Introduction:

E-Business or Electronic Business, is the administration of conducting business via the Internet.
This would include the buying and selling of goods and services, along with providing technical
or customer support through the Internet. e-Business is a term often used in conjunction with e-
commerce, but includes services in addition to the sale of goods.

Web marketing is a term of e business that can attract more people to one’s website, increase
customers for one’s business, and enhance branding of a company and products. Today's top
businesses are focusing more and more on an Internet marketing strategy. Effectively executed,
an Internet marketing strategy offers:

 Powerful opportunities to reach customers,

 Unparalleled ROI
 Clearly measurable results

Building blocks of E-business:

Internet technology has played a critical role in the progress of e-business. Internet was launched
in early 1960s. In 1989, CERN labs designed a new protocol for data distribution over internet
which became known as the World Wide Web in 1991. Before the introduction of that protocol,
internet access was only limited to research, government and military institutions and use of
technology for conducting business transactions was very partial. The fact is clearly
understandable from the discussion that internet and World Wide Web technology are building
blocks of current e-business era (Bartels, 2000).

Requirements for an efficacious E-business:

There are two basic elements that are required in successfully continuing an e-business. These
are an e-business model and appropriate strategies to implement proposed actions. E-business
model is defined as a description of links between a company‟s customers, suppliers and other
relevant stakeholders, which identifies the flow of money, information and products, and values
of the people who have a share in the organization. They also devised a diagramming technique
called e-business model schematics to develop successful e-business models.

Aims and objectives of the study:

This paper is a case study analysis of Amazon.com, Inc. (Amazon). In this paper, we tried to
expatiate the business strategy of Amazon Incorporation.
Special attention is given to five parts, including a historical overview, organizational structure,
business operations, financial performance, and the future outlook of Amazon.

The future outlook of Amazon is discussed last, offering a topical overview of where Amazons
business interest is shifting.

An overview of amazon:
Amazon incorporation is an American international e-commerce company. It was started by
Jeffrey P. Bezos in the year 1994. When many .com companies were not able to survive during
the 90‟s, Amazon managed to survive and is successful now. It is the 11th most searched site
around the world. it began as one of the first major companies to sell goods over the Internet
Started as solely as an Online Bookstore Due to success diversified into many other product lines
and services Multinational e- commerce company.

By 1995, Amazon quickly became the world‟s top online book selling website. Two popular web
portals (Yahoo! and Netscape) placed it in their featured website lists. Two business practices
correlated with Amazons immediate scalable success, it was capable of adjusting to rapid
demand of products while maintaining satisfied customers. Amazon created a supply chain based
on wholesale relationships for inventory it did not have, acting as the middleman in the shipping
process because it still only had its Seattle warehouse. With this logistical design, Bezos was
able to ship to over 50 states and 45 countries in July of 1995.

In July of 1996, Amazon released a new service; it‟s directed at innovating within their current
customer base or exploiting the market for new ones. it launched their “Associates” program,
allowing independent websites to receive commission revenue at 3-8% per sale. Specifically, this
was performed by inline linking to Amazon titles and was one of their first vertically integrated
moves.

Amazon became a public company in May of 1997 with an initial public offering (IPO) of three
million shares of common stock.

By 1998, Amazon was fast becoming one of the world‟s leading Internet startups. They
conducted business with over one and half million customers, reaching both the United States
and 160 countries. Outstanding success as an e-commerce bookseller influenced the development
of new services, products and additional markets to enter.

Amazon posted a $3 million first quarter net profit in 2002, signifying the end of its internal
recession. Operating as a lean cost cutting corporate culture led to their first annual profit in 2003
at $35.3 million. Stable financial growth soon followed and maintaining profitability these years
rebooted Amazons business strategy of acquisitions and innovations.

In 2005, the debut of the still popularized service “Amazon Prime”, a “shipping club” arrived.
Shipping time was a decision criterion customers used when evaluating online ordering, and
Amazon Prime wanted to close this gap, experiencing profitability with the service soon after.
Amazon had now expanded their product categories far beyond books, offering apparel and
electronics since the early 2000‟s.

World‟s Largest online RetailerAmazon is the largest online retailer, according to the Wall Street
Journal, selling $67.8 billion worth of products in 2013. The second largest, Apple, sold only
$18.3 billion online in 2013.

