Category: Amazon

Millions of potential customers visit Amazon.com daily to search for or buy products. This means that any product listed on the site can be seen by millions of people from different regions. A thousand monthly sales through the site is enough to make a company profitable. Conversely, selling on Amazon has many disadvantages, including the possibility of fake items and an inability to control marketing (Taher, 2021). Thus, whether or not to sell on Amazon is a contentious issue for many brands, particularly emerging ones. In this context, DripIt, an upcoming men’s apparel brand, is uncertain whether it should sell on Amazon. This essay outlines DripIt’s management decision problem (MDP), the appropriate market research problem (MRP), and the approach to solving it.

The Management Decision Problem (MDP)

Will listing Dripit’s products on the Amazon.com marketplace increase the company’s sales and customer reach?

DripIt has gained popularity among teenagers and young adults since it started operations a few years ago. The majority of its current clientele are aged between 10 and 26 years. Many of these customers have transformed into enthusiasts are always visiting DripIt to stores to check if there are new products. This has enabled the company to add one additional physical store from the original two. The management has seen the potential of the company becoming even more popular but is worried that the growth has stagnated, especially since not many grownups relate to the brand. Indeed, DripIt has been adding a wide range of apparel that should appeal to this particular clientele, particularly for males above 25 years. However, this strategy has not worked, so DripIt is considering listing its clothes on Amazon.com to increase sales and add more customers. The company understands that this is a great opportunity since eCommerce has grown significantly in the past two years. Moreover, in 2019, a third of all internet users were between the ages of 25 and 34, with internet users in this demographic constituting the largest group of internet users globally (Johnson, 2022). Accordingly, the company considers its ambition realistic and economically viable.

As initially stated, DripIt is concerned that listing on Amazon.com might hurt its thriving business. Primarily, the management feels that selling on the eCommerce platform increases the likelihood of its apparel being counterfeited. DripIt understands that the brand has succeeded mainly because of the unique design of its clothing lines. Listing on a site with over 200 million subscribers from different parts of the world risks this competitive advantage (Howley, 2021). At the same time, selling on Amazon.com implies will require the company to play by the site’s rules. This encompasses upholding their A-to-Z guarantee, how they interact with customers, and what they can and cannot sell. In other words, if DripIt wishes to market its products on Amazon, it will lose a significant level of control and independence.

Whether a product will be listed on Amazon or not is seldom a choice made completely by the business. Since Amazon is an online platform, it allows people and businesses of all kinds and sizes to sell their products. This is intentional, as Amazon executives feel that extra vendors equal more choices, which equals increased pricing competitiveness and broader options for Amazon consumers. Essentially anybody can create a merchant account in seconds and begin selling an item obtained through different reputable, dubious, or entirely illegal means. Due to this unregulated planform framework, DripIt should assume that any of its products will appear for purchase on Amazon.com with or without the company’s approval.

The Market Research Problem (MRP)

DripIt’s market research problem is to figure out which distribution strategy is ideal for the brand to maintain lucrative control over what occurs on Amazon.com. In this case, the brand executives must choose between selling on or to Amazon.com. The focus concerns, difficulties, and product management goals will be determined by which of these pathways it selects and the distribution method it adopts in that sector. The ability of DripIt to control its brand tactics (e.g., pricing, brand content, marketing), make profits, and establish a sustainable frequency for overseeing operations on the site will be impacted by either distribution option.

Approach to Solving It

Analytical framework

Amazon is the leading platform customers use when undertaking an eCommerce search, surpassing even internet search giants like Google. Amazon currently accounts for 38.5 percent of all online transactions in the US, with third-party vendors now accounting for 60% of its online sales (Howley, 2021). These statistics illustrate the many advantages of selling products on Amazon.com.

Analytical model

Mainly, it comprises a selection of variables linked together in a particular way to represent the whole or a portion of a real-world system or process. Models may take several formats, but this research will concentrate on visual models. That is a representation of the theory graphically and pictorial with supporting explanations. This will provide a clear picture of the current market state and how it influences brand decision-making.

Research Questions

1. Do shoppers who frequent Amazon.com prioritize quality above price?
2. Are grownups being targeted by the company fashion-conscious?
3. Could they afford to pay more for higher-quality apparel?
4. Is the success of competitors such as Calvin Klein and Levis on Amazon.com tied to cost-effectiveness or brand popularity?
5. Is the grownup population higher than teenagers and young adults to help DripIt gain market share?

Hypothesis (H1): Grownups are not fashion-conscious, and they prefer inexpensive or reasonably-priced apparel.

Hypothesis (H2): Grownups are fashion-conscious, they are more discriminating about the sort of clothing they wear, and they prefer to spend extra for higher-quality clothing.

Specification of the Required Data

The researcher may identify what evidence should be gathered by concentrating on every element of the problem, the research questions, and the hypotheses. It is beneficial to repeat this process for every element of the problem and create a checklist detailing all data that needs to be gathered. I will seek out accessible secondary data to address every aspect of the research questions. To begin, I will utilize target demographic data for my research. There is a wealth of data available that has studied the figures in three crucial groupings; age, income, and ethnicity—and questioned authorities from across the sector regarding how these factors influence fashion (Huaman-Ramirez & Merunka, 2019). The second aspect that requires clarification is: What do clients expect from online fashion brands? I will determine if the issue is cost, convenience, or quality. Ultimately, my investigation will ascertain what shoppers see in Amazon.com to make the company dominant in the sector and what DripIt can do to compete favorably. Through aggregating this information, I may have a new perspective of the customer’s preferences and motivations.

In general, there are main concepts that must be continuously developed and maintained for a product to have a strong base on Amazon. They include branding, distribution, pricing, product availability, and catalog selection.

Branding: What information is utilized on Amazon to explain the firm’s goods? Who is accountable for ensuring that the information is factual, comprehensive, and aligned with marketing activities across all other touchpoints for the product?

Distribution: Which Amazon vendors represent the product? How many of those vendors are familiar with the company and are enthusiastic about its items as anything more than a selection of widgets to resell?

Pricing: How are the company’s items priced compared to the company’s pricing across all touchpoints? Are there any unplanned or uncontrollable price changes? What level of control does the company over the pricing of its products?

Product Availability: How efficient is the company at keeping its items in stock, or at least adequately supplied compared to other brands targeting Amazon shoppers?

Catalog Selection: When and how will the company’s new merchandise be available on Amazon? Is a specific seller in place to ascertain that a company’s new merchandise is released as quickly as they are made accessible in other touchpoints?

Conclusion

The management decision problem inquires about the policymaker’s action plan, while the marketing research problem inquires about what evidence is necessary and how it may be collected. The research goal is to provide the data needed to make an informed choice. The management decision problem is execution-oriented, focusing on what must be accomplished. The marketing research problem, on the other hand, is evidence-oriented. The research goal is to provide the knowledge needed to make an informed choice. DripIt management must differentiate these concepts and apply them appropriately to make the best decision.

