Organization Overview
Amazon.com is an e-commerce company, founded by Jeff Bezos in 1994. It was started as an online bookstore but later on more items and products were explored like DVDs, software, electronics, VHS tapes, toys, furniture, MP3s and even food items. However, they now have around 977 trademarks and 8349 patents grants (Schneider, 2018).
Until 2001, Amazon did not show any profit but afterwards, the company showed an exponential growth in sales. Later on, it diversified itself into many products and service ranges. The company strategic decision to take over on various start-ups helps them in making one of world’s largest online retailer.
Afterwards, the company is known for its innovation in technology, which gives Amazon.com a competitive edge over other e-commerce companies. This is because they have a collection and collaboration with various software development engineers, user-interface experts and test engineers. Their IT department is also very reliable and efficient which can handle and operate massive numbers of transactions.
One of the major company who is selling goods online is Amazon. It is an American e-commerce company based in Washington. Amazon.com has made separate websites for different countries i.e. Germany, U K, China and Japan. For example, in India, their website is Amazon.in (Ungerleider, 2015).
The vision statement of Amazon states – “Earth’s biggest selection and to be Earth’s most customer-centric company”, whereas their mission statement states that – “We strive to offer our customers the lowest possible prices, best available selection, and the utmost convenience” (Farfan, 2018).
Considering Amazon.com product range, there are hundreds of e-commerce websites and companies that compete with Amazon.com. In addition, many retailers present online are trying to achieve economy of scale by either increasing line breadth of products in an existing market, or trying to penetrate a new market with the existing products.
Various competitors of Amazon.com like Tesco and Wal-Mart have an advantage of physical store whereas eBay.com has the scope of wider geographical areas and product portfolio. The reason why Amazon still one of the market leaders is its innovation and competitiveness strategy (Bose, 2018).
Over the past 20 years, Amazon has been evolved in an ecosystem as whoever accessed internet must have encountered with the services of Amazon. The company business strategy is well structured and design and all are connected with independent sources of Amazon connected by somehow (Ladd, 2018).
There are nine building blocks involved in the Amazon.com business model canvas –
- Customer segment
- Revenue Streams
- Cost Structure
- Key Resources
- Customer Relationship
- Key Partnerships
- Channels
- Key Activities
- Value Proposition
Business Model of Amazon
The Amazon.com business model is majorly divided into its marketplace. Amazon marketplace is an e-commerce platform where products from the third parties and Amazon are sold to customers. It is just a usual marketplace model, which is run by sellers and buyers, however; Amazon is just providing excellent facilities to them (Guo, 2007).
In Amazon.com marketplace model, the third-party sellers sold their items are either fulfilled by Merchant (FBM) or Fulfilled by Amazon (FBA). The difference in FBM and FBA can be referred in terms of their storage. In the handling of FBM goods, the third party do all necessary things like keeping goods in inventory, shipping and the customer service. Contradictory, in the case of FBA, all the necessary processes are handled by the Amazon (Terry, 2013).
The commission is being charged from these FBM merchants as a part of a referral fee. The amount of commission differs according to the types of goods. The company also charge sellers to promote and advertise their products and brand.
Amazon.com is not limited to the marketplace, but its diversity into several other businesses. One of the division is Books including online book retailers, book catalogues and e-book services. Although profit is generated from few if the services like Amazon Kindle, Audible, Amazon Publishing and other services like Book finder, Library Thing, etc. (Spector, 2009) (Gralla, 2014).
The company has expanded its model into revenue based on making money in the rising market of music and videos. It is estimated that all of these services generate prominent revenue for the company.
The various services under this category include –
- IMDB – It includes the Internet Movie Database, which is an authoritative source for TV, movie and celebrity content. The earnings of IMDB services come from advertisements, IMDB pro subscription and licensing from content. In 1998, Amazon acquires IMDB (Jung, 2012).
- Amazon Echo and Alexa– A smart speaker in the form of Amazon Echo capable of music playback, voice interaction, setting of alarms, making of checklists, weather and traffic details and much other real-time information. In addition, Amazon Alexa is just like Cortana by Microsoft and Apples Siri (Ebling, 2016). They both are integrated for providing better services to users.
- Amazon Music and Video – Amazon has same music locker just like the other competitors i.e. Spotify and SAVN. Upon fixed subscription, it provides users unlimited streaming of music at a fixed cost. In addition, Amazon prime Video also helps users in getting accesses to latest trendy content like movies, shows and seasons (SN, 2018).
In these services, Amazon assists other businesses enterprises by offering IT infrastructure in the form of cloud computing. The Amazon did take this initiative in 2006 but today it is known as a highly reliable and low-cost platform that provides millions of businesses an infrastructure all over the world (Newcombe, et al., 2015).