Business Models of Amazon:

Amazon has three distinct businesses, plus a slew of nascent enterprises and developing
opportunities:

1. Amazon Retail

Starting in books and then expanding into electrical and other goods, Amazon built an online
retail business around three aims:

I. Best prices: Amazon products are generally offered at a discount, a steep discount in the
case of books.
II. Unrivalled selection: Amazon often has the largest selection of goods in a particular
category, especially books (outside S/H marketplaces like Abebooks.)
III. Convenience: Amazon focus on the customer and try make purchasing an enjoyable
experience, offering:

 An attractive, easy-to-use customer interface (which evolved through many trials)

 Fast and reliable delivery from vast, fully automated warehouses, first located in
strategic spots in the US but increasingly worldwide.
 A no-nonsense returns policy.
 Reviews by customers of the product.
 Purchase suggestions based on previous purchases and webpage viewing (an example
of realtime systems).

2. Amazon Marketplace:

 Amazon also offers a third-party selling platform, Amazon marketplace, that allows
merchants to offer goods and services through an online shopping mall. Amazon
charges a commission based on a formula involving the sale price of the item, a
shipping credit, a referral fee of 6-25% of the sale price, a variable closing fee and a
$0.99 fixed closing fee. This has now been augmented or replaced by four comparable
services:
 Sell on Amazon. Merchants pay $39.99 per month, plus a commission varying as
above, generally between 15% and $1.35 per item.
  Amazon Webstore. More complete service. Merchants pay $24 per month plus 2% of
sales.
 Checkout by Amazon. Similar to PayPal and Google Checkouts, but needs to
integrated into shopping cart.
 Fulfillment by Amazon. Allows merchants to use Amazon's advanced fulfillment
technology.
 The services are being expanded from USA, Canada, UK and Germany to other
countries. Amazon does not release information on these businesses, either revenues
or usage levels.

Customer of amazon incorporation:

Amazon defines what it refers to as three consumer sets customers, seller customers and
developer customers (including content creatos and enterprises).

There are over 76 million customer accounts, but just 1.3 million active seller customers in its
marketplaces and Amazon is seeking to increase this. Amazon is unusual for a retailer in that it
identifies “developer customers” who use its Amazon Web Services, which provides access to
technology infrastructure such as hosting that developers can use to develop their own web
services.

Members are also encouraged to join a loyalty programme, Amazon Prime, a fee-based
membership program in which members receive free or discounted express shipping, in the
United States, the United Kingdom, Germany and Japan.

Consumer Seller

Amazon

Content
Enterprises Creator
 3. Amazon Web Services: Amazon leveraged the technology it developed in retail to offer
an increasing number of web services.

Companies owned by Amazon Incorporation:

Marketing strategy of Amazon – Amazon marketing strategy:

All of us know that Amazon is an online shopping forum and they bring the sellers and buyers
together through this forum. The main aim that was behind this online portal of shopping was to
make shopping easy, through this the customers can help the consumers choose and go for the
product that they see online.

This activity saves the hassle of traveling costs and saves time; because if you go to the shop
choose and then get it then the price of the commodity is increased due to the additional travel
cost. Amazon is a real-world experience for the consumers and the sellers both.
The question here remains unanswered that what is the reason behind the successful business run
by Amazon. All the business experts have a fair idea that it is the business strategy of the
Amazon. The Amazon business strategy is stunning. The marketers know that Amazon has
personalized its business strategy in a way that it attracts the majority of the consumers and
makes it one of the top web sites being visited in the entire world.

1. Cost leadership strategy: A cost leadership strategy is where the price may be similar or
usually lower than the competition, but costs are certainly lower. In Amazon‟s case, the
core strategy is clearly more a cost leadership one when compared with bricks and mortar
retailers. Amazon has massive warehousing facilities and processing capability, which
give it physical economies of scale. That in turn gives it cost advantages. But in its
service it is differentiated - so it is something of a hybrid.

2. Market segmentation: E-commerce giants like Amazon uses demographic &

psychographics segmentation to segment the markets. Amazon‟s segmentation is based
on actual purchase behavior: not what people might have expressed interest in, but what
they actually did. Amazon‟s micro-level segmentation targets each customer individually,
allowing the company to convert visitors into long-term, high-value customers.

