Contemporary Management
Dr. Riham Adel
Case Study
AMAZON
We have recently entered the Age of Knowledge. Often we might hear the
phrases, “knowledge is power” and “content is king” when discussing business on
the Internet. Events in the short course of e-business and e-commerce history
have demonstrated that successful e-businesses are those that recognize the
needs of their target audiences and match those needs with relevant content.
Building an e-business to accomplish this is not limited to seasoned professionals
—many successful online ventures have been started by students on
college campuses . The terms e-business and e-commerce, often confused with
one another, are different. According to Andrew Bartel, vice president and
research leader of e-commerce trends at Giga Information Group, Inc.,
e-commerce involves exchanges among customers, business partners and the
vendor. For example, a supplier interacts with a manufacturer, customers interact
with sales representatives and shipment providers interact with distributors.
E-business is composed of these same elements, but also includes operations that
are handled within the business itself. For example, production, development,
corporate infrastructure and product management.
E-business and e-commerce have increased the speed and ease of business
transactions and, as a result, competition is intense. Businesses must adjust
constantly to new technologies, integrate newer and faster systems and meet the
needs of people around the world. Inventories are no longer kept in preparation
for orders; rather, products are prepared specifically for consumers. Good
employees are hard to find and even harder to keep. Competing entities must
now collaborate to survive, and must realize that customers do not have far to go
to buy from the next available vendor. There are many benefits of bringing a
business to the Internet. An e-business can offer personalization, high-quality
customer service and improved supply-chain management—the strategic
management of distribution channels and the processes that support them.
There are different types of businesses operating on the Internet, Amazon.com,
eBay™, Yahoo! and other e-commerce sites have helped to define industry
categories and business models on the Web and the different types are the
storefront model, the auction model, dynamic-pricing models, the portal model
and other Web- business models. Businesses operating within a particular model
can leverage their technologies to differentiate themselves from the competition.
Amazon Success Story
From books to Music CDs to Electronics to Groceries to Sporting Fashion, Amazon
success story claims it as the largest E-commerce leader in the world. Having
become online in 1995, Amazon has more than just provide the customers with
the timely delivery of their orders; Amazon has built huge customer loyalty,
brought in newer features to its website or mobile app, better products and
cheaper prices in comparison with other e-commerce websites.
The beginning
Jeff Bezos began with Cadabra in 1994 which came out as amazon.com in July
1995.Not having planned to sell anything other than books, Amazon, later on,
began to receive suggesting emails that people would like to buy music CD’s or
Movie DVDs in the same manner. It led the foundation to much more at Amazon
and it now deals with over 30 product categories ranging from books, Music CDs,
Fashion, Hardware and Tools, Electronics, Computer software, and Accessories
and more. In 2019, the American multinational e-commerce company,
headquartered in Seattle, Washington, employed 798,000 full- and part-time
employees with around 280.5 billion U.S. dollars in 2019 as net revenues .
Amazon and the Storefront Business Model
Amazon is the most widely recognized example of an e-business that uses
shopping-cart technology ,Founded in 1994, the company has rapidly grown to
become one of the world's largest online retailers. Amazon offers millions of
products to more than 17million customers in 160 countries. Amazon also offers
online auctions.
In its first few years, Amazon served as a mail-order book retailer. Its line product
line has since expanded to include music, videos, DVDs, electronic cards,
consumer electronics, hardware, tools, beauty items and toys. Amazon’s catalog
is constantly growing and the site allows to navigate among millions of products
and it uses a database on the server-side (the merchant’s computer systems) that
allows customers on the client-side (the customer’s computer, handheld device,
etc.) to search for products in a variety of ways. This system is an example of a
client/server application. The Amazon database consists of product specifications,
availability, shipping information, stock levels, on-order information and other
data. Book titles, authors, prices, sales histories, publishers, reviews and in-depth
descriptions are also stored in the database. This extensive database makes it
possible for Amazon to cross-reference products.
For example, a novel may be listed under various categories, including fiction,
best-sellers and recommended titles. Amazon personalizes its site to service
returning customers; a database keeps a record of all previous transactions,
including items purchased, shipping and credit-card information. Upon returning
to the site, customers are greeted by name and presented with lists of
recommended titles, based on the customers’ previous purchases.
