E-Business Technologies have altered the Nature of Competition within Amazon - Essay Example

?Running Head: E-BUSINESS TECHNOLOGIES E-Business Technologies have altered the Nature of Competition within Amazon of the of theInstitution] E-Business Technologies have altered the Nature of Competition within Amazon Introduction Internet has changed our lives to a large extent. The business done through internet or e-business is one of its major examples. The technologies through which business is done electronically are known as e-business technologies. A variety of e-business technologies and its applications are developed to enhance commerce online through internet. Though World Wide Web is considered to be the only e-business technology but the reality is that it is the only one feature amongst several other features (Fontana, 2000, pp.9-10). E-business technologies are composed of a set of technologies that work through internet. These e-business technologies comprises of websites, search engines, browsers, e-procurement software etc. On the other hand, internet can solely be described as several computers connected together in a form of network through telephone lines or other tools. As electronic business involves a large number and variety of technologies so the range of its applications is also large (Gladwin, 2001, pp.12). E-business affects business from the first step to the last. It marks the definition of the product as it is easier to redefine the current product. In e-business through technology it has also become easier to introduce new products and services. E-business has also changed the features of the traditional trade. E-business has effects on all steps of commerce from development of products or services to dealing with suppliers and distributors to sending of products or services to the customers. It has also led businessmen into difficulty in starting a business (Ball & McCulloch, 1999, pp. 222-228). Also, in e-business following what others are doing may not be a good criterion for starting an e-business as for example some clothing companies stepped into e-business by developing their websites where customers can easily see the company’s designs and products and place their orders online. But the same sort of e-business may not be a good start for other companies dealing in some other goods or services (Cox, 2000, pp.32). For example: businessmen dealing in vegetables and fruits while seeing the rise in the trend of e-business in fashion tried to follow their steps but unfortunately they fail as customers would prefer to go to vegetable market for buying vegetable rather than placing order online (Conner, 2001, pp.13). Inventions in existing technologies are taking place and researchers come up with innovative technology gadgets every day. Whenever any innovative technology is invented, it is assumed that it will further simplify the existing technology, would be more efficient and would also be user friendly. At the same time it would also save time and reduce cost. But the technologies that were invented since early 1980s gave a chance to entirely change the practices in businesses that were in vogue then and to adopt completely new methods (Corcoran, 2001, pp.13). But, unfortunately those modernizations were not readily accepted and followed by the companies. In e-business the innovative technologies provide commerce with an opportunity to disconnect with the past and start afresh. This gives the firms a chance to revolutionize and get an economical benefit over their competitors. The most important factor that is of major concern to the businessmen is the quick alteration and uncertainty in the business environment. There are several reasons of this quick alteration and uncertainty in the business environment among them the most important ones are new technological inventions, diversified and rapidly changing market needs, growing competition and challenging customers with growing demands (Bull, 2000, pp. 102-143). The risky activities relating to business are increased due to the quickly altering and uncertain kind of business environment. Therefore, e-business technologies should be developed to deal such market situations. These innovative e-business technologies not only deal with highly problematic conditons of commerce but also a cause of quick change and uncertainty. In the same manner e-business technologies have helped Amazon deal with this type of business environment (Jastrow, 1999, pp.3-6). They have done so by improving the knowledge about the needs of customers and also by giving assistance to customisation of goods and services. Success Story of Amazon.com The CEO and founder of Amazon.com is Jeffrey Bezos. Amazon.com is generally known as the “world’s biggest bookstore.” Many people who are having e-businesses can get many lessons from the story of this virtual bookstore, Amazon.com. Surprisingly, this web site dealing with the sale and purchase of books only, has shaken the industry because Bezos not only created a web site. The founder, Bezos perceived and applied a bright, intellectual and worldwide digital trade. He turned his technology into business and business into technology. Only within a few months after Amazon.com was started, it opened up several hundred virtual bookstores internationally through internet. Jeffrey Bezos, the youngest vice president at Banker’s Trust in New York, did his graduation from Princeton. At that time he had to choose whether he wanted to get his bonus of Wall Street or wanted to take a risk and start a new commerce on the internet. He is of the opinion that he tried to think when he will be at the age of 80 and would be thinking about his past life. He would not mind missing his bonus of Wall Street but would be hurt if he did not take part in the Internet boom. He, therefore, planned to start a business on the internet and for this purpose made a list of 20 products that have the capacity to be sold on the internet. Finally, he selected books as the product of his e-business as books are small-ticket objects. They are also economical and not difficult to ship. Furthermore, there was no bookstore that used to store more than a million books annually published. For excelling in his business of trade of books on the internet, Bezos developed a strategic plan. After three years Amazon was launched. At the end of the year 1994, Amazon delivered its