Customer segmentation often involves creating personas who will buy in a certain way &
certain products. Similarly Amazon targets the middle class & upper class people who
have got hands on experience in the basic technology but don‟t have time or prefer
convenience over shopping from the physical outlets. Amazon has successfully
positioned itself as a Glocal (Go global Act local) e-commerce giant where one can buy
anything & get it delivered at any remote locations. Using the catchphrase #AurDikhao in
its most recent campaign in India, it has further helped them carve a distinct space in the
consumer‟s mind.

3. Generic Corporate Strategy: Concentranic diversification create value for customers by

using their technology expertise. The lowest cost customer centric the market place.
Founder of Amazon incorporation Bezos’ goal is to be a cost leader. so it is committed to
levaraging amazaon’s core competecies in whatever ways they can find to realize the
value of the company’s assets.

4. Web Marketing & Promotion Strategy: One of the reasons that customers are attracted
to the website is the variety of products that are listed at the website; the provision of
such a facility extends the limitations of the business. The business strategy of Amazon is
simply to make buying easy by giving a user friendly and customer friendly forum for
shopping.

The websites interface is absolutely amazing and simple for anyone to use. One more
business strategy by Amazon is to build a strong bond between the people who have
 designed the website and the people who use it. The acceptance of quality of products
along with the provision of such a market to the masses makes the life easy for all those
who want to shop while staying at home.

To help the consumers with a shopping suggestion it would be a good idea to provide
them with the views of the product being promoted on the website. It is amazing that
most of the people rely on what the others tell them about the thing they are about to buy
and one of the most important business factor is “the word of mouth”. This attracts the
most strongly motivated customers who are willing to spend on the things from the shop
and in the case Amazon; they are willing to buy from the web site.

When it is about the website business strategy then it definitely is about the search
engines optimizations. Business strategy of Amazon is definitely relying majorly on the
concept of how their website can be ranked as one of the websites that are searched for
most. Amazon makes sure that it targets the audience and then uses its own personal
experience of business catering the needs of the customers that are well known to be
beneficial for the business.

Amazon hits the at the right target as it pulls the trigger of the business strategy of
making the website with a variety of pages so that it is searched by the majority of the
consumers for one product or the other. The search engine optimization is a business
strategy for Amazon because it gives the website an opportunity to provide visual offer to
treat for the product online this way the customers have to an option of buying from
Amazon.

Efficient business based on the concept of search engine optimization will need a strong
background with a well build and well organized website. Now the idea is to focus on
how Amazon‟s business strategy works, it works on the basis how well build the websites
individual pages are and how those pages are indexed. The organization of the web pages
will increase the opportunity to find Amazon while they are looking for products online.

The visual impacts of the web site leave a major effect on the consumer‟s mind and then
n turn the choices of the consumer of the product to buy. The layout of the entire website
has the same impact on the consumer as the packaging of a commodity has on the
consumers. One of the Amazon‟s business strategies is the well organization of the
website. In addition, the colour and the well-designed web pages attract the maximum
customers.

5. Global Branding Strategy: The company also manages to engage a number of partners
and businesses for the global branding strategy for the web site to flourish as the online
web market. This also is based on how the Amazon is affiliated with the industry and the
people it works with for the development of their global business.

6. Pricing and Business strategy: The Amazon works with a well-developed business plan
that includes the business strategies of the company specifically designed for the
 customers so that they not only make the most of the website themselves but also provide
benefit for the company itself. It makes sure that like all the other markets this online
market also earns them the maximum profit through not just the advertising strategies or
the pricing strategies but also from the business strategies.

Amazon not just carter to a specific kind of consumer but it also has to look upon the
customers from a global point of view. Amazon‟s position is strengthened when it is
known as a global bookstore that provides the variety throughout the world to all kinds of
customers. The pricing and the business strategy redefines the Amazon‟s business plan
comprehensively.

Marketing mix of Amazon:

Amazon is one of the world‟s biggest online retailers, selling a vast array of goods such as
books, music, games, clothes and movies. As of 2013, Amazon employs 117, 300 members of
staff, and has a global net revenue of 74.45 billion US dollars. Since its conception in 1995,
Amazon has outgrown several competitors in its field, and has gone on to become a market
leader, and has around 240 million customer accounts worldwide. Amazon has used careful
investment and acquisition of other smaller companies to enable itself to stay ahead in its field,
and continues to expand its product range, whilst offering competitive prices to customers, and
faster deliveries to those who choose to sign up for its various account packages.