Amazon searches the customer database for patterns and trends among its
clientele. By monitoring such customer data, the company provides personalized
service that would otherwise need to be handled by sales representatives.
Amazon’s computer system drives sales of additional items without human
interaction.
Buying a product at Amazon is simple. we begin at the home page and decide on
the type of product we would like to purchase. For example, if we are looking for
a book we can find the book by using the Search Box in the top-left corner of the
home page. Select Books in the Search Box, then type the title of the book into
the window. We will then be taken directly to the product page for the book. To
purchase the item, we select Add to Shopping Cart, on the top-right corner of the
page. The shopping-cart technology processes the information and displays a list
of the products we have placed in the shopping cart. then we have the option to
change the quantity of each item, remove an item from the shopping cart, check
out or continue shopping. When we are ready to place the order, we proceed to
checkout. As a first-time visitor, we will be prompted to fill out a personal-
identification form with information including name, billing address, shipping
address, shipping preference and credit card information. we will also be asked to
enter a password that we will use to access our account data for all future
transactions. Once we confirm our information, we can place our order.
Customers returning to Amazon can use its 1-ClickSM system, which allows the
customer to reuse previously entered payment and shipping information to place
an order with just one click of the mouse. It is an example of how an intelligently
designed database application can make online business transactions faster and
easier. When we have finished placing the order, Amazon sends a confirmation by
e-mail. It sends a second e-mail when the order is shipped. A database monitors
the status of all shipments. we can track the status of our purchase until it leaves
the Amazon shipping center by selecting the Account link at the bottom of the
page and entering the password. This will bring us to an Account Maintenance
page. we can cancel our order at any time before the product is shipped, which
usually occurs within 24 to 48 hours of purchase. Amazon has regional
warehouses from which it ships a majority of packages overnight without having
to use express delivery services. Amazon operates on secure servers that protect
our personal information. If we feel uncomfortable using our credit card on the
Web, we can initiate our order through Amazon’s Web site using the last five
digits of our credit card and later complete our order by calling Amazon’s
Customer Service Department to provide the remaining numbers. We discuss
Web security in Chapter 7, Internet Security
Products and services
Amazon Marketplace
Revenue generated through commissions and other charges from sellers.
Amazon Books
The Company earns revenue by selling books on Amazon marketplace, book
depository, and AbeBooks, audio books on audible, comics on ComiXology, and
through Amazon publishing. It also created an all new e-book demand by
introducing Kindle in the market. Amazon also owns physical bookstores in some
countries.
Amazon Music and Videos
Amazon Business Model includes star websites like IMDB and twitch.tv which
makes loads of money for Amazon. Amazon Music and Videos also add to the
revenue.
Amazon Gaming
Amazon’s subsidiary, Amazon Game Studios, is one of the renowned names in the
game development industry. Amazon Digital Game Store sell third-party games as
well.
Amazon Web Services
The company is among the top IT infrastructure providers in the world which also
provide support to CIA and Netflix.
Amazon Fire Products
Amazon launched its fire range of products which include phones, tablets, Tv and
Mobile OS.
Amazon Prime
The company provides premium membership to its every service through Amazon
prime.
Amazon Patents
Amazon holds more than 1000 patents many of which are licensed by other
companies.
What Shaped Amazon?
Because its focus is on the customer’s demands and perspective and not on
building itself against the competitor. Amazon success story is mainly driven by
ideas and innovation. Jeff Bezos, the Ideator-in-chief welcomes unconventional
ideas and concepts and then relate them with new technologies.
Jeff Bezos thinks that ideas stroke up growth. Against everyone’s will when in
2007, Amazon launched itself into electronics device: Kindle E-Reader, it proved
to be a confidence-boosting game changer. And later on, Amazon brought in Echo
and Alexa speaker devices with more than 30,000 skills to bring verbal solutions
to people’s problems.