References

Huaman-Ramirez, R., & Merunka, D. (2019). Brand experience effects on brand attachment: The role of brand trust, age, and income. European Business Review, 31(5), 610-645. Web.

Howley, D. (2021). Amazon Prime now has 200 million members, jumping 50 million in one year. (2018). Yahoo.com. Web.

Johnson, J. (2022). Distribution of Internet users worldwide as of 2019, by age group. Statista. Web.

Taher, G. (2021). E-Commerce: Advantages and limitations.International Journal of Academic Research in Accounting Finance and Management Sciences, 11(1), 153-165. Web.

Amazon has grown tremendously in the past few years and is now the largest online retailer. To retain this position, the company must be strategic in its operations. One way to do this is to be adaptable to customer needs. For instance, during the past year, many people resorted to online shopping to reduce the risk of being infected with the coronavirus (Weise and Corkery). An e-commerce company such as Amazon should be able to anticipate such customer needs and adjust its strategy appropriately. Amazon will continue to be the largest e-commerce retailer if it remains adaptable and is able to conveniently deliver what customers expect.

In July 2021, Amazon founder Jeff Bezos resigned as the company’s CEO. In the past, he has been associated with unfair labor practices, including underpaying employees and providing poor working conditions. It was amid these controversies that Bezos resigned, leaving the CEO position to Andy Grassy. This was a good approach because the company suffered too much bad publicity under Bezos. Additionally, Bezos had led the company for twenty-seven years since its formation in 1994. It will be interesting to see what new strategies a new leader will employ to raise the company further.

One internal condition that Amazon needs to address is its treatment of employees. There are numerous complaints of the company treating its employees poorly and making them work in deplorable conditions. Failure to do so will increase employee turnover and possibly cause a labor shortage. In the external environment, Amazon needs to address legal issues such as compliance (Weise and Corkery). Due to its massive growth, Amazon is bound to be heavily regulated. It should ensure its operations are all within the confines of the law.

Work Cited

Weise, K. and Corkery, Michael. “People Now Spend More at Amazon Than at Walmart.”New York Times, 2021, Web.

Amazon is one of the largest companies in the world, which opens up a wide range of financial opportunities that can manage risks and threats with a margin. In this regard, the most likely problems with a high rating are competitiveness in a sector with a lot of competition and a decrease in the purchasing power of customers. At the same time, the analysis of opportunities showed that the broad diversification of the company’s services and products is both an advantage and a challenge in the struggle in each sector with several competitors. Supporting advanced technology innovation, more related to the realities of the pandemic, is the most promising solution for a giant like Amazon. The pandemic has brought an economic recession that needs to be offset in sales by developing products and services while simultaneously seizing momentum and financial opportunities to eliminate competitors.

The optimization of the company’s internal business processes has a relatively high weight, both among the threats in the form of cyberattacks and opportunities as analytics tools. In fact, Amazon was one of the pioneers of online retail, and using technology primarily to optimize the company itself is its hallmark (Sadq et al., 2018). As a result, the threats associated with the site’s operation, internal control systems for counterfeit goods, and many more, have a low weight. Considering also the government’s policy of reducing base erosion, changes in taxation for multinational companies are a significant threat beyond Amazon’s control (Álvarez-Martínez, 2021). The trend is unfavorable for multinational companies due to the increase and establishment of a standard rate for corporate tax, as well as ranking taxation according to sales in different countries. Otherwise, the company has significantly more opportunities than threats, judging by the EFE matrix.

References

Álvarez-Martínez, M. T., Barrios, S., d’Andria, D., Gesualdo, M., Nicodème, G., & Pycroft, J. (2021). How large is the corporate tax base erosion and profit shifting? A general equilibrium approach. Economic Systems Research, 1-32. Web.

Sadq, Z. M., Sabir, H. N., & Saeed, V. S. H. (2018). Analyzing the Amazon’s success strategies. Journal of Process Management and New Technologies, 6(4). Web.

Introduction

Amazon.com Inc. is a retailer, e-book reader producer, and Web services supplier whose brand is known for online shopping. Seattle in Washington, is home to the corporation’s headquarters. The company sells toys, electronics, housewares, movies, music, and several other items directly or via intermediaries between Amazon customers and other sellers (Hall, 2022, para. 2). Web services, also known as “cloud computing,” are a company division that enhances data processing and storage ability over the Internet. In 2012, Amazon’s data centers handled 1% of all website traffic in Northern America. The firm also creates the finest Kindle e-readers (Hall, 2022, para. 3). Amazon’s strategies have led to a significant rise in its sustainability due to the competitive advantages they offer to the firm.

According to A.I. Assistant, Amazon is the world’s largest Internet corporation regarding income and market share. In 2021, Amazon Prime, a monthly service with approximately 200 million users worldwide, surpassed Walmart as the most prominent global retailer outside of China. Amazon is the second-biggest private job creator in the U.S. Amazon Music, Amazon Prime Video, Twitch all offer various downloading and streaming materials offered by Amazon.com Inc. (Hall, 2022, para. 1). Amazon Studios created television shows and movies and acquired Metro-Goldwyn-Mayer. It also makes consumer electronics like Kindle e-readers, Echo devices, Fire T.V., and Fire tablets. As of December 2020, Amazon operated in the U.K., the U.S., Italy, Spain, Germany, and Canada (Amazon.com Announces Fourth Quarter Results | Amazon.com, Inc. – Press Room, 2022, para. 6). Amazon Prime Air uses a drone system in its delivery. Amazon recruits people directly for its bulk distributors, warehousing, staffed “Amazon Hub Locker+” sites, and delivery stations.

Impact of Pandemic on Sustainable Development

Organizations compete through sustainability to generate shareholders’ finances and offer industrial services to deliver an additional foundation of income and permit manufacturers to grow more cooperative enterprises that move past arms-length dealings. Firms further adopt digitalization, which encourages innovation among workers, improving their competition levels (Parida and Wincent, 2019, p. 6). Businesses may better target their customers and increase sales and revenue margins with the above-mentioned sustainable operations while also retaining customers and employees (Peskett, 2018, para. 4). The pandemic touched all the aspects of sustainability due to its environmental, and biological threats to humanity. It impacted humanity badly in the practical quest for healthy lifestyles, physiological sensations, and economic development.

COVID-19 impacted various firms, including small-sized companies, which were vulnerable. Because of the COVID-19 scenario, manufacturing companies had to hold their production channels for a more extended period while searching for longstanding explanations (Kumar et al., 2020, p. 4). Millions of people died due to the COVID-19 epidemic, which had far-reaching consequences for individuals, families, businesses, and the entire supply chain (Further and Faster, Together, 2022, para. 3). During the epidemic, Amazon’s company surged, resulting in pollution. The pandemic created various opportunities for Amazon; shoppers turned to Amazon for everything, including face masks and sanitizers to foodstuffs and office equipment; the opportunity made Amazon’s online store a big winner. Despite an increase in total emissions, Amazon reduced its carbon intensity or the number of emissions produced.

