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Amazon Case Study

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Introduction

Amazon has become an Internet business icon in American e-commerce. The business was

established in 1994 by Jeff Bozos and launched on line as an online bookshop in 1995. The

emblem was quickly symbolic, though, when everything began to be marketed from a to z. "The

vision of the Bezos of the online retail world was so complete, so elegant and attractive his

[Link] web-site, that it became the reference point for everyone who would have anything

to sell online from day one. [Link] announced a revenue loss in 2001 and lay off over

1000 workers for a few years. But, instead, the idea of combining the other retailers to sell their

goods online via [Link] was not discouraged from this setback. So, the simple online

bookstore has become the global phenomenon of [Link] with a lot of hard work and

determination (Goel et al., 2020).

Amazon mission statement has always focused primarily on its online customer – [Link].

Amazon focus and solitary mission have been clear since it was begun in 1994. Creator Jeff

Bezos has consistently pointed to the mission statement of [Link] as the cornerstone in his

strategic actions in the context of the organization. Amazon's mission and vision are:

The primary vision is to be a customer-centred company in the world, to create a place to find

people, products and to discover everything online.

This number reflects the total number of [Link] full-time and part-time staff from 2007 to

2019. In 2019, 798,000 full time and part time employees were employed by the American

multinational electronic commerce company, headquartered in Seattle, Washington. With a net

turnover of some US$ 280.5 billion in 2019 Amazon is the world's leading e-commerce retailer.

A semi-exhaustive list of Amazon-sold products and services includes a range of electronics,

books, cloud infrastructure, clothing, furniture, food, toys, jewellery and more. About 50% of
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Amazon's 2019 worldwide revenues came from electronic components and other products online

retail, and about 19% came from third-party retail service (Rupp and Clinton, 2017). Revenue

performance stays steady and the business maintains an ever increasing amount of staff in order

to achieve its rising progress. Amazon employs more than Google and its e-commerce

competitor eBay with its 798 000 employees in 2019. With the approach of holidays, online

retailers in e-commerce must find a solution for growing sales. Amazon normally fulfils this

vacation requirement by adding new staff. In the vacation season of 2019, Amazon has hired an

additional 200,000 people to spend their holidays, mainly in lounges to support deliveries.
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Initial business model used by Amazon and how the business model evolved from the company's

launch in 1995 to early 2020

In comparison with many of its competitors, many academics believe that Amazon has been an

outstanding retailer of the Internet because of its ideal business model and its rapid response to

the changing market since it was founded. To start with, Amazon chose the perfect line of

electronic products, with products that the consumer did not have to handle in person before

purchasing: books, but then distribution in DVDs, music and other media. In addition, book and

music categories consumers tend to want information when shopping online, which is offered on

their websites by Amazon through opinions and advice. Consumers of Amazon seemed willing

to pay some extra for that convenience, although the company was forced to reduce prices or use

other promotion methods by the recent market competitiveness and to move its business model

from pure quality driven back to price driving (John, 2018).

In order to broaden its customer base and improve margins, Amazon has therefore turned to

diversification and expand its product portfolio, which results in its strong focus being on

buildings for its product portfolio that can offer more choices for customers. Amazon expanded

its electronics business in 2001, tripled its selection of kitchens, launched computer and

magazine subscription stores and established new alliances with retailers such as Target and

Circuit City. In November 2002 the new online clothing store, which includes The Gap, Old

Navy, Land's End, Nordstrom's, Cole Hahn, Osh Kosh, Spiegel, Eddie Bauer and Foot Locker

was launched. [Link] announced the launch of the store. This diversified business model

has allowed Amazon to increase market capitalisation and financial performance, and to become

the world's leading online retailer in large measure (Lincoln and Andrew, 2018).
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The company is also focussing on improving comfortably using new features, such as "Instant

Order Update" recently launched, which warns customers to buy that item two times. The

company aims to become the "most customer-orientated company" in the world and operates

through three basic companies: online retail; market pleasure and others, and third-party sellers.

The marketing itself offers Earth’s greatest choice. Amazon also began to focus on the

institutional market and to expand its business model to foster a new source of income: to rent its

services to other firms. The site-building and hosting services it has decided to sell to clients like

Borders and Toys "R" owe a good amount of its relative financial well-being in comparison to

other pure Internet retailer. (Robischon, 2017)

Sutton (2005)'s newly created article focuses on Sears CanadaInc., which recently announced

that it would leverage Amazon's long-term background with customer-facing websites to draw

on the technology aspect of its online retail presence. According to Vincent Power of Sutton,

'[Link] will continue to be very much a Sears’s company,' so from a consumer viewpoint, Sears

will continue to operate the platform with the same internal fulfilment house to manage

consumer orders from the web so the Sears catalogues. In a recent series with other retailers,

Amazon Services Inc., a subsidiary of [Link] Inc., will deal with the arrangement that is

only the latest. Retail analyst Jim Okamura, with the Czech J.C. Williams Group (Sutton, 2005),

said the idea for retailers to outsource their web sites in recent years, and the business model of

Amazon is now fully aligned with this fact.