Amazon focuses on delighting its millions of customers with free shipping,
cheaper prices, varied range of products and timely delivery and of course, great
customer support. The Following are some of the points that made Amazon stand
out in terms of innovations, experimentation, and Risk-taking:
Ideas and Innovation:
Amazon believes that ideas have value and consider them as assets alongside its
people, and equipment. Jeff Bezos works with an innovative e-commerce website
development strategy to channel the opportunities into a stream of ideas into
their implementation. Their innovation is customer driven. With an approach of
listening to the customers via data, a business can understand what the
customers want and it will automatically lead the business into creating and
innovating as per the customer .Naturally, the money will follow.
Risk-Taking and Clear Thinking:
Constant experiments taking the risk of everyone’s disapproval is what led
Amazon to what it is today. It works on the thinking that an idea must comply
with three requirements:
1. Scalability
2. Significant returns
3. Original.
The E-commerce company takes risks, experiments constantly and has thought
that never kills a potential idea. Amazon innovates the ways of innovation and
thinking. In his memo, Jeff Bezos makes sure to induce clarity in the thinking and
then he with his senior team holds a discussion with the prepared questions,
counters, etc. on the advantages of the idea.
Online marketing
Internet marketing has different forms such as pay-per-click, search engine
optimization campaigns, email marketing campaigns & banner advertising, It is
different from the traditional marketing because we have the potential to reach
the people globally, It becomes more popular & improving every day .
Advantages of digital marketing
The main advantage of digital marketing is that a targeted audience can be
reached in a cost-effective and measurable way. Other digital marketing
advantages include increasing brand loyalty and driving online sales.
The benefits of digital marketing include:
Global reach
A website allows us to find new markets and trade globally for only a small
investment.
Lower cost
A properly planned and well-targeted digital marketing campaign can reach the
right customers at a much lower cost than traditional marketing methods.
Trackable, measurable results
Measuring our online marketing with web analytics and other online metric tools
makes it easier to establish how effective our campaign has been. We can obtain
detailed information about how customers use our website or respond to our
advertising.
Personalization
If the customer database is linked to our website, then whenever someone visits
the site, we can greet them with targeted offers. The more they buy from us, the
more we can refine our customer profile and market effectively to them.
Openness
By getting involved with social media and managing it carefully, we can build
customer loyalty and create a reputation for being easy to engage with.
Social currency
Digital marketing lets us create engaging campaigns using content
marketing tactics. This content (images, videos, articles) can gain social currency -
being passed from user to user and becoming viral.
Improved conversion rates
If we have a website, then our customers are only ever a few clicks away from
making a purchase. Unlike other media which require people to get up and make
a phone call, or go to a shop, digital marketing can be seamless and immediate.
Together, all of these aspects of digital marketing have the potential to add up to
more sales.
Disadvantages of digital marketing
Some of the downsides and challenges of digital marketing we should be aware of
include:
Skills and training
We will need to ensure that our staff have the right knowledge and expertise to
carry out digital marketing with success. Tools, platforms and trends change
rapidly and it’s vital that we keep up-to-date.
Time consuming
Tasks such as optimizing online advertising campaigns and creating marketing
content can take up a lot of time. It’s important to measure the results to ensure
a return-on-investment.
High competition
While we can reach a global audience with digital marketing, we are also up
against global competition. It can be a challenge to stand out against competitors
and to grab attention among the many messages aimed at consumers online.
Complaints and feedback
Any negative feedback or criticism of our brand is can be visible to the audience
through social media and review websites. Carrying out effective customer service
online can be challenging. Negative comments or failure to respond effectively
can damage our brand reputation.
Security and privacy issues
there are a number of legal considerations around collecting and using customer
data for digital marketing purposes. Take care to comply with the rules regarding
privacy and data protection.
Customers of Amazon
Both buyers and sellers can come together in Amazon’s platform considering how
it is a mass market. Where its brand is concerned, anyone that inherits internet
connection is a potential customer. Amazon’s customer base is also its most loyal
one. Millions of people across the world have a Prime subscription and pay their
fee for its services respectively.
The consumers who buy various goods on Amazon are directly responsible for
their current successes. Amazon has cemented its position as providing a safe,
reliable and well-stocked platform for shopping which is why they continue to
utilize its services repeatedly.