Identification of The Competitive Stances

One way to describe Amazon’s business model is cost management occupied to its rational assumption. Amazon’s competitive gain is based on its ability to offer a wide variety of products at a reasonable price. There is no margin for error when it comes to the world’s largest online retailer because of the mixture of scale economies, new procedures, and ongoing diversification of the company’s business model. Depending on the three organizational tactics, Amazon has maintained a long-term competitive edge. A low-cost leader, a customer differentiation strategy, and a focus strategy are examples of this business approach. Amazon is pursuing low-cost leadership by differentiating its products based on price. Amazon ensures its long-term prosperity by delivering low prices to its customers. Achieving more significant sales capacities, getting better deals from suppliers, and refining operational competence will reduce the overall cost of cutting prices.

Amazon guarantees that its goods contain a similar quality as other firms but significantly lower prices. One of Amazon’s strategies is the company’s fast delivery service, which comes in various flavors. Various Amazon products are eligible for free two-day shipping with Amazon Prime. It’s also worth noting that Amazon Prime members get access to a wide range of discounts and special offers. Various brands and companies are sold on Amazon, as well. Amazon prioritizes its clients, and the company is well aware that the delivery process is one of the most sought-after features by customers. Because fulfillment centers are not retail storefronts, no sales taxes must be charged on Amazon purchases. Amazon can better serve its consumers since it has several warehouses in various places. Throughout the years, Amazon’s growth has made it possible to lower its costs.

Amazon’s strategies include regularly entering new markets and categories, developing its ecosystem, and maintaining a laser-like focus on providing excellent customer service and upholding its core principles. Amazon’s modest edge is constructed on the groundwork of advanced universal logistics. The computer behemoth has made great use of this edge to broaden its scope of operations and achieve financial success. The e-commerce behemoth often stumbles into new markets and niches while searching for solutions to business issues. An excellent example of this is Amazon Web Services (AWS). On a more specific level, Amazon was straining to maintain pace with its rapid expansion in 2000. Infrastructure functions, including computing, storage, and database management, were handled by internal systems designed by the corporation for its use.

Amazon’s corporate strategy is based on the idea of an ecosystem. An essential part of the Amazon network is a group of people who can communicate with customers, authors, publishers, and application developers to spread the word about what is possible on the platform. Amazon’s business strategy is based on the belief that customers are essential to the equation. As the world’s biggest online retailer by sales, Amazon ranks long-term progress over temporary income. Customers are Amazon’s priority, and they do not give a hoot about their competitors. Instead, Amazon has acknowledged a chair for each boardroom to represent the consumer as “a concrete reminder to develop in their favor.” Amazon’s ability to maximize the value of its human capital is another clear advantage. Amazon employees must work long hours, often sacrificing their personal lives, to meet the company’s high standards. As a result of Amazon’s leadership concepts, including customer devotion, focusing on the top level, and digging deep, the company’s workforce can contribute more.

SWOT Analysis

Strengths

Among Amazon’s strengths are the following: a well-known name, a wide range of products, and the capacity to implement new technologies quickly, particularly in the online service sector, are some of the essential attributes of a successful organization. To maintain its position as the world’s largest online retailer, Amazon relies on a strategy that emphasizes cost leadership, distinctiveness, and narrow focus. The corporation has reaped the benefits of this tactic, enabling stockholders to gain wealth. The corporation’s rapid success, mainly in the initial years, can be credited to this benefit, significantly impacting brand awareness and consumer trust (Greenspan, 2019, para. 2). Amazon’s market analysis includes various positives, including a moderate level of business diversity. Examples include online retail operations, private label items, and cloud computing. Amazon.com Inc. is a formidable rival because of its wide range of related operations. Therefore, the business is well situated to adopt the changing trends.

Weaknesses

Limitations in Amazon’s infrastructure impede the company’s ability to expand. Imitable marketing strategy, limited expansion in underdeveloped regions, and local brick-and-mortar operation are the most critical of Amazon’s shortcomings. There are several ways to copy Amazon.com, Inc.’s sales model. Other firms can build e-commerce websites to offer anything, which is a vulnerability that generates possibilities for other companies to impose more significant pressure on the electronic commerce behemoth. Amazon’s lack of mobility in emerging economies is another problem that stops the company from reaping the benefits of these markets’ high economic growth rates (Greenspan, 2019, para. 3). However, due to its minimal brick-and-mortar footprint, the company has difficulty developing swiftly in the offline sector. With the takeover of Whole Foods’ Markets, Amazon wants to expand its non-online businesses. Nonetheless, the company experiences a hurdle in expansion in both the present and growth of e-marketplaces because of internal variables in this area. It is possible that Amazon’s organizational design and layout and its strategic development and scheduling will need to be altered to meet these difficulties head-on.

Opportunities

There are numerous avenues available to increase Amazon’s diverse business efficiency. Expanding in developing areas, expanding brick-and-mortar company operations, and forming new alliances with other companies are possibilities for Amazon. The company can expand into emerging markets like China and India. When other substantial e-commerce companies begin to root, this step will benefit the corporation with a better competitive edge. External factors include the increased money generated by adding additional brick-and-mortar locations to the current Amazon locations (Greenspan, 2019, para. 5). In addition; the corporation can use external strategic factors, such as the chance to form new alliances with other companies, to broaden its worldwide e-commerce footprint. The company can enhance Amazon’s corporate responsibility policy by partnering with companies with successful company citizenship images. These external influences can help the organization expand its market presence and increase income.

Threats

Different businesses and markets present Amazon with different risks. Threats to Amazon include intense rivalry from digital and non-online enterprises, cybercrime, and replication of Amazon’s pricing structure and goods in the sector (Greenspan, 2019, para. 6). With Costco Wholesale, Walmart, Google, eBay, Netflix, and Apple, Microsoft is among the many competitors Amazon.com Inc. faces in the retail market today, and competition stands the most significant danger to the company. Consumer devices, commerce, e-commerce, internet digital content delivery, cloud-based activities, and other I.T. services are all facing increasing levels of competitiveness. The table below summarizes Amazon’s SWOT analysis:

Table 1: SWOT Analysis Box

Recommendations

Amazon’s sustainability can be achieved by setting goals and most minor amounts in financial inclusion programs that focus on agricultural systems that are environmentally friendly, as well as food and nutritional security and decreasing environmental damage, both of which can be achieved through particular budgetary allocation to support environmental activity in nearby public policy initiatives. Bioenergy chains can be improved and developed to create a green recovery. Amazon must operate an eco-friendly venture to assist Amazon in minimizing its environmental effects and preserving natural resources (Marysol Goes, 2022, para. 14). The industry can maintain its green recovery by using fewer natural resources and recycled material (The benefits of an environmentally friendly business | Business Queensland, 2022, para. 1). The organization should start limiting airline travel by conducting interstate meetings via teleconferences as part of a comprehensive review of the corporation’s operational processes.

