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Amazon.com from start-up to 2004
Amazon.com from start-up to 2004
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Recommended: Amazon.com from start-up to 2004
History
The launch of Amazon.com in July of 1995 was the creation of a new and bold way of doing business on the Internet. Amazon.com forced the traditional physical world brick and mortar retailer in the book industry to change the way they target the industry's consumers and then epitomized Business-2-Consumer e-retailing. Although, Amazon.com started as an online bookstore, according to eRetailNews , they have since spread its wings into other industries such as music, DVD, toys, videos etc...
Subsequently, this has created a multitude of direct competitors for Amazon.com in several different industries. As Amazon.com continues to grow and create new alliances with other industry's leaders, the competition for global online market share grows intensively.
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Strengths.
* Amazon is a profitable organization. In 2005 profits for the three months to June dipped 32% to $52m (£29.9m) from $76m in the same period in 2004. Sales jumped 26% to $1.75bn. Until recent years Amazon was experiencing large losses, due to its huge initial set up costs. The recent dip is due to promotions that have offered reduced delivery costs to consumers.
* Customer Relationship Management (CRM) and Information Technology (IT) support Amazon's business strategy. The company carefully records data on customer buyer behaviour. This enables them to offer to an individual specific items, or bundles of items, based upon preferences demonstrated through purchases or items visited.
* Amazon is a huge global brand. It is recognisable for two main reasons. It was one of the original dotcoms, and over the last decade it has developed a customer base of around 30 million people. It was an early exploiter of online technologies for e-commerce, which made it one of the first online retailers. It has built on nits early successes with books, and now has product categories that include electronics, toys and games, DIY and more.
Weaknesses.
* As Amazon adds new categories to its business, it risks damaging its brand. Amazon is the number one retailer for books. Toy-R-Us is the number one retailers for toys and games. Imagine if Toys-R-Us began to sell books. This would confuse its consumers and endanger its brands. In the same way, many of the new categories, for example automotive, may prove to be too confusing for customers.
* The company may at some point need to reconsider its strategy of offering free shipping to customers.
The most obvious technological advance that helped Amazon, and the one that launched the company, was the internet (Parnell, 2014). Jeff Bezos knew that he wanted to open an online business and decided to start with a bookstore due to low pricing and an existing worldwide demand (”Amazon.com, Inc. History”, n.d.). After deciding on a model, he chose Seattle as a home for his business due to its proximity to high tech workers and a large book distributor. The website opened with a database of more than one million titles, whereas many competitors only stocked 2,000, and the orders went directly to wholesalers. Amazon quickly expanded their database to 1.5 million books and started offering deep discounts which attracted many new customers.
Starting out as solely an online bookstore, Amazon has become the largest online retailer in the world.
It's important to realize that first and foremost Amazon.com is a technology company. Over the past years, Amazon.com grew from an online retailer into a platform on which more than 1 million active retail partners worldwide do business. Behind Amazon.com's successful evolution from retailer to technology platform is its SOA (service-oriented architecture), which broke new technological ground and proved that SOAs can deliver on their promises.
Amazon.com operates in the Online Retail Industry. The sector is one of the fastest growing globally and is outperforming the ordinary retail marketplace. It was created after 1995 and it was only the Internet that made it possible for such an industry not only to be established but to become one of the most flourishing sectors in the business environment. What is interesting is that Amazon.com, together with eBay is the pioneer in the field. Both companies were launched in 1995 and are still extremely successful. The creation of e-mail in 1996 had a huge impact on the development of online retail by introducing a fast and easy way to communicate with customers. For this two-year period Internet usage doubled annually, thus, allowing for the expansion of the industry. Google is launched a year later, in 1998, only to become the most used search engine in the world and an essential partner for the online retailers by helping them tailor their websites to customer’s personal preferences and by advertising. After that, more and more people see the opportunity in the growing industry and enter it. By 2001 there are more than 513 million Internet users globally, which calls for action in terms of creating regulations and laws to protect the users and personal property. In 2003, Apple launches iTunes, and provides a platform for low-cost digital downloads. Another major change is the appearance of social media from 2004, which is one of the biggest influencer on the state of the industry. With the launch of iPhone in 2007, this trend strengthens as people get to enjoy the Internet anywhere they want to. From then on, technological advancements have made it extremely easy and fun to shop online, making it ...
