Management Information System: Case Study of Amazon.

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Introduction
Organizations under E commerce industry seek to attain core competence by creating and
sustaining a unique process to collect personal information about customers and their
purchasing trends. The report critically evaluates the how service based organization -
Amazon use Management information systems as a vibrant tool in attaining competitive
advantage through efficient management and acquisition of information. The study involves
assessment of the best MIS practices in place for Amazon throughout its value chain
activities. Uniqueness of MIS is being highlighted in the report through assessment of
technology, process and the systems that Amazon use right from the initiation of the end user
with the website till the payment and delivery mode is being selected. The last part of the
report involves discussions on recommendations and suggestions for Amazon in order to
enhance its existing MIS systems in place. The recommendations are based on the assessment
of qualitative information and the extent of feasibility in implementing the proposed
strategies.
Management information systems aids organization and its system to integrate in an effective
and efficient manner to bring out the synergy between the interactions of the people and
information systems. MIS facilitates management decisions at the strategic and operational
levels of an organization. The case of Amazon reflects the successful alignment of
information systems with the overall strategic goals of the organization. Amazon has been
fine tuning its E strategy by means of keeping its website systems unique and separate from
that of its order systems. MIS has played a crucial role in the development of the company on
global context (Weber, 2010). Amazon has used MIS as a vibrant tool to streamlines its
management activities and that at the same time has ensured that the customers are offered
with diversified services through its MIS (Cao, 2011).
AMAZON
Emerging as an American multinational E commerce co, Amazon has turned out to be
leading online retailer co and offering cloud computing services. Two technologies driving
the growth of Amazon has been the integration of Customer relationship management and
Information management to the overall business strategy. Linux has been a core strength
behind the technology of Amazon, the IT infrastructure of the organization has been built in
such a way that could handle more than millions of operations and also handles queries and
issue of more than half of the volume of sellers. The company has been exposed to threats of
storing and securing the credit cards and debit cards information of more than 1000’s of
customers a day (jordon, 2008). The company uses the customer relationship management
module under enterprise resources management to store personalized information and
purchasing trends of its customers which is integrated with the marketing and advertising
campaigns of the organization.

Figure 1: Amazon IT infrastructure

The sales strategy of Amazon has been very unique that reflects its MIS. The operations of
the company have made a transition from a single level sales strategy to that of multi-level e
commerce strategy. The initial growth of the organization was favored by business to
consumer models of selling and business to business mode of operations. The recent
development in the E commerce population has enhanced the interactions between the
consumer and the business thus forcing Amazon to give more priority and customization to
its IT to value and respect reviews of the customers as a part of their business operations
(jordon, 2008). The exclusion of the retailers has been the signs of growth in Amazon as it
allows the customers to sell and buy the products using Amazon as a platform.
The business model of Amazon reflects the management information systems. Browsing,
management of accounts and the final step involves shopping. Unique MIS and technology
play a crucial role in each one of these stages that is discussed below. Elastic cloud
computing has been yet another vibrant web service offered by Amazon.
Amazon takes the brokerage model as it acts as a platform to business to business, consumer
to consumer transactions. Amazon charges a fee against the mode of usage by the end users.
Auction brokers are yet another tool that has been used by Amazon that includes bidding
information and fulfilment. Amazon has got the patent registered (U.s patent Feb 8, 2005) for
offering the personalized content to customer with the help of tracking the actions of users in
a surfing session. This reflects the unique competence of Amazon in offering the most likely
products to the customers at the time of search. At the time when customers search or
complete finding the book the virtual space stating that “customer who have bought this
product / book have also bought” these phrases reflect the success of the company in
enhancing the retention rates of the customers and also has provoked a sense of
belongingness with the customers.
Online shopping and order tracking

Customers could add any number of products which they wish to buy. The integration of
CRM at this stage allows the users to view the products that have been bought by their close
networks. And customers could also save a particular product for future purchase. This
information’s are saved under the Infomediary model of MIS. Amazon has created the
platform of social networking within the website which further offers more interactivity.
At this juncture Amazon offers the customers the option of viewing their search histories so
that they will be able to select similar products that they wish to buy. This feature has been
patented by Amazon on June 28, 2005 thus adding more to the inventory of core competence
in its Management information systems. The sign in process of Amazon collects the new
user’s information with appropriate fields to be filled which is directly linked to Infomediary
model. The next time when a user enters the website of Amazon he /is offered with a set of
recommendations of products available in Amazon.
Amazon with the objective of collecting the consumer purchase and personal information
which is being critically analyzed and evaluated for initiation of marketing campaigns (Allen,
2009). The information helps Amazon in offering recommendations to the customers on
frequently shopped items or visited items. The personal preferences are being asked at the
time of registration and recommendations pops up to the customers based on the key words
of their areas of interest (Poynter, 2009).

