Amazon.com But in the beginning of 2003, electronic commerce

 

 

 

 

Amazon.com Inc.

 

Tufail Rahman |
[email protected] | E-Business | 26/12/2017

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Table of
content

Contents
Introduction. 2
The beginning. 3
Products and
services 5
Revenue Model 7
Target Market 9
Sector Overview.. 10
Amazon Website. 11
Conclusion. 12
Bibliography. 13
 

 

Introduction

Name

Amazon.com, Inc

Headquarter

Mountain View, California, United States

Founder

Jeff Bezos

Date founded

July 5, 1994

Active Since

July 1994 ( 23 years )

Revenue

$135.98 Billion ( 2016 )

Employees

541.900 ( 2017 )

CEO

Jeff Bezos ( Since 1996 )

 

 

 

 

 

In late 1990s, with the public
release internet it was certain that the way of business know for the time was
about to change. At the time electronic ecommerce was still at its first stage
but it did not discourage big company to invest on it. Company like E-bay,
AltaVista, HotBot, Lycos, Yahoo! and many more decided to migrate to this new
way of business and among those was Amazon.

The history behind electronic commerce
was an interesting. Since the beginning in 1990s electronic commerce grew
rapidly until 2000, when many company has seen to struggle. The phenomenon was
described by popular media as “dot-com boom”. Between 2000 and 2003, many have
seen the end of their industries. But in the beginning of 2003, electronic
commerce began to show sign of a new life. And the companies that had survived
were able to see increase of sales and also started to make profit. Amazon.com
Inc was along those companies who had survived the “dot-com-boom”.

In
this paper I will discuss about Amazon strategy, product and services that
brought the company to become one of the most successful electronic business in
the entire world.

 

 

 

 

 

 

The beginning

Amazon was
founded by Jeff Bezos, in 1994 in Seattle, Washington USA. Bezos initially registered
his company as Cadabra Inc. but often people misled it with the word “cadaver”
so Bezos decided to name it differently. In September 1994 Bezos purchased the
domain Rentless.com and considered to name his online store Relentless, but
friends told him the name sounded a bit sinister, so Bezos began to look for a
word that he can use to name his company. Looking through the dictionary he
selected the word amazon to name his company as he found “exotic and
different”. At the beginning Bezos realizes that an online store that sells
everything would not be practical so he decided to write 20 possible product
that he might sell, including computer software, office supplies and music. The
option that sought best for first product was books. On November Bezos
registered the domain amazon.com.

The first product
sold by Bezos in his company was Fluid
Concepts & Creative Analogies: Computer Models of the Fundamental
Mechanisms of Thought. At the time Amazon had not anyone assigned to pack
the books so Bezos would take order during the day and pack the book during the
night with the help of some of his friends and his wife and dispatch them the
very next morning at the post office.

After being
featured on the home page of Yahoo!, the company started to swamp with orders
and within the first month it would have sold books in 45 countries. In late
1995 Bezos receive $1 Million in investment to expand its company in term to
keep up with the high volume of order through server upgrade, hiring new staffs
and improving the infrastructures. Thanks to the success of the sales of the
books Bezos decided to amplify the catalog including product such as DVD.
Between 1998 and 2000 Amazon acquired IMDb (Internet Movie Database), Telebook
and Bookpages. This strategic acquisition gave access to Amazon the customer
based in United Kingdom and in Germany. During this time the company expanded
the product line including toys and electronics. Surprisingly Bezos company did
not make him any profit until late 2001. Bezos stated that he emphasized the
customer service over profit.

At the same time Amazon began
to struggle as many companies under Amazon went down and Amazon stock price
dropped from $107 to $7. The keep the cost one thousand employees were laid off
and one facility was shut down. Luckily in 2003 the company began recover and
at the same time they expanded the product line including jewelers, software
development center, Amazon Prime. Since then Bezos company has acquired a
verity of companies and began to operate in different sectors. 

