Early Days of Amazon as an Online Bookstore
According to Stone (2013), There was a time back in the early 90s when Amazon introduced itself as an on-line book retailer and soon the company specialized in electronic commerce and cloud computing to deliver the best quality services to the customers. For the first four years, the company managed to start off as an online mega bookstore that used to sell only books, especially to compete with the local booksellers and create convenience for the customers to make purchases with ease and effectiveness (Amazon.com 2018).
“That’s actually a very liberating expectation, expecting to fail” -Jeff Bezos
Previously, the major book stores were Barnes & Noble, Waldenbooks and Crown Books and so to compete with these companies and ensure that more sales revenue can be achieved, Amazon.com launched the online bookselling website. It was a very convenient and effective online website from where the clients could gain accessibility to the different types of books available (Stone 2013). At that time, Amazon was known to be the “Earth’s biggest bookstore” because of its major distribution of books online.
There were huge numbers of clients from more than 150 countries and sales revenue of nearly $150 million, which made the company go public with market capitalization of more than $438 million (Bao and Chang 2014). The market value became $475 billion, which soon created better scopes and opportunities for the company to make other products and services online to achieve a larger customer base and higher revenue generation too.
Based on Store (2013), the success with online book selling allowed the e-commerce company to expand its business beyond its origin in book selling. The consumers were also quite happy with the way they purchased the products and services online, which created convenience for them the products were delivered at their doorsteps. Though the stock prices increase largely, Jeff Bezos was focused on expanding into new markets by managing the financial aspects properly.
The company was built or gaining long term success, which helped in gaining trust and faith from the shareholders, which further shaped the business expansion and generated healthy profit or revenue generation (Stone 2013). To expand the services and business, Amazon made sure to satisfy the customers by providing free shipping to push beyond boundaries and made sure to maintain the organizational standards by remaining customer focused.
“To me Amazon is a story of a brilliant founder who personally drove the vision” – Eric Schmidt, chairman of Google
Expansion of Amazon Beyond Book Selling
Bao and Chang (2014) argues that the company has grown to be the “everything store, because it has empowered the retail industry and made sure to made every kinds of products and services available ranging from electronic goods, clothing and accessories along with food items too. The Best Seller list and customer review features further contributed to the synergy effects that helped engaging media aspects and ensured establishing a god relationships between the media and environment to facilitate the business operations’ management and created an ecosystem where the multiplier effects could be advantageous (Store 2013).
Not only the wide range of products, but also the launching of Amazon Prime enabled consumers to gain online movie and other programs viewing with a convenient membership option. The Amazon Elastic compute cloud, which was a virtual site enabled the users to utilize the Amazon infrastructure to manage the applications from various simulations to the hosting of websites and databases.
The main reason behind the company’ success could be the improved computing infrastructure, which had introduced the advertising technology and the potential customers were identified, which allowed Amazon to make a big change in the way business is conducted (Raw 2015). Thus, ranging from computers to home goods, shoes, clothing and accessories, food items, online movie viewing services, etc. everything have been offered and there is not much that has not been delivered by Amazon at present (Amazon.com 2018).
2. Various major aspects of operations management according to the enhanced globalization of world trade
According to Feng and Shanthikumar (2017), success of e-commerce of Amazon.com is highly dependent upon the various aspects of managing business operations and is directly associated with the production level of the company. The company has focused on various areas where strategic decisions are to be made for the optimization of productivity and ensures that the technological support enhances the production level through optimization of resources and managing the services effectively too.
Though the strategic decisions areas for managing business operations may sometimes be difficult and complex to cope up with, still the organization has focused on the diversification of products and services, which has enabled continuous improvement to improve the skills and capabilities of the company (Demirkan and Delen 2013). This has ensured maintain proper level of support for the management of business operations, furthermore reached greater heights of success through global business expansion and by enlarging the product mix components.
Key Aspects of Operations Management for Global Business Expansion
Based on Coyle et al. (2016), during the assessment of financial aspects and outcomes, the fluctuations in foreign exchange created complexities to manage the international business sometimes. The major strategies implemented by Amazon in the e-commerce business have become quite reliable and effective for providing the best competitive features required to expand business by adding more geographic locations and entering different new market segments to expand the global outreach.
There are huge numbers of fulfillment and distribution centers, which kept monitoring the organizational infrastructure and made sure to match the services with the needs and preferences of the customers in the market for staying ahead of the competitors who possessed a better scale, infrastructure and economy (Feng and Shanthikumar 2017). The investments were done in China and India, considering the fact that both these countries have certain laws, rules and regulations and so to succeed in the long run, the company maintained international operations, websites and promoted the brand globally too.
