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Strategic analysis of amazon
Amazon case study analysis
Amazon case study analysis
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2. Compare Walmart and Amazon’s business models and business strategies.
Walmart:
Business model
Walmart operates retail stores in various formats around the world and is committed to saving people money. Walmart earns the trust of its customers every day by providing a broad assortment of quality merchandise and services at everyday low prices while nurturing a culture that rewards and embraces mutual integrity, respect and diversity. EDLP is a pricing philosophy Walmart uses under which it prices items at a low price every day so its customers trust that its prices will not change under frequent promotional activity. Walmart operations comprise three business segments, namely: Walmart U.S., International and Sam’s Club. The Walmart U.S.
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The company started as an online book seller, which then rapidly expanded into music and movies, and finally into electronics and households.
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.
Encompassing this ‘long tail’ retail model, Amazon introduced the sale of used products through its seller marketplace. This retail model provides another retail revenue stream for the company without the need to store products in its warehouses. Shipping and advertising are handled exclusively by sellers, with Amazon taking a percentage cut of every sale for simply providing the channel.
Internet Services
From the consumer side, Amazon provides services like Amazon Prime, which delivers free two-day shipping on retail purchases, on-demand video streaming and a free access to the Kindle library, everything for an annual
Wal-Mart’s competitive environment is quite unique. Although Wal-Mart’s primary competition comes from general merchandise retailers, warehouse clubs and supermarket retailers also present competitive pressure. The discount retail industry is substantial in size and is constantly experiencing growth and change. The top competitors compete both nationally and internationally. There is extensive competition on pricing, location, store size, layout and environment, merchandise mix, technology and innovation, and overall image. The market is definitely characterized by economies of scale. Top retailers vertically integrate many functions, such as purchasing, manufacturing, advertising, and shipping. Large scale functions such as these give the top competitors a significant cost advantage over small-scale competition.
In addition to Amazon great physical networking presence with all of their warehouses they also have a great delivery network that allows businesses to sell their goods through Amazon. Having many warehouses spread out helps getting products delivered quicker and cheaper than many smaller businesses can. Smaller businesses sell their goods via consignment with Amazon. Selling their goods using Amazons delivery and website services helps keep cost for small businesses down despite the fees paid to
This gave the company a huge marketing advantage over its fellow retail stores within the same market. “Walmart’s everyday low price, or EDLP, strategy stems from these economies. It also helped the retailer garner market share from other companies through strategic pricing. It has strategic pricing through programs like the Savings Catcher, Save Even More, Ad Match, and price rollbacks. (Soni, 2015)“With the power and success that the company is able to harbor, its fellow companies like Kroger, K-mart, and Target don’t even stand a chance.
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).
Amazon has been able to maintain sustainable competitive advantage based on three operational strategies. These are low cost-leadership, customer differentiation and focus strategies. Low cost-leadership is pursued by Amazon by differentiating itself primarily on the basis of price. By offering low prices to customers Amazon ensures its future success. Partially modifying the costs of lowering prices over time through achieving higher sales volumes, negotiating better terms with suppliers, and achieving better operating efficiencies. Amazon makes sure that it offers the same quality products as other companies at a considerably cheaper price. Another strategy that Amazon has is its fast delivery service and there are many delivery services that one can choose from. With Amazon Prime, there are certain, but many products that have free two-day shipping. Also, with Amazon Prime, there are many offers specifically for people that have Amazon Prime. For example,
One of the greatest opportunities for Amazon is an Online Payment System. The online system allows the company to reduce transaction fees and increase ease of use for their customers. Internet sales are increasing at a fast pace. This is a product of increased fuel prices, which make driving to a store less likely, and foreign purchases. This development allows foreign purchases to buy clothing as it becomes more popular abroad. Amazon’s biggest competitors can include retail stores that online stores such as Target, Best Buy, and Walmart among others, these can be considered the most dangerous for them since they have strong market share and can be a direct competitor since they attack the same market. Amazon wish to compete in prices, offering
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.
New online retail brand e.g. Amazon, Lastminute.com - Essentially these companies could not have been conceived without the creation of the Internet. New companies sprang up as the Internet began to be adopted. Entrepreneurs were investing heavily in all sorts of start-ups. Some were successes, most were not. [pic]
Amazon is a growing and trending brand, giving consumers the unique shopping experience they have always wanted. The company that was started by 1999 man of the year, Jeff Bezos, has taken 44 percent market share in online sales and purchases. (http://bloomreach.com/2015/10/survey-amazon-is-burying-the-competiton-in-search/) That makes consumers more inclined to search for products through Amazon, before the well-known search engine powerhouse, Google. The Seattle, Washington based company was started in 1995. During the well-anticipated start-up, the company’s focus was on book sales online. Over time, Amazon has set many trends in Consumer Behavior, expanding products across every product pool imaginable. "Amazon.com puts the customer
Amazon model initially offered customers access to massive selection without the needs to incur cost, time and stress of opening warehouses and stores and the needs for inventory handling. Amazon realized to ensure customers get a pleasant experience and Amazon acquire its inventory at reasonable prices, they need to be in control of the transaction process from beginning to the end through operating the business from their own warehouses.
The marketing plan of Amazon is focused on increasing the costumer traffic on their website, strengthen and expend the brand name, encourage repeatable purchase, developing revenue opportunities, bringing awareness of the products and the services, improving costumer experience, free shipping options. That leads to more customer visits and word of mouth promotion. They use various methods of advertising including online and portal advertising, e-mail campaigns and others.
For our business profile project, we focused on Amazon. Amazon.com Inc. was founded by Jeff Bezos in 1994. Amazon was first started in Bezos ' garage and has turned into a billion dollar operation over the course of 22 years (Smith). Amazon is currently headquartered in Seattle, Washington and has branch locations all over the world. Amazon is most known for their kindle, fast shipping, and selling various products (Smith). With Amazon being such a large corporation professionalism, academics, character, and engagement are crucial parts of the success of the company.
.... Amazon uses the internet to allow customers to make content searches, for instance inside books. In addition it has used e-commerce to enable customers to buy online access to certain books through its upgrade program (Webanalyticsbook.com, 2007).
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.
Jeffrey Bezos, the founder and current CEO of Amazon.com, initially started the company as an online bookstore in 1994. Within several months, Amazon spread its operation to all 50 states and abroad. Presently, customers from over 45 countries buy at Amazon. Over a short period of time, the company expanded sales to electronics, video games, software, CDs, DVDs, MP3 downloads, food, furniture, apparel, jewelry, and toys. Today, the company even produces its own products such as the Kindle series. Also, Amazon.com is one of the major providers of cloud computing services. Currently, the company is the largest global online retailer responsible for 20% of online retail market share.