-store strategy that Amazon resorted to in response, therefore, is a sensible step. Combined with e-commerce, the strategy permits the design of the omnichannel fulfillment strategy that will help address the emergent competition-related issues.
Multichannel Fulfillment
In light of the above issues, Amazon has recently decided to design the so-called multichannel fulfillment. Although the framework under analysis was designed for the company’s customers and suppliers as opposed to the needs of the organization, it still should be viewed as a giant step in the right direction: “Multi-Channel Fulfillment is Amazon’s service to enable you to fulfill orders from sales channels other than Amazon.com (such as your company website) using the inventory that you have stored in the Amazon fulfillment center” (Amazon, 2016, par. 1).
Members: The Participants That Matter
Retailers for Amazon Devices: A Breath of Fresh Air
Despite doubtlessly owning the monopoly over the e-sales department, Amazon has been attempting to introduce several retail services as well. While some might consider the given decision as a retreat and a means to escape being devoured by smaller businesses, it, in fact, is a reasonable strategy. Amazon has lately entered the retail arena to sell its devices (primarily, Kindles).
Wholesalers: from AmazonSupply to Amazon Business
At some point in the firm’s development, the leaders of Amazon decided that the company needed to be represented at the wholesale level as well. The decision of the leaders is understandable in light of the tough competition in the target market and the fact that most rivals were represented in wholesale. Thus, AmazonSupply was born.
However, as the company evolved, the idea was abandoned. In lieu of AmazonSupply, the Amazon Business emerged. The new and improved retail-related service is supposed to offer products both directly from Amazon as well as from third parties (Demery, 2016).
Industrial Distributors: What AmazonSupply Really Meant
Although AmazonSuppy is no longer in existence, it has left its mark in the history of Amazon as one of its industrial distributors.
Allocation of Channels and Flows
Channels: E-Commerce as the Foundation
Because of the specifics of its services and the target audience, whose needs it has to meet, Amazon has been using e-commerce-related sales channels for a while.
Flows: Free Cash Flow (FCF) as the Key Tool
One must admit that the tool chosen by the organization proved to be rather efficient in the environment of the global economy. The specified approach helps coordinate the financial transactions in a more accurate manner. However, as Figure 2 below displays, the company could use improvements in its cash flow model as most of the expenditures of the company were unrelated to sustaining the business.
Figure 2. Amazon Cash Flow (Don’t Be Fooled by Amazon’s Cash Flow, 2016).
Meeting Customers’ Demand for Service Outputs
Segmentation
To make sure that the customers’ needs are met and that their demands are taken into account and addressed properly, Amazon has been using segmentation as the foundational strategy. A closer look at the current approach toward segmentation in the Amazon Company will show that the managers have created a rather impressive segmentation strategy based on targeting every single customer individually (Banker, 2013).
Broad Titles Variety
It could be argued that the provision of more options for titles variety could help meet the needs of individual customers.
Suggestions for Improvement of the SalesForce
Customer Service
Despite being targeted at meeting the needs of an individual buyer, Amazon still needs significant improvements as far as its customer services are concerned. For instance, customer support service clearly needs a redesign as a number of customers have been complaining about having little to no feedback from the company and its representatives after their query. Similarly, customer satisfaction rates could be increased by addressing the issues regarding the quality and the speed of product deliveries.
Return Policy
At first glance, the current return policy of the Amazon Company is rather bearable. According to the information provided by the customer support team, the eligible for a full refund after returning their purchases within 20 days from the moment of acquiring them provided that the product remains new and unopened. The policy, however, has several evident dents in it, the term “unopened” being the key one. In most cases, it is only after unwrapping the package that a buyer sees its flaws. Therefore, the current policy could be shaped so that buyers could receive a full refund for returning defective products even if the cover has been taken off.
Personalized Recommendations
The company is evidently geared toward meeting the needs of individuals rather than creating mass products. Amazon manages to cater to the needs of every single customer, which is beyond impressive. It is essential, therefore, that the firm should retain its strategy when altering its sales channels.
Prime vs. No-prime
The idea of encouraging customer loyalty by providing special opportunities and making unique offers to prime customers is a sensible decision. However, Amazon must also make sure that the needs of nonprime customers are also met.
Ratings and Reviews
The significance of customer ratings and reviews is not to be underrated, either. As one of the most efficient and by far the fastest tools for retrieving feedback from the target population, online surveys must be incorporated into the company’s framework. However, the surveys must not be obtrusive; otherwise, the customers are likely to get frustrated very soon. The adoption of the Likert-type scale as the basis for surveys should be considered since it allows locating customer satisfaction rates with rather high precision.
At the present, consumers are assailed by a variety of mass produced items ranging from shoes, clothes and food to electronics, bed covers and a plethora of other products that an average consumer may need. From the perspective of Kotha, mass production on a global scale of consumer products has enabled goods to be produced more cheaply resulting in consumers getting access to an assortment of items that they otherwise would not be able to afford (Kotha 23).