first order of book which was packed up by Bezos himself. Amazon’s E-Business technology Amazon does not have any physical stores. The sale is done completely through its Web site. It is taking advantage of the e-business technology in the best manner and provides its customers with a satisfied and personalized experience. The e-business that started off with the man created list of choices of products transformed and developed into a refined recommendation engine which is generated by computer. The web site saves the remarks and the suggestions of the customers which are helpful for the future visitors of the web site. This serves just as the salesperson in a shop or store gives advices on buying of books. Amazon.com keeps a record of the number of customers, the number of people who visited the web site, the duration for which they used the web site, the web pages they visited and etc. These records are used to analyse the purchase and sale rate of the company, its success rate and the victory of its advertisements. Just in a few years Amazon.com is developed into an ideal success story internationally for the businessmen who are making efforts for having success in e-business. With the help of amazing features of Web site, Amazon.com maintains its customers. As for example, personalised recommendations, customer reviews, order on one click etc. Amazon.com provides customers with the facility of buying online any book they want just on one click. The firm, Amazon.com proposes almost everything related to the trade of books by the help of innovative technology which has helped it to offer auctions, zshops and last but not the least marketplace of amazon.com where used items can be sold by the customers (Brock, 2001, pp.56-72). Amazon has also introduced a web service for its business associates or business partners to work together with the web site. This web service is free of cost and makes its partners access the data of catalogue. Through this service its business partners can also develop and fill the shopping cart if amazon.com. Amazon and Porter’s 5 forces Threat of substitute products and services For Amazon.com there is high degree of threat of substitute products and services. There are a number of alternatives present for the goods and services that amazon.com offer just with the exclusion of its high use of innovative technology as for example ordering at just 1 click. Many book stores while having physical presence also have online websites. Besides Amazon, Barnes and Noble Books, Books-A-million, and Half Price Books are the places where books can be bought. Also books are available at newsstands, books stores and on discount stores. One can also get books free from libraries. Hence, there appear to be many alternatives for Amazon but these alternatives do not provide one with the same services, convenience and quality as do the Amzon.com. Threat of the entry of new competitors Amazon.com experiences low degree of threat of the entry of new competitors. The prominence that Amazon.com has would be difficult to achieve by any new company. Amazon.com offers an amazing amount of goods and services. It has been almost thirteen years that Amazon.com is operating in the marketplace of internet. For any new company to compete with Amazon.com on a low level would be difficult as it will not be able to gather the required capital. Furthermore, Amazon offers enough goods and service differentiation that maintains loyalty in its customers. Though it is easy to start an e-business now a days but to compete amazon.com looks fairly impossible. Competitive rivalry within industry Amazon.com experiences high degree of competitive rivalry within industry. Amazon.com has a number of competitors which are continuously increasing. As Amazon.com offers a large number of services and goods, its competitors are trying to come up to its level. E-sales websites such as Barnes and Noble.com and eBay are included in its direct competitors. The direct competitors of the Marketplace of Amazon i.e. it’s auctions and zshops are other auction websites e.g. eBay, Yahoo!Auctions etc. Though all of these competitors are also big names but they do not threaten Amazon.com as its rating of customer service is still the highest. Also as compared to its biggest competitor i.e. eBay, last year Amazon.com experienced more visitors. Bargaining power of customers/buyers Buyers have high bargaining power as the customers can visit other retail websites to get the book or service with in the price range in which they want to but the book or service. But Amazon.com maintains the lowest prices for the books. Also Amazon.com provides best services that no other retail website offers so the customer do not want to get books or services from any other web site. Bargaining Power of Suppliers Suppliers have medium-high bargaining power. As the inventory of Amazon.com is available worldwide at different suppliers so suppliers have medium power. Also the objective of Amazon.com is to cater to everyone so it is a large purchaser of goods. Amazon.com choose what should be presented on its web site and makes use of its power on smaller suppliers. Suppliers enjoy high power as they cannot be challenged by Amazon.com. Amazon.com does not have any production plant and relies heavily on online sellers and business partners. References Ball, D., & McCulloch, W. (1999). International business: the challenge of global competition. Boston, MA: Irwin. pp. 222-228. Brock, James R. (2001) WebSphere Keeps the World of E-commerce Turning. InfoWorld. pp. 56-72 Bull, K. (2000) Mark Hoffman: Changing the Face of the Digital Exchange Industry—Commerce One CEO Believes Digital Exchange Growth Depends on Supplying Both Software and Services. InfoWorld. pp. 102-143 Conner, D. (2001) Hewlett-Packard Unveils Bevy of Internet Appliances. Network World. pp.13 Corcoran, E. (2001) Oracle: Walking the Talk. Forbes. pp.13 Cox, J. (2000) Oracle Eats Its Own E-business Dog Food. Network World. pp.32 Fontana, J. (2000) "Microsoft Relies on BizTalk Server 2000." Network World. pp.9-10 Frook, E. (1999) Big Blue Boosts Ad Spending 21 Percent to Spread e-Business Message to the Web-challenged. Business Marketing. pp. 42 Gladwin, Lee C. (2001) "Borders Turns to Amazon for Outsourcing." ComputerWorld. pp.12 Jastrow, D. (1999) Internet Resellers Alter Web Strategies. Computer Reseller News. pp.3-6 Read More