...Amazon’s business model components can be characterized on the basis of customer value proposition, profit model, critical processes and critical resources. Amazon has three different businesses – Amazon retail, Amazon marketplace and Amazon web services. Its customers include the consumers (global market) – who want to buy the products, the sellers (company and individuals) – who want to sell products on Amazon and the developers – who want to use Amazon developing services. Its customers are more concerned with products and services that have been tailored to meet their needs and are willing to pay a premium for effective tailoring (pg. 109). Hence, Amazon uses customer intimacy value discipline. Amazon as a customer-obsessed company provides a unique customer experience through competitive pricing, integrated offerings, convenience, ease of purchase, personalization through collaborative filtering and wide selection in order to gain customer loyalty. Amazon focuses on long-term profitability. Its main revenue streams include sales, the fees and sales commission from third party and the fees from the developers. Due to competitive pricing, Amazon has low profit margin. As we can see from exhibit 3 (pg. 172), Amazon isn’t that profitable in relation to its revenue. Also, its cost structure includes fulfillment, marketing, technology and content, general and administrative operating expenses. However, Amazon has been expanding the product categories and across various countries...
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...• Describe their business model and explain their supply chain strategy. Amazon’s business model is based around customer satisfaction. Customers want three things, according to Bezos: the best selection, the lowest prices and the cheapest delivery. (Amazon, 2012) It strives to obtain efficient customer fulfillment, while cutting sales and operating costs. The company first began selling just books; today Amazon is known to be the biggest online retail store in world. Amazon makes its profits from a few customer sets. The area they focus on the most is the consumers. They provide millions of products that can be purchased quickly and hassle free by the customers. They try to provide the best shopping experience possible for consumers. They have developed new tools such as recently viewed history, recommendations based on past purchases and one-click check out to improve the customer’s shopping experience. Another area that is creating profits for the company is their services. Amazon has become a platform for others to sell and advertise their products. For a fee, Amazon will allow other companies and individuals to sell their products through Amazon’s website. They also provide fulfillment services, for those who want to store and ship their products through Amazon. A few years ago, Amazon began an IT infrastructure service to Developers called cloud computing. Today, this service powers hundreds of businesses in 190 countries. Amazon has also introduced their product,...
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...network of customers and partner companies, there is a large user base to support the huge size. Choosing B2C as the platform, Amazon kept a massive user base, and shared it to the third party enterprises. The more high-quality enterprises are attracted, in turn, the more valuable the platform is. It is because it can meet more different needs of users. When Amazon conducted the platform business, it had already had the support of tens of millions of users. It applies to commodities also, Amazon share the developed categories to the third party enterprises. Meanwhile, Amazon actively opens up more new categories with them. It makes Amazon’s platform have sufficient depth and competitiveness in each category. Moreover, Amazon treats its partner companies and itself equally. The goods of the partner companies and its self-operated purchased goods get the same exposure to have the same opportunity to be displayed in the search listing page of the site. In each product (no matter self-operated or associated), both commodity prices and entrance of partner companies information are clearly shown. Resources of homepage and channel pages are also equally shared to associate enterprises. The treatment on different partner companies is non-discriminatory, not depends on the size of their business to provide differentiated services, but depends on their business type and charging. Also, the search ranking, recommended frequency, results of the goods of the partner companies would not be...
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...Amazon.Com’s E-Business Model Amazon.com’s E-Business Model Contemporary Business – Bus 508 Dr Linda Harris July 21, 2011 Question 1 1. Discuss the pros and cons of Amazon’s growth and diversification of business and specialization, and make recommendations about what Amazon could have done differently. As the economy continues to grow and change so will consumers with how they shop and purchase their everyday needs. Having a successful business online takes time and effort to ensure that consumer needs are being met. This paper will discuss how Amazon has been able to stay so successful with new and upcoming competitors. In addition to discussing the success, the struggles will be evaluated as well as ways to improve the company. When visiting Amazon, one obtains several products at one time;-it is a one-stop shop similar to an online “Seven-Eleven Store. “ Amazon is the largest online book retailer composed of a multi million-customer base. Jeff Bezos, the founder of Amazon, had great confidence in the World Wide Web even before the dot.com boom. He used the internet as the core of Amazon's business model. Amazon customers are able to search inside the book before buying it, read customer ratings on products of interest, and purchase products at low prices. Amazon’s initial target market of online book consumers, proved to be very lucrative. In addition, the expansion into more diverse product offerings beyond books, such as music, DVD & video, toys, electronics...
