Web Site Evaluation of Amazon.com - Essay Example

1.EXCECUTIVE SUMMARY: The proposed business case for V.J.Jones for online shopping is made in context of an analysis made on evaluating the online business of its major competitor, www.amazon.com, whose niche is into music, DVDs and books. The study intends to propose an effective online shopping cart to the V.J.Jones in relevant to the current growing trends. The evaluation study closely observes the competetive edge of the services offered by Amazon from start up to the latest services like web services. As the company believes to increase its sales by redesigning the web site, the prime factors Impact of the home page, Context of use, Usability and Page Lay out & navigation are considered which are great attributes of its web prominence. The evaluation study was based on the primary and secondary research of Amazon web site and related articles on the “Earth’s biggest Selection”. The business model is observed in the light of conceptual and structural context that were functioning on the 3 operational strategies. The competitive edge of the Amazon was illustrated in terms of Web site layout and information content along with business strategies in relevant to pricing, advertising and promotion, tie-ups, Customer and partner associations, vertical integrations, Legal and Technology adoptions for future growth. With the above scope the client’s web site can be easily monitored to redesign its model for the uplift of business. 2. INTRODUCTION: 2.1.Background: The client V.J.Jones company found it difficult to maintain its sales revenue from the online business. Key problems are difficulties with site navigation, confusion over how to order and most especially slow loading pages. This all impacts directly on the experience of shopping online The poor presentation of the business through web site had driven away the customers to visit the other sites like Amazon for their Information and usability. The inappropriate methods of partner network through web have increased promotional costs decreasing the profits. In such scenario the client V.J.Jones company should realize the outfalls of its web site compared with Amazon and need to adopt some of the successful Business models. 2.2.Purpose of the Report: To suggest continuous, successful Business model to the client, the Key drivers of the business model of Amazon has to be closely observed for the adaptability. Hence the observation was carried out in the areas like - Customers, Partners, Buyers, Suppliers, and Industrial competitors, Legal and Ethical issues. The report gives the sequential information of the key competitive factors like – Business models, strategies, Web site evaluation, Marketing techniques, legality and other business niche presentations. 3. Industrial Scenario of Amazon.com 3.1.Company Info: Amazon.com is a pioneer of online book reseller started its operations in July 1995 by Jeff Bezos. The firm’s biggest focus is online reselling of Books, Vedio and DVDs, CDs and Greeting cards, toys and electronics. Amazon operates on different strategies to reach its global customers – one among them is establishing local web sites, Amazon.co.uk, Amazon.de to reduce the shipping costs offering the goods at lower price. The success of Amazon reveals in the words of its CEO -“Our vision is that we want to be the world’s most customer-centric company.” (Business Week 1999b:54). In 1997, Amazon has bagged one million customers by adopting to its patented One Click Shopping (Spector, 2000, p.143), through which the customers are designated to preset credit card information and shipping details. Today amazon is one of the Top ten companies and is calles a s the “Earth’s biggest Bookstore”. 3.2.Engineering of Business Model: Amazon.com's site is based on two strong models: the conceptual and structural model. The conceptual model is based on the concept of a reference catalogue, which helps Amazon.com to uniform product categories. This magazine-styled catalogues was also designed to browse and explore reference catalogues and product specific searches. (Baxley, 2003, pp. 382-389). This model of reference catalogue not only gives users clear understanding of what the site offers and how it is organised, but also provides a solid foundation on which the interface can grow and develop (Baxley, 2003, pp. 382-389). Another model is the structural model. Because of the huge content in its web page, the structural model looks like a hub. The center of the hub contains the product details and category index pages and the spokes link to functional areas, such as checkout and account management. Amazon also uses the structural model as a guide for its checkout process and another hub for its account management area (Baxley, 2003, pp. 382-389). Due to this model, Amazon.com is able to plan effective ratios of breadth and depth in website hierarchies and also provides clear, brief and highly conspicuous information (Farkas & Farkas, 2000, pp.341-358). 