It includes different ranges of phone, computers and tablets like – Kindle Fire and Amazon Fire OS.
It was an extra part of service launched with a premium subscription offer for all the customer of Amazon.com (SN, 2018).
The website of Amazon includes its domain name Amazon.com that attracts millions of users worldwide. Amazon also has invested heavily in a large amount of server capacity for their websites so that to handle excessive traffic from all over the world.
Websites Content
For an effective website, it is necessary that a perfect balance is maintained between its accessibility, functionality and marketability.
- Brand Logo– For an organization, a Brand Logo can help in attracting many users as it helps in building trust, which ensures in returning of buyers. Amazon brand logo states that all products from category A to Z are available with customer satisfaction.
- Search Bar and Easy Navigation – On a website, it is necessary that customer can easily locate the product with a minimum number of clicks through an accessible search bar. Amazon is efficient enough in handling this aspect and it also has an option of filtering, capabilities and comparison. (Buhrmester, et al., 2011)
- Videos and Visuals of products– Amazon makes easy accessibility to zoom their products on their website with different angles. This helps customer to see and examine the product from various angles.
- Login and Registration – Amazon always tries hard to make registration and login algorithm easy so that the process of checkout can be minimized and hurdles can be eliminated. This makes and helps users not to repeatedly enter all necessary details again and again.
- Mobile-friendly website – The mobile app of Amazon is built in every OS like android, IOS and blackberry. This leads to an easy purchase by the customer without login repeatedly to Desktop.
- Customer reviews and Trusted Marks –There is a general tendency that most users will take the decision of purchase by inspecting on reviews and rating done by other users. Amazon already has this plugin, which assists customers in their purchasing process.
- Wish Lists– With Amazon public and private wish list, the user can bookmark their product for purchasing later (Kelly, 2017).
- Social Media accessibility – In this digital economy, social media can serve as an add-on to value of the brand, which will help in increasing the volume of sales and engagement of customer. Amazon has also made its presence on all social media websites where they pass regular information regarding the offers and the products.
Hardware infrastructure of Amazon includes the infrastructure layer, which is a data centre building, equipment and systems running continuously. Various components also are part of this infrastructure layer like HVAC system, backup power equipment and fire suppression. All these connected layers protect Amazon servers and customer data.
The hardware infrastructures of Amazon also include servers, firewalls, proxy servers and encrypted devices (Miller, 2015).
The AWS team of Amazon run a continuous test on their backup equipment networks and machines so that at the time of emergency, this will not cause any trouble.
Starting in 2006, Amazon Web Services (AWS) started their web services, which then became their central mainframe to control all the process and activities in an organization. This also evolved to the area of cloud computing which helps them in replacing capital infrastructure expenses with low cost of variables (Bort, 2016).
In today life cycle of the business, Amazon Web Services stands on highly reliable and low-cost infrastructure platforms, which also help other business on the world. Amazon has data centres in a various location like Australia, Europe, U.S., Brazil and Singapore. This helps them by giving various advantages like-
- Open and Flexible– AWS is a language and operating system agnostic platform. Any business can choose any platform of programming model according to their sense of the business. This leads an organization to focus on innovation, not infrastructure.
- Secure – Their services and data centres have multiple layers of protection so that to ensure the integrity and safety of data.
- Low Cost – The long-term commitments are made by AWS with no up-front expenses. As they have a high scale of expertise and scale, on 15 different occasions, they have lower the price.
The cloud service provider, Amazon includes these issues, which needed to be addressed.
- Ranking the security strategy– It helps in prior assessing a control or tool, for supporting the issue.
- Overcoming the lack of security visibility in cloud – AWS can achieve better visibility by taking an inside-out perspective, going beyond logs and defend against the insider threat.
- Refining confidence in cloud provider security – Amazon needs to answer up to the front as for how can they ensure compliance and easily access log data and how they are going to deal with the incident response.
- Checking why hackers are attracted to the cloud –Can be checked by multi-factor authentication (MFA), monitoring for anomalous logins and implementing logging service at the host level (Jung, et al., 2012).
- Explaining who is liable – This can be done by taking a proactive approach to defining new access levels and actively monitoring across the network.
- Order reference is created when addressing widget is shown to the buyer.
- The address will be chosen by customer from address book including payment method from the wallet widget. The total order will also be generated.
- The order will be placed by the user and then the purchase detail and order reference will be confirmed.
- In this step, the amount will be authorised against selected payment method.
- The order can be shipped after getting successful authorization.
- The order will be shipped.