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What capabilities did IT built to executing the strategy of Amazon?

The functioning and maintenance of any company relies on information systems. IS executives

are confident in the advantages of this project for their organisations. Management decisions and

other important stakeholders within an organization revolve around most operations. And it is

important to have a good information system if decisions are to be adopted adequately because

they are predicated upon information available. In this respect, Kim and Choi (2019) states that

organizations must make sure that they have a good management information system, based on

the important role that information plays in the decision-making. However, before deciding on

the appropriate information system suitable for the business and management of this system, it is

very important to evaluate a system's business degree. In order to have an effective impact on an

enterprise, instrumentation and output of the system managed by the management of information

systems, these attributes may therefore possess a number of attributes which would give the

organization a competitive edge. Value generating attributes of the information required by the

organization must be fully understood to evaluate the information system that would promote the

organization (Applegate, 2017). Basically, it is important to ensure that the choice is fully

compatible with the current system before deciding which MIS strategy to use. This not only

helps you to avoid mistakes, but also saves you time and money (Rhodes, 2010; Jahangir, 2005).

In addition, Amazon adopted the following system in order to execute its strategy and to gain

competitive advantage in the market.

System of online support

Amazon uses some of its competitors' technologies unique. Their One-Click Delivery,

Customers Email Alert are among such technologies. Amazon should however also improve its

online customer support and provide a range of product information in a timely manner. The
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website needs a live Chat Software System where customers can receive immediate help via the

website in order to enhance customer experience.

Pricing systems for discount and allowance

In order to reward customer loyalty, this information system used by Amazon to adjust prices.

Customers can buy one for a half cost or free of charge for this compensation. Customers with

incentives in various forms such as cash discount, price reductions can be given to customers

who often work with reputable businesses, as well as to customers who carry their friends into

the business. Amazon can thus retain its existing customers.

System of advertising pricing

In order to build customers' excitement, Amazon uses promotional pricing systems to

temporarily price its products below the list price and even below cost. In this way customers can

purchase more from the company and expect to even purchase additional products at normal

prices (Silva et al., 2019)

Price system segmented

In order to allow different prices for different customers in different locations Amazon uses an

information system for changing the appropriate prices. Different customers may pay different

prices for the same product or service in segmented prices. For illustration E.g. For a certain

product, students can charge a lower price. The Amazon information system should also be used

to determine what prices should be charged in the various countries where it operates.

Program of Business Alliance

Amazon uses the Business Alliance system to have a relationship with other retailers or

businesses. This will enable both companies to exchange their website privileges. Amazon must

post the inventories online on the website of its supplier and will receive a commission if
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customers purchase any goods from their affiliate. Amazon will also receive a commission if a

consumer purchases the products of an external retailer through Amazon.

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Describe the areas where IT was applied in Amazon's business operations and how the

application of IT helps in executing company's strategy

Amazon has become the leading online retailer and offers cloud-computing services as a US

multinational E-commerce company. The assimilation of customer relationships and information

management into the overall business strategy have been two technologies that drive Amazon's

growth. The IT network of the Amazon was designed in such a way that it could process over

millions of transactions and even manage inquiries and question more than half the number of

sellers. More than 1000 consumers a day (Kaur and Wadera, 2018) are at risk of storing and

securing credit card and debit card details. Within enterprise resources management, the

company uses its customer relationship management module to store customer information and

customer procurement trends integrated within the organisation's marketing and advertising

campaigns.

Amazon's sales strategy, which reflects its MIS, was quite unique. The company's operations

have changed from a single sales strategy to a multi-level e-commerce strategy. Business to sell

consumer models and business to business modes favoured the initial effectiveness of the

company. The rapid increase in the demographic of the E-commerce market has increased

consumer-company experiences, pushing Amazon to offer its IT greater preference and

accessibility of personalized feedback as part of their business (Brown, 2019). The retailers'

exclusion has been the sign of growth in Amazon as it makes the products available to Amazon

customers for sale and buy. Amazon's business model reflects information management systems.

Browsing, account management and shopping is the final step. In any of the phases listed below,

the particular MIS and technologies play a crucial role. Amazon's vibrating web-service was

Open Cloud Storage. EC2 at Amazon targeted at supplying the developers operating with
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computation on the network scale. It provides end users with full control over computer activities

and enables customers to use Amazon's computer environment. At Amazon, the advantages of

E2C computing are its ability, while ignoring the needs to boot a new server, to save more time

(Janice 2011). The end user generates Amazon system picture to use E2C services. The most

attractive part of E2C is the payment feature for actual application only and helps developers to

personalize their applications in order to isolate most typical failure scenarios.