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...concerns two of the most famous companies in the world: Amazon.com and eBay,Inc.. They have become so ubiquitous that probably there is not a household with a computer and internet connection in the world that hasn’t purchased at least one item from them or visited their websites at least once . In the following paragraphs we endeavor to analyze how these two companies have achieved this worldwide success and how they are defined by all as online giants and colossus. But above all, we will focus on how they differ from each other, what are their strengths and weaknesses, what their business model is and how it has changed over the course of time. We will discuss briefly the history of these two giants and explain how they deal and cope with this ever-changing market and business environment. We will start with the background of these two companies, and then analyze the differences in terms of business models, focusing on financial data, services provided, overall stakeholder value and customers’ perception. Background of eBay EBay was launched by Pierre Omidyar in 1995, and referring to his own words, his purpose was giving “ the power of the market back to individuals, not just large corporations”...and his goal was “pioneer new communities around the world built on commerce, sustained by trust and inspired by opportunities”. It is important for us to underline the words of Omidyar because they are the base of eBay’s success. Building up upon those initial foundations, eBay...
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...Ⅰ. Introduction A. What is amazon? Amazon is an American electronic commerce company with headquarters in Seattle, Washington. It is the largest Internet-based retailer in the United States.[12] Amazon.com started as an online bookstore, but soon diversified, selling DVDs, VHSs, CDs, video and MP3 downloads/streaming, software, video games, electronics, apparel, furniture, food, toys, and jewelry. The company also produces consumer electronics—notably, Amazon Kindle e-book readers, Fire tablets, Fire TV and Fire Phone — and is a major provider of cloud computing services. Amazon also sells certain low-end products like USB cables under its inhouse brand AmazonBasics. Amazon has separate retail websites for United States, United Kingdom &Ireland, France, Canada, Germany, The Netherlands, Italy, Spain, Australia, Brazil, Japan, China, India and Mexico. B. History of Amazon The company was founded in 1994, spurred by what Bezos called his "regret minimization framework", which described his efforts to fend off any regrets for not participating sooner in the Internet business boom during that time.[16] In 1994, Bezos left his employment as vice-president of D. E. Shaw &Co., a Wall Street firm, and moved to Seattle. He began to work on a business plan for what would eventually become Amazon.com. Jeff Bezos incorporated the company as "Cadabra" on July 5, 1994[11] and the site went online as Amazon.com in 1995.[17] Bezos changed the name cadabra.com to amazon.com because...
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...of its business model, what do you see as some of the key revenue drivers for Amazon.com (as defined by your text)? On pg 43 of the text, Applegate defines a business model as a model that “defines how an organization interacts with its environment to define a unique strategy, attract the resources, and build the capabilities required to execute the strategy, and create value for all stakeholders.” She further goes on to explain that a business model “defines the linkages among key strategy, capability, and value drivers of business performance.” Amazon chose a unique approach to their business model that allowed for an evolving model focused on ensuring that they could capitalize on their key revenue drivers (their product line, their IT infrastructure/supply chain management, and their customer base). Amazon started as an online bookstore and then moved into product expansion. It then added components of a marketplace and an online auction and went into equity partnerships. They then added the infrastructure services. On pages 124 and 125 of the text, Applegate presents a chart that provides some examples of revenue drivers within the core business model components of strategy, capability, and value. According to Applegate, strategy revenue drivers include product differentiation and effectiveness of demand channels. Amazon’s product line is a key revenue driver that fits within the strategy component of a business model driver. By evolving their business model to include...