 

Figure 1.
Amazon stock price between 1997 and 2009

 

 

 

 

 

 

 

 

 

 

 

 

Products and services

Since
2003 Amazon started to build its empire acquiring company and investing its
asset to improve its product and services. Today amazon is a platform that
offers a complete solution for its customer and the main are the following:

 

Amazon
Prime is a paid subscription service introduced in
2005. It was first launched in the USA with the annual cost of £79 dollars or
£7.99 monthly, then followed by United Kingdom, Germany, Japan, Canada and
other countries. It offers free delivery in 1-2 working days as well as
discounted products. Amazon Prime include other amazon paid subscription so
service such as Amazon Video, Amazon Music are included.

 

 

Amazon
Video is an online video streaming service under premium subscription offers
digital movie and TV shoes. Prime Video features TV shows and movies. Its
offers more than 15000 digital content and its main competitor is Netflix.

 

Amazon
Music is an online music streaming platform lunched in 2007. It offers over 30
million songs in digital format from more than 180.000 artists and over 20.000
labels including EMI music and Universal Music Group.

 

Amazon
Fresh is a service introduced buy amazon in 2007 in the USA and in 2016 in the
UK. It offers fresh grocery with same day delivery or early next day morning
delivery depending on the post code and area. It is an additional service to
Amazon Prime and it cost annually £14.98 monthly.

Amazon
Kindle is physical device developed by Amazon. It is a small one-hand device
launched in 2012 with and it is used to read e-books.

Amazon
Echo is the latest product introduced by Amazon in 2015. Echo is a brand of
smart speakers that mounts the Fire OS the personal assistant on board. Echo is
capable of voice interaction, play music, make to-do list, setting alarms and
many other smart function.

These
are the few most important services and product that Amazon offers to it
customer.

 

 

 

 

 

 

 

 

 

 

Revenue Model

The
company often touted as the largest online retail shop in the world. Its
operates under a business model with many moving parts. A great percentage of
product are sold by Amazon directly, but it also offers other retailers to
sells product to buyers. Product sold indirectly by Amazon by other retailer
are less common and sometime with a higher purchase price. This creates
relationship between Amazon and businesses of any size and type. The company
does not assess any fee for its retailers however is good to precise that it
does retain a portion of the sale as a commission. Therefore, it is possible to
assume that the biggest online retail shop revenue is based entirely e-commerce
model however it uses more than one model revenue. As it uses:

Figure 2.

 

The company main revenue is based on sales of product directly to
its customers from its online platform. The following revenue model the
customers to choose the product and purchase it from one single platform.

 

 

 

 

 

 

As the company offers other retailers to use its platform to sell
product its retain a portion of the sale as a commission. In this type of
revenue model, other retailers advertise and sell their products and
services through Amazon paying a commission.

 

 

 

 

Figure 3.

Figure 4.

The company has growth to a size to become the third force in
advertising only after Google and Facebook.
Many retailers use ads on Amazon platform along aside with the
products this create a strong relationship between Amazon and its
partnerships. Researches shows that the company made $945 million in
advertising in 2016.
 

 

 

 

 

 

 

 

Figure 5.

Another model adopted by the company is the subscription model. An
example is Amazon Prime which offers special content / access to the final
consumer such as free 2 working days delivery, free access to the following
services Amazon Book and Amazon Music.

 

 

 

 

 

 

 

 

The
revenue models are perfectly adopted as the company has more than 80 million customers
(2016) registered with Amazon prime and delivered over 2 billion products
worldwide ( 2012 ) with over based on the statistic of the website Statista. The number is predicted to
grow over the following year. This demonstrate the result of a successful
strategy taken over the year by Bezos company.

 

Target Market

Figure 6.
Average income member income

The
company target is certain that aims to a wide audience who have got a little
experience in the use of technology and often do not have time or prefer
shopping online rather that physical stores. However recent survey shows that
Amazon audience are younger and richer than its competitor such as Walmart. The
average for Amazon customer is 36.5 years versus 42.5 years for Walmart. All
this is possible thanks to its strategy taken over the years.

