Strategy management in Amazon Inc.
Table of content
Introduction
Amazon.com, Inc is a well renown and online incorporated organization that
engages in retail sales of the consumer products and subscriptions across the globe
especially in North America. The organization was first founded in 1995 as an online book
retail store and has since transitioned to be major provider of a diverse field of merchandise
available in different market shares. The company’s prowess in incorporating the ecommerce market and capturing the entire internet retail platform has been phenomenal
outweighing some of its predecessor rivals such as Walmart, Costco and even Ebay across
the borders. The company operates through three segments: North America, International,
and Amazon Web Services (AWS). It sells merchandise and content purchased for resale
from third-party sellers through physical and online stores. The company also manufactures
and sells electronic devices, including Kindle, Fire tablets, Fire TVs, Rings, and Echo and
other devices; provides Kindle Direct Publishing, an online service that allows independent
authors and publishers to make their books available in the Kindle Store; and develops and
produces media content. In addition, it offers programs that enable sellers to sell their
products on its websites, as well as its stores; and programs that allow authors, musicians,
filmmakers, skill and app developers, and others to publish and sell content. Further, the
company provides compute, storage, database, analytics, machine learning, and other
services, as well as fulfillment, advertising, publishing, and digital content subscriptions.
Additionally, it offers Amazon Prime, a membership program, which provides free shipping
of various items; access to streaming of movies and TV episodes; and other services.
With a critical analysis of its continuous developmental phases, this paper aims at
presenting Amazon’s success strategies that advance the organization into higher
economic heights, broadening of its brand, improvement of its customer base, and being
the preferred online shopping destination in the United States and internationally.
Main analysis (1500)
As of the first quarter of 2021, Amazon had reported a net sale of $108.518 billion, an uplift
of about 43% from the previous years quarterly net sale. The net service sales which
included the fulfillment services for sellers on its marketplaces accounted to a total of
$51.027 billion, an even greater increase of up to 51.8% from its previous year net service
sales. The evolvement of the market strategy from the start of the organization in 1995 to
where it stands has proven a strategic management success that has ultimately cultivated
into a big piece of the online platform market share. In the company’s business model,
Amazon has identified as a base to follow an egocentric key success strategy that has
boosted its brans outreach, increased on its customer base through provision of its clients
with outstanding value and product shopping knowledge. Their strategies have enabled the
company to identify scopes and scales of economies providing them with subsequent
success runs at each market platform they choose to indulge in. needless to say the
company has capitalized on its huge acclaimed customer base and built loyalty over time
and their diversity in product incremental and service revenue opportunities.
Some of the critical success factors indulged within the company include:
A customer- centric approach in delivery of product and services by the company.
Implementation of a customer centric approach has proven to be a critical factor that has
contributed to the success of Amazon across the online platform. This approach involves
asking the customers what they want and sorting out how each one of them can have
access to their products through a diverse range of delivery services. Moreover,
implementing innovative metrics in customer centric approach has been a theme that has
scaled he company’s products and services widely. This would involve creation of products
and services that the customers don’t know they need and delivering it to them.
Additionally, Amazon platform has made it easy in delivery customers fantasy into reality in
their provision of stores through launching of customizable stores within its deliverables.
This approach has translated the organizations vision in achieving its objectives in delivery
of convenient, selected services at a broadest price.
Innovative drive from the top
Amazon being a company that sets frontier strides towards improvement and scaling
globally, its top-notch ability to build and deliver unique and futuristic innovations puts it at
the fore front of successful companies. Amazon is able to come up with well thought
through ideas that tackle real world problems from a forecast perspective of how the future
is going to be. Their innovative roadmap takes the company from where it is o where it is se
to be in the future on time and on schedule in regard to product development, deployment
and scaling.
Clear thinking and risk-taking culture
The adoption of ideas within Amazon follows a strategic management pattern of originality,
scalability and its ability to generate and return capital. The company is in constant
experiment with new thinking methods that acre critically analyzed before high investment
initiatives are put in place. The organization structure of the company provides it with a
strategic advantage of critical evaluation of new ideas by hundreds of managers before
green lighting the project to the next development phase thus capitalizing of well analyzed
markets and problem solutions to the applied markets in question.