3.3.Operational Strategies: There are three operational strategies that have helped Amazon.com to enhance its competitive advantage, including cost-leadership, customer differentiation and focus strategies (Saunders, 2001, pp.122-123). The first strategy, cost-leadership is pursued by Amazon.com by differentiating itself primarily on the basis of price. Due to this strategy, Amazon.com always makes sure that it offers the same quality products as other companies for a considerably less price. Their second strategy is customer diffentiation. Amazon.com provided current and prospective customers with differentiation though design, quality or convenience and Amazon.com always selects a differentiator that is different among the competitor. So, Amazon.com consumers can recognise and differentiate its product from competitors (Saunders, 2001, pp.122-123). The last strategy that it uses, is a focus strategy. This strategy takes one of the two earlier strategies and applies it to a niche within the market (Saunders, 2001, pp.122-123). Amazon.com fouses on outstanding customer service as a niche but not the whole market because each niche has its own demand and requirement. 3.3.1.There are four primary drivers for growth: 1. Product focus: Product focus is to make a products or line of products that will be interest by customers. 2. Customer focus: Amazon.com tries to find a way to satisfy customers’ needs and expectation through a variety of products and services. 3. Technology focus: Amazon.com attempts to use technology to solve real problems. Now, technology has been used for easy ordering (e.g. One-Click System), securing customer credit card numbers, speeding delivery and new and exciting offerings that draw people to check it out. 4. Distribution focus: Amazon.com tries to expand its business, so it needs to expand its products’ distribution. Now, Amazon.com operates its retail websites not only in the US, but also in Canada, UK, Japan, Germany, France and so on. 3.4. WEB LAYOUT 3.4.1.Home page: Amazon’s Home page is a vital storefront with dynamic content and features. The web site is presented with speed and convenience. The design is simple and functional, almost to the point of ugliness. It is easy to use and crucially, fast loading over home modems with only a few small graphics. The site is also backed up with innovations such as one-click ordering. To explore the virtual space of Amazon’s web site one either browses or uses keyword searching. Web pages are generated from databases of millions of books, videos and gifts that Amazon stocks. 3.4.2.Navigation: Despite using these foundation models, Amazon.com follows some effective guidelines for its web navigation, such as providing orientation information on lower-level pages to support continued exploration of the website, providing a search facility or an index for direct access to content and providing a link to the homepage throughout the site (Farkas & Farkas, 2000, pp. 341-358). Amazon.com features an unusually rich amount of online help and this help system is procedural in nature and follows a FAQ style (Baxley, 2003, pp. 397-405) along with topic summary on the category index page. 3.4.3.Lay out: The layout of Amazon’s various pages present a clear visual hierarchy by placing critical elements at the top of the page and using horizontal rules and color to identify different sections and groups (Baxley, 2003, pp. 397-405). 3.4.4.Context of Use: The side menu bars in the page layout offers the relevant links to the concerned page and information searching, giving an ease of context use. "Search Inside the Book" is a feature, updated recently from a9.com search engine that allows users to search within the text of books as well as searching for text on the Web, and the Internet Movie Database (IMDb). This facilitates the content available for the purpose of knowing and using the relevant books to buy. 3.4.5.Information Content: Amazon maintains its content as a symbolic representation to the Virtual business which maintain close relation with the general buying habits. The words Store , the graphic representation of Shopping cart, Proceed to the Check-out counter will always reminds the visitors the experience of retail shopping 3.4.6.graphical representations: The symbolic actions of Amazon.com include initiatives through which it engages various audiences and through which it creates broader meanings. The graphical representations are very simple, and eye catchy 4.COMPETETIVE ADVANTAGE: 4.1.Customer Participation: Amazon has built up strong customer network by making them actively involved in the company beyond simply spending money. This is seen in the facility to write and post reviews on the web site and in terms of the Associates program, which has been a particularly successful initiative. 