Jeff Bezo’s began Amazon in his garage in July 1995 with three Sun workstations setting on wooden doors for tables and extension cords running from everywhere (Academy of Achievement, 2010). Right from the beginning he was a visionary leaving his well paying job as a senior vice president with D. E. Shaw to begin Amazon.com (Academy of Achievement, 2010). Being the visionary that he is he saw an opportunity prompted by the huge growth rate of internet use in a single year and ran with it never looking back. Jeff realized that the internet had “no real commerce to speak of” so he began researching possible businesses (Academy of Achievement, 2010). “After reviewing 20 mail order businesses and deciding which could be conducted more efficiently over the internet than by traditional means he decided on books” (Academy of Achievement, 2010). He thought books were perfect because attempting to send huge catalogs for all the available books would be expensive and cumbersome, but an online resource database that was easy to navigate would provide customers with easy access and a single point from which to shop. “In 30 days, with no press, Amazon had sold books in all 50 states and 45 foreign countries, obviously by the success of Amazon he was right (Academy of Achievement, 2010). In a case study written by Javad Kargar called “Amazon.com in 2003” he stated that “Amazon's online store was a big hit, with about $5 million in the first year of operations” (2004). This huge success so quickly would have confirmed for Jeff that his idea was viable and drove him to continue to strive for more. Jeff Bezo’s charismatic-visionary leadership is the key to his and Amazon’s success.
Since the creation of Amazon in 1995, it has been a reference of adopting a successful strategy which has preserved over time; being the largest online store in the world nowadays. In addition, i...
Another part of Amazon’s retail strategy is to serve as the channel for other retailers to sell their products and take a percentage of cut of every purchase. Amazon does not have to maintain inventory on slower-selling products. This strategy has made Amazon a ‘long tail’ leading retailer, expanding its available selection without a corresponding increase in overhead costs.
Launched by Jeff Bezos, the Amazon.com website started in 1995 and is today considered as one of the most prominent retail website on the internet with a record turnover of US$ 14.87 billion in 2007. Jeff Bezos’s intention was to create an internet based company with the most dedicated product portfolio on the internet where customers could find anything they might want. Amazon’s success is based on technology, services and products (Jens et al., 2003).
When Amazon.com first began in 1995, as strictly a book retailer, Bezos knew he had discovered an excellent company. After all, a physical bookstore cannot stock anywhere close to the number of books Amazon can offer online. Within a year, the company had a customer base of approximately 340,000 consumers and daily site visits were huge as well. But Bezos wanted to expand the company to offer music and DVDs, because he realized there was little or no barrier of entry. In the next years Amazon would emerge as a marketplace, expanding the company globally offering products from toys to kitchenware. Because of the relatively cheap prices Amazon was offering and also the growing number of online shoppers, the company was doing tremendous amounts of sales and creating profits.
Amazon.com creates value for its customers by offering customers broad array of products to select from through their website and ensuring timely delivery of products to exhibit high level of commitment towards their business and customers
People know that for the most part they can rely on Amazon.com for fast delivery and a wide selection of goods and somewhat affordable prices. Amazon.com has an efficient and advanced supply chain model, which is why they are able to guarantee quick product delivery to customers. They have strong customer loyalty due to their string customer service and unique business model. Customers freely and openly rate products and services which allows for greater customer satisfaction because customers are able to perform better product research in order to find the best fit for their needs. There are many benefits to be a strictly online business, for example having less overhead expenses compared to normal department stores with multiple locations and employees. and more money to give back to shareholders (Free SWOT). Customers can shop anywhere, anytime, and in any condition they choose. And depending on where the customer may live, they will always get their desired product within a week unless notified otherwise. It is easy to understand why Amazon.com has become a giant in the E-shopping
In 2002 Annual Report, Amazon has made numerous attempts so that they will remain ahead among its competitors in the industry. Among those efforts includes store personalization that cater for each customer, show customer reviews on its offering products and wide selection to the customer by placing used products next to the new products.
Amazon has recorded a magnificent success in its business throughout the years that it has been in operation. It has attracted almost all people to use it when necessary. Amazon has built its success in business methodically and slowly. Amazon has made much success because of its ability to read market trends and diversify its operations. It started as an online book selling company. However, it changed its operations and started selling other products. Currently, many large retail shops use Amazon to host and power their websites, for instance, sears and virgin megastores. Amazon now attracts over fifty million visitors in a period of one month. Amazon has tried to make their services fit each individual user. It has based its services on the end user. It has shipping discounts, customer product reviews and a credit card with bonuses. It also has prime membership, product forums and 1-click ordering system among other services. The company has tried to make a remarkable experience for customers and visitors (Thomas, 2006).
Competition – The biggest competitor of Amazon is EBay and all the internet retailers and suppliers as Priceline.com; Buy.com; BN.com and many more.
Firstly, Amazon.com employed the cost leadership strategy by offering products and services at lower costs than competitors. The key to making this strategy successful were the economies of scale that allowed the company to offer the largest range of products to its customers.