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...originally named Cadabra Inc. They found that the name was often negatively mistaken as “Cadaver.” The name Amazon was adopted soon after because the Amazon River is the largest in the world, and the letter “A” would help the company to show up at the top of alphabetical lists. Amazon, since its release in 1995, has become one of the Fortune 500 e-commerce company (btmaushart.iweb, 2014). In the business world, Amazon is currently the largest online retailer in the world. It manufactures consumer electronics, most widely known is the Amazon Kindle e-book reader, and has an extensive cloud computing service. Amazon’s start-up was initially only an online bookstore, giving Amazon an advantage of having more and readily available books than any long-established brick-and-mortar book store. By the last 1990’s, Amazon’s success had enabled an expansion from an online bookstore to a wide variety of other products including, but not limited to: CDs, videos, DVDs, electronics, toys, tools, home furnishings, and more. In addition to those products from Amazon, Amazon also sells products from well-known retailers through intermediaries’ agreements. Among those retailers are Toysrus.com Inc., Target Corporation, and Circuit City Stores Inc (FundingUniverse.com, 2014). Amazon takes on a face of a company that came out of nowhere and took over the internet in terms of e-commerce. Amazon has customized the way people can buy things online and continues to come up with new technology and obtain...
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...Case Report - Amazon CONTENT 1. Amazon in Brief 2. Amazon’s Five Forces 2.1 Threat of New Entrants 2.2 Bargaining Power of Buyers 2.3 Rivalry Among Existing Competitors 2.4 Bargaining Power of Suppliers 2.5 Threat of Substitute Products or Services 3. Amazon’s Value Chain 4. Conclusion 5. References Case Report - Amazon 1. AMAZON IN BRIEF Amazon.com, an American company, started the journey 1994 in a small garage based in Seattle, Washington. Today, twenty years later Amazon has become the world's largest web retailer with a predicted revenue around $100 billion in 2014. The founder Jeffrey Bezos, a former Wall Street broker, started Amazon.com by selling books online from the garage in Seattle through the website Amazon.com; With a mission to provide everything for everyone. The company is one of the most customer-centric company in the world and every decision taken by Amazon, started with the key question; What is the value for the customer? - to provide the costumer with the best possible experience of Amazon. Jeffrey Bezos did not care about profit or return to the shareholders; the main focus has always been to provide the costumers with the most enjoyable experience. By offering a wide range of products and services to the lowest possible price and a fast and convenient delivery. Over the years, the selection of products and services have expanded enormously from just...
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...1. Review of Amazon’s strategy between 2007 and 2009 Strategic analysis Profiling the business: ➢ Mission: Amazon’s mission is to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible price[1]. ➢ Product/service analysis: Since the establishment of Amazon, new products has been kept adding into the original book category and Amazon has moved further to provide service. There are three product categories in Amazon, media category, electronic and general merchandise category and other category like Amazon web service and Amazon Enterprise Solution. This means you can buy almost everything from Amazon. ➢ Sales and gross profit analysis: The net sales growth of Amazon in year 2007 and 2008 was in average 30% and the total sales in 2008 was $19166m. In the same time, the gross profit grew from $3353m in 2007 to $4270 in 2008. Actually, both the sales and profits grew quickly since 2001 and they seemed to grow at a quicker way. External environment analysis ➢ Opportunities and threats: • Opportunities: to further improve the speed of delivery; international expansion in emerging markets such as China and India; extension of brands into new areas; through acquisitions and partnership to consolidate Amazon’s technological capability. • Threats: unexpected changes in regulatory requirements both U.S. and abroad ( take taxes policies...
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...assessment of the long-term viability of Amazon’s business model it will become greatly successful as the big retailers. The idea of selling products at competitive prices is great. Everyone now is looking for a cheaper and a better alternative to save money. Another good thing is that it permits individuals or third parties to sell their products on the website. It will attract more people and give them opportunities to promote and sell their product. Amazon is also expanding their service from books to other merchandise which is a plus. But like in any case, working with other services or third parties can bring risk. I feel like Amazon will surpass and find ways to adjust and work their way through. 2. I agree and disagree at the same time with Ravi Suria’s analysis. Amazon present negative cash flow which results higher debt risks than other retailers who has a lower ratio of debt. It created doubt in people if Amazon was able to carry themselves and not run out of money. But then I disagree because at the end, Amazon strategically used those critics and remarks and make adjustments to their operating procedures. Amazon did not change their business model which resulted a missed in Suria’s predictions that were to be expected. 2. Amazon today is one of the largest and known web retailer in the United States. There are people from all over the world buying products and even selling their products. Their business model is still pretty much the same. You can find any...