Value Proposition of Amazon
- Convenience, choice and speed, and. Convenience to shop from the comforts of
home by making few clicks on website or app.
- Choice of going through a wide range of products, without spending even a
fraction of time of what one has to spend when shopping physically in a store.
- If we know exactly what we want we can order it in few minutes. And speed of
delivery proves to be a real deal breaker.
Amazon Business Model’s User Segmentation
Amazon divides its customers into three groups based on certain characteristics.
Group#1 Based on interest
As Amazon collects critical data that tells it about the interests of its users, it
becomes easy for the company to segment its customers based on interest.
Group#2 Based on engagement
Given that Amazon is not the only player in online retailing, people have many
options to buy their products from. So the company focuses on loyal, revenue
generating customers, by tracking engagement metrics.
Group#3 Based on personal information
This includes making a data based on customer’s age, language, geographical
region, gender.
AMAZON INNOVATIONS
It’s an Amazon world, we just live in it. At least that’s the way it feels
sometimes when so much of what we do (shopping, watching, reading, listening,
etc.) is connected to Amazon. And the innovative brand may soon grab another
corner of the market. Amazon announced the opening of Amazon Go, a physical
food/grocery store in Seattle with a killer feature: No checkout lines. Using the
company’s “Just Walk Out” technology, customers use an app to enter the store,
pick out the products they want, and then head out the door. Customers will
automatically be charged for groceries through their Amazon accounts. This
shopping innovation is the latest in a long-line of game changers from Amazon.
Below are a handful of other notable innovations from Amazon—some which
might be familiar to us, others which might not…
1. PRIME
Not only did Amazon give people fast and free (aside from the yearly subscription
fee, of course) shipping on thousand items with Prime, they also made people
come to expect fast and free shipping from every other company. Now, it’s a
letdown for Amazon users when they buy something online from anyone and
don’t get it in two days. That’s not just good business, it’s good marketing.
2. PRIME NOW
Not one to rest on its laurels, Amazon continues to work to make shipping even
faster for its customers. Prime Now, which is currently available only in a limited
number of areas but continues expanding, enables individuals to get certain
Amazon items in two hours for free or in one hour for $7.99.
3. PRIME AIR
Still in development, Prime Air could be a real game changer—enabling customers
to get their orders delivered in 30 minutes or less via drones who drop them at
our doorstep. That’s right, flying robots will deliver our packages immediately
after we place our order. The future is coming quick.
4. ONE-CLICK PURCHASES
We tend to take innovations like one-click buying for granted… until we go to
another retail website and have to fill out multiple forms and click through
multiple pages to place an order. Across the board, Amazon really has
streamlined the ordering process to make it as quick and easy as possible.
5. DASH BUTTON
A small but smart and practical innovation. Amazon dash buttons are a physical
manifestation of Amazon’s one-click ordering. we can buy one for $5 for major
brands and then just click it when we want to reorder that item and—presto!—
our order is placed.
6. ALEXA
While the technology isn’t entirely there yet, Amazon’s voice-responding virtual
assistant is helping to propel it forward. With the Amazon Echo, Tap, and Dot,
Amazon is getting people accustomed to using this technology—and trying to
grab their share of the market (versus competitors like Google and Apple).
Amazon’s voice assistant, Alexa, is amazing at doing Amazon things (placing
orders, finding music, etc.). And she can hear and respond to voice commands at
a normal volume from across a noisy room, which is pretty impressive.
7. KINDLE
Before the Kindle, e-books were stalling. Readers and content existed, but they
weren’t breaking through. Then Amazon gave people a quick, convenient and
affordable way to get books and the medium surged forward. By working to put a
Kindle in the hands of as many people as possible with a low price tag, Amazon
took control of the e-book market—becoming the destination for purchasing
content.
8.CLOUD COMPUTING
Amazon initially built its cloud computing platform to help the company’s web
services run faster and smarter. But they’ve also built a huge business providing
these services to other companies. This New York Times article notes that
Amazon’s Web Services are far more profitable than its North American retail
business and “profits from A.W.S. represented 56 percent of Amazon’s total
operating income” for the first quarter of 2016.
