Amazon, referenced in The Economist, is a B2B-to-C business. It was started in 1997 by Jeff Bezos. The owner of an online bookstore, Amazon has been growing rapidly. It is also expanding its global empire. Amazon has already established e-commerce websites in 14 countries and plans to expand. (The Economist). Amazon develops business relationships with businesses of all sizes, from sole proprietorships through to corporations.
Personal accounts can be used to jump into new and emerging industries. Business accounts can then be upgraded when sales grow. Many Amazon associates and companies rely on the many platforms and facilities offered by Amazon. These corporations benefit from the increased exposure of clients and better sales opportunities. Amazon earns more than its product sales. Amazon also makes money through salary, fees, and directives. (Chron & Charmayne Smith). Smart Insights states that there have also been improvements to business models that focus on hardware. They include Fire Tablets and kindle E-readers. Also, the growth of Amazon Web Services, which is business-oriented. Amazon Major is a yearly membership that includes unlimited free shipping AWS is a little-known service, but Amazon continues to use it. In 2011, AWS introduced 82 new services and features. (Smart Insights, Dave Chaffey 19/01/2018) Source: (comScore. Bloomberg. JP Morgan estimates Jan. 2011 Business Canvas. Chaffey’s Model Amazon’s Model Business Model Canvas Key Partners. Authors and Publishers. System retailers. Value Proposition: Suitability Price Huge variety Customer Relations: Self facility Automated facility Customer Segment : Single power Group Power Worldwide Customer Marketplace Key Partners: Authors and Publishers System of retailers. Key Activities: Marketing, Manufacture, and Design. Smart Insights says that the most expensive products for online shops are the most popular. Less well-known products tend to have lower prices and thus, Amazon makes a larger profit. To stimulate basket growth, customers must spend more to get free shipping. Amazon can connect the agreement using a variety of methods. These include demonstrating modern inventory accessibility, estimations of delivery times, and options for accelerated shipping.
Amazon.com scored 88 on the American Customer Satisfaction Index, which was the highest score for customer satisfaction ever recorded in any online service business. Round (2004) notes that Amazon’s focus has always been on customer satisfaction. Amazon sites are carefully monitored for download speediness and site accessibility. It also checks the per-minute revenue limits. There is an alarm system, which is similar to a control room. The alarm goes off if the site’s income falls below $10,000/minute. (SmartInsights) Source (Data compelled to eMarketer). Amazon is always about making consumers happy. Amazon’s advertising budget is very small considering the size of the corporation. However, they are determined to make their customers happy. Customers tell others about great experiences if they have one. It is very important to spread the word.
Amazon also spent 2.8 billion dollars in digital marketing. Their sales between 2014 and 2015 was $71.84 million. Amazon spent more than 90% on SEO in 2015 and PPC in 2015. It is remarkable that Etsy was the only brand with a larger budget for search marketing. Apple’s account was 85%. Target and Best Buy had accounts of less than 20%. (ProfitWorks) Amazon.com is facing many challenges in its e-business strategies. Wal-Mart recently surpassed Amazon.com. Wal-Mart saw its online sales grow faster than Amazon.com in the 12-month period ending December 31. Wal-Mart beat Amazon.com to its gains thanks to a well-crafted strategy. This included the acquisitions and building of warehouses. Wal-Mart Labs became Wal-Marts e-commerce arm in 2013 when it bought four start-ups. Inkiru was a predictive intelligence platform and Torbit was a cloud-based website accelerator. OneOps was a cloud-based automation tool. Tasty Labs were also acquired by Wal-Mart Labs. Amazon continues to be the online leader and beat Wal-Mart 7-1. Wal-Mart’s strategy shows that Amazon has no sustainable competitive advantage. A retailer can enter its markets by investing in the recruitment and acquisition of top talent.
Wal-Mart doesn’t just sell clothes. It is the world’s largest retailer. It did this by pricing itself. This is Amazon’s biggest problem. It is used to competing on very tight margins, and has a tendency to focus on profit growth over sales growth. Wal-Mart entering Amazon’s territories may change the game. Amazon won’t be able to raise its “bundle” price, which may make it more difficult. This could also fuel a price war that may endanger Amazons narrow profit margins. Amazon.com had a completely different strategy. It first built the warehouses. Then it stacks the books and fills the orders. The company also launched clever promotions that included discounts and free shipping. This allowed it to scale up. It also expanded to other merchandise to achieve greater scope, sometimes by signing up as affiliates. It expanded its reach into content development by partnering first-time and with more experienced authors. Fifth, Amazon.com entered the electronic product market. This enabled it to sell digital content online. Amazon.com seems to have adopted many of the strategies used by established companies over the years, such Standard Oil’s 1880s monopoly. Amazon.com is expanding horizontally and vertically. It has raised barriers that keep other competitors off its turf. However, customers resisting price hikes may cause Amazon to have too much capacity, which could result in a shrinking profit margin. (Forbes)
Harvard Business Review reports that Amazon entered India’s online ecommerce market when it was ten years later. The country displayed both good and negative news. The country’s population was young, with more than 65% of its population under 35, increasing in salary and cell phone ownership (approximately 80%). Unfortunately, 67% of India’s population lived in rural areas with a small substructure. The Internet is only used by 35% to 35% percent of India’s population. Cash is more commonly used than credit cards and checking accounts. India endorsed a stringent FDI policy that restricted foreign multiband merchants to marketing online. This meant that any venture selling Indian-made products would be considered a third-party seller. There are many Indian vendors, both large and small. Also, there is plenty of Indian-made goods. A few years ago, online sales were rare as sellers were afraid of the complexity and time-consuming nature of ecommerce.
Amazon created a platform for contractors to find work and persuade them that they were reliable partners that could help them expand their market. Thus, it launched its first Indian website. Amazon Chai Carts were mobile teacarts, which provided assistance to small business owners and served refreshments. Chai Cart’s team probably travelled more than 9,400 kilometres through 31 cities, meeting up with over 10,000 suppliers. Amazon Tatkal is a set of launch services that allows suppliers to get online quickly and address their concerns about e-commerce. (Harvard Business Review July 20, 2016)