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...online retail line of business includes those products sold by Amazon as a traditional retailer, most commonly as a low-cost retailer. Amazon claims to have "Earth's Biggest Selection" of products available through its family of websites, sold at the lowest cost at a small profit. The company started as an online book seller, rapidly expanding into music and movies, and ultimately into electronics and household goods. But Amazon doesn't stock everything that is sold through its website. Another part of its retail strategy is to serve as the channel for other retailers to sell their products and taking a cut of every purchase. Amazon maintains its status as a destination website, but does not have to maintain inventory on slower-selling products. This strategy has made Amazon a leading long-tail retailer, expanding its available selection without a corresponding increase in overhead costs. Extending this long tail retail model further, Amazon introduced the sale of used products through its seller marketplace. Originally developed to compete with eBay, the seller marketplace provides another retail revenue stream for the company without the need to stock products in its warehouses. Advertising and shipping are handled exclusively by sellers, with Amazon taking a cut of every sale simply for providing the channel. Amazon's internet services cannot easily be discussed as a standalone line of business because it is deeply intertwined with both its retail business and the Kindle ecosystem...
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...synergies in business operations are consequences of diversification strategies. It is possible to classify companies according to the type of diversification strategy selected. Unrelated diversifiers are companies that diversify across industry, while related diversifiers are firms that diversify within the industry (Kim, Hwang and Burgers 1989). Companies pursuing related diversification over a period of time have achieved superior performance than companies following an unrelated diversification (Palepu 1985). Amazon has started its business by selling books and music, soon after it incorporated online auctions for airlines tickets and hotel rooms, computer hardware, pet food and pet accessories, electronic cards, toys and consumer electronics. Whereas Amazon has achieved very high volume of sales and gained important market shares in the book industry, the company has never been profitable. As a result, in this essay, in order to determine if Amazon’s decision to diversify so extensively was a wise decision, we will firstly describe the firm business model and the reasons for its success. We will then try to determine if this business model is applicable to Amazon’s diversification strategy as well as the limit of diversification. And finally we will try to evaluate the limit of such strategy in an international context. I Is the business model designed for selling book on internet apply for different category of products? The success of Amazon Business...
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...Amazon’s business strategy and revenue model: A history and 2014 update I’ve used Amazon as a case study in my books for over 10 years now since I think all types of businesses can learn from their digital business strategy. From startups and small businesses to large international businesses, their focus on the customer, testing market opportunities made available by digital technology and their focus on testing and analysis to improve results. I aim to keep this case study up-to-date for readers of the books and Smart Insights readers who may be interested. In it we look at Amazon’s background, revenue model and sources for the latest business results. We can also learn from their approach to digital marketing since they use digital marketing efficiently across all customer communications touchpoints in our RACE marketing planning framework: * Reach: Amazon’s initial business growth based on detailed approach to SEO and AdWords targeting millions of keywords. * Act: Creating a clear simple experiences through testing and learning. * Convert: Using personalisation to make relevant recommendations and a clear checkout process that many now imitate. * Engage: Their focus on customer experience, “Customer Obsession” as they call it is shown by the way they consistently outperform other retailers in their ACSI customer satisfaction rating too. We have our own internal experimentation platform called “Weblab” that we use to evaluate improvements Experiments and...
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...Amazon.com Describe their business model and explain their supply chain strategy. Amazon is one of the leading online retailers in the world. From foundation, Amazon was an online book retailer. Their online success allowed them to move into other areas including e-books, music and other products. Jeff Bezos, Founder, started the business in his garage and has built the company on an unconventional business model that in my opinion gives Amazon a competitive advantage. Amazons business model consists of a combination of logistical processes and information services that work together to provide a sustainable competitive advantage. Amazon provides shopping convenience to consumers, products can be ordered at the click of a button without the hassle of the retail store experience. Consumers experience an easy purchasing experience with a variety of payment methods such as paypal, bill me later, and credit card payments. As an added convenience consumers can set up accounts and save payment information for future purchases. Amazon has a very fast turn-around time for items fulfilled in Amazon fulfillment centers. In many cases consumers can expect their products to be shipped within a 24 hour period. As an additional service to consumers, Amazon provides what they call “decision enabling information”. Amazon compares products and pricing, provides consumer product reviews and ratings, and provides detailed product descriptions to aid consumers in making the best product...
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