Case study: Amazon.com

Résumé du document

Amazon.com, which went online in 1995, has been the first company to thoroughly understand the fundamental basics of e-commerce, and who skilfully knew how to use the evolutions in the Internet landscape and composition to its advantage, constantly adapting to the market. Amazon.com is an innovative, bold and flexible company, which flooded the markets and used technological improvements and a customer-centric approach to convince the most sceptical customers to buy online. Although Jeff Bezos, the founder, did not have any background or knowledge in the retail book market, he proved able to build an effective and efficient business model and to add value to its business year after year, while resisting to the fall of "Dots.com?.

Extraits

[...] Moreover, this strategy allowed Amazon.com to surpass all its competitors and remain the dominant player. Its growth speed will then always be higher than other more focused players such as bn.com. By covering more markets, Amazon.com knew that it would increase its presence and fame and leveraged it with smaller potential profits, increased costs and possible losses/ failures in some markets. On top of that, when Amazone.com started its diversification, it was a hype company cherished by Wall Street and pointed by business consultants as an example of a new and successful way of conducting business. [...]

[...] Also, this strategy soon turned global and Amazon has proven able to succeed in major markets such as France and Germany. Secondly, Amazon.com went also right when choosing the location of the company small number of customers have to pay taxes), and the field and products in which it started business. Books are informational products, which facilitate online selling, and allow a large and constantly renewing database which permit a better customer satisfaction. They are also easy and cheap to manage on a logistical standpoint, i.e. warehousing, transportation and Amazon.com succeeded in speeding inventory turnaround and reducing return rates. [...]

[...] Amazon.com spent a lot in R&D in ordered to gain and keep its technological advance on its competitors and nowadays a lot of companies online have used these innovations on their website: “product review information”, “purchase circles”, “e-mail alerts”, “wish “recommendations”, page you made” Indeed, its understanding and adaptation of the 4 steps of the AIDA concept (Attention, interest, desire and action) was particularly intuitive and clever. It also changed the traditional book publishing industry. Indeed, Amazon broken the principle of critical mass” for the book market, and has implemented number of innovative systems that permitted the company to grow quickly and become the uncontested leader . its management of inventory, discount systems, supply chain and distribution support are stunning examples. [...]

[...] In addition, the company spent too much money on marketing and advertisement before deciding to reduce it drastically, and made investments in companies that did not pay-off (Pets.com Besides, although the technological advance is one of the main competitive advantage of Amazon.com, it is very costly and some analyst argue that the company would have saved money and used it more efficiently by reducing this R&D costs. Should Amazon have remained an online bookstore? Critically evaluate the arguments for and against quick diversification. It is often a good strategy to choose diversification when a business is as successful as Amazon.com in its early years. Amazon.com then had the relevant financial strength, brand equity, experience, physical and human support to start expanding its product line. In fact, a rapid diversification, in the case of Amazon.com was judicious for several reasons. [...]

[...] However, the number of small booksellers has kept on decreasing at an accelerating pace since the creation of Amazon.com. Some of them have tried to built an online presence without much success. The only way to survive and stay profitable in the future will be to gather and form associations of small booksellers that would enhance protection, help raising funds, creating website, and permit them altogether to reach a critical mass and get a recognizable name by belonging to a famous organization. [...]