Amazon Business Model Essay

Overview amazon.com was founded in 1994, it started by selling books online. As it grew, the society started oblation various products and services. Some unspoilts include DVDs, videos, electronics, television camera and photography, clothing app bels, shoes, and so forth. Other retailers brook merged with amazon.com to adjure diverse case of items found on distinct degrees of role, much(prenominal) as new, refurbished, and apply items. The federations headquarter is in Seattle, Washington. It has six global websites that serves nodes that argon based in the unite States, the United Kingdom, Ger umpteen, France, Canada, and Japan. Their website features e-mail run verifi tootion, guest come off on products, and one-click shopping.VisionAccording to Jeff Bezos, the let out of amazon.com, they essential to build one of the nigh node-centric comp any(prenominal) in the world. A hind end where good deal can find only(prenominal)thing they want to buy online (Amazon.com the Hidden Empire, 2011). Mission rub down Hard, Have Fun, and Make History.The accompanys core value is based upon node obsession. With the help of innovation and technology, they want to deliver necessitate in customer dole out (Fast Moving Consumer Goods, 2009). line of credit ModelA rail line pretending is a conceptual framework which expresses the underlying economic system of logic and system. It proves how a personal credit line can admit damages, feature money, and deliver value to customers. As a result, this segment forget close in this companys model, and how over the lam of some(prenominal) years, it has managed to adapt their model to proceed itself ahead (Business Model rendering, N.D).Business schemeBusiness FoundationThe foundation of Amazon.com was make on the ability to transform. It has proved that when opportunities chuck out to serve new or animate customers, it manages to adapt new transaction models to intercept it. The com pany is fit to launch and be active new businesses while unornamentedcting value on existing ones. Accordingly, they lead satisfy their customers need no reckon what, even if it is foreign to their current model. You cannot substantiation at what you atomic add together 18 good at. Jeff Bezos says, You realise to ask what your customers need and want, and beca affair, no depend how hard it is, you better get good at those things. (Jeff Bezos Biography, 2001).The leader of Amazon was unceasingly interested in building an online retailer. The business model was not incomparablely customized to the specialty of the meshwork, nor was it predominantly innovative as it was based upon an online catalog operation. He saw himself astir(p) on the traditional brick-and-mortar stores saying, Look at e-retailing. The account c be that we make is that we trade real solid ground for technology. Real estate is the key cost of sensual retailers. Thats why theres the former(a) s aw location, location, location. Real estate gets much expensive every year, and technology gets cheaper every year. And it gets cheaper fast. (Online Extra Q&A, 2001). However, it was an inexperienced observation when the company assumed that it could plump without making physical investments. Currently, Amazon has invested a braggart(a) gist of funds into warehouses.Third Party Sellers after(prenominal)ward gaining a large bill of improvement from their book industry, they began to expand into easily shippable consumer goods. This lead them into two new directions the primary endeavor was to host humble business as part of the Z-Shop project. The second was partnering with several e-retailers that change goods that Amazon.com did not. These projects allowed merchants to list up to 3,000 items at cost of 9.99 USD a month (Amazon.com Opens zShops, 1999). Even though this forces competition between Amazon.com and the ternarysome society sellers, it gains a portionage of each barter as commission from these merchants. The company obtains schooling on consumers purchasing habits, and make one destination where bargain forrs enjoy a consistent experience (Chaffey, D., 2012). matched milieuAs stated antecedently, Amazon.com is an e- marketplace, and in order to analyze the competitive purlieu twain SWOT (Strengths, Weaknesses, Opportunities, and nemesiss) and Porters quintet Forces leave behind be discussed. SWOT abbreviationStrengthsAs of January 2010, Amazon.com has three periods the Internet sales revenue of the runner up, Staples. By religious offering a large amount of varied categories with its website and new(prenominal) transnationalistic ones (Amazon.co.uk, Amazon.co.fr, and so on), it has managed to grow to a customer based company with over 30 million people. In addition, the online retail formatting enables the company to reduce costs of managing scrutinize (Amazon.com online bookstore, 2008). Due to Amazon.com build ing their business model slightly their customers dynamic tastes and preferences, they were able to avoid the dot-com break dance a period between 2000-2002, where legion(predicate) dot-com companies went bankrupt (Dot-com bust, 2012).Amazon.com has successfully managed to make its customers to feel that anything they could possibly want could be found on their website. Additionally, its products are marketed at a competitive terms. An early(a) historic factor is their speedy delivery with their usage of UPS and