Amazon.com, Inc.

Company Overview

Amazon was incorporated in Washington in 1994. The company started as an online book seller. The
company sold its first book in 1995. After three years of incorporation, Amazon completed its public
offerings and its common stock was listed on NASDAQ Global select market. Amazon expanded its
operations through acquisitions, alliances, partnerships and agreements. The main objective of the
company was to become sustainable in terms of growth and profitability. In order to achieve its
objectives, the company focused on increasing its operating income through its revenues and by
minimizing its costs, efficiently managing its working capital.

By the year 2008, Amazon became a global brand with websites in Canada, UK, Germany, France, China
and Japan with order fulfillment in more than 200 countries. The company was operating on the basis of
two principle segments; North America and International Operations which later on included Italy and
Spain in 2010 and 2011 respectively. By the year 2012, a company has a human resource of 56,200
people around the globe who were working in corporate offices in seattle, in software development,
order fulfillment and customer service centers in North America, Latin America, Europe, and also in Asia.

Chairman Board of Directors and CEO of the company owns 90.4 shares. The company board consists of
three committees; the Audit committee and the Governance committees are the standard committees
whereas the leadership development and compensation committee is uncommon. The board members
are not populated by CEOs and retired CEOs but its members include venture capitalists, executives of
varied industries, scientists and a few representatives of the non-profit sector organizations. The board
has saved together for a very long time and they are even currently serving which clearly shows
understanding, familiarity, and even friendly relationship among the members of the board which has
always helped the company in discouraging independent thinking and objectivity.

When the people become comfortable in shopping online, the company developed to cater increased
traffic and to serve more efficiently. The standard set by the company ensures friendly and trustworthy
environment that was enabled by sophisticated technology and employees. The company offered huge
array of products designed for personalized shopping and informed buying decisions. Continuous
improvement was the key of success of the company. The company utilizes its maximum time on the
identification of problems faced by the customers and for the development of their solutions to enhance
experience of online customers.

To achieve perfection, Amazon aggressively keeps on analyzing its website traffic and developing the
systems accordingly. They keep the track of customers and utilize that information to direct the users to
the products because the items were either related to a product that they have previously searched or
purchased by a customer of similar profile. Likewise, recommendations were also made on the same
basis as Amazon collected data even of those who have never visited any of the websites of the
company but had received gifts from them.

Another distinctive feature was the community that they have created on the basis of reviews of private
individuals in order to make others more informed purchasers. Anyone can get the review and rating of
the products that they have sold. Even individuals can also give their personalized comments on the
basis of their experiences about the product. In order to further streamline the research for the
customers, the company consolidated different versions of products.

Permission marketing that the company has engaged helped in targeting more potential customers on
the basis of assumption that a target email is more liked as compare to a blanket email. This activity was
highly appreciated by the customers. This appreciation by the customers resulted in further success of
the company. The company also purchased pay per click advertisements on search engines. This is done
by the ads that appeared on the site of the research list. The company is paid with a fee for each click of
the visitor. It was also observed that TV and bill board ads were less influential as compared to online
marketing. Therefore, Amazon reduced its offline marketing and shifted to the online marketing.
However, the company initiated advertisement campaign on Television for brand awareness amongst
potential customers.

Finally, to enhance customer care, company expedited its shipping time. The company reduced its cost
as compared to its competitors. The company gave speedy services than its competitors. Furthermore,
in USA, UK, Germany and Japan, the company offered free shipping, free delivery by the next day of
order developed customer loyalty which was the key success of Amazon.

Industry Overview

Amazon has a huge range of its products it has many different competitors. Its competitors ranges from
music, video, book, business services, commercial printing, advertising, copy centers, marketing and
entertainment retail and most specifically online retailing. The top most competitors of Amazon.com are
EBay, Barnes & Noble, and Wal-Mart, who are giving tough time to Amazon.com. Each and every
competitor gives tough time to Amazon.com in its own way and the company has to face the industrial
competition. Wal-Mart is renowned as one stop shop in the online market, it also provide everything the
product range of wall-Mart includes almost everything that any online seller is selling. Both the
companies have the lowest price strategy in the industry. But relatively Amazon.com has a more
customer base as compared to any other online seller in the industry.

The major difference between Wall-Mart and Amazon.com is that the customers of Amazon.com have
not to pay the separate account for the third party transaction. Thus the services provided by
Amazon.com are more convenient and this convenience attracts more customers as the purchased
product is provided at the doorstep by both the online sellers. Amazon.com customers have not to go to
the seller for money back guarantee this is another plus point for the customers of Amazon.com.

As far as Branes and Noble is concerned they are also their competitors but they are mainly the book
sellers in the United States. They have a huge book bank but it only accounts for 10% of their overall
revenue. But it cannot be termed as a substitute of Amazon.com as they do not provide a huge range of
products like Amazon.com. They are the competitors of Amazon.com for the products like books, videos,
music and entertainment products only.