Conclusion

Making Amazon more environmentally friendly is good for the company’s bottom line and the surroundings. The company should also avoid wasting resources by printing double-sided and encouraging employees to take messages on scrap paper rather than buying message cushions instead. Based on the work surrounding Amazon’s advantages, Amazon’s operations can continue to grow. E-commerce expansion, particularly in high-growth emerging economies, can help the company flourish. To address the issues this Swot matrix raises, Amazon will have to re-evaluate most of its current plans. Still, the company is among the world’s largest technology companies. The firm should continue expanding its business to reinforce itself against manufacturing threats to answer the external and internal aspects of this SWOT analysis. Amazon should expand its global operations to better withstand competition and other associated strategic problems by forming new alliances.

Reference List

Amazon.com, Inc. – Press Room. (2022) Amazon.com Announces Fourth Quarter Results | Amazon.com, Inc. – Press Room. [online] Web.

Business.qld.gov.au. (2022) The benefits of an environmentally friendly business | Business Queensland. [online] Web.

Greenspan, R. (2019) Amazon.com Inc. SWOT Analysis & Recommendations – Panmore Institute. [online] Panmore Institute. Web.

Hall, M. (2022) Amazon.com | History & Facts. [online] Encyclopedia Britannica. Web.

Kumar, A., Luthra, S., Mangla, S.K. and Kazançoğlu, Y. (2020) ‘COVID-19 impact on sustainable production and operations management,’Sustainable Operations and Computers, 1, pp.1-7. Web.

Marysol Goes, C. (2022) Is there still time for a Green Recovery in the Amazon? [online] Green Economy Coalition. Web.

Parida, V. and Wincent, J. (2019) ‘Why and how to compete through sustainability: a review and outline of trends influencing firm and network-level transformation,’International Entrepreneurship and Management Journal, 15(1), pp.1-19. Web.

Peskett, M. (2018) Five steps to get a sustainable competitive advantage – SmartCompany. [online] SmartCompany. Web.

Sadq, Z.M., Sabir, H.N. and Saeed, V.S.H. (2018) ‘Analyzing the Amazon success strategies, Journal of process management and new technologies, 6(4), pp 65-68. Web.

Sustainability – U.K. (2022) Further and Faster, Together. [online] Web.

In today’s fluctuating world, all companies strive to support their employees and ensure they have credible knowledge and practical skills to compete with others by offering them training programs. AT&T, the American leader in telecommunications, media, and internet services is not an exception, as the company provides Nanodegree training. Meanwhile, Amazon, a multinational e-commerce company, focuses on multiple training programs for its staff. More extensive geographic segmentation allows Amazon to have more efficient and diverse training programs than AT&T.

The significant difference between the two companies lies in the number of offered training programs and their professional approach to them. AT&T offers only a Nanodegree program, while Amazon has many apprenticeships focusing on various aspects such as technical, mechatronics and robotics, UX research, and design. This variety is justified by the fact that the company accelerates its international sales, having more broad geographic audience than AT&T, limited in the US borders. That is why the company quickly covers 95% of the tuition fees of the Career Choice program abroad (Amazon, 2022). Moreover, many pieces of training use a gamification approach when game design elements are utilized in non-game contexts (Armstrong & Landers, 2018). For example, Amazon Technical Academy implements engaging behavioral modeling-styled training where employees relate learned concepts to real-life examples. Therefore, each of Amazon’s many programs has extraordinary features, such as gamification, which makes them unique.

The Nanodegree program is tightly intertwined with the STEM employees, allowing AT&T to provide essential data science, artificial intelligence, programming, and development skills. Unlike Amazon’s primary focus on the company’s employees only, AT&T allows everyone to join its program (AT&T, 2022). Meanwhile, Amazon contributes to the skills of hired employees by involving them in a Machine Learning University, where they learn software programming quickly. Although Amazon has training programs that invite non-staff members, their number is negligible because the company is interested in promoting its workers and enhancing productivity rather than just offering training to everyone. This difference hints at the idea that Amazon wants its employees to succeed, while AT&T’s training is more inclusive.

Another differing feature of the training programs companies offer is their eagerness to accept people completing them. For example, AT&T admits that the skills obtained by their program meet only some of the entry-level jobs, accepting only 100 people as interns (AT&T, 2022). Considering that thousands of people graduate from the Nanodegree program, but only a few get hired full-time is very frustrating. In contrast, 95% of employees graduating from Amazon Technical Academy were promoted to software development engineers (Amazon, 2022). Additionally, evaluating training effectiveness through return on investments point that training returns such as task performance and competency outweigh its costs only in Amazon (Andrews & Laing, 2018). Hence, unlike Amazon, AT&T provides training but does not guarantee its success.

The similarity between the programs is their formative evaluation, assessing employees at different periods. Both companies realize that performance evaluation occasionally neglects essential episode sets emerging over time and provides an incomplete perspective (Sitzmann & Weinhardt, 2018). For example, AT&T conducts several online interviews and testing to ensure that the applicants keep up with the course’s pace. Thus, AT&T and Amazon monitor their participants to improve the programs annually.

To conclude, AT&T currently provides only one training, which includes many people seeking a job, but only some get employed upon graduation. In comparison, Amazon has many programs for its employees to ensure they gain new skills to get promoted within the company. Although Amazon demonstrates significant superiority over AT&T in employee training, both companies strive to improve their productivity and advancement of the working force.

References

Amazon. (2022). Our upskilling commitments. Web.

Andrews, P., & Laing, G. (2018). Evaluating the outcomes of a training program through an ROI evaluation: A case study. E-Journal of Social & Behavioral Research in Business, 9(3), 1–9. Web.

Armstrong, M. B., & Landers, R. N. (2018). Gamification of employee training and development. International Journal of Training and Development, 22(2), 162–169. Web.

AT&T. (2022). AT&T’s Nanodegree program affordable trainings for high-demand tech jobs. Web.

Sitzmann, T., & Weinhardt, J. M. (2018). Training engagement theory: A multilevel perspective on the effectiveness of work-related training. Journal of Management, 44(2), 732–756. Web.

Marketing Strategies

There are several important factors that have to be considered when discussing the overall success of Amazon across the retail sector. First, the company offers an extensive list of products that cover practically all categories. The company also remains client-friendly in developing personalized recommendations and generating unique offers that could appeal to existing consumers and attract new ones (Ives, Cossick and Adams, 2019). Improvements made to the company’s interfaces make Amazon one of the most heavily customer-centered businesses in the world. The second important factor that has to be discussed is an incredible focus on scalability, as Amazon always tries to step away from smaller initiatives and deploy their larger alternatives. This was how cloud computing and e-commerce became the biggest sources of income for Amazon (Aurambout, Gkoumas and Ciuffo, 2019). Either way, these strategies are important because they contribute to a thorough exploration of online retail and its inherent capacity.