SWOT analysis of Amazon’s strategic management system in its current market
environment
With the shifting demands for new and advanced products and services day in and day out
within the internet, maintaining of a critical strategic equilibrium in the delivery of upscaled
products hat meet customer satisfaction and capitalized on the market force available is
important. The performance of a SWOT analysis to gauge on the organization’s strengths,
weaknesses and the available opportunities they can capitalize on while facing implacable
threats to its existence is fundamental in the organizations market evaluation.
Amazon’s strengths
1. Strong brand name – the success story of Amazon as a globally recognized ecommerce giant is beyond a doubt established within the online platform. The
company holds a strong position in providing of the best possible E-retail platform
across the world with a publicly acknowledged citing since 1997.
2. Brand evaluation – Amazon ranks as the second most brand valued company in the
world after Apple with a market cap of up to $1.7 trillion as of 2021.
3. Customer oriented – Amazon enjoys a wide range of customer base that are loyal to
the organization. This is achieved though the company’s ability to provide a wide
range of products with inexpensive prices conveniently to its customers’ requests.
4. Cost leadership – the company does not incur costs in maintaining physical retail
stores as most of its products are sold online. Its ability to scale across economies
enables the conglomerate company to efficiently control costs within its products and
lower its inventory replenishment time. The organization enjoys a strong value chain
that assists in the maintenance of its low-cost structure.
5. Large number of third-party sellers – from its highly acquired traffic volume, Amazon
accumulates a high number of third-party sellers that sell products through amazon
fulfillment services thus adding to their net revenue income.
6. Superior logistics and distribution systems – the company implements a high range
of efficient logistics and distribution network across North America and
internationally. With its fixed rates in delivery of products, the company executes
services and product delivery reliably, securely and efficiently to its customers’
satisfaction.
Amazon’s weaknesses
1. Easily imitable business model – with the increase in online traffic availability, the
availability of similar business models that represent online retail stores have
increases in number. This poses as a challenge to Amazon as rival companies can
easily imitate the business models structure and influence the companies market
share in retail stores online.
2. Product flops and failure – amazon has faced a diverse range in product failure.
Adoption of some of their launched products into the market proved to be futile as
they did not meet the desired market necessity as anticipated. Some of these
products include its fire phones and the Kindle fire device.
3. Tax avoidance controversy – amazon faces negative publicity from arising cases of
tax avoidance in different countries including Japan, USA and the UK. Criticism from
such allegations affects the overall net revenue income made from shied away
customers.
4. Limited brick and mortar Prescence - the number of physical stores owned by
amazon is limited thus it faces a disadvantage in making sales from impulsive walkin customers. Also, their limited physical presence has hindered the attraction of
customers buying things that are not sellable on online stores.
Amazon’s opportunities
1. By expanding physical stores, Amazon can improve competitiveness against big box
retailers and engage customers with the brand.
2. Amazon has the opportunity to improve technological measures and organizational
policies to reduce counterfeit sales. One case of counterfeit sales came into light
when Amazon sold a fake My Critter Catcher. The product was sold for $1 less than
the original product.
3. Can do backward Integration by expanding its production of in-house brands such as
Amazon basics to differentiate its offerings and improve profit margins.
4. Amazon may continue to raise more markets in other countries worldwide to remain
positioned on the E-commerce market that the company has enjoyed so much.
5. More acquisitions of e-commerce companies can increase the company’s market
share and reduce the competition level.
Amazon’s threats
1. Controversies – the destruction the company’s brand image though critics and false
allegations have tended to ruin the customer-oriented focus that the company is
trying to maintain. People critically reacted and boycotted Amazon sites in 2010
when they found that it’s selling the book “The Pedophile’s Guide to Love &
Pleasure: A Child-lover’s Code of Conduct.”
2. Government regulation – government regulations have tended to limit the extend at
which companies can expand to. Currently Amazon faces common business laws
and regulations in regard to online commerce and additional implied tax laws.
Regulatory authorities impose laws might impede the growing of the Internet or other
online services. This could, in turn, reduce the request for Amazon’s services and
products in addition to increase Amazon's cost of doing business. Additionally, it is
not clear how existing laws governing issues for instance sales and other taxes,
property ownership, libel and personal privacy apply to the Internet and online
commerce. Disapproving resolution of these issues may harm Amazon's business.