However, as of late there has been a trend in market production wherein aside from mass production, mass customization has been an endeavor where companies attempt to gain a market advantage over their competitors by offering product lines that enable customers to be more “unique” and thus appeals to a higher form of demand among consumers (i.e. the desire to be different) (Liu, Shah and Schroeder 681).
The different types of customization encompass a variety of retail products such as shows, clothes, food, and even beauty products. Utilizing a similar strategy to their mass produced brethren, these products also utilize the same delivery systems (i.e. FedEx, UPS, etc.) and ordering mechanisms (i.e. online websites) that have become synonymous with modern day methods of product retailing (Chinnaiah and Kamarthi 292).
However, it must be questioned whether this trend in product customization would actually be successful in the long run. It is based on this that this paper will utilize Amazon.com as the independent variable for examination with sites with customized applications for selling custom products will be the dependent variable.
Through a comparison of price, delivery time and amount of effort needed in order to purchase a mass produced product or a customized product, it is anticipated that this paper will be able to showcase the likely success or failure of these sites and correlate it with potential the success of product customization as means of generating sales.
Converse Customized Shoe versus Converse from Amazon.com
The first customizable product site to be examined is Converse.com and its Hi Canvas customized shoe application. Using the shoe designer application on the site, the shoe seen above was created with an initial cost of $75, a delivery fee of $5.95 and a delivery time of 2 to 3 weeks.
When it came to the information required by the site for delivery, it merely asked for the address and the shoe size needed. Overall, the process itself was actually quite easy and it can be seen that converse placed a lot of effort into ensuring that customers can easily get the type of product they want in a convenient fashion.
In comparison, Amazon.com sold a show with a similar design for $54.99 with free delivery and can arrive at your home within 2 to 3 days upon ordering the product. Amazon.com also allows users to choose the shoe size and the purchasing process is just as easy when compared to Converse.com. When examining both products, it can be seen that the quality is the same yet the mass produced version sold via an online retailer is far cheaper and you can get the product faster.
Truthartbeauty.com Customized Raspberry Eye balm versus Amazon.com Eye balm
It is surprising to note that when comparing the customized eye balm from truthartbeauty.com with a similar branded eye balm from Amazon.com, the one from the former was actually cheaper than the one from the latter. The product price of Amazon.com’s “Skinceuticals Eye Balm Rehabilitative Emollient for Aging Skin” is $53 while the one from truthartbeauty.com was only $50.
Do note that the one from truthartbeauty.com contains significant levels of product customization resulting in a product type that is simply not available on Amazon.com based on the level of customization involved.
The problem with Truthartbeauty.com is that it requires members to go through a very rigorous process of registration before buying a product. As explained by Ribeiro, when it comes to an online shopping experience, customers want something that is easy and does not take much of a hassle to accomplish. The more “hoops they have to jump through” so to speak, the less likely they are to purchase a product or patronize a service (Ribeiro 42).
Evidence of the effectiveness of this approach was seen in the case of Amazon.com wherein its previous requirement of having customer register was eschewed in favor of making the process of product purchasing that much easier. In the case of this product, the level of customization involved that allows customers to get exactly what they want seems to be far better than the mass produced variety sold on Amazon.com
Zazzle.com t-shirt versus Amazon.com t-shirt
Zazzle.com is a site where you can upload your own personal designs to have a t-shirt printed with the design on it. This is a service not available on Amazon.com resulting in the potential creation of various unique t-shirts. After utilizing their online t-shirt designer, a single white t-shirt with the design seen below will cost $18.95 with a 4 to 7 day delivery. However, the delivery cost is pretty high at around $5 or more depending on your location. It can be free though if you order $50 worth of their merchandise.
In comparison, a white t-shirt bought on Amazon.com with a similar white and black design cost $5.79 with free delivery. The shirt that was found can be seen below:
Since it would have been possible to download a similar image and utilize it on Zazzle.com to produce the same shirt, it can be stated that the product customization of the site is a bit expensive. Not only that, similar to the case of truthartbeauty.com, an extensive registration process is also required on the site.
This of course detracts from the overall appeal of using Zazzle.com since it makes it far more difficult to get what you need. However, when it comes to someone that wants to look unique and utilize a design that they made on their own t-shirts, it can be stated that Zazzle.com provides exactly the type of service that a person like that could want.
Conclusion
When going over everything that has been presented to so far, it can be seen that mass produced products sold through a large online retailer at times far cheaper, get to customers quicker and are easier to obtain as compared to the various “hoops” that customers of customized product sites have to go through in order to get their products.
However, the level of customization involved in these sites that allows customers to get exactly what they want without having to settle for something “less ideal” is a definite drawing point and it can be concluded that so long as some customers want something that is “unique” to them and them alone, then these product customization sites will undoubtedly continue to be profitable in the niche markets that they are involved in.