On the other hand, the industrial distribution could be noted as one of the key elements of enhanced marketing strategies applied at Amazon. Various affiliations push the company forward and make it safe to say that customer targeting is an exceptional strength that has to be exploited by the organization. As noted by Baker (2014), online marketing channels bring the most conversions, so Amazon continues to target customers on social media and different websites. Being the largest e-commerce retailer, Amazon also has the opportunity to showcase how it carries out its responsibilities and promotes sustainability. With millions of products and thousands of third-party partners, the company shaped itself into a large platform where sustainable choices have to be made to appeal to consumers (Ives, Cossick and Adams, 2019). Overall, it shows how the focus on collaboration brings out the best in all parties involved.

Path to Sustainability

Another important topic is the existence of sustainable decision-making and how the latter is applied by Amazon. The bottom line for retail businesses is that a set of perfect standards has to be developed to ensure a safe workplace and display respect for human rights (Aurambout, Gkoumas and Ciuffo, 2019). Amazon carefully approaches sustainability in order to enhance the organization’s supply chain and make sure that strict compliance brings new competitive advantages into place. From health and safety to ethics, businesses have to take care of supply chain transparency to monitor operations and understand the source of existing issues affecting the company (Ives, Cossick and Adams, 2019). With Amazon, the idea is that the company always interacts with industry experts and stakeholders to understand how the existing operations could be improved further. Additional enhancements have to be viewed through the prism of supply chain needs and employee aspirations.

At the same time, Amazon’s path to sustainability is affected by how the company treats the community. It means that the company is open to cooperation in an attempt to improve environmental conditions and find workarounds to improve the community. In line with Aurambout, Gkoumas and Ciuffo (2019), sustainability has to be perceived as an opportunity to create new jobs and enhance the local economy. With this information in mind, Amazon can be considered a sustainable organization because it tries to reduce unemployment rates and create a positive working environment. This means that the company understands the notion of corporate social responsibility and pays attention to how various resources are utilized and conserved. Jobber and Ellis-Chadwick (2016) believe that international enterprises have to lead the way in terms of how they resolve significant issues pertaining to socioeconomic background. Thus, Amazon is a corporate citizen and a sustainable organization.

Reference List

Aurambout, J. P., Gkoumas, K. and Ciuffo, B. (2019) ‘Last mile delivery by drones: an estimation of viable market potential and access to citizens across European cities’, European Transport Research Review, 11(1), 1-21.

Baker, M. J. (2014) Marketing strategy and management, Macmillan International Higher Education, New York.

Ives, B., Cossick, K. and Adams, D. (2019) ‘Amazon Go: disrupting retail?’, Journal of Information Technology Teaching Cases, 9(1), 2-12.

Jobber, D. and Ellis-Chadwick, F. (2016) Principles and practices of marketing, McGraw-Hill Education, New York.

Introduction

Amazon Company is a renowned corporation that was started with a mission to execute quality online distribution and selling books to customers. The company has executed this noble objective in an excellent manner. Currently, it remains the leading online book selling service provider that enjoys a large market share. Its high-tech warehouses and effective retail distribution centers have enabled it to serve its customers with limited complications.

Notably, the company’s product portfolios are internet based and they are managed using relevant software setups that promote efficiency in service delivery. Key services that it offers include online book selling, content development, browsing options and shopping guidelines to customers (Evans and William 247). Indeed, the company has been able to record exemplary performance over the years since its inception.

The company’s exemplary performance is attributable to the performance oriented operating strategies that its management has adopted. Firstly, the company is managed under quality assurance ideals that ensure that proper guidelines are followed in all aspects of operation. The management has always ensured that quality assurance guidelines are adhered to holistically with an aim of reducing potential risks that customers may face.

This has contributed in safeguarding customers from incurring risks that are normally attached to online transactions. The company also has proper pricing strategy, order fulfillment guideline, effective retailing and product display policies. These strategies enable the company to provide customer oriented services at low prices and in good time. Thus, this paper explores essential strategic aspects that drive performance in Amazon Corporation.

Contribution of Amazon.com’s CRM software in enhancing its market share and competitive advantage

As indicated by Evans and William (247), Amazon Corporation has been able to record good performance using various software setups. The software setups have been instrumental in facilitating operations in the institution that was formed with a core mission to provide quality services to customers in real time. In particular, CRM software has contributed immensely in the development of the company. Firstly, it has enabled the company to gain a huge market share due to its efficiency.

The software has also enabled the company to gain competitive advantage over its rivals that has in turn made it the leading online book selling corporation. The gains have been possible since the software provides quality support incentives that foster holistic satisfaction of customer needs. Particularly, the software has enabled the company to execute effective personalization of customer details. This ensures that customer details are only used for official purposes to avoid privacy risks.

The software also provides requisite incentives that ensure good display of products and other related information such as price and features. This enables customers to make informed choices of products from the wide range of items that are listed (Evans and William 247). Variably, the software has enabled customers to make orders for books and various items online without unnecessary delays. It has also promoted filtering of information pertaining to certain products especially items that are complimentary in nature.

For instance, when a customer orders a product, he is likely to see other items that hold synonymous features as the one ordered appearing on the web page. The effectiveness with which the software has enabled delivery of services in the company explains why the company has been able to record exemplary performance over the years.

How operating efficiencies are being realized in order fulfillment activities

The operating efficiencies in order fulfillment activities are being realized through the use of technology and effective retail strategies. The strategies have ensured that customers’ orders that are placed on timely basis are processed adequately and a relevant feedback is given.

They are tailor-made to enhance efficiency with which services and products are delivered to customers at the specified destinations without complications. In particular, technological advancements and software setups have enabled the company to develop a website that is and remains the leading edge trading platform. The platform has been developed to serve customers better (Evans and William 248).

It is accessible and easy to use since it provides excellent display of information that aids choice making and ordering of products. This is evident since if one accesses the website, he is bound to see the products that are in supply, their prices and features. One can also see ordering procedure of a product, payment methods available and mode of delivery.

The state of the company’s cost given the current position of its warehouses

Notably, low product prices that the company is offering to customers are based on the low cost of stock management. This has been caused by high-tech warehousing strategy that has been instrumental in eliminating bureaucracies and other cost centers that are not necessary. This has enabled the company to operate a leaner stock management structure that requires limited resources. The effective management of resources is what has made the company to be able to set low product prices.

This trend is likely to continue despite the evident changes that may occur depending on the state of the economy (Evans and William 248). This is because the company has put in place viable strategies to ensure that it maintains its operating cost as low as possible with an aim of continuing to provide its services at low prices.

To achieve this, the company seeks to enhance its retail strategy of operation, install more effective sorting software setups and eliminate bureaucratic service centers. The strategies are to ensure that the company is able to offer products at lower prices irrespective of changes in the economy.

The evident customer privacy risks

In reality, institutions are under obligation to manage information that customers provide with at most confidentiality and integrity. The information provided must also be used only for purpose with which it is given. This is essential since poor management of customer’s private information compromises their loyalty to the company.

This is apparent since it makes them to develop negative attitude about the company and eventually withdraw from being key stakeholders. Although Amazon Company has been managing information that appertains to its customers very well, it faces some privacy challenges that its management must address (Evans and William 249).