 

This
positioned the company as a Glocal or better known as Go global act local
e-commerce, where is possible to buy anything and have it deliver in any remote
area.   

 

 

 

Sector Overview

Since
1990 the electronic commerce has changed way of business is transacted, whether
in retail or business to business (B2B), locally or globally. Prior the public
release of internet the success was entirely based on the location. However,
this is not the case anymore, as internet is a global marketplace. Electronic
commerce is now became a fundamental part of economy in country. According to
the U.S. commerce department, the country’s online sale during 2011 was roughly
$194 billion and by 2013 the figure has increased to $262 billion with an
increment of 13.4%. The sector is very competitive but dominated by Amazon,
E-bay, Wal-Mart Stores, John Lewis and Costco Wholesale Corporation, Tesco PLC,
Kroger Company and Walgreens Boots Alliance, Inc. Although all the company
early cited operate on the internet, they all operate differently offering
different product, targeting different audience and using different strategy. The
company biggest competitors are E-bay and Alibaba however Amazon leads this
market by having a more effective, professional and easy interaction with its
clients. Furthermore, the company has made a brand personality as is fast,
friendly and innovative.

Figure 7.
Stats of E-commerce ( in million ) between 2011
and 2016

Amazon Website

The
key factor of a business is certainly its website and Amazon has perfectly
implemented all the feature in its platform. Below is described how the design
and function are implemented to provide excellent experience to the final
customer.

Figure 8.

Figure 8. The home page includes
the header, the navigation bar, the content more content scrolling down until
the footer at the end. The header includes the amazon logo, the search bar and
the navigation bar. In the main content it is possible to observe how the
banner is integrated to capture the attention of the customers. Continuing
scrolling product based on shopping trends are shown.

Figure 9.

Figure
9.
This is a typical page of a product before the item is added to the chart. In
the following page is possible to notice in the center left the review of the
product by customer who already bought the item, therefore the customer is able
to make an idea of the product before buying it.

Figure 10.

Figure
10. The following page is a payment page where the customer finalizes the
order, its notable at the top-left the shipping address, aside the billing information,
at the left-bottom the product aside with the shipping speed and at the very
right the order summary.

The
platform is simple, intuitive and user friendly from the choosing the product
until the very end with the payment. 

 

Conclusion

Once
started selling books, has now strategically positioned itself to grab the
emerging trend, has innovated its technology and usage of e-commerce and its
services bringing the company ahead its competitor. The company diversification
strategy does not have a clear direction. Its provide a variety of products,
from book to the less common item. The company’s service is one of the key that
led the company ahead of any other electronic commerce company. Moreover, the
founder / CEO stated that
he emphasized the customer service over profit. The company is looking ahead and
seeking new way of delivering its product using drones and cutting of the cost over
the shipment. The future for Amazon is certainly bright if the company keeps innovating
and offering excellent products and service.

 

 

Bibliography

2007
Gary Schneider book –  E-Business,
International Edition 11th edition.

2016
Web Page – First product sold:  https://www.quora.com/What-was-the-first-product-sold-on-Amazon  

2017
Web Page – Amazon acquisitions:  https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Amazon#1998

2009
Web Page – Amazon stock price:  http://www.businessinsider.com/chart-of-the-day-amazons-stock-price-2009-11?IR=T

2017
Web page – Amazon products: https://aws.amazon.com/products/

2017
Web page – Amazon information: https://en.wikipedia.org/wiki/Amazon_(company)

 

 

 

Academic
Declaration

I
certify that I have accessed and understood the Blackboard Course BBK COIY042H5
2017: Avoiding Plagiarism. By submitting this assignment, I confirm that the
work is my own, with the work of others fully acknowledged. All quotations from
the published or unpublished works of other persons are duly acknowledged.
Where there is no such acknowledgement the work is my own. The work presented
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It
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Tufail
Rahman