Discussion
Amazon has been one of the well-known brands in the e-commerce platform. It is an American multinational company that focuses on cloud computing, artificial intelligence, digital streaming and e-commerce. The company was being founded by Jeff Bezos in Washington on July 5, 1994. The company had initially started by selling books, and gradually the company expanded their market into different product categories and was popularly known as “The Everything Store” (Lai, Liu and Xiao 2018). Gradually the company diversified their product categories and started entering into different markets through Amazon Prime Video, Amazon Music, Twitch and Audible units. The company has been one of the leading giants in the digital platforms by providing their premium service to the customers. The customers are able to avail almost every product under one platform and at the cheapest rate. The main competitors of the company include Flipkart, eBay, Myntra and several other local companies that have entered into the digital platform.
The strategy of Amazon is to provide the customer with premium service so that they are able to avail themselves of the products at a minimum time period. The company treats customer preferences as their main priority and bring up new innovations according to their requirements. The main focus of the company involves mainly into three categories which are as follows:
- Selection
- Price
- Convenience
The main focus of the company is to practice a cost leadership strategy where they focus on minimizing the operational cost to the maximum extent and providing the best service facilities to their loyal customers. Thus, the customer convenience and the price of the products are taken care of by Amazon gives them a competitive edge in the e-commerce platform.
The value chain analysis has been divided into two parts, such as the primary activities and the support activities that help Amazon in the smooth functioning of its daily operations. The primary activities include:
Inbound logistics refer to raw materials, but Amazon is a company that focuses on providing service to the customers. The service is related to the inbound logistics that the company provides to the vendors (Rahe, Buschow and Schlütz 2021). The company dominates in the digital platform because of their logistics management and efficiency in its delivery process. The company provides guaranteed service to the customers on the basis of customer service, returns and hassle-free payment options.
Amazon has a completely different operational strategy into different geographical locations and international segments. The operational segment of Amazon is about Amazon Web Services (AWS). This refers to the process of computing, storage, cloud computing, database and other services. Cloud storage, AWS and cloud computing are some of the main in house operations of Amazon.
Outbound logistics refers to the storage, supply, and distribution of the finished goods to the customers. The outbound logistics of Amazon evolve around 175 centres across the world. The fulfilment is related to the robotic technology for inventory management. This process includes shipment of the products through efficient logistics systems (Schielein and Börner 2018). Lastly, it also deals with the digital delivery of the products for the physical stores.
Strategy Statement
This includes the marketing campaigns that the company introduces to reach their target customers. Some of the most common sources of marketing activities of Amazon include print and media ad campaigns, sales promotion, public relations and target customer marketing (Rikap 2020).
Amazon provides premium service to their target customers and vendors with a reliable business model for everyone. The company provides training, literature and support to the vendors. Even also, the customers can use the Amazon marketplace for more advantages. Lastly, the after-sale service of Amazon is one of the unique facilities provided by the company for customer retention for the future (Jindal et al. 2021).
The support activity of the company includes the following elements that are as follows:
Amazon has been one of the giants in the e-commerce platform and has invested huge capital, time and efforts to build a reliable business model and huge market share. This includes the offline structures such as shipping, hiring and delivery with the digital solutions to the customer.
The company has its in-house employees, international employees, and temporary workforce (Alshmrani 2021). The well-established rewards and recognitions have helped the company to retain the majority of the employees and have the least turnover rate in the industry.
Amazon has now only shown their success in physical merchandise but has also established them into the digital platform. The processes include cloud computing and cloud storage which was the main tool for maintaining the operations of the company.
The procurement part is mainly taken care of by the sales and operations team of the company. The inventory is also being managed through this system using tools like forecasting and just time inventory principles (Watanabe et al. 2021).
The Porter Five Forces analysis helps the company to identify its competitive edge within the industry they are operating. This allows them to utilize their strengths to grab the opportunities in the coming days and react accordingly to the changes being made by the competitors. The Porter Five Forces Analysis of Amazon is as follows:
Amazon has to face a low threat from the new entrants in the e-commerce platforms. It is effortless to establish a business in e-commerce, but it would be difficult to compete with a giant like Amazon in the initial stages. Even also the new companies had to undergo colossal investment for warehousing, marketing, distribution, customer service, logistics and making a user-friendly interface for the customers (Sadq, Sabir and Saeed 2018). Lastly, customer loyalty towards Amazon has been extreme as the company had the first-mover advantage in the e-commerce platform. Thus, it would be not easy for the local brands to build trust from the customer who is reliable on Amazon.