The privacy issues or risks that it faces include customer confidentiality, data gathering process, record keeping and access to unprecedented levels of information. Firstly, customer confidentiality poses a risk since some customers may divulge key strategic information that helps the company to service its customers well compared to its competitors. This may make the company to loose out its competitiveness.

Secondly, record keeping poses a privacy risk to the company due to the increasing number of customers. This is a risk since managing vast amount of information is always challenging. Other risk areas include access to unprecedented levels of information and data gathering procedures that must be enhanced.

Works Cited

Evans, James and William, Lindsay. The Management and Control of Quality.

Mason, OH: Thomson South-Western, 2008. Print.

Introduction

To a great extent, the rise of e-commerce platforms, including Amazon, which offers competitive prices and reliable shipping of items, has transformed how consumers make purchasing decisions. The clients can browse multiple commodities, read reviews, and buy products from the comfort of their homes. The purchasing biases positively impact the consumer’s behavior, making them buy products that meet their daily needs to improve their livelihood.

Awareness Stage

The initial phase of the customer purchase journey is the awareness phase, where the client is alert to the desire and need for a service or a product. The buyer may not know that there are possible alternative solutions to their problems and do not have a clear idea of the commodity they intend to purchase. One behavioral economics concept influencing a client’s decision-making process in e-commerce is the framing effect (Aiello et al., 2020). The heuristics in consumer behavior is determined by how a product is presented and can impact buyers’ perception. For instance, Amazon’s management emphasis on the merits of a product in its description could make it highly attractive to prospective consumers.

Scarcity is one of the cognitive biases in the Amazon e-commerce context that impacts the client’s buying decision. For instance, salespeople may present a commodity, such as an iPhone watch, as limited in availability to increase its perceived value and inspire customers to purchase it before it becomes rare in the market (Pizzutti et al., 2022). Scarcity may lead to anchoring bias, whereby the initial database seen by a customer regarding an item can anchor their viewpoint on its worthiness, even though the information may be irrelevant. For instance, if a rare product is first manifested as expensive, the clients consider it a high-quality item regardless of its actual benefits. There are multiple nudge techniques that Amazon’s management can deploy at the awareness stage, which are as follows:

• Special discounts and promotions can attract clients towards particular products, mainly for scarce or time-limited commodities.
• Amazon salespeople can feature certain items on the company’s “Today Deals” home page or in search results, thus nudging consumers to buy products they did not initially intend to purchase.

Information Search Stage

During the information search phase, the clients explore the database regarding the commodity or service they are interested in to make buying decisions. Notably, consumers can gather information through various sources, such as by visiting a physical store and undertaking online research (Pizzutti et al., 2022). One behavioral economics concept impacting a consumer’s decision-making process in e-commerce is hyperbolic discounting. Amazon’s management may attract clients by offering them immediate deals, gratifying them with the product’s short-term benefits instead of focusing on their long-haul value. Confirmation bias is inevitable during the information search phase, as consumers want to authenticate their pre-existing beliefs and preferences concerning a product. The heuristics of client behavior is that they believe that a particular brand, such as Amazon prime videos, is of high quality and seek more reviews to support their belief.

Confirmation bias may result in social proof, where other people’s opinions and experiences influence customers. The ratings and reviews from other consumers can offer social proof that a commodity is of high standards and worth purchasing (Klein et al., 2020). Nevertheless, scarcity is another fundamental bias impacting clients’ decisions while buying a product and may lead to social proof. The perception of limited availability of a particular product can increase its perceived value and drive massive purchases, causing clients to search for information concerning the commodities considered to be in short supply. One of the nudge strategies that Amazon’s executive team can apply during the information search phase is as follows:

• The management team must ensure that Amazon’s recommendation engines use algorithms to suggest items that may interest clients based on their browsing history to influence their purchasing behavior.

Alternative Evaluation Stage

The alternative evaluation phase is the step in the consumer decision-making process, where clients have pinpointed a few options that they are interested in, making consumers assess such choices. The anchoring effect is one fundamental behavioral concept impacting a client’s buying decisions. The initial information about a product on Amazon’s e-commerce portal witnessed by a consumer affects their perception of the subsequent database regarding the product (Aiello et al., 2020). The customer’s heuristic behavior is that if a commodity is presented as costly, other options might seem highly affordable to contrast products that have been overpriced. Another crucial behavioral economic framework is the endowment effect, where the clients overvalue products they are familiar with, such as Amazon music, even though competitors offer better price alternatives.

Confirmation bias is inevitable during the alternative evaluation phase, where clients search for a database to approve their pre-existing beliefs about a product. For instance, consumers who believe that a particular brand, such as Versace, sells high-quality clothes may seek more pragmatic reviews concerning their products and ignore negative suggestions. After making a purchase, a client may feel highly attracted to the product they choose even though it has flaws, resulting in choice-supportive bias and making them face the challenge of comparing products objectively. Such cognitive purchasing discrimination may result in status-quo bias, whereby the consumers buy products from high-quality brands, such as Amazon prime (Klein et al., 2020). One of the nudge techniques that Amazon’s management can deploy at the alternative evaluation stage is as follows:

• The executive team should offer comparison tools that enable clients to contrast different products grounded on various criteria, such as pricing and quality, to make it easier for customers to assess their options and make a decision.

Purchase Stage

In the e-commerce context of Amazon, one of the fundamental behavioral economic concepts is the scarcity effect, where their perception of the limited availability of an item increases its value, resulting in massive consumer purchases. The client’s heuristic decision-making behavior is that they are highly likely to buy a product that Amazon management has advertised to have restricted stock availability or present at a certain period only (Pizzutti et al., 2022). The loss aversion economic framework indicates that consumers are highly motivated to avoid losing privileges, such as limited-time discounts, making them make purchases they had not intended to undertake. For instance, Amazon management may offer free shipping for a particular time, making customers buy products to avoid losing the opportunity and save money.

Due to bandwagon bias, the clients are more likely to purchase a commodity if they see others buying it, assuming that it offers immense value. The bandwagon bias leads to social proof, where consumers are influenced by the actions of others, motivating them to buy a product based on its popularity (Klein et al., 2020). For instance, Amazon management may display customer ratings, reviews, and testimonials, on the product page, influencing the decisions of other clients who consider the commodity popular. The status quo bias is inevitable, mainly when the executive team offers Amazon as a default option, making it easier for consumers to continue with earlier subscriptions instead of canceling and seeking other buying options. One of the nudge strategies that Amazon’s management can deploy at the purchase stage is as follows:

• The management must notify the client through short messages, particularly when they add a product to their cart, to motivate them to complete the purchase, thus influencing their behavior.

Post-Purchase Stage

During the post-purchase phase, the clients assess their buying after they have received and utilized the commodity. The confirmation bias behavioral economic concept indicates that a client may seek a database that authenticates their decision and rejects the information that contradicts their views (Aiello et al., 2020). For example, a client who bought an item on Amazon might concentrate on positive suggestions confirming their choices.

