Amazon online Retailer Case Study

The internet has changed and revolutionised the way we live, the way we work, and the way we make and maintain friendship. In this day and age, the world could be accessed at the touch of a button. Since 90s, the internet usage has increased and more and more people have become aware of the opportunities of web technology. Consequently, the business model that we are accustomed to apply has undergone a change that creates new challenges for not only the initiators of new systems but also for the one who stays loyal to the old system.

Amazon is the world’s largest online retailerthat is founded in 1994 in Seattle. It is not an ordinary website; it is an e-commerce success story which has changed the general understanding/approach to the commerce.It goes without saying that it has definitelybenefited from the internet. When something related to commerce is called as a success story, we are prone to look at financial figures, meaning profit. However the accomplishment of Amazon is more than profit. The bizarre information about Amazon is that they are not profit-seeking but growth at the beginning. Hence, their philosophy differs from the general business philosophy that dominates the world for years.Hsiao-Yun Tengalso states that Amazon has been successful in terms of their growth in its customer base, revenue, and operation scale; however it has problems generating net profit from the beginning.1In this paper, I would like to examine the business strategy and model of Amazon, what they benefit from Data-Net-Content strategy and their comparative advantageous. There are so many firms which have been trying to benefit from new economy however Amazon’s success is ground-breaking in the sense that it has also survived through the times of dot.com bubble burst. The other important thing about Amazon is that it had to learn from their mistakes or tries due to the lack of former example.

Jeff Bezos who is the founder of Amazon explained the reasons of success of this entrepreneurship: putting customers first, inventing, and being patient.Amazon has started its journey by selling books online and Bezos had no dream of selling everything. He said “We actually started to get e-mails from customer saying ‘Would you consider selling music, because I’d really like to buy music this way and DVD’s and electronics.”2Nowadays, Amazon’s product range is so wide that allows you to find not only books but also toys or technological tools. Additionally, people also become third party and sell products by themselves.Amazon also benefit from the long tail effect meaning that there are core users who constantly buy products from Amazon but long tail effect helps them to sell millions of goods.

The business model of Amazon is hybrid which means that the classical business model features and the opportunities of new age have merged. At the beginning, it was free. Consumers could be part of the site and shopped the things they wanted. After the prime service has been offered it has become freemium. Creation and development is at the centre of the process as in the case of every commerce activities.Mass production – as in the case of Kindle -  is still important because at the end, we are still interested in selling products and making profit which is the main drive of commerce activities even if Amazon was not the profit seeking firm at the beginning. The one of the most important things about e-commerce is the changes in the storage which maintains its importance owing to the fact that things will be sold. At this point, Amazon differs and it has used virtual stores that have both advantageous and disadvantages. It has advantage owing to the unlimited space to show products.If you have virtual stores, it means you will not pay for rent, and you do not have to hire too many people to work for you. So basically it helps you to decrease your cost andat the end of the day you earn more money than conventional business. However people cannot reach the actual content so it is a little bit hard to attract causal consumers as in the case of physical stores. In this business model, logistic plays critical role because, in this age, it is possible to sell things globally that makes logistics complicated in the sense that you should be able to send the product on time to make happy your customers.

Whatever the business model, it is known that it is important to reach the target group. If you have classic model, you will have physical stores and you will try to open it up at the attractive location. For the internet part, it is a little bit hard to get attention of the people. Nevertheless, it is good to remember the power of people in this age thanks to the participatory structure that they can benefit from. People are not just consumers but they are the active participants in the sense that they can express their feelings about the firm and the product. Besides, people read the reviews before buying the product or using the service. Hence, word-of-mouth has a big effect on any company in this age. Amazon grew also by word-of-mouth among the internet users. Amazon as a hybrid model uses not only classical models but also opportunities of new media to increase their sales and marketing activities. “With no press promotion, Amazon.com sold books across US and 45 countries within 30 days.”3