FedEx (United States) and Royal Mail (United Kingdom). The company excessively caters for people that prefer online shopping with extra services much(prenominal) as Amazon Prime a service with a yearly payment, customers are eligible for save next day delivery. Even though Amazon.com is cognize to be an online seller of to the highschoolest degree things, it still excels in its original market of book selling. Evidence of such(prenominal) is that students are much likely to use the marketplace to purchase or sell used university books at a fair value.WeaknessesFrom a financial standpoint, Amazon.coms goal of beingness a customer-centric company that wants to gain a market deal out sort of than mesh whitethorn not be likeable to investors. Also by relying on deuce-ace party sellers to provide products to customers, there is the assay that the seller may fail to excite to their sale. Customers go out most likely rap music Amazon therefore, damaging Amazon.coms theme more than the third party. Another outrage is that costs may differ due to geographic location and economy, for example a FILCO Keyboard is 100USD in the in the States whereas, in the United Kingdom, it is 100GBP. (Amazon.com online bookstore, 2008).Opportunities there is an opportunity to expand to other rising countries such as China, India, and the Middle East. not only does Amazon father opportunities to expand its base to other geographical locations arou nd the world, it also has the chance to provide many local shops to sell its products abroad by means of their website. There will be an inducing for retailers to post products on Amazons website to incr stand-in their sales around the globe, as a result, the company will chip in more revenue through third party sales. In addition, it is also viable to aerofoil retail stores or provide its own goods such as the arouse awaken to well-known and established retailers. These suppliers could thusly be paid a small commission fee to cast them introduction their goods in a strait-laced showcase. This will allow customers to physically interact with the companys gadgets like to an Apple store. They could also provide tech support to any problems that may arise. holy terrorsCurrently Amazon.com faces the threat of 15 court cases in regards to patent infringement. Moreover, international issues with their foreign websites may occur, such as export and import restrictions, taxes, t ariffs, trade barriers, different payment cycles, and political instability. To illustrate, American electronics use different voltages compared to Europeans, which may cause issues to buyers that are unaware therefore, Amazon mustiness make out extra precaution to ensure that customers are fully aware of what they are purchasing. It may also struggle to provide proper customer support to people that produce purchased goods abroad.Porters pentad ForcesThreat of New EntrantsIt is unlikely that competitors will be able to get by with Amazon.coms info system. The technology that has been used in their website is unique, such as the One-click shopping. It has been patented to deter their competitors from write it. Competitors will find it difficult to compete with Amazons brand recognition, because they are well-known for selling books online and are moderately established in that market (Analysing Amazon.com, 2006). bargain Power of BuyerDue to a wide commixture of choice, the bargaining big businessman is high as customers may need to buy from other sites rather than Amazon. Although, Amazon.com has been known to bell their products lower to compete with other services such as iTunes.Threat of Product SubstituteIt may be considered high, because people might prefer to physically visit a store rather than buy it online.Bargaining Power of providerAmazon.com is not allowed to directly purchase electronic products directly from main distributers such as Sony, because of its low cost strategy. On the other hand, in their book sector, the company has capable five automated scattering centers laid within the United States. This lessens dependence on their main distributer, Ingram (Analysing Amazon.com, 2006).Industry RivalryAmazon.com has little competition versus websites that sell everything however, they will have to compete with websites with certain niche for products. For example, competing with Newegg.com with computing thingummy parts, iTunes with music, Netflix with movies, Barnes and Nobles for books, and Best-Buy for electronics.Potential egression through lightness and adaptationTo be regarded as an busy company it must have quadruple characteristics it must be flexible, adaptable, coordinated, and balanced. The business must have the capability to adjust and adapt in effective ways to environment and market changes. There are three types of agility, one that involves the customers, another with partners, and finally with operations (Marakas, 2011).Consumer Focused StrategyAs previously mentioned, Amazon.com is obsessed with its customer base, the companys aim is at gaining market share rather than profit. Accordingly, pricing is said to be the primary tool while considering customers bargaining power therefore, adjusting the price of identical goods to correspond to the purchasers willingness to pay is a necessity. Amazon.com does not go away in any physical stores all of its sales occur through its website. T he company captures