The optimization of production process, being the objective of successful operations’ management facilitated the automation process and even managed the warehouses properly to keep stocks (Lee, Seo and Siemsen 2018). Ross (2015) stated that the management of supply chain and inventories further allowed the goods ordered by customers to get transferred at the fulfillment centers and then shipped to them for fulfilling their needs. The scheduling is another area of strategic decision that enabled the suppliers to access the website of the company and determine the schedules prescribed for online shipping and delivery (Coyle et al. 2016).
Though there are signs of slowing down of international growth and revenue, still it could be stated that the addition of infrastructure and fulfillment capacity along with the use of cloud computing had implemented an advertising technology solution. It has identified the potential customers from the global market segments according to their areas of interest and gradually investments were made in ad sales, which further helped in engaging social media platforms (Ross 2015). Thus, the data and software expertise enable Amazon to manage online business successfully and managed the operations based on the increased globalization of world trade.
3. Amazon has focused on smaller sellers and linked them with a huge customer base and involved the fulfillment program. Can e-commerce replace the in-person shopping experience?
The marketplace consisting of Amazon’s products and services focused on the smaller sellers and manufacturers to increase the customer base and implemented effective fulfillment programs for delivering the best quality consumer experience while making purchases online. The operations are managed by introducing the Amazon Elastic Compute Cloud or Amazon EC2, which favored the creation of a virtual website that created ease for the users to utilize the infrastructure of the organization to run the applications including the management of simulations and web hosting applications too.
Amazon’s Marketplace for Smaller Sellers and Manufacturers
One of the most important decision areas of operations management is the designing of products and services and managing its qualities to meet the expectations of customers everywhere (Niranjanamurthy et al. 2013). The organizational culture and infrastructure helped in adapting to the local culture and supported generation of new ideas to improve the business functioning. There was a time when Amazon used to sell only books online, but soon the company managed to open its first brick and mortar expansion by delivering products and services online, which was much easier for the consumers to make purchases.
According to Niranjanamurthy et al. (2013), the linking of small sellers and manufacturers with the fulfillment program and large customer base further contributed to the better accessibility of products and services by the customers online. The omni-channel retailing enabled the wholesaler and merchants to deliver the products and services to the customers and offer a seamless experience while making purchases online by using internet on their computer systems or mobile phones (Liu, Burns and Hou 2013).
The in-person shopping experience offers face to face interactions with the customers and provides extensive customers’ services, a great brand experience and up selling through motivation of customers by making they understand the benefits of the products that will be purchased (Chakraborty et al. 2016). Online purchases through e-commerce platforms suffer from low level of consumer enthusiasm though the drawbacks of managing stores include limited size, due to which, the products range may be limited and the brick and mortar stores are expensive to function.
The operating costs become higher, and the probable solution can be the management of e-commerce business, which will allow the customers to make purchases any time and from anywhere. Based on Chakraborty et al. (2016), the e-commerce business is more structured and offers better flexibility along with better automation process, i.e., integrated with the appropriate technological aspects to connect with the clients and influence them to make purchases from the brand.
The Fulfillment program by Amazon has enhanced the online sales by reducing a lot of money and time and provided us access to the resources, faster and free delivery options and trusted customers’ services (Raw 2015). The orders placed through FBA are convenient because the products are applicable for one day delivery and free delivery options in few cases too. The packaging of products is world class and the shipping is done properly along with pay on delivery options available too. This has created loyal and trustworthy customers, which has increased the sales for the company too (Demirkan and Delen 2013). Therefore, the e-commerce can definitely replace the in-person shopping experience for Amazon.
Can E-commerce Replace In-person Shopping Experience?
4. Long-term implications that can be caused due to the emergence of Amazon in Australian Retail Industry?
The retail industry in Australia already consists of major retail chain supermarkets including Coles, Woolworths, JB Hi Fi, etc., all of which have established a sustainable position in the marketplace. The retail companies, though are quite popular in Australia and has provide extensive and wide range of products and services to cater to the clients’ needs and expectations, still with the presence of a retail giant like Amazon, the business can expand and it will result in growth of economy of the country too.
