Executive Summary
Amazon.com, Inc. is commonly referred to as simply Amazon and is an American company involved in conducting e-commerce and cloud computing. The organization was founded in 1994 by Jeff Bezos. The organization started off as an online bookstore for book lovers and has grown into an immense retail store available for individuals across the world. The organization has created numerous platforms where consumers may be able to purchase different items according to their preferences. Amazon.com was provided its initial public offering within three years after it was founded raising $54 million in 1997. It was able to make significant acquisitions such as the Internet Movie Database in 1998 as the organization continued to increase the number of products and services offered. As of 2005, the organization moved into cloud computing through Amazon AWS and through early entry into the industry the organization has achieved world domination in cloud computing (Hardy, 2016). As a result, the organization controls much of the physical infrastructure of the internet. In 2011 the organization offers its consumers mobile streaming services through Amazon Music and Amazon Video and in the years to follow it surpasses the market capitalization of Walmart. The organization is seen to be growing with more innovative ideas coming up on ways to improve e-commerce.
Introduction
The e-business is an online platform that allows buying and selling of different products and services. In this case, the organization targets the common internet user who seeks to purchase different items at the comfort of their home or office. The organization offers multiple products including sporting goods, musical instruments, beauty products, health and personal care items, groceries, media (books, music CDs, DVDs and software), electronics, tools and many others. The e-business is used to serve individuals in the United States, Canada, Germany, France, UK, China and many other countries across the world (Chaffey, 2014). The organization has enabled internet users to easily get items within a day or two for free as seen with the use of Amazon Prime.
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This enables users to receive their desired goods within the fastest possible time. As of April 2016 numerous Amazon Prime members can get their goods within the same day of purchase. Consumer electronics, digital content, games, art and videos are other products that are available from the e-business. Furthermore, the company offers cloud computing services available for storing file data online. This enables users to backup items from their computers that may be susceptible to theft or hacking (Chaffey, 2014). Amazon is the current world’s largest provider of cloud computing infrastructure available for both personal and business use.
Role of the Internet in Strategy
The organization has relied heavily on the internet in its quest to achieve market domination. The company was launched shortly after the internet boom in 1994 where initial business strategy was being able to reach maximum number of people. SEO and AdWords that targets millions of keywords have been used to put Amazon as the frontrunner in conducting online sales (Imran, 2014). The name Amazon was chosen as the founder believed that even in listing in alphabetical order it would be easy to identify of reach. Through the website system and order fulfillment system used in 1995, the organization was able to ensure security for its consumers online.
The organization has incorporated Information and Communication Technology (ICT) in its strategy by becoming the global provider of cloud computing infrastructure enabling users to purchase books online rather than owning the hard copies. The organization also incorporates e-Commerce strategies through linking consumers with other consumers, business to consumers, business to business and consumer to business (Chaffey, 2014). Through the information systems the organization is able to understand the different needs of each consumer based on their behavioral patterns online. This ensures that relevant recommendations are made and a clear checkout process for purchases made. Amazon.com also engages customers to ensure satisfaction during purchasing process on their platform (Higginbotham, 2015).
Online User Types and e-Commerce Considerations
The platform was created as a means of enabling book lovers to gain access for their various favorite books. This enabled the organization to reach out to the American society and made its first sale in 1995. The online organization reached out to all customers across the 50 states and over 45 countries (Higginbotham, 2015). Within the first two months the organization would sell nearly $20,000 in a week. Due to the immense storage of the online bookstore it would be able to offer several times more than the 200,000 titles offered by other bookstores.
The organization has been able to transform numerous times from auction theme followed by B2C before moving on to sales and service model. This ensured that the target group of the organization was customers and business groups. This enabled small business groups to offer products to their customers using the Amazon web service and platform. The organization would then take commission from each sale (Chaffey, 2014). Through the Amazon Associates Program, the organization was able to extend its products from books to other retail products and digital content that consumers would prefer. Hereby, the organization would increase its customer base from just book lovers to the entire society.
Technological Advantage of e-Business
With continued innovations in information and communication technology, this has been a major advantage to the practices of companies like Amazon.com. The internet boom was the main motivating factor that propelled Jeff Bezos in establishing the company. Online transactions have since been viewed as advantageous both to the e-business and the customers alike as opposed to using brick-and-motor operations. This is mainly due to the unending virtual warehouse that the e-commerce provides. One of the major advantages of to the company is the cost-effective marketing where one is able to drive numerous customers to the site using different marketing techniques such as article marketing, e-newsletters and social media networking. Many of these efforts are either free or at very low costs.
The e-business also provides flexible business hours where despite time difference in location internet services are available 24 hours a day ensuring that business continues even when one is asleep. This also helps in eliminating the geographical barriers as individuals from other countries are able to make transactions as long as they have an internet connection. The e-business also reduces the costs of transaction as there are fewer individuals involved in making one transaction (Chaffey, 2014). Additionally, there are reduced overhead costs that a business owner would incur in running a physical location for the business.