In July 2013, Amazon launched its services in India, choosing not to employ an advertising
campaign. The site is ranked as the 27th most popular in India, with around 4.2% of all Amazon
customers coming from this country. The company is doing well here, and this Indian venture is
part of a bigger effort to offer its services to a wider range of people in Asia.

Amazon is an international ecommerce company, using connections to the internet from various
gadgets such as phones and tablets, to allow its customers to browse and purchase products
immediately. These products are then delivered to the customer, using delivery service
companies. Amazon has built up a huge product base, and sells almost everything, including:

 Kindle
 Books
 DVDs
 Mobile phones/tablets
 Gaming consoles and games
 Clothes for men/women and children
 Jewellery
 Gardening equipment
Place in the marketing mix of Amazon:

In the recent past, sites such as indiaplaza and allshcoolstuff were forced to close due to the lack
of trust when buying goods online. However, the brand image of Amazon enables it to have a far
and wide presence and the bottom line of the company is enough to enable massive R&D efforts
to secure the website. Amazon has customer service bases in many of the countries where it has
an online presence, with most bases being located in the different states of the USA. Amazon
employees are friendly and relaxed.

Promotion in the marketing mix of Amazon:

While Amazon has broadcast television commercials, these are mostly in the American market.
Amazon uses mainly web based advertising, and they make some use of billboard and smaller
methods of advertising. Amazon also uses advertising networks online so that whenever you
check something on amazon, you will see an ad for the same thing somewhere else on some
other website. Search engine marketing and getting the company‟s name high up the search
engine‟s results is also a smart promotional strategy by Amazon. The founder of Amazon had
this in mind when creating the company, deciding that it should start with an „a‟.

In India, Amazon can be seen to rely on the best source of promotion there is – word of mouth.
People telling others about the site, or mentioning it in a positive way is a sure way to have a
new future customer. However, there are several print media ads to make their presence felt to
the people. However, much more is needed in the promotions department from Amazon in India
because the traffic of Amazon is being taken over fast by Flipkart.

Price in the marketing mix of Amazon:

Amazon is competitive with its prices, and has little ways of staying ahead of its market
contemporaries. For example, if you are looking to buy a book, Amazon offers you a new copy,
or a used copy as well, complete with pricing and condition. Another initiative is to pay to have a
premium account, ensuring faster deliveries. Amazon can also keep their prices competitive due
to their use of staff. Minimum numbers – but well trained – ensure that consumers benefit from
the lack of overheads, and the result is shown in the prices online.

SWOT analysis of Amazon – Amazon SWOT analysis:

Strengths in the SWOT analysis of Amazon:

1. Strong background and deep pockets – Built on its early successes with books,
Amazon now has product categories that include electronics, toys, games, home and
kitchen, white goods, brown goods and much more. Amazon has evolved as a global E-
commerce giant in the last 2 decades.
2. Customer centric: Company‟s robust CRM has created customer centric processes in
order to carefully record data on customer‟s buying behavior. This enables them to offer
 individual items, related items or bundle them as an offer, based upon preferences
demonstrated through purchases or items visited. Also, the company claims that 55% of
their customers are repeat buyers resulting in low cost of acquisition of new buyers.
3. Cost leadership: In order to differentiate itself, company has created several strategic
alliances with other companies to offer superior customer service. The most important
strategic tie ups are with logistics provides who control costs. Because of playing on
economies of scale, Amazon is able to lower the inventory replenishment time.
4. Efficient delivery network: With its strategic partners & due to its Amazon fulfilment
centers, Amazon has created a deep & structured network in order to make the product
available even at remote locations. It also has free of cost delivery charges in certain
geographies.
5. GLOCAL strategy: By using the strategy of “Go global & act local”, Amazon is able to
fight with domestic E-commerce companies through absorbing & by forming / partnering
with supply chain companies. The branding too is done as per local taste. For example- In
India, Amazon is currently using the “Aur Dikhao” campaign to encourage users to
browse more of their products.
6. Acquisitions: Acquiring companies like Zappos.com, Junglee.com, IMBD.com,
woot.com etc. has proven to be a successful and revenue generating step for the E
commerce giant.