4.2.Partner Association: There are over 260,000 Associate sites and these represent a huge number of virtual storefronts scattered across the web that drive business to Amazon (Johnson 1999).This is a form of micro-franchising where other web sites list books which are linked to Amazon for purchasing on a commission base. 4.3.Customer care: The company adopts its customer care through its own packing and shipping to customers to maintain quality. Amazon has had to invest significantly in warehousing, particularly in 1999, and the company currently has seven major distribution centers in the US and two in Europe. 4.4.Tie –ups: Amazon established its tie ups with Virtual stores in three broad categories – web retailing properties, strategic technologies and auction related 4.5.‘Local’ franchises: This was achieved with the national Amazons in the UK (www.amazon.co.uk) and Germany (www.amazon.de), which opened in October 1998. The logic being that customers will be happier buying from a local store, charged in local currency. And in the case of Amazon.de the site is in German, of course. Local distinctiveness comes from the domain names, the site design, the language employed and unique editorial content (see figure 4). Another key advantage is faster and cheaper shipping costs for books that can be sourced locally. 4.6.Traffic generation: Amazon imparts credit of “traffic generation” to its thousands of Associate sites and the major portals. Generation of traffic is vital to get people onto the Amazon.com site where they may buy things. Amazon spend millions on prominent links and recommendations from major search engines and portals, including Yahoo, AOL, Excite, and AltaVista. This is very much like prominent advertising in the real world to get people through the doors, into a store. 4.7.Personalization: Amazon.com goes to great lengths to develop a one-on-one relationship with its customer. For example, it trains its employees about “the tone” of e-mail messages with customers, so that the messages convey a sense of personal touch. It also offers innovative email- based personalized services: “Eyes" is a notification service, in which customers can register their interests in a particular author or topic; “editor's service” provides editorial comments about featured books. These services are automated and are available free of charge. The personalized interaction enabled by Internet technologies, such as collaborative filtering, provides e-commerce firms with significant amounts of customer-specific knowledge. 4.8.Advertising: Amazon.com invests more than 23% of its revenues in advertising. Moreover, it has chosen to operate with losses in order to continue its substantial information about the firm, (2) it attracts and concentrates the potential target customer group, and (3) it increases customer propensity to undertake a commercial transaction (Hagel & Armstrong, 1997). Thus, it showcases advertising as an important element of the online business model, which involves extensive brand building 4.9.Vertical Operational Integration: Amazon’s primary value chain includes purchasing/sourcing, marketing, distribution and after-sales services, which includes returns and exchanges from unsatisfied customers. Their main focus is in the purchasing/sourcing and in the distribution of the products to the consumers. Their investments are therefore, geared towards warehouses in key points of high consumer demand areas and an efficient delivery and distributing system to service all its consumers. Thus, Amazon controls most of its distributing system that spans across borders. 5. PRICING: Amazon.com combined its price cuts, the classical signals of competitive toughness, with an explanation that its lower prices are due its superior business model. It explained that consumers were to benefit from the superior model enabled by the Internet, thus diverting attention from the lower margins imposed by price wars (Porter, 1985). Finally, the very fact that a start-up like Amazon.com launched a frontal attack on the industry leader sends a meta-signal about the advantages associated with the new medium. 5.1.Personalizing Price: Personalization enabled retailers to use dynamic pricing, whereby prices were changed based on demand (i.e., the value placed on the product or service by a target customer) or supply (e.g., product availability) conditions. While dynamic pricing existed well before the Web, Web technology and customer databases greatly increased its potential. For brick and mortar retailers, testing demand elasticity was an expensive and time-consuming proposition, and the ability to offer personalized pricing was limited or non-existent. By contrast, Web-based sellers could perform real-time price tests, measure immediate customer responses, and act on them. For example, if a Web retailer wanted to know the sales impact of a 5 percent price increase, it could conduct a test by randomly charging visitors this increased price. By studying the response, retailers could gain important insights into the role price played in customers’ buying decisions, by customer segment. 