Amazon Sustainability
Amazon is making big changes to protect the planet. On September 19, 2019,
Amazon and Global Optimism announced The Climate Pledge, a commitment to
meet the Paris Agreement 10 years early. Amazon is the first signatory of this
pledge. The Climate Pledge calls on signatories to be net zero carbon across their
businesses by 2040. a decade ahead of the Paris Agreement's goal of 2050.
100% Net zero carbon by 2040
Deploying technology and people to reach net zero carbon across Amazon by
2040, one decade ahead of the Paris Agreement.
80% Renewable energy by 2024
Investing in wind and solar to reach 80% renewable energy across all business
operations by 2024. Amazon expect to reach ~40% renewable energy by the end
of 2019 .
100% Renewable energy by 2030
Investing in wind and solar to reach 100% renewable energy across all business
operations by2030
50% Shipments net zero carbon by 2030
Amazon’s vision to make all Amazon shipments net zero carbon, with 50% of all
shipments net zero carbon by 2030
Fulfillment and sort centers
Every Shipment Zero delivery begins its journey at fulfillment and sort centers
powered by 100% renewable energy. More than 50 Amazon facilities around the
world are powered by solar roofs, which can generate as much as 80% of a single
fulfillment facility’s annual energy needs. To reach 100% renewable energy,
Amazon invest in large-scale wind and solar projects that distribute energy onto
the grid for our use.
Packaging
A Shipment Zero order will be shipped in its own container or in carbon neutral
packaging. Amazon continue to raise the bar for sustainable packaging—from
optimizing the size and weight of shipping materials, inventing new recyclable
mailers, and working with suppliers to streamline and innovate product
packaging.
Transportation
A Shipment Zero package will be transported in a zero-emissions delivery vehicle
—for example, one of Amazon’s 100,000 newly ordered electric delivery vehicles,
an electric bike, or an electric rickshaw in India. Amazon also leverage innovative
technology to maximize efficiency on the road and reduce delivery times by
placing delivery stations close to large Amazon customer populations.
Energy
Amazon is committed to using 100% renewable energy across our global
infrastructure by 2030 and 80% renewable energy across all business operations
by 2024. In 2019, Amazon announced a goal to reach net zero carbon emissions
by 2040 as the first signatory of The Climate Pledge, a commitment to meet the
Paris Agreement 10 years early.
Amazon was ranked #1 in the U.S. by the Solar Energy Industries Association
(SEIA) for corporate on-site solar installed in 2018. These installations offset the
carbon dioxide equivalent (CO2e) of more than 200 million miles of truck
deliveries.
Environment
Amazon has global teams focusing on our key environmental and social impacts
and opportunities for innovation. Amazon programs include Frustration-Free
Packaging and retail packaging standards; solar on Amazon fulfillment center
rooftops; investments in the circular economy with the Closed Loop Fund; and
numerous other initiatives happening every day by teams across Amazon.
Amazon joined The Recycling Partnership to increase the recycling of products
and packaging, and launched Amazon Second Chance, a one-stop shop for
customers to learn how to minimize their impact on the environment through
reuse, refurbishing, and recycling. These are just a few of the innovative programs
and initiatives to help the company achieve Amazon sustainability goals
Circular Economy
Amazon continue to pursue multi-year waste reduction initiatives that promote
easy-to-open, 100% recyclable packaging and to ship products in their own
packages without additional shipping boxes. Since launching in November 2008
with 19 items, Amazon’s sustainable packaging initiatives have grown to include
three tiers of certification and multiple other initiatives focused on reducing
packaging waste across our suite of packaging. Since 2008, Amazon has
eliminated more than 810,000 tons of packaging material, the equivalent of 1.4
billion shipping boxes. Amazon are working to minimize waste in operations as
well. In 2019, Amazon piloted plastic film recycling at four fulfillment centers.
Based on the success of this pilot, Amazon dramatically expanding this program in
2020, starting with more than 50 fulfillment centers across it’s network and in
every region of the country, with more on the way. Through this program,
Amazon expect to be recycling over 7,000 tons of plastic film a year, in addition to
the 1,500 tons of plastic waste already being recycled annually in Europe.