3. Lack of predictability in the e-commerce market - E-commerce predictably changes
every given time. There is a predictable threat a competitor to equal to Amazon will
emerge crushing every bit Amazon has built over the years.
Competitive advantage strategy
The basis of Amazons business strategy is mainly focused on customers. The organizations
belief that buyers are crucial tot heir business and as such the customer experience and
satisfaction is key at every encounter within its businesses. As documented by Dudovskiy
(2020), the company cares more about customers' satisfaction than they care about
market competitors. He distinguishing factor of the company is its flexible business culture
that changes with customer and market needs. The company has been at the fore front of
pace setting market dependencies with consistent dominance of the new segment market
fields as well as the existing ones. Like most giant e commerce companies, Amazon
segments its markets based on demographic and psychographic segmentation (Bhasin,
2018). This is conducted through tracking of buyers’ actual purchases and using the data to
create target audiences to implement market strategies (Bhasin, 2018). The market strategy
is aimed at influencing customers into making frequent purchases over and over.
The competitive advantage is the factor that sets the competencies, capabilities that
provides the company with its uniqueness that attracts a traffic base (Vogel, 2005). Amazon
provides a competitive edge that aggressively sets it aside from other online ecommerce
and retail stores. Its ability to influence market value of products sets it to enjoy low cost and
value added to service within its frameworks. Moreover, with its large traffic base the
company enjoys high profit turnaround. Despite the company undertaking a slim profit
margin, the level of economic scale, continuous moderation of its business model
operations, and the flexibility in different market spheres in response to consumer demand
gives the competitive advantage in their success story (Dudovskiy, 2020).
A much as Amazon enjoys a wide customer base in North America and internationally,
there is still room for growth to adopt more and more people amongst the different
populations in the world. Most of the influence that can cultivate the progression of the
organization would be to get more into digital marketing strategies. The company’s
framework can efficiently acquire customer bases from effective customer communication
touchpoints. The frame work would involve building of an agile strategic approach towards
digital marketing that would manage and optimize digital channels against defined targets.
This would initiate creation of outreach strategies where Amazon can induce business
growth derived from detailed approach to search engine optimization and AdWords
targeting millions of keyword searches. The organization can create clear and simple
product experiences through testing and learning which in turn can be converted into
personalized product descriptions that can influence different market dynamics of the
different regions in the world. Moreover, improvement of their engagement practices into a
more customer centric approach would highly influence return buyers thus getting them
more and more delighted on the products and services offered by the organization.
Conclusion
Amazon has developed its brand to be a household company in online e-commerce and
retail. The company’s ability to combat different market structures and still outshine its rival
companies can all be accounted to a well-developed business model that implements a
strong strategic management structure. Amazon has successfully expanded and
transitioned from on state to the next developing subsequent and flexible business culture
that evolve through efficient and effective business strategies. Its approach as a customer
centric company has provided, he organization to convert customer satisfaction into
profitable entities from delivery of diverse product descriptions that cater for market needs
within North America and some parts of the international spectrum. Despite the various
threats and weaknesses facing the company, Amazon remains a power house in the retail
business showing prospective progress in its development in the future. key reinvention
capabilities are essential in the prospective growth of the company. Adoption of new
strategies in its strategic management plan would involve a proper digital management
system that will capitalize on the great number of people within the online platform.
Consistency is also key in their strategic management plan to maintain their relevance and
brand awareness as a strong hold ecommerce platform.
References and bibliography
Bhasin, H. (2018, September 27). Marketing strategy of Amazon - Amazon marketing strategy.
Marketing91. https://www.marketing91.com/marketing-strategy-of-amazon/
Dudovskiy, J. (2020, March 23). Amazon Business Strategy: cost leadership & customer
centricity - Research-Methodology. Research. https://research-methodology.net/amazon-businessstrategy-benefiting-cost-leadership-diversification/.
Vogel, M. A. (2005). Leveraging information technology competencies and capabilities for a competitive
advantage (dissertation). ProQuest Information and Learning Company, Ann Arbor, MI.