With the downturn of the economic conditions online market has grown and despite the revival of the
economic conditions the consumers are even becoming more price conscious. People are more
concerned about their spending patterns due to highly competitive market position. Amazon.com gives
surety that their consumers will get the best prices at their door step. This act increases the confidence
of the consumers in the Amazon.com. Amazon.com has always worked hard to provide best product to
their customer at the cheapest rate for maximum customer satisfaction which ultimately resulted in
return visitor.

Competitive advantage of Amazon.com is because of many key factors like they have the three
variations in the type of customers, sellers, and developers, then lowest cost operations and customers’
loyalty. The above mentioned three factors provide wide economic moat to the customers of
Amazon.com.

The main objective of the company of providing low price products is the key to success of Amazon.com.
The top selling products of Amazon.com are DVDs, books, CDs, and musical items at low prices. This low
price strategy has helped Amazon.com to become market leader through its cost leadership strategy.

The company has faced losses during its initial years as it was initiating cycle of the company as
Amazon.com was struggling for the development of distribution network which now they have
established due to which they have penetrated in most of the markets. With the passage of time as the
company has established its huge network no the cost of providing such facilities has lowered and the
company can perform its activities at a cheaper rate without facing any loss rather this has helped the
company to attract maximum customer base which results in the profits of the company.

The major difference between Amazon.com and its competitors is that they provide quality with
convenience. Amazon.com is user friendly which attracts even less educated customers. The customers
can give reviews about the products which helps other customers.

The strategy of customers’ views about the product helps the future customers to be more aware about
the products and they can do informed purchase. This unique feature of customers’ reviews is only
being provided by Amazon.com. This ability of Amazon.com helps the company to earn more revenue
due to loyal customers.

With the passage of time the industry barriers have enhanced for the new entrants in the industry. But,
Amazon.com has always faced competitors in retail sales due to the increase in e-commerce. In the era
of digital devices and digital media Amazon.com has helped its e-readers to be convenient but apple has
sliced the market share of Amazon.com. The apple and iPod have captured huge market but still the
revenues have enhanced due to growth in the customer base for the e-books.

Internal Environment

Internal environment is based on the capabilities of the organizations. Any organization is based on two
dimensions the first one is resources and the second one is competences. Resources are physical and
includes human, financial, capital and informational whereas, competences are in the human and
technological resources. The unique resources of Amazon.com are its main key areas of success. The
main key unique resource of Amazon.com includes financial strength, huge distribution network, and
strong brand image. Strong financial resources of Amazon.com guarantees availability of sufficient
capital foe any type of profitable investment. This strong financial position has endured international
expansion all over the world by Amazon.com.

In addition to this Amazon.com has a huge network of suppliers and distributors. The company believes
in just in time management system but still Amazon.com has some storage houses. The shipment is
done with the third party like DHL, this outsourcing helps the company to reduce its cost and to provide
cheap services to the customers, which enables Amazon.com to be more competitive and helps to
achieve cost leadership strategy.

Amazon.com is among world’s most valuable brands, which shows high awareness of the customers of
Amazon.com. While capturing maximum market share Amazon.com was facing certain restrictions
especially in China. The company solved the issue by acquiring Joyo.com which was the leading online
store of China.

Among the core competencies of Amazon.com technology innovation and broad product range are at
the top. For fulfilling the need of the customers Amazon.com has developed state of the art technology
which is the main competitive edge of the company. This technological advancement has helped the
company to implement an efficient customer relationship management system. This system helps the
company to track the buying behavior of the customers. This system through its tracking system
regarding the buying pattern of the customers helps the Amazon.com to suggest the customers about
the latest products available in the market. This feature increases cross buying of the products along
with assisting the customers for their purchase decision. All these things collectively increases the
revenues and ultimately the profitability of the company.

External Environment

External environment includes all the stake holders. Amazon.com not only caters its shareholders and
customers but take care of all the stake holders of the company. The expectations of the crucial
stakeholders of Amazon.com depends upon the corporate level strategies.

Without the regular and continuous patronage of the stakeholders the survival of any business is very
difficult and Amazon.com has no exception to it. The outstanding business success can only be achieved
if the expectations of the stakeholders are figured out. Once the expectations of the stakeholders are
properly figured out they need to be catered properly for success.

For the external environment Amazon.com caters all the stake holders the first identify who are their
stake holders. Then they figure out the preferences of their stakeholders. One the stakeholders are
identified and their concerns are identified, Amazon.com put its maximum efforts to solve the
anticipations of the stakeholders either they are their customers or suppliers or the owners.

The top most stakeholders are top management, investors, customers, consumers, regulatory
authorities, media, producers, carriers and anyone who is any how linked with the company. The major
distinctive feature of Amazon.com is that their major stakeholders on various powers an interests in the
company. Few of them may have the decision making powers regarding the development of strategies
of the company. But this is not sure that all the stakeholders may be interested in the affairs and
especially the strategies of the company