S3 serves as a caching system for internet use in the E2C framework of Amazon. The important

factor in managing the end users to save, retrieve and use any data volume irrelevant to the time

from any location. Users start surfing to find the products they want to purchase. The business

model used at this point in time by Amazon is search agent. It uses the data mining method

where data are collected from the central data base and customers with the appropriate results are

offered in the information saved about the products and service. The image of the product must

be uploaded with a small description on the condition of customers who wish to sell their

product. Amazon adopts the brokerage model as a platform for business, consumer and

consumer transactions (Althafairi et al., 2019)

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Explain how IT help Amazon build capabilities that helped the company to execute its strategy

Customers can add any number of products they want to purchase. The inclusion of CRM allows

users at this stage to view products purchased from similar networks. And customers could save

for future purchases a specific product. This data is captured according to the MIS informative

model. Amazon created a social networking platform within the website that provides additional

interactivity. At this point, Amazon offers clients the option of viewing their search history to

select similar products they want to purchase. Amazon patented this feature on 28 June 2005 and

adds to the core competence inventory. Infomedia model is used by Amazon for the collection of

consumer purchases and personal data that is critically analysed and evaluated in order to initiate

marketing campaigns (Borges et al., 2018). This helps Amazon to recommend frequently

shopped items and visited items to its customers. At the time of registration, personal preferences

are requested and customer recommendations can be drawn up on the basis of the search terms of

their area of interest. Amazon's authentication gathers information from the current customer,

who is explicitly correlated to the database layout and includes correct fields to be filled in.

When a user enters Amazon's website, the next time he / she is offered a series of product

recommendations in Amazon.

The mailing address from which the commodity has to be shipped is demanded from the

consumer. In some cases, the purchaser can order the Amazon product himself in such a case that

the shipping address saved when the product was registered can be retrieved (Ghosal, 2018). The

opportunity to locate the address helps users raising the time they need to enter the address again.

If the customers wish to add another address, they will be able to save it with a new name.

Amazon offers a wider range of shipping options for end users. Once customers have placed

their orders with the selection of shipping methods, they integrate the management of business
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resources – logistics and delivery. The Logistics Department of Amazon is actively using this

information to ensure that its products are received in time by the customer (Jordon, 2008).

Amazon's technology includes web service, middleware, group goods and, above all,

networking. These is the cornerstones of knowledge management programs. Logistics,

accounting and human resources are the business systems which are integrated with the internet.

Amazon's technology and business systems are connected with vibrant, interdependent, relational

databases
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Who are Amazon's competitors and why is Amazon's business model and strategy is still

superior to these competitors

With some of the world's largest corporations, Amazon (AMZN) is competing head-to - head to

achieve market share. As Amazon began as an online book retailer, its revenue has grown to be

the largest e-commerce company in the United States in the course of decades. In other regions,

including traditional retail outlets, delivery packages and cloud sites, Amazon is the world's

biggest internet marketplace with a steadily increasing preserve (Denning, 2018).There are

various competitors of Amazon which is mention below:

 The competitors of Amazon's retail shops are Target, Walmart, Best Buy, and Costco.

 Amazon is competing with Netflix, Apple, and Google for subscription services.

 Amazon rivals Oracle, Microsoft and IBM in the web services category.

The domination of the brick and mortar business model by Amazon has not only been

challenged, the consumer expectations and reset industry standards have also been transformed.

No one wants to pay for delivery and, with a one-day free shipping start for Amazon, dealers are

locked into "arms race for fast delivery." Competitors such as Walmart and Best Buy, following

the leadership of Amazon, roll out their own delivery services next-day. Amazon is known for

providing free shipping, but it also offers a wide range of products at competitive prices.

Amazon is also a major option for a growing number of consumers, thanks to its simple checkout

experience, and the large stock of review reports (Denning, 2018). This is the reason that which

makes Amazon more superior than its competitors and allow the company to gain competitive

advantage in the market.

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Assuming you are a member of the Amazon's board of directors, what advice would you give to

Jeff Bezos in early 2001?

The advice that I can give to Jeff Bezos is to deal with the more investors by showing the growth

of the company in the past recent years. It has been seen that the company was growing at the

rapid pace and the company was dealing with the various functions and the technology used by

the company in that period of time was superior as compare to the competitors. Presenting such

statistics and the growth of the company to the new investors would allow the company to collect

fund for operating their functions so that there will be appropriate cash flow and it would not

hamper the overall growth of the company (Wingfield, 2017). Collecting funds from the new

investors would allow the company to maintain the cash flow in the organization and also to pace

up the existing operations of the company which would allow the company to sell its products at

the rapid pace and maintains the strong image of the company in the market. By pacing up the

sale of its products, the company can easily return the amount to its investors and also able to

gain competitive advantage in the market

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