Works Cited
Chinnaiah, Pratap S. S., and Sagar V. Kamarthi. “Mass Customization And Manufacturing.” Innovations in Competitive Manufacturing. 283-296. Print
Kotha, Suresh. “Mass Customization: Implementing The Emerging Paradigm For Competitive Advantage.” Strategic Management Journal 16.(1995): 21-42. Print
Liu, Gensheng, Rachna Shah, and Roger G. Schroeder. “The Relationships Among Functional Integration, Mass Customisation, And Firm Performance.” International Journal Of Production Research 50.3 (2012): 677-690. Print
Ribeiro, Liliana. “Mass Customization: Modularity In Development Of Fashion Products.” International Journal Of Management Cases 16.2 (2014): 41-45. Print
Several aspects should be mentioned in terms of Amazon’s purchase of Whole Foods. First of all, it is a good move for Amazon. Being one of the greatest companies that provide different online services, it also tends to enlarge the sphere of its influence and conquer new markets. The companys CEOs perfectly realize the fact that stagnation means collapse. That is why the given deal will help to attract new customers and increase the companys revenues significantly. Furthermore, the process of the buyout will alter the online grocery industry significantly.
Amazon possesses numerous resources to align the online delivery of different goods. Moreover, it could use drones to assure that a customer will acquire his/her order as soon as it is possible. All these factors will result in the radical changes in the online grocery industry and all companies functioning in the given sphere will have to create similar approaches to be able to compete with Amazon and attract customers. This deal will stimulate the industry, and the wide usage of innovations could be expected.
Whole Foods is also a powerful company that has its target audience and a stable level of income. It is another factor that contributes to the potentially high incomes and guarantees success for Amazon in case it manages to preserve the brands image and support its further evolution. As for Whole Foods, the deal is not as good as for Amazon because the company loses its independence. At the same time, it is not the worst variant as Whole Foods is allowed to preserve its current name and other peculiarities that differentiate the company for the best ones. Under these conditions, Amazon managed to make a good move that will alter the image of the online grocery industry.
Throughout many years of its existence, Amazon rapidly evolved into the world’s topmost online book vending online store. Two commercial approaches are thought to be connected with the instantaneous ascendable achievements of the company; moreover, it possessed the ability to regulate its practice in accordance with a quick request for produces at the same time as upholding contented clientele. The mission statement of the company reproduces these essential notions up to the present day: “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices” (Amazon, 2016, para. 3).
Amazon managed to create a supply chain founded on comprehensive relations for products that it did not have in possession, having the role of a distributor in the distribution progression as it still only had its Seattle storeroom in the beginning. In the present day, Amazon appears to be the company that is recognized throughout the world. It was established almost two decades ago by Jeff Bezos with a single warehouse in Seattle, Washington; at the moment, it is the worldwide frontrunner in e-commerce.
“Bezos’s bachelor’s degree in computer science and electrical engineering from Princeton (1986) provided him the insight to the interface, information systems, and database capabilities Amazon relied on” (Amazon, 2016, para. 4).
Exploiting these three theoretically reasonable issues, indorsed clienteles to find the books they required with no difficulties and abridged the obtaining procedure. Jeff Bezos tried to find steadiness among competence, enactment, and low processes budget in the retailing and distribution of books. This is complemented by their purchaser-leaning philosophy, not just an essential mission but a significance they trust makes Amazon cost-effective as well. Rendering to Bezos, emphasis on the purchaser is a cultural matter, and he states it as a core competency for the company.
When Amazon announces an innovative provision, it’s focused on revolutionizing in the framework of their existing purchaser base or manipulating the marketplace for original ones. For instance, nearly twenty years ago, they started their “Associates” database, permitting the self-governing websites to obtain warrant income at from three to eight per cent per auction. In detail, this was accomplished by aligned connecting to Amazon headings and was one of their first precipitously combined changes.
The self-motivated extent that separate suppliers were able to accomplish at the positioning stage created the foundation of the great expense for Amazon. The triumph of this platform was confirmed several years later, as soon as enormous corporations at that period of time, for instance, Yahoo! and America Online, developed into the topmost earning contacts in the program.
As the corporation collaborates with a lot of other civil services and vends their merchandises, a well-organized and effective channel design is imperative for it. Amazon has established contacts with traders, suppliers, and editors of the selling books in a straight line. The company obtains its produces and then distributes them to clienteles, implementing the role of a go-between distributor. In this manner, a commerce-to-customer multichannel presentation is preserved. This type of strategy is the finest one for the establishments, and it subsidizes to operative organization and administration prominently.
Channel conflict takes place in cases when producers (or trademarks) disinter arbitrate their channel associates, for example, suppliers, traders, sellers, and transaction agents, by vending their produce openly to clienteles by means of the wide-ranging promotion systems and/or over the Internet.
A number of producers desire to possess online advertise for their trademarks; nonetheless, they have no intention of creating encounters with their other supply conduits. “The Census Bureau of the U.S. Department of Commerce reported that online sales in 2005 grew 24.6 per cent over 2004 to reach US$86.3 billion. By comparison, total retail sales in 2005 grew 7.2 percent from 2004” (AWS Channel Reseller Program, 2016, para. 3). These statistics made the online market eye-catching to producers; however, it elevated the query of how to contribute to the business deprived of hurting the prevailing network contacts.
Admission to the market possesses a perilous part for the company, as it functions in the intercontinental marketplace. As a consequence, the majority of the consideration is given to the imports and the locations they are obtained from. It began to accept the selling goods from the editors and issuers unswervingly, neglecting other wholesalers. The association made a decision to confirm the decent relationships with the associates and decrease the expenses.