After purchasing a product, customers may develop feelings that they made the wrong decision. Therefore, regret aversion allows clients to alleviate such feelings by making them research information supporting their decision, even though it might be biased. For instance, Amazon’s “Verified Purchase” label on reviews could potentially alleviate such regret bias, as it indicates that the consumer has bought a particular commodity and has high chances of providing genuine reviews. Recency bias is the type of discrimination that occurs when the Amazon management sends an email to rate the product after purchasing it. One of the nudges approaches that Amazon’s leaders can deploy at the post-purchase stage is as follows:

• The management must encourage the clients to rate the products they have purchased by sending them pop-up notifications and email reminders after logging into their accounts to attract more customers.

Conclusion

In conclusion, regarding Amazon’s e-commerce context, the company management has leveraged confirmation, social proof, scarcity, bandwagon, and framing effects to create an engaging shopping experience with their customers and influence their purchasing decisions. Amazon’s online platforms enable customers to browse multiple commodities, read reviews, and buy products from the comfort of their homes. The loss aversion economic concept indicates that customers are highly motivated to avoid losing privileges, making them make purchases they had not intended to undertake.

References

Aiello, G., Donvito, R., Acuti, D., Grazzini, L., Mazzoli, V., Vannucci, V., & Viglia, G. (2020). Customers’ willingness to disclose personal information throughout the customer purchase journey in retailing: The role of perceived warmth. Journal of Retailing, 96(4), 490-506. Web.

Klein, J. F., Zhang, Y., Falk, T., Aspara, J., & Luo, X. (2020). Customer journey analyses in digital media: Exploring the impact of cross-media exposure on customers’ purchase decisions. Journal of Service Management, 31(3), 489-508. Web.

Pizzutti, C., Gonçalves, R., & Ferreira, M. (2022). Information search behavior at the post-purchase stage of the customer journey. Journal of the Academy of Marketing Science, 50(5), 981-1010. Web.

Three-Year Returns

The three-year return on the stock price for Amazon is equal to 139.54% (C6, Amazon Stock History). This means that since 2016, Amazon stock has increased by 139.54% on average. The one-year return on the stock price for Alibaba is equal to 29.66% (C8, Alibaba Stock History). This means that since 2018, Alibaba stock has increased by 29.66% on average. It can be seen that on average, Amazon stock has performed better than Alibaba stock. This means that those who invested in Amazon stock earned 139.54% of the value of the initial stock price. Those who invested in Alibaba stock earned only 29.66% of the value of the initial stock price. In other words, it was more feasible to invest in Amazon stock in the past.

Industry Averages

Both companies belong to the consumer electronics industry, so they can be compared on the same basis. Over the past three years, Amazon outperforms its industry in terms of the price-to-earnings ratio. This means that future confidence in the earning power of the business is high. In turn, the P/E ratio of Alibaba is much lower, which indicates that the investor demand for the company’s shares was lower. Amazon’s debt-to-equity ratio is too high, compared to the industry average, which means that the company mainly uses debt to finance its activities. Thus, the company’s financial health in terms of solvency is rather unsatisfactory. Amazon outperformed the industry in terms of return on equity, which once again highlights the profitability of the company. However, the net profit margin of Amazon is lower than the industry average.

Alibaba outperforms its industry in terms of debt-to-equity ratio, which means that the company relies on its own funds to finance its operations. Unlike Amazon, Alibaba uses less debt financing, which speaks of its better solvency. Alibaba’s profitability is much higher than the profitability of Amazon and the industry average, based on the net profit margin. Alibaba also outperforms the industry in terms of return on equity, which means that the company is efficient at generating income. However, Alibaba underperforms the industry in terms of EPS. Considering EPS values, one may note that Amazon generates more money for each share of its stock than Alibaba.

Performance over Time

Amazon’s free cash flows are positive and increase over the past three years (R16-T16, Amazon Balance Sheet). There is a 31% increase in free cash flow in 2017 and a 45.28% increase in free cash flow in 2018. The return on equity ratio mainly increased over 2016-2018 (R13-T13, Amazon Balance Sheet). Despite a small decrease of 11% in 2017, the ROE ratio increased by 111% in 2018. Thus, it is possible to state that one of the company’s strengths is its profitability.

The P/E ratio increased from 153.07 to 190.09 over 2016-2017, yet there is a major decrease of 47% in 2018 (R11-T11, Amazon Balance Sheet). This means that in 2018, investors were not prepared to pay for Amazon shares as much as they were prepared to pay in 2017. However, the EPS ratio increased by 311% since 2016, which means that net income earned by each Amazon share has increased (R15-T15, Amazon Balance Sheet). The debt-to-equity ratio did not change much in 2017, yet there is a 27% decrease in 2018 (R12-T12, Amazon Balance Sheet). One may note that the company used less debt in relation to stockholders’ equity to finance its operations (R12-T12, Amazon Balance Sheet). Still, the debt-to-equity ratio is much higher than the industry average. Solvency is a major weakness of the company, which means that it may be not able to meet its long-term obligations, and its profitability is its main strength.

The P/E ratio of Alibaba increased from 25.19 in 2016 to 81.27 in 2017 and decreased to 44.73 in 2018 (P11-R11, Alibaba Balance Sheet). Investors were not willing to pay for Alibaba shares in 2018 as much as they were willing to pay for its shares in 2017 (which is also the case for Amazon). There is a slight increase in the debt-to-equity ratio during 2016-2018, yet the ratio is relatively low (P12-R12, Alibaba Balance Sheet). Thus, the company is able to meet its short- and long-term obligations successfully.

In 2016, ROE was 32.85%, yet it decreased to 14.79% in 2017 and slightly increased to 16.79% in 2018 (P13-R13, Alibaba Balance Sheet). This means that the company’s profitability in relation to equity has decreased. EPS ratio decreased from $3.49 in 2016 to $2.12 in 2017 and increased to $3.06 in 2018 (P14-T14, Alibaba Balance Sheet). There was a dramatic decrease of 63% in the net profit margin in 2017, which further decreased by 6% in 2018 (P15-T15, Alibaba Balance Sheet). In turn, free cash flows have significantly increased over the last three years due to an increase in net income. The company does not have remarkable weaknesses except for low EPS compared to the industry average, and its strengths are profitability and solvency.

The price-to-earnings ratio of Amazon is much higher than that of Alibaba, as well as the EPS ratio. Thus, investors consider that it is more feasible to invest in Amazon shares. On the other hand, Alibaba is a more reliable business as the percentage of debt that it uses to finance its operations is much lower than that of Amazon. Both companies have high ROE ratios, yet those of Amazon are a bit higher. Alibaba has a higher net profit margin ratio, which may be explained by a higher amount of net income and a lower amount of net sales. Amazon has generated more free cash flows than Alibaba over the past three years.

Investment

These companies can be considered growth companies for several reasons. Firstly, both Amazon and Alibaba shares have a 10+% growth rate for the last couple of years (Amazon has a 139.54% growth rate, and Alibaba has a 29.66% growth rate). Secondly, both companies have strong ROE ratios, compared to the industry average. Based on all the above-said, Amazon is considered to be a better investment option than Alibaba.

