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Report on Amazon.com

Report on Amazon.com

Introduction:

Amazon.com (2009) is one of the largest retailers for books and other amenities like CDs, DVDs and large collection of electronics, apparels and computers. It was an enthusiastic convert to the internet and has revolutionized its products and services through the online shop.

Organizational strategy

Amazon’s main aim is to generate profit, enabling them to survive, re-invest and grow. The Amazon marketplace is concerned with generating sales and making sales leads purely through their purchase site. Amazon also aims to:

1.      Excel and maintain Customer Relationship Management (CRM.)

2.      Attract and enroll new customers.

3.      Retain existing customers.

4.      Communicate information.

5.      Gratify supply and demand.

6.      Make the site fun and interesting for users.

Their organizational strategy is in catering business to customer (B2C) and business to business (B2B) services through their website. Their ERP system enables them to better integrate with the suppliers and manufacturers. Their SCM system effectively tracks the transformation of their goods and their services from procurement to delivery and even after sales popularly known as value chain.

Business processes:

Amazon’s business processes are mammoth in nature. It handles the procurement of the various goods from the retailers and manufacturers and takes extensive help of the geographical retailers and distributors for shipping of its

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products across the globe. The various procurement of its products is directly taken care by the Amazon’s ERP system which it exploits to its very best. The primary component of its business is the affiliate marketing sites which forms the largest chain to drive sales of Amazon. It forms the very success of the online retailer.

Amazon represents a new breed of retailers; changing the way business is conducted online with their business to consumer model (B2C.) It is a virtual reseller, one of the main new intermediaries (Sarkar, 2006). They are an electronic-commerce only intermediary; business and customer relationship management (CRM) is conducted purely via their website; a virtual marketplace with no direct contact between buyers and sellers. Amazon have created a virtualised value system through their accelerated ordering, delivery and payment of goods and services, while reducing operating and inventory costs associated with traditional bricks and mortar stores. They have access to global markets, economies of scale and the ability to personalise. As a virtual merchant, their products are suited to the Internet, their business models remain a source of differentiation. Amazon is a seller-controlled site whose commercial mechanism is fixed price sales.

Information processes

Amazon’s business model as a virtual community, which “helps build customer loyalty and trust through an interplay of virtual and physical realities.” (Hagel and Armstrong, 2007). Amazon strengthens their association as a virtual store with “shopping trolley technology” (Cooke, 2002). Shopping carts and checkouts act as reminders of physical environments.

Amazon’s effectiveness as a virtual community is evident with their customer co-presence. “Amazon has made customer relations the centrepiece of its strategy.” Collaborative filtering helps them achieve personalisation and mass customisation. Customer extension is offered via their site and e-mails.

This has enabled mutual close relationships. Significantly increasing customer loyalty, a major source of competitive advantage.

Amazon’s business model is now considerably more flexible as it has diversified from books and CD’s to a range of products more typical of a department store. Amazon has warehouses to support their technical innovations. They are dependent on the publisher-to-wholesaler supply chain. Their distribution centres are placed near distribution warehouses to allow quick turn around on deliveries.

Amazon’s brand has enabled them to pursue differentiation strategy. They have an excellent reputation due to their efficient one-click purchasing system, prompt after-sales service and tight security measures. Amazon are using innovative business models such as e-mail alerts, which deliver value in ways that have not been economically viable in “traditional” physical settings. Their distinctiveness is evident in their online value proposition “Earth’s biggest selection.” Their brand, accompanied by reputation and trust is difficult for competitors to imitate, making it a source of sustained competitive advantage.

Barnes and Noble previously traditional intermediaries, now conduct business using both traditional and online methods. Due to its large share of traditional consumers and physical store outlets, Barnes and Noble are able to appropriate benefits of EC innovation in a manner that Amazon cannot match.

Information technology:

Technology is integral to Amazon’s sustained competitive advantage. Amazon operates on a client to server basis. Their technology consists of a web browser linked to the Internet, which goes to a web server. The web server is linked to a business process server, which may be linked to a series of other servers such as payments and security servers. As previously mentioned they also use SSL technology to protect e-commerce transactions.

Legal and ethical issues are vital to online success. Building trust and user confidence is essential to our client, respecting consumer privacy and adhering to data protection legislation. “Consumers are extremely concerned about security and privacy on the Internet”. Amazon’s Safe Shopping Guarantee means customers pay nothing if unauthorised charges are made to their credit cards as a result of shopping at Amazon. They use secure sockets layer (SSL) technology encrypting all personal information. “Amazon takes customer fears about security seriously”.

Amazon makes clear terms of trade and offer warranties/returns policy. They address copyright, patents and trademark protection.

Due to the complexity and diversity of large scale web development it is vital to adhere web engineering principles when re-developing their site. These principles offer a disciplined approach to achieving the most competitive website. Engineering principles will ultimately affect profit; costs of bad design are high. Our client must consider the Quality Requirements and aim to maximise performance in usability, functionality, reliability, efficiency and maintainability. Engineering principles will prevent problems with outdated or irrelevant information, slow response, crashes or security breaches to which web applications are sensitive.

Engineering principles will minimise risk, improve quality, maintainability and scalability. Software Configuration Management and Quality Control should be addressed to maintain standards. Testing will help our client plan, monitor, control and cope with the challenge of their web application.

Amazon’s homepage provides the user with an overview of their whole site, which is vitally important as (Nielsen, 2002) explains “The homepage is your company’s face to the world.” As recommended by Nielsen (2002) Amazon has used a tagline to capture and communicate the essence of the company; making the sites purpose immediately clear “Amazon.com: Online shopping for electronics, apparel, music, books, DVDs & more.” Their logo is also apparent, boosting brand awareness, differentiating identity from competitors and providing familiarity to users. It can be found in the top left hand corner of the homepage, showing standard HTML conventions have been adopted.

References/Bibliography

Amazon.com (2009). Retrieved 16, January 2009 from http://www.amazon.com/.

Armstrong, A. & Hagel, J. (2007) The Real Value of On-line Communities, Harvard Business Review, pp.134-141.

Cooke, M. (2002). Java e-commerce: technologies for distributed enterprise computing, http://www.dcs.shef.ac.uk/~martin/teaching/ecommerce/intro_1.ppt.

Nielsen, J. (2002) Top Ten Guidelines for Homepage Usability. Retrieved 16, January 2009 from http://www.useit.com/alertbox/20020512.html.

 

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