E BUSINESS ANALYSIS OF AMAZON.COM INC
EBusiness analysis of Amazon.com Inc
Overviewof the company
Amazon.comInc is the largest online retailer in the world. The company providesa wide range of consumer goods and web based services. Some of thegoods offered by Amazon.com Inc include apparels, health products,beauty and cosmetic products, books, electronics, auto and industrialproducts and grocery. Amazon.com Inc also offers a wide range ofentertainment products such as children toys, sporting goods, musicand movies, and jurally among other products. It also provides a widerange of web based services such as web hosting, clouding and relatedservices. Amazon.com Inc also provides suppliers such as authors,filmmakers, musicians and other content developers to publish andsell their products through its website (Bahareth, 2012).
Thedotcom boom in the early 1990 led to the establishment of Amazon.comInc. The dotcom boom had a huge impact in communication landscapes inthe business environment, which progressively changed how people dobusiness. The technological advancement inspired e-business wheregoods and services can be bought or sold through the internet. As aresult, Jeff Benzos founded Amazon.com Inc in 1993, an online companythat mainly sold books online. Due to technological barriers such aslimited access to reliable internet and lack of knowhow, the growthof the company was very slow in the first seven years (Singh &Waddell, 2004). However, the busting of the dotcom bubble in theearly 2000s transformed Amazon.com Inc into the world largestbookstore. Advancement in internet technologies and its influence onthe business environment led to progressive changes in the businessstrategy at Amazon.com Inc. Mergers and acquisitions as well asdiversification of the target market has transformed Amazon.com Incinto a market place where customers can buy almost anything(Schneider, 2011). Amazon.com Inc is present in the United States,Canada, Mexico, Europe, Australia, Brazil, Mexico, Japan, China andIndia. Additionally, the company can ship selected products to othercountries around world. Due to the changes in the shopping patternsand increased confidence in online marketplaces, Amazon.com Inc hassurpassed Walmart by market capitalization (Bahareth, 2012).
Needsof the company
Advancementin information and communication technologies has had a huge impacton the business environment. Additionally, companies such asAmazon.com Inc are adopting ambitious strategies to expand globallyto venture into emerging markets due to the ease of internationalbusiness as a result of technology. The creation of a digital economyhas results into e-business and ecommerce. This is an alternative tothe traditional trade where physical interactions between the buyerand the seller are essential. The Amazon.com Inc business model aimsat venturing into the ever expanding online market where an increasednumber of customers are opting to do their shopping online. In thelast few years, there has been a phenomenon increase in the number ofonline shoppers. This is due to increased accessibility to theinternet and supporting technologies. Majority of these customers arerelatively young and education individuals mainly in the middleclass.
Roleof the internet in the business strategy
Withthe increased internet connectivity in the modern world, the role ofthe internet has evolved into a critical aspect of business strategy. Since it was founded, Amazon.com Inc business model has been basedon the internet and related technologies. Therefore, the internetplays a central role in the business strategy of Amazon.com Inc.There are several ways through which the internet influences thebusiness strategy of an organization. Internet provides a timelessand borderless means of communication. This means that through theinternet, business organizations are able to reach their suppliersand customers remotely. In the modern business environment, manybusiness organizations are making their first contact with theircustomers online. Thus, the various forms of online marketing such asthe use of company websites, social media and search engine articleshave become a basic marketing tool. Online contact with the customeris followed by an offline contact (Schneider, 2011). However, theAmazon.com Inc business strategy, the internet is the only contactbetween the customer and the company. Amazon.com Inc engages itscustomers on the internet and sells the products online. There areseveral advantages of the Amazon.com Inc business strategy. Byselling online, the company is able to significantly reduce theoperations cost, especially the cost involved in the management ofthe supply chain. The strategy introduces a new approach to customerservice which is more convenient and personalized. Additionally, thestrategy gives the company more tools that can be used to analyze thebusiness environment (Bahareth, 2012).
Onlineuse types for Amazon.com Inc
Dueto the internet selling boom currently being experiences, Amazon.comInc must be able to identify they type of online shoppers it isinterested in. competitors in the online market places are using thelatest technologies to update and cross check their websites toensure that they meet the needs of the targeted clients. There aredifferent types of online users, who are considered as potentialcustomers by online marketers. The first type of online users is newin the online market place and the ecommerce concepts. They are morelikely to make small purchases which they consider safe in theirfirst online transactions. Having a simple to use interface and morevalidations supported by easy checkout process will attract thisgroup of online users (Dholakia, 2012). To attract these particulartype online users, Amazon.com Inc uses products pictures as well ashelp to assist them navigate through the website.