2.3 Payment systems offered to customers of Amazon:

The payment gateway of Amazon takes in the account the debit card or credit card
information of the end user who would place an order for a product. Netscape Secure
Commerce Server is a vibrant tool that is used by Amazon with the help of the secure socket
layer in order to store the banking information. These data are not made accessible over
internet thus paving way for high confidentiality and protection of customer data. The
company also provide customer an option of making a part amount of the payment online and
rest through the telecommunications post order. Legal as well as privacy policies are being
communicated to the users at this stage thus ensuring that the trust component of customers is
being increased (Chaffey, 2009).
Yet another important part of Amazon CRM is the integration of logistics systems
with that of the customer contact information. Customers could track the progress of the
shipping through logging in to the Amazon website and entering a unique identity order
number; this enhances the confidence amongst the customers by offering tangibility in the
services. At any point of time the customers could be able to know the status of the product
(Kleindl, 2011).
Each one of the marketing strategy of Amazon reflects in the behaviour, preferences
Amazon also offers an incentive marketing program in order to gain more customers and
business to its website. Amazon uses incentive marketing as a tool for collecting customer
information which is used both for the marketing activities of the organization and also sold
out to other pertinent layers for a particular fee. Virtual storefronts have been the interface
which has attracts n number of customers to the website of Amazon (Kalb, 2009). Through
virtual storefronts Amazon has been able to enhance the retention of the existing customers as
well as increase the word of mouth marketing through gaining customer loyalty. Customers
value the importance offered by Amazon towards them as the company has ensured to take
all the opportunities to understand the changing preferences and expectations.
Supply chain management
The term Amazon supply chain essentially refers to Amazon's entire process from product
warehousing to inventory management, pricing, delivery, and more. Amazon has optimized each
of these elements to ensure that everything is working smoothly and efficiently.
Supply chain management, customer relationship management, operations management and
the human resource management of Amazon has to be driven with the use of intelligent
virtual agents. As far as the efficiency of MIS in responding to the queries of the customers
has been low, customers have constantly filed a set of complaints due to the delay they
perceive with responses. Use of intelligent virtual agents would help the organization in
relying less on the customer service centre and could cut high number of costs involved with
human resource (Weber, 2010). The combination of sophisticated information technology, an
extensive network of warehouses, multi-tier inventory management, and excellent
transportation makes Amazon's supply chain the most efficient among all the major companies in
the world. Those efficiencies have made the current shop-from-home world possible.

Amazon Inventory System

Amazon is leading e-commerce in the market with its ability to sell products in
Amazon’s inventory and provide platform for other sellers to list and sell their
products. Amazon .com called itself "Earths Biggest Bookstore” because it has been ranked
as the best consumer e-business. As its competitors estimate that Amazon.com has the highest
percentage of the e-business bookstore. Therefore, Amazon tries to share its information and
outsources this area of its business to improve inventory cost and customer service levels.
From the inventory management point of view, Amazon can outsource its inventory to reduce
its inventory costs and to sell competitor’s products on its site to achieve both managing its
customer relationship and sustaining its competitive advantage.
There are couple innovative inventory strategies. First, unlike Wal-Mart stocking the
stores with all products fit in the neighborhood market, it is impossible to stock all possible
books in the market. Amazon is concentrating more on the quality of the products and the
manufacturer or the publisher of the products. It decreased its inventory and developed a
distribution infrastructure to provide its customers with the fast delivery from the company
directly.
Second, Amazon outsourcing some of it inventories to third parties. It cut cost on
operational cost and focused on its core activities. It can contribute more labor and
information technologies on its distribution and consumer satisfactory; and of course those
two factors are Amazon’s key to success. From the video, one can see how amazon received
other’s product, and store in a secure inventory and fast delivery to consumers.

Amazon has this innovative inventory management strategy, however, it seems it only
being used in e-commerce field. In healthcare systems, Patients are waiting for weeks to get
their appropriate treatment done most of the time. Majority of those waiting time is for
ordering appropriate medical supplies.
Amazon Wraehouse management:
One aspect that the news source noted as interesting is that Amazon does not solely
rely on computer systems, but rather uses a hybrid data gathering methodology that utilizes
humans armed with barcode data collection software. The system helps to ensure that
Amazon can keep up with its shipments, as at peak demand a truck will leave one of the
company's fulfillment centers every 105 seconds.

Customize Marketing campaigns

The marketing campaigns of Amazon must be more tailored to the needs of the
customers. Use of data of customers belonging to a particular community will promote this
practice there by offering newsletters which are most customized to the needs of the
consumer communities. Recommendation for Amazon would not comprise how it could
change its technology or platform rather will involve suggestions to correlate and make the
best use of available information.