Impact of Internet Regulation to E-Business
The government has been involved in the regulation of e-businesses as a means of controlling this innovative style of trade. In this case, the major regulation on these companies is the protection of the consumers of the website. Amazon.com like other e-retailers will usually seek personal information of the consumers such as credit card information and addresses for delivery purposes. Through the regulations the organization is tasked to withhold customer information from third parties. The government has also imposed laws on online marketing and advertising (Imran, 2014). This is where companies like Amazon are restricted from unsolicited spam emails that serve to advertise their products and services to consumers (Chaffey, 2014). The internet regulations have also served a major purpose in protecting digital rights and copyright. Hereby, e-businesses are required to refrain from distributing material that appears to constitute copyright infringement. Amazon for instance cannot sell books or music as the original creator but only as a distributor or retailer. This ensures that the appropriate legal transactions have been carried out in purchasing and redistributing of these items.
EC Metrics of an E-Business
E-commerce metrics serve as a means of measuring the success of the business as a retailer to its target consumers. Amazon seeks to identify the customer-centric metrics as a major factor of improving the performance of the organization in providing to their various needs (Chaffey, 2014). The organization looks into the various behavioral trends of the customer where the items searched for the most will help provide recommendations in future visits to the website. The organization has also been able to deconstruct its platform into the selective areas that customers would like to visit and make purchases. For instance, Kindle e-book reader serves as the store where the customer can purchase books and read them immediately without having to wait for a hard copy. Amazon video also enables the consumer to search and watch movies or television programs that they prefer. Through the use of the personal profiles of individuals, the organization is able to tailor the experience of each customer to their needs. This is an effective means of ensuring customer satisfaction across the different services offered by Amazon.com Inc.
EC Security of an E-Business
There are nearly 100 million customer accounts in Amazon and a further 1.3 million seller customers. This increases the risk to the security practices of the organization. The company may face issues with securing information. This is particularly regarding to the customer information as third party individuals may seek to abuse these vulnerabilities including fraud and theft (Niranjanamurthy & Chahar, 2013). The third party may create direct financial fraud by pausing as a particular customer only to take their funds and transfer them to another account. Additionally, an intruder may disclose confidential, proprietary and technological information belonging to the firm or consumer as a means to damage the firm or customer in question. Amazon.com has worked tirelessly to ensure that security online is at its highest particularly in making transactions (Rao, 2011). Numerous authentication processes are included in the transaction process and a means of ensuring fraud or theft of customer information does not take place. This secure digital e-commerce cycle has been used to ensure that the customer is notified when transactions made are fraudulent and hence the customer notifies the organization which will go on to cancel the transaction. Encryption software and digital signatures are used to ensure the legality of the transactions that are carried out on the Amazon platform.
Limitations to Global E-Commerce
As the e-commerce business continues to grow across the world, there are significant limitations that continue to hamper its efficacy in reaching the target group. Security is a major concern particularly for consumers who may feel insecure to making purchases from the organization. This is evident where customers have yet to trust the use of online retail especially in developing countries. Amazon has been able to establish itself as a secure means of making purchases online. Nevertheless, cybercrime reports by Norton indicated that in 2011 consumer cybercrime cost nearly $21 billion in the US and affected more than half a billion individuals across the world. This creates further distrust among customers seeking to purchase items online. As of 2015 Amazon.com surpassed Wal-Mart as the world’s largest retailer ensuring that entry into e-commerce industry particularly for small vendors is quite risky. Further, the limited interaction between consumer and service provider has been a major factor in discouraging individuals in making purchases. In e-commerce consumers make decisions based on images and reviews and cannot be able to handle the product to identify if it is of good quality.
Conclusion
Amazon.com is evidently undertaken significant processed to become one of the largest e-commerce businesses in the world. The organization has incorporated an effective business strategy of utilizing the internet boom in meeting the needs of its consumers. Early entry into the e-commerce industry has ensured that the growth of the organization has been steady and through effective management its success has been long lasting. The organization has been able to address the various risks and threats of the industry and capitalized on the opportunities and strengths to achieve success.
References
Chaffey, D. (2014). Amazon.com case study . Smart Insights, Online. Retrieved from http://www.smartinsights.com/digital-marketing-strategy/online-business-revenue-models/amazon-case-study/
Hardy, Q. (2016). Google Races to Catch Up in Cloud Computing . The New York Times, Online. Retrieved from http://www.nytimes.com/2016/07/25/technology/google-races-to-catch-up-in-cloud-computing.html?rref=collection%2Ftimestopic%2FAmazon.com%20Inc.&action=click&contentCollection=business®ion=stream&module=stream_unit&version=latest&contentPlacement=1&pgtype=collection
Higginbotham, S. (2015). Amazon's Internet-of-things strategy takes shape . Fortune, Online. Retrieved from http://fortune.com/2015/03/31/amazons-internet-of-things-strategy-takes-shape/
Imran, A. (2014). A Study On Amazon: Information Systems, Business Strategies And E-CRM. Academia, Online. Retrieved from https://www.academia.edu/8001771/A_STUDY_ON_AMAZON_INFORMATION_SYSTEMS_BUSINESS_STRATEGIES_AND_e-CRM
Niranjanamurthy, M. & Chahar, D. (2013). The study of E-Commerce Security Issues and Solutions. International Journal of Advanced Research in Computer and Communication Engineering , 2, 7: 1-12.
Rao, V. (2011). Why Amazon Is The Best Strategic Player In Tech . Forbes, Online. Retrieved from http://www.forbes.com/sites/venkateshrao/2011/12/14/the-amazon-playbook/#1fbe799b3378