Anothertype of online users targeted by Amazon.com Inc is the reluctantshoppers who are more concern about privacy and security. This typeof online user is likely to visit an online seller website toresearch on an item rather than buying online. Amazon.com Inc websiteuses different tools to convince these online users about theirsafety and privacy. This includes clear privacy and safety policiesand online customer support. Amazon.com Inc largely depends on itsreputation to convince online shoppers about safety and privacy. Thebargain shopper is also an important customer targeted by Amazon.comInc. This is an online user who visits the company website to compareprice. This potential customer can by the product offline or otheronline sellers depending on the price (Dholakia, 2012). Providingcompetitive prices is the only strategy that can be used byAmazon.com Inc to reach this type of online users.
Anothertype of online users is the surgical shoppers. These are regularshoppers and log in to a website when they have decided they want topurchase the item. They know the criteria to use when makingdecisions, where to get the product and how to buy it online. Theyare confident about their online purchases. Amazon.com Inc targetssurgical shoppers by enabling quick access, quick turnaround time,between product configurations and real time customer services.Enthusiasts are also an important type of online users who shoponline for recreation. The wide range of products offered byAmazon.com Inc makes it suitable for this group of shoppers. Poweronline shoppers are a group of customers who shop out of necessity(Dholakia, 2012). Good navigation tools and additional informationabout the product make Amazon.com Inc an appropriate shopping sitefor this group of shoppers.
Inthe early 2000, Amazon.com Inc enjoyed technology advantage becausethere were less mega companies in the online sale market. Thisenabled the company to develop its brand name and customer loyalty.The huge success enjoyed by Amazon.com Inc is based on the fact thatthe company entered the market before other online sellers. However,in the modern business environment, Amazon.com Inc does not enjoytechnological advantage compared to its competitors. This does notmean that the technologies used by Amazon.com Inc are not up to date.For example, in the provision of cloud computing services, Amazon.comInc is competing against technology giants such Rackspace. Thesecompetitors have an access to the most advanced technologies. Amazon.com Inc is also competing with other online sellers such asApple Inc and Netflix (Bahareth, 2012).
Impactsof internet regulations
Internetregulations have both positive and negative impacts on ecommerce.Since Amazon.com Inc does all its sales on the internet, it isdirectly affected by changes in law or regulations that affect theuse of the internet. The most important effects of internetregulation are increased security. Government regulates the use ofinternet to prevent both business organizations and individuals fromfraud and other internet based crimes. This increases the confidenceof online customers, which has positive impacts on online sellerssuch as Amazon.com Inc. However, there are some negative effects ofincreased regulations. As a result of new laws, Amazon.com Inc couldbe faced with increased incidences of law suits. Additionally, thecompany will spend more resources policing vendors and supplies toprevent the sale of pirated products in its website. This will have adirect impact on the profit margins of Amazon.com Inc and preventfurther expansion of the variety of goods offered by the company.Other regulations are likely to affect the acceptance of the internetas a safe platform for doing business (Schneider, 2011).
ECmatrix for Amazon.com Inc
BCGmatrix is essential in ecommerce because it allows markets andbusiness leaders to make a decision on which category of product willgenerate the best returns on investment. The matrix has four quadrantmarkets as star, question mark, cash cow and dog. Dogs have lowmarket share and low growth rate. There are no dogs in Amazon.com Incoperations. Question marks are growing rapidly but have low returnsdue to low market share. In Amazon.com Inc operations, video ondemand and Spanish software can be considered as question marks.E-movies on demand, cloud computing, electronics, apparels, beautyproducts and appliances can be considered to be stars. Thesecategories have relatively large market share but consume moreresources due to relatively high rate of growth. The eBooks are thecash cows in Amazon.com Inc operations. They have high market shareand consume less compared to what they generate.
Ecommerceis faced a wide range of threats. Therefore, there are severalthreats to Amazon.com Inc online business operations. Some of thesesecurity concerns are likely to deter potential customers from buyingonline. The most important security concern relates to privacy ofcustomer information and identity theft. There are numerous cases ofbreach of security in transactions involving credit cards and debitcards. Usually, fraudsters have an access to the most sophisticatedtechnologies which enables them steal secret and sensitiveinformation on transactions. Integrity and authenticity of the datacaptured by online sellers is also an important security concerns inecommerce. Both technical and non technical attacks are also asecurity threat to ecommerce. Technical attacks include hacking of acomputer system while non technical attack may include socialengineering (Schneider, 2011).
Limitationsto global ecommerce
Thereare several factors that limit global expansion of ecommerce byAmazon.com Inc. the most important limitations are technologicallimitations. Ecommerce is dependent on accessibility to internettechnologies. Due to uneven distribution of technology globally,Amazon.com Inc cannot be able to expand to all global markets. Forexample, while some cities have an access to the most recentinformation and communication technology, some rural areas do nothave basic access to the internet. Another important limitation islack of knowledge and skills among a large number of potentialclients. As a result, many people will either not trust onlinetransactions. Ecommerce expansion is also affected by the type ofcommodity that can be sold by an online seller (Kshetri, 2007). Forexample, perishable or bulky goods can only be sold within a limitedgeographical area.
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