Challenges faced by Amazon in regards to international growth: as it has been

evident in the records that Amazon had generated higher profit percentages in North
American sales and showed a losing curve in the international sales graph. There has
been a surprising comparison in the global and North American sales. The global sales
are less than the North American sales for Amazon. One of the key factors behind
Amazon’s failed international business sales is there excessive emphasis placed on the
topographical context (Bartneck et al. 2015). The core supply chain system in
development of Amazon tends to cover up the closer geographical areas. With the
necessity of extending the global access and covering up greater areas of international
proximity, the need for reformed infrastructure is paramount. The above-mentioned
services depend majorly on the retailers therefore marks the difficulty of moving beyond
the local delivery areas. The land grab mentality and limited bracket of opportunities
being focused on by Amazon are some of the deterrents in marking the company
claustrophobia (Strauss and Frost,2016).
 Profitability Isn’t Guaranteed.
Depending on your sales structure, margins, shipping costs, and competition in your category, your
profit on Amazon can vary greatly. Analyzing marketplace performance and profitability accurately and
in a timely fashion is challenging.  Adding to this, Amazon’s reporting leaves a lot to be desired, so
may sellers don’t really know if they are truly profitable or not. If you’re running a hybrid program
between 1P and 3P and also running advertising campaigns, you have to download reports from
several different interfaces, then figure out a way to merge the data in a useful way and factor in your
fee and margin data to really understand profitability.
Amazon is Complex

Sellers are challenged with learning in detail about shipping options, FBA logistics, re-negotiating
fees, duplicate listings, MAP issues, tax set up, buy box competition, reviews management, and more.
We’ve seen our clients go from having one part-time employee managing their Amazon programs, to
dedicating experienced teams and bringing in agencies once they start to see the sales potential in
the channel. Success on Amazon requires keeping up with the evolving landscape and leveraging
experts, whether in house or through an agency like Adlucent, to run a healthy and profitable program.

Recommendations:
Enhance sorting of products and enhancing anti-phishing interventions
As far as the customer relationship management is concerned Amazon needs to offer
the customers with option of sorting a particular book / product based on the recent products,
reviews and the ranking offered by the customers. Technical issues are most restraining
forces of promoting new implementations, Amazon has been constantly affected by phishing
issues which ask the customers for accounting information of the existing users of Amazon.
This has to be addressed by vigorous anti – phishing interventions that promote awareness
amongst the customers (Allen, 2009).

Integration of website operations with Social networking:

Amazon needs to enhance the synergy that turns as an outcome of integrating the
information sourcing from advertising, sales and post sales services. The MIS of the
organization must aid in offering touch points to the customers at each point of time. Amidst
using the customer relationship platform for marketing and acquiring more customers,
Amazon must integrate its entire platform with social networking websites. It is evident from
the MIS of E bay and upcoming E commerce organizations that majority of the customers do
exist in the social space. By integrating the shopping experience of a user with their social
networking profile will result in promoting the product as well as the services offered by
Amazon to the close networks of the end users. Use of enterprise resources planning tools in
social networking would help Amazon in sharing the reviews and the responses of end users
which will enhance the trust amongst the customers (Anderson, 2011).

Establish Customer relationship management interventions across the business

operations of Amazon:

3.6. Resolve the existing gap between the marketing and sales activities of Amazon:
The inter relativity between the sales and the marketing department is yet another area
that needs more intervention through standardizing MIS systems. ERP has driven the success
of Amazon to a great extent, but the analysis of the errors and pitfalls that Amazon has come
across states that knowledge management is yet another area which needs to integrate with
the existing Information system and its infrastructure (Klaus, 2010). Experiences associated
with the customer issues and resolving strategies will further reduce the level of customer
dissatisfaction perceived with customer call centres. The employees must also be offered
modes and means of viewing the number of customer complaints and returned products
through ERP packages this will improve pro active offline customer service and help
Amazon gain more emotional bonding amongst its customers (Ghosh, 2010).
The most attractive part of implementing the intelligent virtual agents for Amazon is
in the integration of the technology with other web based applications (Scott, 2009). Given
the growth of social networking both on virtual and non virtual modes Amazon will be able
to spread its business further with the use of MIS in to second life (a virtual social networking
platform) this will ultimately offer a long lasting emotional impression left in the minds of
customers of Amazon (Lewis, 2011).

III. Conclusion
The report thus examines the current infrastructure and process behind the
management information systems of Amazon. It is evident from the report that there is plenty
of scope for Amazon to enhance the customer relationship management through its Enterprise
resource planning.

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