Amazon.com, Inc. has established itself over the years as a leading multinational technology company. The company focuses on various sections of business such as e-commerce, digital streaming, artificial intelligence, and cloud computing. Amazon is currently a global technology giant and has managed to achieve this feat by outdoing its competition. Amazon has made use of the right strategies to ensure that it outperforms its competitors.
Building Layers of Advantage
Amazon has built layers of advantage by ensuring that it integrates its resource of financial capability to undertake significant capital investments. Amazon was founded on July 5, 1994 by Jeff Bezos. The company started with an initial financial outlay of $250,000 and established itself as a market place for books. Amazon later expanded into the retail industry and has used its portfolio of adequate financial resources to outdo competitors. In order to establish competitive position in the retail industry, Amazon had to invest in various e-commerce products such as groceries, home products, and electronic products. Apart from investing in online shopping, Amazon has heavily invested in cloud computing, artificial intelligence, and digital streaming which are considered the four critical areas of its business (Mohammed, 2018). With such a strong financial structure, Amazon has set the price of its products and quality of services above its competitors.
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Loose Bricks in Competitor’s Wall of Defense
The lose brick that Amazon identified was the online shopping in the retail industry. Walmart had for a long-time dominated in the offline retail as a brick-n-mortar retail store. Amazon saw an opportunity first having convenience with accessing books online and this outdid most of the physical bookstores. The internet was also emerging at the turn of the 21st century and it created several opportunities for online retail that other competitors like Walmart did not consider (Garner, 2018The online shopping industry had not been established itself strongly and Amazon capitalized the lose opportunity that had not been capitalized by other companies in the retail industry.
Changing in Terms of Engagement
Before the introduction of online retail, shopping usually involved leaving one’s house, identifying the goods on offer, and having a conversation with the seller before making the purchase. The change in the retail industry was brought about by Amazon that sought out to create competitive engagement in the way customers would access products they wish to buy. Amazon established a greater and competitive value to customers who would have extraordinary convenience, comprehensive selection, and instant access with the products they would wish to purchase (Schultz & Block, 2015). Such a difference in engagement would create a competitive advantage. Additionally, Amazon sought for value proposition that meant that customers would access products at low price and a high value.
Collaboration of Smaller Companies
Amazon did not start out through the collaboration of smaller companies or engaged in mergers with other firms in order to realize a competitive advantage. Throughout its years, Amazon has had a stable financial structure and the firm has mainly used acquisition of other companies to outdo its competition. Some of the notable acquisitions that have been by Amazon include Zappos, Kiva, and Whole Foods (Moynihan & Payo, 2019). Zappos shoe e-commerce was acquired for $1.2 billion and this allowed for Amazon to establish itself in the shoe industry. Amazon spent $775 million to acquire Kiva systems and this allowed the company to invest in robotics. Whole Foods was acquired for $13.7 billion and this has enabled Amazon to establish itself in the grocery industry. The acquisition of the grocery store business enabled Amazon to be able to compete with Walmart that had also established a grocery store business. Such acquisitions have provided a competitive advantage to Amazon as it has enabled it to establish itself strongly in the retail industry.
References
Garner, B. A. (2018). Amazon in the Global Market. Journal of Marketing & Management , 9 (2).
Mohammed, S. (2018). How Did Amazon Build Its ‘Sustainable Competitive Advantage’? -The Key Success Factors. Retrieved from https://medium.com/@shahmm/how-did-amazon-build-its-sustainable-competitive-advantage-88cfee7fe2c8
Moynihan, R., & Payo, A. (2019). These are the acquisitions that have made Amazon the giant it is today. Retrieved from https://www.businessinsider.com/acquisitions-that-made-amazon-the-giant-it-is-today-2019-6?IR=T
Schultz, D. E., & Block, M. P. (2015). US online shopping: Facts, fiction, hopes and dreams. Journal of Retailing and Consumer Services , 23 , 99-106.