6. LEGALITY: Amazon keeps all the legal information needed for the transactions in the help file and services menu. The legality arises with the issue of credit card authentication and shipping, documentation processes and content and with promotions and advertisements. Barnes & Noble’s motto since the 1970s has been “The world’s biggest bookstore.” Amazon.com, as noted earlier, positioned itself as “The Earth’s largest bookstore.” Barnes & Noble sued Amazon.com arguing that “[Amazon] isn’t a bookstore at all. Rather, it is a book broker making use of the Internet exclusively to generate sales to the public” (Munk, 1999). Amazon.com responded by filing a counter lawsuit. The lawsuits were waged over the very definition of the boundaries of the book retail industry, as well as over the definition of retail in the virtual space. Thus, their consequences extended beyond building the players’ reputation for toughness and toward redefining the industry paradigm, within which stakeholders make evaluations of these firms. 7. TECHNOLOGY: Amazon is constantly updating it technology to serve the customer needs and to facilitate the easy access of different sites in the following ways: Amazon E-Commerce Service (ECS) exposes Amazon’s product data and E-Commerce functionality allowing developers, Web site owners and merchants to leverage the data and functionality that Amazon uses to power its own E-Commerce business. Amazon Web Services (AWS) provides software developers direct access to Amazon's ever-growing technology platform and product data. Developers are empowered to innovate and build businesses by creating dynamic, highly effective Web sites and Web applications. The Alexa Web Information Service (AWIS) provides developers with programmatic access to the information Alexa Internet collects from its Web Crawl, which currently encompasses more than 100 terabytes of data from over 4 billion Web pages. Amazon.com has been exposing itself again, much to the delight of developers, entrepreneurs, and media junkies. This time, they've revealed Amazon Simple Queue Service (SQS), a basic message queue service with a web services interface. Originally developed and used in-house by internal Amazon developers, the API is now publicly exposed so that everyone can join in. Amazon also owned Alexa Internet, Accept.com, Exchange.com, a9.com search engine which allows users to search within the text of books as well as searching for text on the Web, and the Internet Movie Database (IMDb) (Wikipedia, 2004). SUMMARY: In the purview of the above evaluation of Amazon.com, the V.G.Jone’s company can re enter the online web marketing with its Books, Dvds, Cds, and Videos. The company is supposed to re launch its operations with the revised web layout and reengineered business model and strategies. The V.G.Jone’s company can play in the market if it starts giving competition with the observed strategies by closely following and adopting similar or counter operations to penetrate in to the market. V.G.Jones can share the market capture, on slashing the costs to offer the lowest price to the customers by improving the global partners and associations. And the new innovative adoptions and services other than Amazon.com will bring the traffic generation and customer accounts. Above all the great customer satisfaction with closer look on what they need and how, when and where they need will bring the repeated loyal customers which is a sole growth factor for any e-business, including V.G.Jone’s References: - Amazon.com (2004) "Ordering via 1-Click," retrieved October 20, 2004, from http://www.amazon.com/exec/obidos/tg/browse/-/468480/002-8378554-9227265 Mary Grace Velasco,College of Business Administration,Senior, Fordham University,Fall 2000 Finding the source of Amazon.com: Examining the hype of the “Earth’s Biggest Bookstore”.Ed. Martin Drodge. July 1999 May 2005 . Building Reputation on the Internet: Lessons from Amazon.com and its competitors Violina.P.Rindova. Revised September 1999. May 2005. http//www.Wiki.mediaculture.og http//www.indiainfo.com http//www.Itfacts.biz/index.php Amazon.com: Marching towards profitability.pdf. case number Ec-25. July 2001. may 2005 Fun with Amazon's Simple Queue Service.Ed by Jason Levitt. January 05, 2005. May 2005 . David Streitfeld, “On the Web, Price Tags Blur; What You Pay Could Depend on Who You Are,” The Washington Post, September 27, 2000. - “Amazon Sells CDs, Videos in Japan,” The Financial Times, June 14, 2001. A discussion of the Amazon affiliates program from the point of view of an individual affiliate.May 2005 < http://www.j-bradford-delong.net/Comments/Kaching.html> Read More