According To Steel et al. (2013), with the increased presence of Amazon.com, there would be more employment opportunities as well as increased accessibility to different types of other products that might not be available in the retail companies of Australia. The improved level of corporate infrastructure along with technological support through the use of cloud computing technology and e-commerce platforms should be useful for establishing itself within the Australian retail marketplace. (Steel et al. 2013).This would create good trade relations between the two countries and extension of business networks too.
With the extensive global supply chain management, Amazon could innovate its business operations and create good relationships with the competitors in Australia to make significant investments on the automation of supply chain. This would reduce the overall time for product delivery, create more warehouses and enhance the efficiency of manufacturing and production processes, furthermore replace the traditional business with online e-commerce business (Yang 2018).
The unique supply chain strategies and innovations done with the sue of advanced technologies could also be beneficial for using autonomous vehicles for transportation of goods, enable robotics and use drones to assess the global market segments in Australia. It has been found that nearly 80 percent of the products from all over the world are available at Amazon and thus with its extensive global outreach to the Australian retail industry, the strategic and operational benefits would be doubled (O’Connor 2017). There are no Fulfillment program available at any of the companies in Australia, and with the entering of the company in Australia, there will be more convenience in getting the products delivered on time and obtain free delivery facility too.
From various reports, it was found that the people in Australia spend mostly on the products of variety store followed by fashion and clothing items and them home appliances. According to O’Connor (2017), because of the dominance of Amazon in America, the company’s launch will be successful I Australia as well and the expected online sales can range around 60 percent in the first quarter itself (Stone 2013). The retail industry holds a share of 3.6 percent in Australia, which can create more scopes for Amazon and its prime services to be delivered timely to the clients and even use platforms for third party sellers to deliver those.
Though, the launch of Amazon can open the sellers to wider audience and higher revenue generation, the competitors may feel the pressure (Coyle et al. 2016). With Amazon, the delivery network will be strengthened and this can make customers gain trust and faith on the company within quick time.
References
Bao, T. and Chang, T.L.S., 2014. Why Amazon uses both the New York Times Best Seller List and customer reviews: An empirical study of multiplier effects on product sales from multiple earned media. Decision support systems, 67, pp.1-8.
Chakraborty, R., Lee, J., Bagchi-Sen, S., Upadhyaya, S. and Rao, H.R., 2016. Online shopping intention in the context of data breach in online retail stores: An examination of older and younger adults. Decision Support Systems, 83, pp.47-56.
Coyle, J.J., Langley, C.J., Novack, R.A. and Gibson, B., 2016. Supply chain management: a logistics perspective. Nelson Education.
Demirkan, H. and Delen, D., 2013. Leveraging the capabilities of service-oriented decision support systems: Putting analytics and big data in cloud. Decision Support Systems, 55(1), pp.412-421.
Feng, Q. and Shanthikumar, J.G., 2017. How research in production and operations management may evolve in the era of big data. Production and Operations Management.
Lee, Y.S., Seo, Y.W. and Siemsen, E., 2018. Running Behavioral Operations Experiments Using Amazon’s Mechanical Turk. Production and Operations Management, 27(5), pp.973-989.
Liu, X., Burns, A.C. and Hou, Y., 2013. Comparing online and in-store shopping behavior towards luxury goods. International Journal of Retail & Distribution Management, 41(11/12), pp.885-900.
Niranjanamurthy, M., Kavyashree, N., Jagannath, S. and Chahar, D., 2013. Analysis of e-commerce and m-commerce: advantages, limitations and security issues. International Journal of Advanced Research in Computer and Communication Engineering, 2(6).
O’Connor, T., 2017. Retail response. MHD Supply Chain Solutions, 47(4), p.38.
Raw, L., 2015. The Everything Store: Jeff Bezos and the Age of Amazon Brad Stone. London: Bantam Press, 2013. The Journal of American Culture, 38(2), pp.194-194.
Ross, D.F., 2015. Distribution Planning and control: managing in the era of supply chain management. Springer.
Steel, W., Daglish, T., Marriott, L., Gemmell, N. and Howell, B., 2013. E-Commerce and its effect upon the Retail Industry and Government Revenue.
Stone, B., 2013. The everything store: Jeff Bezos and the age of Amazon. Random House.
Stone, B., 2013. The secrets of Bezos: How Amazon became the everything store. Bloomberg Businessweek, 10.
Store, E., 2013. Jeff Bezos and the Age of Amazon. Stone, 41, pp.43-44.
Yang, D., 2018. Has the arrival of Amazon altered the market structure for consumer electronic goods in Australia.
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