Even though both companies have growth stocks, which means that they are able to generate sustainable positive cash flows and their earnings increase at a faster rate than the industry average, Amazon outperforms its competitor in all spheres of financial health except for solvency. Almost all of Amazon’s financial ratios are higher than the industry averages. Moreover, over the last three years, investors were more willing to invest in Amazon stock.

Reference

Your Name. (2019). Financial ratios – Part A.

Amazon

• Amazon is an electronic commerce company.
• Founded in 1994 in Bellevue.
• Founder and CEO: Jeff Bezos.
• Initially was an online bookstore.
• Amazon quickly diversified their business selling a wide variety of goods.
• Produces electronics (Kindle e-book, Fire tablets and phones).
• Today Amazon is one of the world’s largest online retailers.

Amazon started their business being a small book selling business. Initially, the business operated from a garage where people were manually packing and shipping books. The table they used for packing books was fashioned with the help of a door that was not used. Nowadays, the business has been operating for 20 years and it is one of the largest and most profitable online retailing businesses in the world. Amazon quickly expanded and started to sell goods other than books. The range of items sold on Amazon includes electronics, clothes, food, jewelry, and furniture, among others.

Profit and Success

• The progress made by Amazon is stable and sufficient.
• 11% profit during recession.
• Amazon’s shares have grown by 18% after the company reported a surprise profit.
• Sales rose by 20% in the end of June.
• Forecasted growth between 13 and 24% compared to last year.
• Outstanding success in North America (25% growth of sales compared to last year).

Amazon has customers all around the world. It is especially popular in North America. The company has an incredibly strong performance, its sales showed an 11% growth even during the period of recession (2008 – 2009) (Webley par. 1).

3 Steps of Amazon’s Innovation

1. The use of the Internet and its immense popularity as a resource.
2. The cooperation with their party sellers.
3. Targeting the IT community through their web service platform.

Amazon’s Service Innovation

• Advanced services for the customers with the help of the new technologies.
• Service innovation is closely connected to the technological progress and change.
• Amazon uses the huge popularity of the internet to expand their business and maximise revenues.
• The company targets markets that are untapped yet.
• Amazon employs the latest technologies to move their business forward and present a stronger competition.

The type of innovation used by Amazon is service innovation that relies on the technological development as the means to improve and expand the services. The internet boom that has been happening for the last couple of decades is extremely helpful for the business.

Amazon’s Business Model

• Innovative business model is the main source of surging shares of Amazon.
• Initially – commission was earned from brokerage service.
• Later – partnership with the competitors (third party sellers).

The reason for the surging revenue of Amazon.com is its innovative business model. Amazon.com initially, earned its revenue from the commissions from its brokerage service to buyers and sellers. Later they moved on to serve third-party sellers, who were essentially the company’s competitors, to sell through their website and earning commission in the process (Johnson par. 4).

Ongoing Diversification

• Engaging the IT community through the web service platform.
• Production of Kindle e-book for the reading enthusiasts.
• Online retailing + B2B relationships with other sellers.
• Development of the cloud platform for the customers.

Amazon never stopped innovating and transforming their business in order to target new groups of customers, engage new resources, and remain different and thus, more demanded than its competitors. Kindle e-book alone is a good example of diversification as a product and service offering (Johnson par. 5). Due to its constant diversification of services, strategies, and target customers, Amazon is basically impossible to copy.

Amazon’s Cloud Computing

• Highly novel technological product, introduced to the market very recently.
• Allows customers to subscribe and use a domain and run any application on it as well as store data, paying for their usage.
• Cloud computing division brings 80 % revenue increase in 2014-2015.
• Cloud technology is not widely used yet, so it limits the competition for Amazon.

Cloud computing is a novel technology which is being experimented by many companies like Microsoft and Google. Cloud computing provides its customers a pay-per-use and self-service model via the Internet. Thus, cloud computing helps create business value and increase technology enabled business innovation. The cloud platform offered by Amazon provides its customers with a unique platform where they can use any operating system of a computer that works virtually, and store their data in the virtual storage provided with by the company. The customers have to subscribe to the cloud services provided by Amazon and continue using the product with little or no hassle. Due to the novelty of the cloud computing technology the only strong competitors of Amazon in this sphere are Google and Microsoft. Using this untapped resource Amazon is able to increase its revenue and attract a wider customer base.

Value of Cloud Computing

• Elastic Cloud Computing (EC2):
  • Provides infrastructure as a service to the customers.
  • Attract customers who face the problems with high traffic in the internet (Siegel and Gibbons 9).
  • Elastic IP addresses, thus attracting web hosting market.
• Simple Storage Service (S3):
  • Provides users with highly scalable, fast, inexpensive, data storage infrastructure.
  • Easy access to data stored in the cloud.

The cloud computing service of Amazon is divided into two categories – Elastic Cloud Computing (EC2) and Simple Storage Service (S3). Elastic Cloud Computing helps customers rent a machine on the web in order to boost web-scale computing (Rouse par. 3). Simple Storage Service allows the clients of Amazon to work with their data kept in the cloud accessible from anywhere on the web.

The cloud platform provides a unique opportunity to make inroads into an emerging market with the aid of a nascent technology. The target customers of Amazon for its EC2 and S3 services are mostly small start-ups who receive great value for the services they subscribe for and larger companies.

Theory of Innovation Applied to Amazon’s Cloud Computing

• The technology S-curve life cycle:
  • A new technology (such as the cloud) is marketed while it is at the top of its popularity and novelty.
  • While the development of the technology is possible it is explored as a resource.
  • As the technology matures, its development slows down and so does the growth, so the new resource technology is needed.

The company’s business model remains the same as before. The only change observable is in the product/service that Amazon provides. The company provides the infrastructure that helps other companies to process, access, use, and store data with minimum subscription.

S-curve life cycle consists of the growth and steep slope of the curve. Amazon’s cloud platform is presently in the rising portion of the S-curve indicating space for future growth.

Cloud Technology and Competition

• Limited number of competitors due to the novelty of the technology.
• Need for the improvement of the product offerings due to the existing competition.
• Search for punctuated equilibrium – a point of stability in innovation.
• Amazon is trying to cover a larger customer base (big and small businesses).

Currently, Amazon is targeting big and small companies trying to facilitate their investments into the use of the cloud services, but the punctuated equilibrium (an optimal comfort level for both the company and the customers) has not been achieved yet.

Amazon has diversity of experience and exposure to prior related knowledge in providing great value to its customers. The cloud platform allows Amazon to increase its absorptive capacity and enhance their online retail business.

Works Cited

Johnson, Mark W. Amazon’s Smart Innovation Strategy. 2010. Web.

Rouse, Margaret. Amazon Elastic Compute Cloud (Amazon EC2). 2010. Web.

Siegel, Micah and Fred Gibbons 2008, Amazon Enters the Cloud Computing Business. Web.

Webley, Kayla. Online Shopping. 2010. Web.