The association is a partner with various commences from dissimilar locations, which, in turn, obtain a prospect to retail their products to the assorted inhabitants with the assistance of Amazon. The corporation deliberated the merchandise it suggests with judgment at all times. For this reason, the charge assurances for properties and merchandise are important for the company.
Amazon’s inclination to take forfeiture or only receive no profit, at the same time as pursuing its source chain mastery, has assisted the massive superiority in the opposition in numerous corporate sections. In some circumstances, for example, those that involve electronic books and bookstores, they have accelerated the decease of a complete offline section.
In actual fact, as is the actuality for the majority of the online stores, the bottommost charges are for the most prevalent produces, with less prevalent produces commanding greater charges and a bigger border for the company. The delivery without payment suggestions is applied in order to inspire an upsurge in the bin extent as the clienteles have to expend over a particular quantity of money in order to collect the delivery without payment. The rank at which the delivery without payment is established is precarious to productivity, and Amazon has improved it as the cooperation has altered and for profile-raising causes.
Amazon interconnects the complete assurance in more than a few customs together with the exhibition of the newest register obtainability data, distribution time approximations, and selections for accelerated distribution, along with the distribution consignment announcements and bring up to date accommodations. This emphasis on the client has interpreted to superiority in the facility with the 2004 American Client Approval Directory awarding the Amazon with a total of eighty-eight; moreover, at that moment, this score was the uppermost purchaser approval mark ever documented in any provision business, online or offline.
Round (2004) notes that “Amazon focuses on customer satisfaction metrics. Each site is closely monitored with standard service availability monitoring (for example, using Keynote or Mercury Interactive) site availability and download speed. Interestingly it also monitors per minute site revenue upper/lower bounds – Round describes an alarm system rather like a power plant where if revenue on a site falls below $10,000 per minute, alarms go off!” (p. 54).
As at the moment, the association retails a vast amount of innumerable produces; its targeted addressees are tremendously miscellaneous. There appear to be no demographic boundaries; therefore, any individual in any region has the ability to discover something to his or her taste in the website of the store. Amazon deals with the merchandise, which is the property of the dissimilar manufacturers, and retails them to every individual who has a card and is able to open the tab with Amazon on their computers. As a consequence, its channel is, at present, perceived as a commerce-to-customer type (Chaffey, 2014, para. 6).
The association accepts as true that it residues to be viable and efficacious as a result of several aspects such as assortment, value, obtainability, suitability, material, detection, trademark acknowledgment, adapted amenities, convenience, client facility, dependability, rapidity of completion, the comfort of usage, and the capability to become accustomed to altering circumstances, in addition to the purchasers’ general involvement and confidence in communications with Amazon and enabled by the company on behalf of third-entity wholesalers (Terry-Armstrong, 2013).
Consequently, it could be determined that the end-customers are predominantly searching for such facility productivities. In other differences of opinion, by giving a prospect of purchasing more or less any available produce, Amazon guarantees its excellence, low charge, rapid assembling, and distribution, which, in turn, seamlessly encounters the requests of the directed marketplace.
The channel associates have a tendency to possess comparable stages of control; nonetheless, Amazon has a greater one. As the corporation has control over the processes and marketing and obtaining procedures, the opposite influence takes place. The traders and manufacturers are inclined to be more reliant on Amazon than the company on them. At the moment, this corporation is well-recognized and affluent, which implies that the clienteles will more likely turn to it when they want something more frequently than they will turn to straight suppliers.
The corporation’s primary commotion is exporting, and the channel partners recompense it to post online and retail theirs produces. Predominantly, they appear to be the motivators of collaboration, which turn them into more defenceless and exposed positions, particularly bearing in mind the point that Amazon is a partner with a vast amount of establishments. Furthermore, the association limits the method by which the imports are vended and transported. In this manner, multi-channel transaction and an aptitude to select the kind of distribution permit to satisfy and entice more customers and to escalate incomes as follows.
With the assistance of channel influence, the corporation develops into a frontrunner and obtains a chance to implement various productive vicissitudes in the channel’s process. By the means of collaborating not only with clienteles but with wholesalers as well, Amazon possesses the control over the ways material flows between them. Under certain circumstances, it has the control over the distribution of the produces as well. As a result, the corporation has a chance to establish the produces on its website in order to appeal more customers and, consequently, the client discernment advances. Moreover, the corporation inspires the clients to demonstrate their response and comments as well, which offers an opportunity to evaluate companions’ enactment.
In addition, Marcus (2004) defines how Amazon applied the personalisation empowered by the means of machinery in order to extend to a challenging to reach marketplace that Bezos in the beginning named ‘the hard middle’. “Bezos’s view was that it was easy to reach 10 people (you called them on the phone) or the ten million people who bought the most popular products (you placed a superbowl ad), but more difficult to reach those in between” (Marcus, 2004, p. 54). The exploration amenities in the exploration appliance and on the Amazon website, in cooperation with its produce commendation structures, implied that the online store would possess the ability to link its produces with the goods of these individuals.
