Hi everyone, As you will already know, that Amazon is that the largest e-commerce company in the world. But, what a number of you would possibly not know, is that Amazon started as a web book retailer, in 1995 by founder Jeff Bezos, in his home in Washington, USA. What started as a little online book website soon become one of the largest retailers in the world.
So, during this article, I’ll provide you a case study of Amazon, answering some important questions which can facilitate you to understand, how it becomes a worldwide phenomenon. during this article, we’ll look at four questions, which are:
- How Amazon became the “Everything Store” after starting as an online bookseller.
- What features of Amazon supply chain management face challenges in the global scenario?
- Can e-commerce truly replace the in-person shopping experience?
- What are amazon’s Implications on the retail industry?
Case Study on Amazon – Overview and History
How Amazon Became the “everything store” after starting as an online bookseller.
Amazon has now become one of the biggest inspirations and an epitome of exemplary success of small and big business owners around the world. Today Amazon is valued at $1.63 trillion and employs a total of 30,50000 people. Whereas, its founder and CEO, Jeff Bezos has become the first person in the world to accumulate a fortune of over $100 billion and he has a net worth of $126 billion, becoming the wealthiest person in the world. Jef Bezos envisioned since the beginning at Amazon would become a place where everything would be available. However, the initial foundation was cleverly built, by selling books online, as it had significant appeal amongst customers, and was easy to ship.
Jeff initially wanted to give a magical name to the company and choose the word “Cadabra” which was quickly dropped, due to its similarity with the word ‘Cadaver’. And then the name “Amazon” was chosen, after the largest river in the world, which can even be seen in the early logo of the company.
The research and Development department of Amazon has played a crucial role in its success. Amazon spent a total of $35.931 Billion on their research and development division in 2019, to analyze the secrets of the trade and enhance business innovation, which is the highest by any company in the industry.
Amazon web services, Alexa, Prime Pantry, Amazon Fresh, Prime now, and Prime music are some of the significant innovations that have helped amazon climb to its success. Even the big MNCs have to face a certain level of risk for their new ventures. This sometimes results in failures, whereas sometimes risks can prove to be fruitful. On June 18th, 2014, Amazon launched its very own smartphone, called “the fire smartphone”. The device was aimed at integrating various media streaming options. However, the venture failed miserably and resulted in a whopping $180 million loss for Amazon.
In August 2014, Amazon acquired Twitch for a staggering $970 million. The integration of this video game live streaming website, to the game production division enhanced the amazon web services.
one thing Amazon focused on since the beginning was, ensuring that its Supply chain management was best in class. Amazon has profited over $100 billion in the last 20 years, owing to its excellent supply chain management. In the initial period of the company, Jeff Bezos had no concept of “work-life-balance”, and employees would work tirelessly for months, to ensure that each order met its schedule. Employees would even sleep in their cars, and then come to work again in the morning, because of a large number of orders.
Jeff Bezos has his way of dealing with escalations from dissatisfied consumers. Customers can directly send an email to the CEO, who will then forward it “as is” to the person in charge with an addition of a question mark ‘?’. When an amazon employee receives this question mark, from the CEO himself, they have only got a few hours to rectify whatever issue there is and come up with a thorough explanation of the problem. This explanation will be analyzed by a series of managers and supervisors before reaching Jeff Bezos himself. This is Bezos’s way of addressing customers escalations, and the symbol is now known as the “Bezos Question Mark” among the amazon employees.
Through the integration of innovative solutions, Amazon has ensured to maintain the fastest delivery time in the industry, putting the competitors under immense pressure. The introduction of the Amazon prime delivery services was another breakthrough in the industry as it promises delivery within two days.
Amazon’s Strategy of outsourcing inventory management to third-party service providers and insourcing logistics was yet another clever move by the company. Amazon has acquired significant positions among the customers and the market, through up-to-date IT services, intact networking of the warehouses, multifaceted inventory management, and effective transportation services.
Amazon has set to introduce the Amazon Prime air service to the arsenal. It is a drone-based delivery system, which plans to deliver orders under 5 pounds, to customers under 30 minutes, within a proximity of 10 miles. This will put amazon way ahead of the league of its competitors.
What features of Amazon supply chain management face challenges in the global scenario?
The Supply chain management has the core of this Amazon Case Study. The supply chain team of amazon undergoes continuous monitoring and scrutiny to prevent any sort of customer dissatisfaction. However, the company has been facing some challenges in its international business section, as compared to the national sales across the USA. Amazon’s presence currently spans across 58 countries and reaches a population of 1.2 billion people. Even so, Amazon is having trouble competing with other delivery platforms abroad and penetrating new markets.