Weaknesses in the SWOT analysis of Amazon:

1. Shrinking margins: Due to extensive delivery network & price wars Amazons margins
are shrinking, which is resulting in even losses. In India, Amazon had a loss of $359 CRS
in the year 2013-14.
2. Tax Avoidance issue: Amazon has attracted negative publicity on account of Tax
Avoidance in countries like U.S & UK. Most of its revenue is generated from these well
established markets.
3. High Debt: In many developing nations Amazon is still struggling to make the business
profitable thereby affecting the overall profitability of the group resulting into High debt.
4. Product flops – Amazon launched the fire phone in the US which was a big flop. At the
same time, Kindle fire did not pick up as strongly as Kindle did. Thus, there were several
product flops which caused a dent in Amazon‟s deep pockets.

Opportunities in the SWOT analysis of Amazon:

1. Backward Integration: Amazon can come up with its In-house brands in different
product categories. They can also differentiate their offering. This will help them make
profits in highly competitive E-commerce market.
2. Global Expansion: Expansion mainly in Asian & developing economies will help
Amazon because those are the markets with low competition in E-commerce industries &
are not saturated like developed economies.
3. Acquisitions: By acquiring E-commerce companies it can decrease the competition level
& also can use the specialized capacity of the other company.
 4. Opening physical stores outside U.S: By doing this Amazon can help the customers to
engage with the brand, resulting in increase in repeat purchases & increase in loyal
customer base.

Threats in the SWOT analysis of Amazon:

1. Low entry barriers of the industry: Low entry barriers affect the current player‟s
business as more & more company means tough competition, price wars, shrinking
margins & losses resulting into questioning the sustainability of the players.
2. Government regulations: Not having clarity on the issues related to FDI in multi brand
retail, has been a big hurdle in the success of the E-commerce players in many
developing nations.
3. Local competition – India has snapdeal and Flipkart who are local E commerce retailers
and are taking away majority of the market. Similarly, there are many local players who
take bites from the market share thereby making it hard for a big player like Amazon to
make profits.

Amazon's Sustainable Competitive Advantage:

The company has built up a size and scale that makes it very hard to compete with.

Amazon.com so thoroughly dominates the online retail world in the United States that no pure
digital competitor would have a chance at knocking it off its throne.

It might be possible for a well-funded niche retailer to nibble at the edges of the online giant by
doing one thing really well, but the idea that anyone would attempt to directly compete seems
silly. Amazon not only has the ability to offer the lowest prices (though it does not always use it).
It also has a well-developed delivery network with warehouses dotting the country.

Those regional fulfillment centers -- which were and continue to be a massive investment for the
retailer -- allow the company to cut shipping costs. Add in the fact that Amazon owns its own
robot company and has deployed non-human workers in its warehouses and the retailer has a
host of advantages that would be very tough to duplicate.

The online retailer has one last advantage that gives it an almost insurmountable edge over its
competitors and any would be challengers -- its massive number of users with credit cards on
file. It's not impossible to compete with Amazon -- Apple or Wal-Mart could in some areas --
but the digital leader has a combination of sustainable competitive advantages that make it very
hard to compete with.

Let's break them down and look at why it's the way each edge the company has built works
together than keep competitors at bay more so than any one on its own.
Pricing is a deterrent:
Amazon has achieved such a massive scale that it gets the best prices possible from its vendors.
Wal-Mart gets the same thing as do a handful of other retailers in select areas, but the amount
paid to manufacturers is not the only factor in setting prices.

Physical retailers price their goods based on a higher cost structure than a pure digital store. Wal-
Mart has actual stores and those stores cost more money than shipping warehouses. Of course,
it's possible for physical retailers to charge less online but that can anger in-store customers.

Amazon can operate on razor-thin margins and still make money on the transaction. Physical
retailers can't do that and if they drop prices online they risk cannibalizing their own sales and
driving margin down while having all the same overhead costs.

Amazon has shipping down:

Because it has no physical stores, Amazon has optimized its efficiency in the delivery business.
This includes warehouses strategically dotted around the country and the aforementioned robots.
The company also has highly advanced software that helps it set inventory levels and even begin
packing orders based on predictive algorithms.

Amazon also has progressive deals with the United States Postal Service and UPS that give it a
shipping edge. It's possible that a competitor could make similar arrangements and the biggest
retailers might match the company's warehouse network, but it's very difficult, if not impossible,
for a competitor to match all of the shipping advantages Amazon has built itself over time

Conclusion:
This paper explained the e-business strategy and e-business model that have been used by
Amazon incorporation is offering its Retail Online goods and services to its customers. Based
on the evaluation, it is very clear that the e-business strategy is complementing the e-business
model used. The new business platform is something else, a web marketing strategy that amazon
has used and succeeded.