Amazon.com Business Development - Assignment Example

1. Amazon.com has been possibly one of the business concerns synonymously mentionable with the notion of e-commerce. It has been the first mover in its own genre and arguably created a new one even. It started out in 1995 and since has exhibited significant growth, a trend that continues till the present date. However, concerns have been raised particularly in light of the recent slowing down trends exhibited by the company. This has fueled research on identifying the causes behind the fluctuation in growth. Amazon started off as being a company selling books online and the format it promoted made it extremely popular. The company then also brought in selling music into its scope. The company thereon has focused upon diversifying to capture the largest possible number of customers. It is argued that through this choice, Amazon possibly has made revenue generation secondary to growth in terms of diversification. At present, Amazon.com offers a number of different product types. It therefore at present is comparable to an online department store rather than an online vendor of books and music. The advantage of growing into a business that is able to offer so large a spectrum of products along with Amazon’s usual awareness generation through the construct of the website automatically implies a larger potential consumer base to start off with. Each search generates a result that contains not only information about the product itself, but also about related products that other customers have appeared to purchase and thus related products that are apparently complementary to the present product. Further, Amazon often offers reduced or zero shipping costs or certain arrangements to deliver the product within shorter deadlines and information about all these value additions are present in the page that shows the result. Apart from that, there are also customer reviews that provide important insight to the nature of the product and thus are that much more useful for the customer who maybe simply seeking information about the product. However, the fact that Amazon was able to provide such detailed information generates a goodwill that is possibly the greatest asset of the company. For product ranges like apparels, accessories, cameras and other electronic goods, shoes, tools and hardware, Amazon promotes and performs the functions associated to taking and serving to orders for retailers such as Target, J& R Music and Computer world Tiger Direct and certain relatively smaller firms. Without taking title to these goods, Amazon through providing these services extracts fixed payments and commissions, an arrangement advantageous to all parties in concern. However, diversifying into product lines other than books and music, admittedly the highest revenue earning departments has been argued to be damaging for the concern. The greatest disadvantage with the company is said to be that its image still lingers in the mind of the majority of the customers as an online book and music store. That its products are spread over a much broader spectrum is yet to be ingrained into the potential consumers’ mindset. As a result, books and music are still the highest revenue generating sectors of the company and the other sectors are much less profitable parts. However, the focus of the company on increasing its spectrum of product-lines prevents enhanced focused on the books and music segments and therefore it is argued that the potential profits utilizable from these segments is not being utilized to the full capacity and advantages of scale economies are being ignored. Thus, some people have suggested removing certain low revenue generating product lines and investing in fully extracting potential of the books and music segments and other segments that have exhibited stronger revenue generation rates. 2. The arrangement of promoting merchandise of other companies is in essence beneficial for all the three parties concerned. The fact that the business partners have customers made aware through the Amazon platform is mutually beneficial for the business partner as well as Amazon. The benefit for the other firm is that its product is advertised, promoted and displayed along with effective reviews without having to invest in setting up the huge framework that would have to be done to similarly present the product independently. On the other hand, every time such a product is considered or bought through the Amazon portal, the brand name is advertised and there is a positive goodwill factor generated that makes the customer likely to return for more and thus in turn positively affect both concerns. The customers are also benefited from the detailed information provided as already mentioned. This framework creates a self-sustaining cycle deriving on mutual benefits that ensures that the business partners have no incentive to detract. Therefore what emerges is that Amazon through sustaining the system of promoting the business associates’ products through its strong framework associated with a number of additional values for the customer may generate strong competitive advantage for its associates as well as for itself. However, it is crucial that the awareness about the Amazon advantage now being available for a far greater number of product types is crucial. Given that the present level of awareness can be enhanced considerably and customers are aware of the broad coverage of the product spectrum, the business partners will always have the incentives to maintain and sustain the association. 3. Questionnaire to assess the image of Amazon.com 1. Name ___________________ 2. Age _________ 3. Male/ Female ________ 4. Nationality _________ 5. Country of Residence ____________ 6. How regularly do you shop online? (Approximate no. of purchases made per week on average) ________________________________________________________________________________________________________________________________________________ 7. What sites do you usually make these purchases from? 8. Have you ever used the services of Amazon.com to make any purchases? (If yes, please provide details – No. of times, Names of products, time of purchase, etc) ________________________________________________________________________________________________________________________________________________________________________________________________________________________ 9. For which products would you recommend making the purchase from Amazon.com? ________________________________________________________________________________________________________________________________________________ 10. List the different types of products you are aware of Amazon.com to be offering. ________________________________________________________________________________________________________________________________________________________________________________________________________________________ 11. What changes would make you purchase at a more frequent rate from Amazon.com? ________________________________________________________________________________________________________________________________________________________________________________________________________________________ 12. What are the deficits in the website that make you look elsewhere/ what are the benefits of shopping online elsewhere compared to shopping at Amazon.com? 4. There is a large difference that the image of the concern has for a store based retailer compared to an online check only retailer. The best instance would be that of a departmental store. While in for a store based retailer, the image of a departmental store is very important as it implies that customers can satisfy their different needs at the same store and thus do not need to shop for different items at different locations, in case of an online check only retailer, a rival is only a single click away. Therefore, the identity of the store or the image that is attempted to be portrayed assumes different degrees of importance for these two types of stores. For an online check only store, it is important to have an image that shows that the site is extremely informative and insightful. Online sites have greater scope to promote any product and inform the customer to greater extents about it as well as related products and services like shipping. These are the value additions that make such retailers lucrative for the customer. In case of a store based retailer, it is far more important to have a diverse product line to maximize consumer base. References: “Amazon’s Multiple Personalities,” Strategic Management (January 14, 2005); Amazon.com (2007) “Annual Report, 2007” http://media.corporate-ir.net/media_files/irol/97/97664/2007AR.pdf Byers, A., (2006) “Jeff Bezos: The Founder of Amazon.com”, Rosen Publishing Group Spector, R., (2001) “Amazon.com: Get Big Fast: Inside the Revolutionary Business Model that Changed the World” 2nd Ed., Random House Business Read More