Online promotion methods comprise compensated search advertising, shared commercials on gateways, e-mail operations, and exploration appliance optimisation. These appliances are computerized as far as imaginable for the convenience of usage. As it has been mentioned before, the associate agenda is correspondingly significant in motivating guests to visit Amazon; furthermore, the online store suggests an extensive variety of approaches of connecting to its site in order to help advance its conversion (Policies and agreements, 2016).
The collaboration between the online store and its channel associates might appear to be imprecise; on the other hand, it is completely flawless from the point of view of the law. At the moment, lawful deliberations for the e-business are not as compacted as those destined for the initial kind of trade. For that reason, the possessions are not secure on the required level, and imbursement protection and safety have a dynamic part in the business.
The corporation functions under the existing regulations and trails the certain recommendations. Furthermore, the company refuses to reveal the material about the purchaser unless there appears to be an authorized request. The content and the non-content material is extremely secure; it could be revealed only in cases when there is a search permit. “The organization cooperates with Corporation Service Company that deals with all issues that occur. All international requests should be made with the help of legal assistance treaties” (Morris, 2015, para. 5).
Amazon meets countless viable services in response to their inventions and dissolute development. Flagrant contravention asserts to have converted to a consistent incidence for their lawful subdivision, besides the innovative probable regulations of fiscal policy, which could have an impact on their general proceeds. These legal and party-political intimidations turn out to be monetary and fiscal pressures to a corporation that functions on reedy limitations.
Operating lean in the place of these powers demands the implementation of improvements in price rearrangement, particularly as Amazon possesses little power over the foundation of these intimidations and entitlements. Amazon is expected to carry on penetrating the fresh marketplaces with their produces and facilities; moreover, it aims to establish innovative ones by the means of connected divergence of affiliates in its extremely precipitously assimilated assembly. The upcoming embraces an excessive prospective for Amazon in evolving into the utmost supplier of digital products.
Amazon proclaimed at the end of the previous year that the company is planning to suggest hovering drone distribution, allowing even more power over their assessment sequence. “Gopago”, a topic of transaction corporation was also attained, representing Amazon’s attention to imbursement dispensation. This novelty and attainment signify their commercial attitude, closing in and supervising both sides of the charge sequence.
By implementing these actions, Amazon is able to control price, purchaser involvement and upsurge incomes through the extended extremity of their assorted produce and facility contributions. While being the biggest online trader in the world, Amazon.com unceasingly modernizes in order to deliver better purchaser practice and suggest produces at the lowermost imaginable charges to them.
The investment process is an integral aspect of a company development that allows improving performance and providing sustainability. Every organization has specific investment priorities determined by its vision, mission, and strategic plan. Frequently, such spheres as technology and product improvement are in the focus of investment projects. At the same time, investment in human resources is underestimated. Still, researchers agree that human capital is a significant factor in the sustainability of an organization and needs additional funding (Ehnert, Harry, & Zink, 2014). Thus, this memo concentrates on the evaluation of opportunities provided by investing in human resources and its impact on the company’s sustainability.
Contribution to the Mission of the Company
Investment in human resources can be beneficial for the mission of the company. For example, the focus of Amazon’s mission is to be earth’s most customer-centric company, which demands employees able to provide clients with high-quality products and services. Because both services and products depend on the staff, investment in training and education of employees is a contribution to the mission of the company.
Benefits for the Value Chain
The value chain included the company itself, its employees, suppliers, and customers. Investment in human resources provides benefits for the company as a whole due to the better performance of well-trained employees, which can increase revenue. Employees benefit from this type of investment because they receive an opportunity for self-development and career growth. Suppliers will be the least affected party in case of investment in human resources, but sustainable development of the company and the growth of income are expected to provide suppliers with long-lasting cooperation and demand for their resources. Finally, customers will benefit because they will receive a better quality of service or product provided by better-trained employees.
Impact on the Company’s Sustainability
Investment in human resources is expected to have a positive impact on the overall company’s sustainability. Employees who receive regular training and are involved in continuous education in the field of their specialization or neighboring spheres have the potential to increase the competitive ability of the company. Consequently, the company demonstrates better performance in a highly competitive and constantly changing business environment. It results in higher revenues that allow further investment in significant spheres of the company’s functioning. Also, investment in human resources adds to the value of the company as well as to its image as an employer, which attracts better qualified and experienced employees.
Evaluation and Anticipation of Investment Risks
Despite evident benefits, investment in human resources has certain risks for the company. The major risk is related to employee retention. Thus, the staff members who are trained and educated at the cost of the company can seek better employment opportunities in other organizations. Therefore, the company will not receive the expected effective output from the investment. This risk can be mitigated by creating competitive conditions for employees and the provision of transparent career perspectives empowered by training and education they obtain. Another possible risk is the selection of programs for staff training. In contemporary conditions, there are diverse opportunities for employee development and education, but the choice of a proper course or training can become a problem. Still, the company can address this risk by careful investigation of any program suggested to its employees and select those that can be beneficial for the performance of the organization.