Their international sales were only up by 9% in the first quarter of 2019, whereas it was an impressive 19% in the previous quarter. This can be attributed to the political shifts and the competition faced by amazon overseas. As countries like China and India both have tremendous prospects for e-commerce. Amazon could expect significant profits returns from these countries. However, Amazon has faced fierce competition in China from companies like Alibaba and JD.com, which are some of the most significant e-commerce companies there. Whereas the new laws in India which favours the domestic companies present a problem in front of amazon.
Besides, Amazon also faces a threat as Walmart recently acquired, Flipkart, which is one of the biggest e-commerce platforms in India. One of the key factor behind this decrease in Amazon’s drop in international sales is excessive emphasis on the top graphical context. The core of Amazon’s supply chain is to cover closer geographical areas. When expanding to global proximities, Amazon’s services experience difficulty in moving beyond the local delivery areas because of its dependency on small retailers.
Can e-commerce truly replace the in-person shopping experience?
Amazon focuses on small sellers and manufacturers by linking them to a vast client base and their fulfillment program. Small businesses can utilize the services provided by Amazon and exhibit their products on a larger platform to attract more customers. Amazon also provides its ‘fulfilment by Amazon ‘ services, under they which they take care of the packaging, warehousing, and shipping operations. Now, this brings us back to the question “can e-commerce truly replace the in-person shopping experience”.
On the one hand, where, online shopping and e-commerce websites bring a world of options to your fingertips. They also deprive you of the emotion you go through while you look for the item which truly satisfied your checklist.
Where online shopping most of the time requires you to pay the shipping and delivery charges, This sum of money would be comparable to that you would spend on gas and parking while going to the store. There’s no denying that a particular factor of personal preference comes into play here. There is also, definitive proof that e-commerce and online shopping has made our lives much much simpler. But even the major e-commerce giants understand the appeal of a traditional store. This is why Amazon has started with its very own pop-up store for pushing its kindle device into the market bridging the gap between online shopping and traditional shopping.
Therefore it can be concluded that there is less probability that e-commerce will ever truly replace the in-person shopping experience. However, it has still had a significant effect on it, as more and more people are opting to order their products of choice from the comfort of their homes. To tackle this obstacle, traditional retail store owners must look for an omnichannel strategy to address the changing expectations of the consumers and address both variables.
What are amazon’s Implications on the retail industry?
In addition to the advantages provided by the e-commerce industry to the customers, online shopping has significantly changed the whole retail scenario. Amazon, in particular, has had a drastic effect on the brick and motor stores. Through their attractive services, such as fast shipping, free return, low prices, discounts, ease of access and other impressive services like prime etc.
Amazon has increased customer expectations. This had made it tough for traditional retailers to compete with them. These changes and implications have been termed as the “amazon effect”. This Amazon effect has caused of all its competitors to come up with new ways to keep their market shares and increase revenue. There have been several instances that showcase the changing competitive landscape due to the amazon effect.
For example, Sears, a famous American departmental store chain, ignored the changes in expectations of the customers, with the rise of Amazon and suffered a significant loss. In contrast, one other American retail store, Kroger. Kroger sensed the shifts and adopted innovative changes in its operations, such as including Technological infrastructure, and created an omnichannel presence with customer purchase history, and thus following in the footsteps of Amazon to offer its customers, personalized shopping services.
Even the retail giants such as Walmart had introduced a two-day delivery service on purchases of about $35 to keep up with Amazon. Besides, Amazon has boosted the pace of innovation in the retail industry. As supply chain management and logistics are the strongest qualities of Amazon, Many companies are now looking to enhance their software-based shipping services. In addition to bringing focus on driving sales through mobile users and mobile applications, and incorporating AI-Based Cloud Computing services to compete with Amazon’s Alexa and web services.
Amazon’s unique supply chain Strategies and continues technological innovations have already changed the way supply chain management works. Their acquisition of whole food is another bold declaration of its move into brick and mortar, Further emphasizing the convergence of traditional retail and ecommerce strategies.
Amazon is already far out of reach of most of its competitors. With impending advances in robotics, drones and other autonomous vehicles, one can only guess what the future hold for Amazon.
This answer our final question and concludes this amazon case study. Hope this articles will solve the questions in your mind.