Amazon Case Study

Brandy Hopkins

January 25, 2006

Case Study of Amazon.com - Individual

Marcus Myers

Seminar in Business

ADM495; BSM259

History

The launch of Amazon.com in July of 1995 was the creation of a new and bold way of doing business on the Internet. Amazon.com forced the traditional physical world brick and mortar retailer in the book industry to change the way they target the industry's consumers and then epitomized Business-2-Consumer e-retailing. Although, Amazon.com started as an online bookstore, according to eRetailNews , they have since spread its wings into other industries such as music, DVD, toys, videos etc...

Subsequently, this has created a multitude of direct competitors for Amazon.com in several different industries. As Amazon.com continues to grow and create new alliances with other industry's leaders, the competition for global online market share grows intensively.

Amazon.com SWOT analysis is based on a report conducted by eRetailNews. The Internet Retailing Report titled "New vs. Old: The battle between traditional retail and dotcoms", eRetailNews. Additionally, I will cover Amazon.com marketing and business strategies, the trends and forces in the online business-2-consumers industries, Amazon.com technology and financial information.

Amazon.com SWOT Analysis (according to eRetailNews, The Internet Retailing Report, 2000; Titled: New vs. Old: The battle between traditional retail and dotcoms - Mini eRetail Scorecard)

Strengths

* Well established web brand

* Loyal customers base of over 12million shoppers

* Distribution facilities to handle growth and fulfillment

* Leader in use of technology to delivery targeted content

* Excellent offline customer service

* Building international presence in markets outside of the USA

* Has moved away form being a low price supplier of books toward a focus on delivering outstanding service at a price

Weaknesses

* Amazon.com brand has been diluted by entering a wide number of product segments, increasing competition

* Need to restructure business to drive toward profitability has meant upward pressure on prices

* No offline brand presence

* Insufficient community added value

* Now competes as a mass merchant, allowing specialty stores to identify with particular segment, e.g. Barnes and Noble - books, eToys - Toys, Home Depot - Tools.

* Customers need to return products through third parry delivery services, even for ToysRUs merchandise

* No telephone support

Opportunities

* Opportunity to establish itself as a global mass merchant leader in the online shopping arena

* Building community events around the brand would help create brand affinity as well as loyalty

* Establish 24x7 hour telephone support for customers and order processing

* Frequent shopper discounts will increase retention and repeat purchases

* Further offline partnerships can potentially help Amazon by allowing customers to return products offline stores

Threats

* Success in mass merchandising typically requires low prices

* Diversification of product assortment may result in diluting the brand identity leaving shoppers unsure of what Amazon.com stands for

* Shopping bots make it easy to find books, music and videos at lower process elsewhere

* Amazon's lack in-depth community leaves it exposed to customer being attracted to competitors with more in-depth content

* Barnes and Noble may establish itself as the world's dominant book eRetailer with its ability to provide better services and a physical presence

Summary

Based on the scorecard analysis conducted by eRetailNews, the report shows that Amazon.com is strong in some areas but has created self-imposed weaknesses by over expanding itself into a number of product segments,