Reference
Ehnert, I., Harry, W., & Zink, K J. (Eds.). (2014). Sustainability and human resource management: Developing sustainable business organizations. New York, NY: Springer.
Amazon is a Canadian e-commerce corporation, which occupies a large percentage of the U.S. domestic market for online trade. According to Mark and Johnson (2018), its share of the U.S. retail sales is 43%. The organization’s tremendous success in business operations enabled many researchers to study and analyze this company to apprehend its managerial wisdom. In this paper, the remarkable market performance of Amazon will be explained from the standpoint of supply chain management using the materials kindly provided in the case study by Mark and Johnson.
Continuous Modernization and Adaptation
One of the reasons why Amazon grows to acquire more and more presence in the online retail sector is that it continually invests in technology and scale. As reported by Mark and Johnson (2018), Amazon builds new distribution centers as its network increases in size. Also, the company is aware that its shipping and delivery partners may not always maintain the same level of development, which led the owners to opt for creating their logistics. Thus, after suffering sufficient financial losses due to the U.S. Postal Services failing to deliver goods to customers on New Year’s Eve, Amazon decided to create an internal logistics network.
Amazon optimizes the use of resources through automation, which allows for increased efficiency and, therefore, competitiveness. As such, the company transitioned to electronic document flow, which boosted communication effectiveness and procurement procedures in general (Mark & Johnson, 2018). The company also simplified the process of gathering necessary information from its suppliers by introducing Vendor Central, a software that allows for faster and more organized reception of shipment details and invoices.
Amazon investments into automation also included optimization of warehousing operations through the use of robotics (Mark & Johnson, 2018). Thus, Amazon storage practices include autonomous loading, movement, control, object recognition, and other AI-enhanced services. The company avidly implements and tests new technological developments such as drones for delivery purposes.
Cost Reduction and Economy
While Amazon invests in the growth and development of new facilities to cover new areas and increases the effectiveness of its operations, it also seeks ways to decrease their cost. As such, the organization tried using individual driver services similar to Uber to deliver small packages within densely populated urban areas. By arranging an outbound sortation and using low-cost carriers, Amazon manages to maintain the delivery costs to a minimum, which also allows the company to stay competitive. The organization also utilizes the full potential of its status as the largest online retailer to negotiate better pricing schemes with its suppliers and transportation firms. The aforementioned decision to transition toward internal logistics is also projected to decrease Amazon’s shipping costs.
Conclusion
The case study of Amazon’s supply chain revealed a variety of nuances that help the firm to aspire to the 43% market share of domestic online retailing. Among the factors that influenced the success of Amazon are its orientation towards cost reduction, a technological boost of operations productivity, and strategic decision-making in terms of logistics. The company invests heavily in expanding, modernizing, and internalizing its operations to maintain control and efficacy of all business affairs concerning supply chains.
It continually seeks ways to reduce costs and tries new approaches. Finally, it realizes and utilizes its status privileges and bargaining power. Overall, these actions led Amazon corporation to be the largest and one of the most successful market players in online retailing.
Reference
Mark, K., & Johnson, F. (2018). Amazon.com: Supply chain management. W18451. Ontario, Canada: Ivey Publishing.
Global markets are conquered by good products, competitive prices, and ethical policies. Amazon is one of the global companies whose latest trade agreements have helped the company in its international endeavors. The company decided to leave potentially unethical practices in the past and declared that from now on, it will pay sales taxes in the countries it operates. According to France 24, “More than two years ago, we began the process of establishing local country branches of Amazon EU Sarl, our primary retail operating company in Europe” (par. 3).
The company is going to operate according to the taxation legislation of the various regions of Europe. It should facilitate the process of business conducting and avoid accusations of the taxes’ evading practices. Amazon was heavily criticized for its practice of paying taxes in tiny Luxembourg. It should be noted that such practice is still used by such giants of the IT business as Google and Apple, and other companies from the different industries (France 24 par 7). Today, the company is aimed at gaining a larger share in the international markets, so fair tax-paying practices are one of the methods of gaining a competitive advantage.
Laws
The tax issue has become the target of the laws regulating monopolization of the market. It appeared that such a method of evading tax paying in the countries where large companies operate created the risk of gaining an unfair advantage over the other companies. Amazon agreed to change its tax-paying practice in Europe and “has begun booking revenue by country in some of its biggest markets, including the U.K., Germany, Italy, and Spain” (CBC News par. 3).
It will clearly impact the growth of Amazon globally. However, only fair tax-paying practices can provide Amazon with the opportunity to develop globally and penetrate other strategic markets throughout the world. Unfair competition is advantageous in terms of the market share and revenue in the short term perspective only.
Amazon’s Lobby
Amazon appears to be a significant lobbyist in D.C. It is in the top 50 of the countries that spent about $715 million for lobbying activities in 2015. Amazon is among such corporate giants as Boeing, Lockheed Martin, Exxon Mobil Corp., and others (Wilson par. 1-2). The company tends to spend money on lobbying laws that regulate the taxation policies of internet sales. Online retailers like Amazon do not have to collect taxes from the items sold in the states where these retailers are not present physically.