The buyers possess high bargaining power over Amazon. The company puts greater emphasis on customer satisfaction and provides high value to its loyal customers. The customers generally hold a high bargaining power because of the intense competition in the e-commerce platforms in the modern days. The customers are mainly price-sensitive, for which Amazon has to provide them with the service at a reasonable price lower than the market else the customer will start moving to the substitutes available in the market (Onyusheva and Seenalasataporn 2018). The only advantage that the company has over here is that Amazon provides a wide variety of products with minimum cost under one roof to the customers.
Amazon’s Strategic Capabilities
Amazon has high competition from the substitute companies. This is because there are several companies that have started establishing their business on e-commerce platforms. Amazon does not have any product of their own, and thus the company has to focus mainly on providing premium services to the customers that help them in retaining the majority of the customers (Girija et al. 2021). Thus, there are high chances that the customers might switch to the alternatives available in the inductee if their requirements are not fulfilled properly.
Amazon has to face low to moderate bargaining power from the suppliers. Typically, the influence of the suppliers in the online platforms is more because they play an integral part in serving the end customers (Bruijl 2018). Thus, if the suppliers for a particular product are less, then the power of the suppliers increases as there is less competition among the suppliers.
The competitive rivalry in e-commerce is relatively moderate to high because of the increased number of brands operating in the industry. The main competitors of Amazon include Flipkart, Walmart, Alibaba, eBay and many local companies operating in the industry (Lincoln and Andrew 2018). These companies give intense competition to Amazon in the digital platform. The main factors of this competition are the low switching costs and the increased number of substitutes being available in the market. This results in the fact that the customers can easily switch to the alternative brands available in the market.
Conclusion
Thus, it can be concluded from the above analysis that the technology has been advancing at a considerable rate, and the customers are switching their purchasing patterns into e-commerce platforms. This has helped them to save a lot of time from their busy schedule. The company has been facing tough competition in the e-commerce platform and has managed to bring up new innovations that have resulted in attracting the majority of the customers. The premium service quality and variety of products being available under one roof have helped the company to gain a competitive edge in the digital industry. One of the recommendations to Amazon is that the company should focus on improving its application interface that will help the customers to operate efficiently. This will help the customer in having an emotional touch and give them a better user experience.
References
Alshmrani, H.M., 2021. An analytical view of amazon success in the worldwide. Life Science Journal, 18(6).
Bruijl, G.H.T., 2018. The relevance of Porter’s five forces in today’s innovative and changing business environment. Available at SSRN 3192207.
Girija, P., Mareena, J., Fenny, J., Swapna, K. and Kaewkhiaolueang, K., 2021. Amazon Robotic Service (ARS).
Jindal, R.P., Gauri, D.K., Li, W. and Ma, Y., 2021. Omnichannel battle between Amazon and Walmart: Is the focus on delivery the best strategy?. Journal of business research, 122, pp.270-280.
Lai, G., Liu, H. and Xiao, W., 2018. ‘Fulfilled by Amazon’: A Strategic Perspective of Competition at the E-commerce Platform. Available at SSRN 3270958.
Lincoln, I.V. and Andrew, C.E., 2018. Porter Analysis: A Business Strategy of Amazon. Com Through a Value Chain and Comparative Advantage Analysis of Amazon’s Trademarks and Intangibles. Com Through a Value Chain and Comparative Advantage Analysis of Amazon’s Trademarks and Intangibles (November 27, 2018). Practical Guide to US Transfer Pricing,.
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Rikap, C., 2020. Amazon: A story of accumulation through intellectual rentiership and predation. Competition & Change, p.1024529420932418.
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).
Schielein, J. and Börner, J., 2018. Recent transformations of land-use and land-cover dynamics across different deforestation frontiers in the Brazilian Amazon. Land use policy, 76, pp.81-94.
Watanabe, C., Akhtar, W., Tou, Y. and Neittaanmäki, P., 2021. Amazon’s New Supra-Omnichannel: Realizing Growing Seamless Switching for Apparel During COVID-19. Technology in Society, 66, p.101645.
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