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Amazon, a major retail corporation, decided to develop drones to perform a delivery function. The initiative dates back to the 1980s when Michael Aldrich invented a method of connection of firms with their consumers. When the Internet secured customers’ safety and provided a decent connection, the barriers to enter the market were removed, giving rise to Amazon, eBay, and Dell. A few years later, the market was cleared from the majority of retail companies.
Starting a book retail business, Jeff Bezos expanded the idea to resell a wide range of products, prioritizing the customers and revenue figures. Next, the company proceeded to grow, increasing the net worth, distribution area, and product line. One of the most progressive strategies comprised of the two-day delivery and subscription plans. The shipping procedure depended on third parties, which put Amazon in a vulnerable position. Jeff Bezos was bothered by the reliance on other companies, the cost of which had increased as a result of a rise in petrol prices. To attract more customers, Amazon started lobbying the US authorities to remove sales taxes. In addition, the company used data on its customers to offer desirable products. Thus, Amazon embarked on the progression of drone technologies as a means of an alternative delivery option. Autonomous vehicles (AVs) benefit the company by reducing expenses on fuel and drivers. However, Google and Carnegie Melon University were also in a process of testing. Thereby, Amazon was determined to reduce the delivery time to a minimum and began its own experiments.
Analysis
The development and further application of AVs will have a considerable impact on retailing, transportation, and some subscription service industries. The AV operation requires a substantial capital investment to purchase and adapt to usage. Apart from being costly, it is highly unlikely that machines can perform without any human assistance. Thus, workers will have to learn to use them, which only adds to the cost of training. Moreover, the benefits of automation cannot be instantly recognized since there is a time lag between purchase and exploitation. Depending on the size, retail businesses will have difficulties with delivering goods via drones as employees need time for education. Firms may be reluctant to undertake substantial funding with long-term results. Hence, employers are more likely to proceed with human operations, unwilling to lose loyal and trustworthy workers.
Another cost of AV usage is the highly-qualified staff required to update and maintain software and hardware systems. A transportation company will face barriers in terms of the cost of a professional to regulate and operate drones safely and effectively. Additionally, customers can be hesitant to allow robots to ship their goods. Indeed, it might potentially reduce the sales and branding image of a company if something goes wrong with the AVs. Firms risk losing consumer loyalty and reputation on the market. Thereby, AVs necessitate specific skills from workers and can be encountered by skepticism among consumers.
The main area of concern related to AV exploitation appears to be job losses as drones replace people. The skill level is a crucial factor where low-skilled labor is less protected from potential unemployment (Tatasciore et al., 2019). The delivery process includes the most basic and straightforward skills, which is driving. More repetitive working procedures have a higher possibility to be reproduced by a robot. Hence, work expectations have changed since the automation started to gain momentum (McClure, 2017). Taking into consideration the scale of possible unemployment levels, it is evident that AV usage will lead to severe and irreversible consequences. It can affect the set of skills required, the organizational part, and the duties needed to be fulfilled (Vermeulen et al., 2018). Given that AVs successfully substituted employees, they would have to acquire those skills to avoid unemployment. Undeniably, the perspective is not encouraging for millions of workers and it will worsen with higher rates of automation.
In case the labor market is flexible and is able to adjust to changes, then AVs will not pose a threat of massive job cuts. However, the inflexible market can experience shifts in demand for workers, causing alterations in unemployment rates. For example, a subscription company sells vegetarian food based on an annual fee. An introduction of drones to deliver the product will negatively impact the staff who do not possess knowledge of the AV operation. Thus, the ability to adapt to changes is one of the critical components determining unemployment outcomes.
The automation acts as an initiative for firms to reduce the cost of production. Adaptation of AVs might lead to significant economies of scale, which is a prominent element for businesses dealing with high capital funding. Drones will reduce the number of workers, removing the power of trade unions. In addition, it can be noted that firms can practice more environmentally friendly operations by diminishing fuel consumption. Reduced expenses might give an opportunity to invest in other areas such as customer service or promotions to engage with consumers. Thereupon, AV application will decrease the cost of employing humans and create possibilities to invest in alternative sectors of a company.
Investment in the AV delivery process bears risks of a shortage of demand for a service. As mentioned above, consumers tend to be skeptical about changes in habits that they follow. An average consumer is more likely to prefer a familiar method of acquiring products via human interaction. Indeed, customers may not be tech-savvy and feel flustered by the undiscovered object. However, Amazon can also invest in celebrity endorsement and advertising to illustrate the plainness of the process. The company’s website can include detailed instructions on drone usage. Hence, Amazon takes a chance of negative or indifferent response to the new service on the part of the customers.
The current pandemic situation led business activities to temporary and permanent ceasing. The rules dictate to minimize human contact to prevent further infestation. Furthermore, there are future uncertainties as to the duration of the quarantine. The company may use the opportunity and provide the service. By this time, the testing of drones might have been productive, which will allow Amazon to introduce the novelty without any disruptions. Therefore, it can be concluded that Covid-19 is a convenient time to employ drones instead of people.