Brick-and-mortar stores state that such a policy is unfair and provides companies like Amazon with a critical competitive advantage. Amazon applies a large amount of lobbying efforts to stop the adoption of the laws against such practice (Plumer par. 7-8). Another area of Amazon’s interests in Washington is the control on the lawsuits regarding antitrust policies of the country. Apple was recently sued for the unlawful activities with books’ prices, so Amazon wants to avoid the same situation.
Federal contracting is in the sphere of Amazon’s interests as well. Thus, the company lobbied a $600 million deal with the government to provide CIA with cloud-computing services (Plumer par. 16). Additionally, Amazon is active in the political arena as well, donating rather extensively to both Democrats and Republicans. It shows that Amazon’s lobbying activities are based on the rather diverse interests of the company in the different areas of business.
How have specific trade deals given Amazon new transnational mobility?
There is hardly a person in the world who does not know the website Amazon. The company becomes more and more popular every day due to the highly professional management and strategic plan. As a matter of fact, globalization brings countries closer, and nowadays, people can buy goods from Amazon all over the world. The trading network is expanding. Amazon has revolutionized not only online shopping but the way people perceive it as well.
However, it is worth pointing out that it is significant to understand what trade deals contribute to the new transnational mobility of Amazon. Trade deals between foreign companies and Amazon contribute to transnational mobility. The work of international companies is based on the relation of various business institutes. This relation is built on multiple trade deals that contribute to the effective work of all the parties. For Amazon to be successful, the customer should feel safe and secure; namely, the good should be delivered on time and without damage. Delivery and payment are two primary components that secure the customer and make the service more convenient.
How has the harmonization and/or monopolization enabled by trade law impacted Amazon’s global growth?
The Amazon Company is considered to be popular not only nationwide but globally as well. They are sure to be monopolists in the United States; however, strategies, goals, objectives, and management contribute to the development of Amazon and their global growth. However, Amazon was recently accused of violation of the antitrust laws. Last year, Amazon celebrated the anniversary, namely twenty years since the project was established and stimulated the development of the online shopping industry.
Amazon is a phenomenon and is sure to be monopolist; however, the question arises, whether monopolization enabled by trade law impacted their global growth. The founder of PayPal, Peter Thiel states that the word monopoly is commonly misinterpreted, and in reality, it reflects the success of the business. If the company is considered to be a monopolist, it is successful and innovative.
A lot of companies fear Amazon, and there are a number of articles that claim that Amazon should be stopped because it is too successful and too powerful to harm the economy. In spite of such a thesis, the company uses monopolization to influence the global growth significantly. Amazon uses their profits to be better, have a good reputation, and provide customer-centered service, and thus, they are popular in the United States, and globally. Amazon is represented in Australia, China, Mexico, Canada, and in the majority of countries in Europe.
Has Amazon been closely involved in lobbying around trade legislation at home or abroad?
The giant corporations spend impressive sums of money for lobbying; among them are the following, namely Google, Facebook, Apple, and Boeing. It should be noted that Amazon is not the exception. In 2015, the company spent over two millions of dollars on lobbying. This year, the company spent almost 10 million of dollars on lobbying which is almost equal to the spending of Microsoft and Google. However, what issues do the companies lobby?
Patent reform, questions concerning the protection of intellectual property, and litigation reform received the primary concern for Amazon. Taxation, as well as trade policy, is also at the company’ focus. According to the Remote Transactions Parity Act of 2015, the company that deals with online shopping is responsible for paying taxes in all the states where they do business. Amazon also aims to influence the international trade law.
Mechanical Turk (MTurk) is a marketplace for research on issues that require analyses conducted with the help of human intelligence. The platform allows businesses to access a skilled workforce and gives an opportunity to perform a great variety of tasks, including sentiment analysis, categorization, and other (Amazon Mechanical Turk, 2018). After a review of MTurk’s HITs, it became apparent that the majority of recent requests are related to data collection and transcription.
For instance, some requesters asked workers to type texts from images, extract data from receipts, categorize variables, and find links between them. The primary advantage of the service is the possibility to recruit study participants/ workers from a large pool of individuals from highly diverse backgrounds. Secondly, Follmer, Sperling, and Suen (2017) state that it is “relatively dominant in terms of data quality and the number of studies that use it compared with alternative platforms” (p. 330).
The reliability of data gathered from MTurk is verified through several studies that implemented test-retest instruments (Follmer et al., 2017). Lastly, it allows obtaining a large volume of data at a low cost and in a relatively short time.
When conducting the Starbucks marketing research aimed to predict the demand for new drinks (for instance, banana milk frappuccino vs. vegan mango latte) through MTurk, the marketers can seek to explore which one of the customers would like more and what would be the motivations behind their choices. The main questions can be as follows: Which of these products would you prefer to purchase? Why would you prefer to purchase it (taste, ingredients, cost, or other reasons)? The first question can provide straightforward answers linked to study objectives, yet the second question is even more important because it allows identifying the variables that influence customers’ decision-making (Attest, 2017). This information can help improve current products and develop new, better ones based on consumer preferences.
