Running Head: AMAZON.COM’S E-BUSINESS MODEL

Amazon is a US based company that is known as the world’s leading e-Retailer of books. Even though Amazon sells online only, it is head to head with EBay, Noble and Barnes and boarders for the world’s largest bookstore. Since 1995, Amazon’s start-up the annual sales have gone-up to more than $1 billion and the company has accumulated more than 30 million customers – but the first annual report was only in 2002. Today Amazon is competing on vast varieties of market that includes books, digital readers, automotive, movies, health and beauty aids, clothing, shoes, tools, toys and many more (Dennis & Harris, 2002). The company has managed maintain its string brand despite their vast product lines.

Amazon.Com Business Model

The business model of Amazon”presumes that increase of the number of internet users will generate a new mass market valuing low prices and convenience and will shop for a large number of their needs using the computer”. When the overhead are removed of the traditional mortar store Amazon is able to charge lower prices as the cost of supplying is reduced.

Takeover of Bookpages established the UK site in 1998and is now the biggest market of Amazon outside the USA. To promote the brand awareness Amazon.co.uk has followed the footsteps of the US parent of heavy advertising (Reddy, 1994). Using the affiliate system more traffic can be encouraged. AltaVista is one of the search engine that offer links to the books when related key words are used. The company site is user friendly and for this reasons the e-shoppers can find books by title or by subject and in seconds they can find the books or item they want in seconds.

Records of customers’ preferences are recorded and stored in-case new books of the same interest are published (Schmitt, 2003). In the past Amazon has been offering discounts of up to 40% and this made it hard to reach profitability. Fast delivery, customer service and security are what Amazon is renowned for.

Has Amazon Lost Its Identity By Expanding Into Well Beyond Books?

Diversification is said to be the simultaneously movement into new products and market. It is seen as a risky strategy but by careful selection of the right business it can be successful. Amazon started by selling only books but did not pick a special book segment and today it is moving towards a variety of items

The information system keeps on advancing especially the internet and more and more companies are coming up. What allow the customers to change are the changes in the business market and they become more dependent on the online stores and thus the online shopping rather than shopping in the malls and the stores (Schmitt, 2003). The intent of every company is to become number one choice and so do Amazon in the online shopping. To provide more convenience websites have been made to help the customer who have intentions of buying the product right away instead of waiting for the product to be delivered.

Amazon can direct the customers to the local stores that may have the product inventory presently. Amazon has tapped the power of the internet and has used its capability to reach more clients. Moreover, the company strategy is work in partnership with other international and local suppliers. For this reason, the company has diversified to offer different products, categories, services and many other physical assets. The intent is to maintain their competitive advantage through the compelling the needs and demand of the targeted market and hence penetrating the global market (Chan & Tharam, 2001). The intention is do business in a slow but sure manner through the innovation of what they are offering the customers.

Advertising and marketing has focused to other products rather than books that gain more interest from the targeted market and has yield more sales by securing online shop in various location like UK and other countries. Also Amazon has managed to create more affiliate websites that will otherwise create more awareness among customers. Though Amazon is diversifying is has maintained the strong brand name and the reputation that is excellent among its customers.

What Amazon Should To Do Protect Its Brand?

To begin with, the company should maintain and continue integrating with physical stores and the online stores because this leads to greater efficiencies and there is the capabilities of reaching more clients. Second, Amazon should honor and recognizes the online shopping brands and the global book stores so that it can have a greater market share whilst maintaining quality product and service offering (Schmitt, 2003). Third, the company should continue with the effective leadership style because this imposes great responsibility to the organization team.

The management has the capabilities of efficient use of the supply chain management in the alignment with the business process and the information system. This can be a competitive advantage in the online market share gained by the successful managerial approaches. Not only has Amazon been able to make effective managerial decision but also has a unique way of managing the subordinates and this enhances performance and company’s productivity as a whole. Fourth, Amazon should continue introducing innovative features.

Over the years the company has continued to surprise many by gradually adding more and more features that gives the user the information of the item she/he is looking for art glance. And finally the company should stick to the business model to expand to the new markets and maintain the old customers.

What Barnes & Noble And Borders Should Do To Recapture Some Of Their Online Market Share?

The companies should focus more on Customer Relationship Management (CRM) as Amazon does. First they should treat the customer individually as CRM is based on the philosophy that personalization means content and services that they are designed based on the customer behavior and preferences (Reddy, 1994). Second, they should major in acquiring and retaining customer loyalty by use of personal relationship and this may continue to sustain customer relationship.

Third, they should select good customer based on the Lifetime Value- this to say that they should find and keep the right customers who records show that they generate most of the profits. By following the above ideas Barnes & Noble and Borders can acquire customers, the value of the customer increased and good customers retained and thus greater profit margins.

Whether Or Not Amazon Is Foreseen Expanding Its Channel of Distribution to Include Retail Locations Such As Wal-Mart      As reported by the UK’s Sunday Times there is a possible alliance of Amazon and Wal-Mart and for this reason the stock rose from $10 to $12.50. As reported by the paper the alliance “would whether or not you foresee Amazon expanding its channel of distribution to include retail locations”. As quoted Amazon spokesperson Patty Smith by the two executive of both said “We do not confirm or deny rumors or speculation about what we may and may not do in the future,”. If the deal went through Amazon would gain presence in Wal-Mart’s 4,500 and of course there will be cash injection and sales percentage for both companies.

References

Chan, H., & Tharam, D. (2001). E-Commerce: Fundamentals and Applications. New York: John Wiley and Sons.

Dennis, C., & Harris. (2002). Marketing the E-Business. London: Routledge.

Reddy, A. (1994). Total Quality Marketing: The Key to Regaining Market Shares,. Westport CT: Quorum Books.

Schmitt, B. (2003). Customer Experience Management: A Revolutionary Approach to Connecting with Your Customers. Hoboken, NJ.: John Wiley and Sons.

Appendix
Comparison Table

 Criteria  www.Amazon.com   www.BarnesAndNoble.com  www.Borders.com Functionality Fully functional Functional Fully functional Design  Excellent Perfect Almost there to perfection Content  Featured Fully featured Not fully featured Originality  Original Original Original Professionalism  High level High level Medium Effectiveness  98% effective 90% effective 85% effective