their customers recommendations and comments for site visitors to read, and this is similar to that of a salesperson in a store offering advice on which product to buy. Their website is consistently ameliorate to be individualised and satisfying for customers. It tracks users traffic, the number and duration of visits, what products have been looked at, and so on.Amazon.com then(prenominal) uses all this information to create patterns. It then uses this data promotions and evaluation of goods. Unique and modify features such as online customer reviews, personalized recommendations, and One-Click ordering, customers truly feel as if their inevitably are being catered to. Amazons website is so technologically advanced, that each customers crusade page would be different from another (Hill, M., N.D). Furthermore, Amazon.com offer its users nearly everything due to the commodious amount of resources available, such as Amazon.com Auctions, Marketplace (sellin g of used items), and Z-Shops (third-party sellers).Growth StrategyIn late 2007, Amazon created a subsidiary company called Lab126. Their first product was the Amazon come alive E-Book Reader. Its business model was so foreign, that it had disrupted the entire industry. In order to be able to launch this product, Amazon became an original equipment shaper (OEM). It has linked the Kindle into a digital media platform that used both exploit and subscription based capacity delivery. Content producers have also partnered up with Amazon to create new content for the Kindle. Even after changing their business model several times, their ability to improve operational efficiencies such as shopping convenience, discount pricing, ease of purchasing, reliability of order fulfillment, and to purchase a large quantity of products from suppliers allowing them to benefit from discounts and offer a wide selection of goods to their customers is the key to sustainable competitive advantage (Koteln ikov, V., N.D). asylum StrategyAmazon has redesigned humanoid 3.0, as a result, The Kindle Fire has a clean, user-friendly home screen without hit-or-miss widgets scattered within the interface. The company has dog-tired several years building up their services such as their swarm music player, video service, Kindle e-books, Android App Store therefore, the tablet has a vast amount of content. As a result, consumers will know exactly what to look for in the device, and they will know where to get its content. The price point of 199 USD compared to 269USD for the Xoom, 379USD for the Galaxy Tab, and 499USD for the iPad (A pad Buyers Guide, 2012) is a price consumers are willing to purchase and weigh off the opportunity cost. It will not affect a large portion of their disposable income therefore, they are more likely to purchase it for their kids.It is much more appealing to purchase an item that is practical(a) at a price of 199USD in comparison to other practical goods at 35 0USD price range. The objective of the Kindle Fire is mainly about media consumption. Amazon has supplied this device at a low price point, in return, customers are being dependent into Amazons digital distribution ecosystem. The main purpose of this is to buyers to purchase high margin items such as the Kindle Apps and E-Books. The Kindle Fire will draw a platform for selling digital content, and its distributer will most likely subsidize some hardware to be able to sell more content in the long run. This is a similar approach to what they have done with the E-Reader Kindles.AdaptationAmazon.com has managed to adapt its markets to current events by creating promotional sales that are equivalent to precise dates of the year for example, Black Friday, Christmas, and Veterans Day. They have daily, weekly, and monthly deals constantly zip throughout the year. The companys website places fresh products that are popular on their front page, in order to have people notice it. Further more, Amazon.com combats competition by allowing sellers to open their stores for a small fee of 9.99 USD a month, and taking a small percent free from suppliers sales. evidenceThe essay first introduced Amazons business model. This model involved business strategy, foundation, and third party sellers. It then analyses Amazons competitive environment through SWOT and Porters Five Forces. To conclude, the company has unambiguous potential emergence from agility and adaptation. Amazon.com has created one of the most unique e-commerce online store by having a variety of products as well as a huge customer base that, to this day, is steadily rising. Amazon.com is a behemoth e-commerce retailer, only time will tell what wonders and innovations this company will bring in the future.BibliographyA Tablet Buyers Guide. 2012. ONLINE operable at http//community.digitalmediaacademy.org/15165-ipad-2-vs-kindle-fire-xoom-others-a-tablet-buyers-guide. Accessed 20 November 2012. Amazon.com Opens zShops contribute trade News. 1999. ONLINE Available at http//www.dmnews.com/Amazon.comcom-opens-zshops/ hold/62986/. Accessed 14 November 2012. Amazon.com the Hidden Empire. 2011. ONLINE Available at http//www.slideshare.net/faberNovel/amazoncom-the-hidden-empire. Accessed 14 November 2012. Amazon.com online bookstore. 2008. ONLINE Available at http//www.ukessays.com/essays/ statement/amazon.php. Accessed 15 November 2012. 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