To explore the first question, respondents will be provided with brief descriptions of products and sample pictures of drinks and asked to choose one of the two reply options. In this way, quantitative data will be obtained that will be easily transferred into percentages. The second survey item will include multiple-choice options, including an opportunity to provide an open text answer regarding product traits that respondents would deem particularly valuable. Thus, it will procure both quantitative and qualitative data that will deepen insight into the matter.
As such, there is no need to target the research on a specific population group because potential Starbucks customers come from different walks of life. Thus, a randomized (probability) sampling will ensure that their interests are considered and will also entail a higher level of finding generalizability. However, it is possible to analyze participants’ preferences based on their reported demographic data (age, gender, educational level, and so forth) that may be gathered through additional questions. Also, it can be useful to limit research to a certain region where the product will be launched because consumer behaviors may differ in distinct countries.
Follmer, D. J., Sperling, R. A., & Suen, H. K. (2017). The role of MTurk in education research: Advantages, issues, and future directions. Educational Researcher, 46(6), 329-334.
In 2017, Amazon declared that it joins Whole Foods, the company owning a network of supermarkets of healthy food products. The total value of the deal was estimated at $13.7 billion, and Amazon was to pay off its debts.1 Currently, there are antitrust debates in the US between those who express their concerns regarding monopolization initiated by Amazon and those who emphasize the value of the mentioned agreement in terms of diversification and customer satisfaction. The author of the article “Market Concentration Can Benefit Consumers, but Needs Scrutiny” argues that such decision of Amazon may damage the interests of customers, while it seems that they will only benefit due to the increased convenience and larger assortment of high-quality products.
Main Body
One of the benefits presented by the acquisition of Whole Foods is the implementation of innovations to meet customers’ needs and anticipate their expectations. Jeff Bezos, the founder and chief executive officer of Amazon, would most likely, target optimization of Whole Foods by introducing modern technologies and reducing transportation costs through Amazon Freight. It should be stressed that Whole Foods is the largest supermarket chain in the United States, specializing in the provision of organic foods. Its sales in 2016 reached $16 billion, while the company manages more than 460 stores in Canada, the US,
and the UK.2 Millions of people prefer Whole Foods since it offers the best natural products of organic origin. Thus, Jeff Bezos considerably improves his position in the market of sales and delivery of food and groceries as he understands the potential of more than $800 billion of the market, the share of online trade which is about two percent.3 The mentioned Internet retailer has been experimenting for several years in this segment. In 2007, the company launched an online supermarket of AmazonFresh grocery products.
It is to be expected that Amazon would strive to offer the best price conditions to consumers, both on the Internet and offline that would be rather beneficial for customers. The latter often complained about the high prices of this network. Due to its huge purchasing power and a well-developed delivery system, Amazon would be able to use its supply chain and delivery, which would reduce costs, and, therefore, prices, thus regulating demand and supply. At the same time, Amazon would try to preserve the reputation of Whole Foods as a network of fresh organic products, improving production and cost. It is also expected that Amazon will put pressure on the market, forcing sellers to cut prices.
More to the point, Amazon expects to reduce the number of staff in Whole Foods and make this network competitive with WalMart and other large retailers through lower prices. The program to reduce costs also includes the use of technology customer service without cashiers, as Bloomberg writes.4 This is about AmazonGo technology, which allows people to pay for purchases from a smartphone without seeing the cashier. In addition, it is possible to anticipate that Amazon would expand the range of Whole Foods, thus attracting younger customers to the network, who would like the possibility of online orders and delivery. In strategic terms, Whole Foods can provide Amazon with a ready infrastructure that would ensure an organic pooling of channels and services, while reducing financial risks. For clarity, one may note a scheme, in which Amazon bookstores are located in Whole Foods, and the Whole Foods button appears in the Amazon Dash panel.
Discussing the concept of monopoly as a market structure in which one company is a supplier of a product that does not have close substitutes on the market, it should be stated that the situation with Amazon is different. The market dominated by monopoly is in sharp contrast to the free market, in which many rival sellers and buyers offer a standardized product for sale in a lack of perfect competition. On the contrary, Amazon provides positive indicators such as low long-term average costs, better quality of goods, and variety of assortment; advantage in using the achievements of technological innovations due to sufficient financial resources and strong incentives for research and development (R&D); and preservation along with strengthening of competitiveness in world markets. The products of monopolistic companies are of a high quality, which allows them to gain a dominant position in the market.5 Monopolization affects the efficiency of production since only a large firm in a protected market has sufficient funds for the successful conduct of research and development.
Conclusion
To conclude, Amazon’s purchase of Whole Foods seems to be quite advantageous for customers. They would receive the opportunity to have more convenient and pleasant shopping both online and offline. Considering that Whole Foods offers organic foods, Amazon would preserve this vision and enhance it by means of technology in logistics, product presentation, and shopping decisions. Even though some debaters consider that this is monopolization, it is evident that the accession of the mentioned company would provide customers with diverse products as well as new experience of convenient purchasing. At the same time, such a solution is likely to stimulate market potential on a larger scale. Thus, the combination of two successful companies with their products and infrastructure would lead to more effective shopping and economy in general.