Proposed Recommendations
Innovation is one approach by which Amazon may boost its market share and increase profitability. Customer loyalty plays a crucial role in achieving these objectives since a strong relationship can become a significant barrier to attract new consumers. When a firm introduces a brand-new technology, consumers tend to side with a more innovative company, wishing to become the owner of a novelty. As a result, many of those customers stick to the firm, which adds to its market power and revenues. Moreover, product and service quality is an important factor for the consumer to understand whether the business is able to satisfy wants and expectations. It refers to different aspects of the product akin to design, features, and special offerings. These elements make the product more desirable for the customer. Therefore, consistent innovation is vital for the company to not only lure consumers but also survive in a business environment. The company’s attitude towards development and advancement influence consumers’ perception of the product and the overall branding image of the organization. Thus, for the purpose of the market share increase and financial improvement, the innovation process is critical.
Innovation can be implemented in various directions with different implications and outcomes. For example, automation may result in net positive growth in employment rates in the long-run (Kelley, 2020). At the same time, short-run consequences are mostly detrimental to a firm as well as employees. What is more, modernization might happen with regard to product development. Amazon can add new aspects to an existing proposal, which will offer special advantages to the customers (Kahn, 2018). The company needs to focus on the improvement of existing product ranges rather than introduce something new. AV is an example of an extreme change in the Amazon delivery process. Marketing is another efficient method to capture market share and increase profits. Its aim is to connect and establish a relationship with consumers, which involves active promotions. It acts as a demand driver by increasing the brand’s status and improving the overall image (Kahn, 2018). Thus, product and process innovation together with promotions are the ways to increase profits by attracting more customers.
Having a clear perception of the customers’ and competitors’ opinions on the products can also be helpful in recognition of the market opportunities. Provided that the industry is unsatisfied with current offerings, Amazon has an opportunity to spot an innovation possibility. Therefore, businesses that are open-minded about modernization are more inclined to use the new information more efficiently (Ziegler & Nogareda, 2009, as cited in Bayraktar et al., 2016). The company must reconsider every crisis encountered in the market and regard it as a chance to succeed. It is vital to note that innovations do not happen under poor management and consistent hesitation. Amazon needs its innovation teams to be consistent, gather regularly, discuss ideas, and conduct brainstorming meetings. It is crucial to grant ownership for innovative concepts and their development. The company must ensure an adequate environment, encouraging its workers to innovate with rewards. Thus, Amazon has to concentrate on growth opportunities and foster an innovative atmosphere.
The most frequent association with innovation is new product development instead of acknowledging processes and activities within the business. The recognition of them can boost productivity and revenues for the firm. A discouraging workplace might reduce workers’ inspiration and motivation, lowering output levels. Amazon might upgrade its offices with coffee shops, themed play areas, and libraries to offer a place where workers can innovate. The company may grow on the foundation of innovative ideas resulted from close communication with employees. Customers may also be a source of aspiration by having open communication with them. The company could try to understand their dissatisfactions, which may assist in the provision of better services. Amazon might collect data, analyze, and confirm the need for innovation. This can for the reason that companies tend to undertake updates without questioning whether the current good and service already fulfill the customer’s preferences. In the case of AV exploitation, Amazon has to conduct surveys and market research using various social media platforms. The gathered information will reveal areas where alterations need to be implemented. Thereupon, an inviting ambiance and active communication with workers and consumers facilitate innovation.
Another innovative tool that can be used by Amazon is continuous development in a new area while existing services are still under appropriate management and control. It can be noticed that many organizations are determined to launch a state-of-the-art product without abandoning present offerings. Amazon should not let AV delivery deteriorate the quality of the conventional method of shipping. For that matter, customers may feel forced to radical changes, which can cost Amazon a share of loyal consumers. The technology-oriented schools and colleges are the incubators that assist students to invent and develop project ideas. From a renewable source of energy to discovering cancer treatment, young individuals create devices using robotic technology. Amazon may run professional as well as amateur competitions on the most innovative solutions and provide monetary rewards. The winners’ ideas can be licensed and used for future company’s growth. Lastly, innovation cannot occur without the willingness to learn, collecting information, studying the market trends to spot alternative frontiers of advancement. Hence, it is recommended for Amazon to prevent novelties from the degradation of existing services, adopt ideas from outsiders, and persistently educate itself.
References
Bayraktar, C. A. (2016). Competitive strategies, innovation, and firm performance: an empirical study in a developing economy environment. Technology Analysis & Strategic Management, 29(1), 38-52. Web.
Kahn, K. B. (2018). Understanding innovation. Business Horizons, 61, 453-460. Web.
Kelley, J. (2020). Impact of artificial intelligence, machine learning, and automation in operations management: An analysis of healthcare, manufacturing, and retail sectors (Honors Thesis, The University of Southern Mississippi, Hattiesburg, MS). Web.
McClure, P. K. (2017). “You’re fired,” says the robot: The rise of automation in the workplace, technophobes, and fears of unemployment. Social Science Computer Review, 36(2), 139-156. Web.
Vermeulen, B. et al. (2018). The impact of automation on employment: Just the usual structural change? Sustainability, 10(5), 1-27. Web.
Tatasciore, M. et al. (2019). The benefits and costs of low and high degree of automation. The Journal of the Human Factors and Ergonomics Society, 20(10), 1-23. Web.
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