- A request has been submitting to capture the funds from Authorized amount, and after the successful capture, order reference will be closed.
Amazon.com is one of the leading e-commerce company providing tough competitions in various others sectors too. However, Amazon needs to focus on measuring and tracking how social media is affecting customers. The social media metrics can be measured by the rate of customer satisfaction and feedback, which will help Amazon in attracting new customers.
As Amazon continues to grow, competition will be increased at a higher level. Therefore, investment in advanced and high-tech technologies will be a viable recommendation for the company. In addition, Amazon should stay focused on quality products and service to the customers. They should follow the management concept of Total Quality Management. If Amazon integrates and implements TQM in their business model, various strategic objectives can be efficiently achieved by customer satisfaction and increased in moral.
Specifically, my focus is on the business model and website content. Amazon had diversified itself into various areas, which also gives a competitive advantage. With nine building blocks, the business model is divided into several sources from where revenue is generated. They are the Amazon market place, Amazon books, Amazon Prime, Amazon video and music and Amazon web services (AWS). Diversification is one of the strategy of Amazon, because their main focus is their customer as represented by their vision.
For making the shopping experience reliable, the company managed their contents of the websites in an efficient manner. Each aspect of their website resembles clear accessibility, functionality and marketability.
This content includes brand logo, search and navigation bar, visuals and videos of products, registration and login, mobile-friendly websites, customer reviews and trusted market, social media accessibility and wish lists.
References
Bort, J., 2016. 4 ways Amazon’s cloud business has transformed the tech world in just ten years. [Online] Available at: https://www.businessinsider.com/astounding-facts-about-amazon-aws-2016-3[Accessed 29 08 2018].
Bose, N., 2018. Walmart expands home delivery in fight with Amazon. [Online] Available at: https://www.reuters.com/article/us-walmart-grocery/walmart-expands-home-delivery-in-fight-with-amazon-idUSKCN1GQ1D3[Accessed 29 08 2018].
Buhrmester, M., Kwang, T. & Gosling, S., 2011. Amazon’s Mechanical Turk: A new source of inexpensive, yet high-quality, data?. Perspectives on psychological science, 6(1), pp. 3-5.
Ebling, M., 2016. Can cognitive assistants disappear?. IEEE Pervasive Computing, 15(3), pp. 4-6.
Farfan, B., 2018. Amazon.com’s Mission Statement. [Online] Available at: https://www.thebalancesmb.com/amazon-mission-statement-4068548[Accessed 29 08 2018].
Gralla, P., 2014. Amazon Fire Phone: The Missing Manual. New York: O’Reilly Media.
Guo, J., 2007. Business-to-business electronic market place selection. Enterprise Information Systems, 1(4), pp. 383-419.
Jung, J. J., 2012. Attribute selection-based recommendation framework for short-head user group: An empirical study by MovieLens and IMDB. Expert Systems with Applications, 39(4), pp. 4049-4054.
Jung, Y., Kim, M., Masoumzadeh, A. & Joshi, J., 2012. A survey of security issue in multi-agent systems.. Artificial Intelligence Review, 37(3), pp. 239-260.
Kelly, H., 2017. Amazon’s wish lists are changing the way we donate. [Online] Available at: https://money.cnn.com/2017/11/29/technology/amazon-wish-lists/index.html[Accessed 29 08 2018].
Ladd, B., 2018. Amazon Is Successful Because Of These Two Things. [Online] Available at: https://www.forbes.com/sites/brittainladd/2018/08/27/these-two-things-are-what-make-amazon-amazon/#526cb3d35fd5[Accessed 29 08 2018].
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Newcombe, C. et al., 2015. How Amazon web services uses formal methods. Communications of the ACM, 58(4), pp. 66-73.
Schneider, L., 2018. Overview of Amazon.com’s History and Workplace Culture. [Online] Available at: https://www.thebalancecareers.com/amazon-com-company-research-2071316[Accessed 29 08 2018].
SN, V., 2018. Amazon India ramps up Prime Video & Prime Music content. [Online] Available at: https://tech.economictimes.indiatimes.com/news/internet/amazon india-ramps-up-prime-video-prime-music-content/62834642[Accessed 29 08 2018].
Spector, R., 2009. Amazon.com: Get Big Fast. New York: HarperCollins.
Terry, A., 2013. Amazon case study: Part one. Busidate, 21(1), p. 2.
Ungerleider, N., 2015. A New Report Shows How Amazon Is Different Around The World. [Online] Available at: https://www.fastcompany.com/3053659/a-new-report-shows-how-amazon-is-different-around-the-world[Accessed 29 08 2018].
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