Paper Sample on Amazon: From Online Bookseller to Global Retail Giant

Introduction

Amazon Inc. is an institution founded in 1994 by Jeff Bezos (Castelli et al., 2017). As an online bookseller, Amazon sold its books to customers in different parts of the world. However, the firm diversified from being an online bookstore to the world’s largest online retailer shop. The product offerings expanded through different acquisitions, partnerships, alliances, and agreements. By 2010, Smith et al. (2017) asserted that the net sales accrued at the organization were from books, media, music, video products, digital downloads, and video games. Half of the sales at the company emanate from computers, mobile devices such as Kindle, Kindle Fire, and other electronics (Smith et al., 2017).

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The company also deals with general merchandise such as home and garden supplies, jewelry, and beauty products, to mention a few. The main challenge facing the company is competition due to the rise of many online retailer firms in the world that offer products at subsidized costs to the consumers. To navigate the rivalry, Amazon has faced the challenge of pushing its technology or general merchandise sale. On the one hand, Amazon wanted to invest money in improving its technology to compete with higher brands such as Samsung, Apple, and Sony. On the other side, the company wondered if it should stick to its strengths as an online retailer and try to navigate the existing competition. Therefore, this study discusses the strategic alternatives available to the corporation and offers a recommended strategy.

Information about the Decision Faced by the Organization

Amazon is in a dilemma of venturing to become a high-tech firm or sticking to online retailing. The desire to become a high-tech player emanated from the usual threats that companies face such as desire for immediate satisfaction among customers. The danger has proved costly for the organization since it pays more to replenish the stock immediately (Smith et al., 2017). Discontinuing this practice would mean losing regular customers who could shift their focus to other competitors. Currently, the distribution capabilities of the Amazon warehouses do not provide the competitive advantage the firm once held. Strategies such as free shipping and Prime were effective marketing tools. However, the expenses incurred when shipping the products have cut the company profits hence lowering the revenue. As such, these cuts have prompted the firm to rethink hence explaining the decision to venture to become a high-tech firm.

Relevant Concepts, Theories, and Applications

Amazon, as the most extensive online retailing company in the world, has dominated the industry by selling its products to millions of consumers worldwide. However, in 2012, the online company has its first quarterly loss attributed to the massive spending in warehouses and distribution centers, Kindle development, and competition (Lai et al., 2012). At the beginning of the season, the company’s CEO, Jeff Bezos, acknowledged that competition would be daunting and identifying its effects would be essential for Amazon’s success. Accordingly, Castelli et al. (2017) indicated that the world’s economy has been in turmoil for the last few years. The company’s mission is to become the world’s customer-centric company where people find and discover anything they want to purchase online (Lai et al., 2012). Since its inception, the CEO focused on this mission and has adhered to it over the years.

The dominance of the company challenges the traditional brick-and-mortar model. The model refers to the conventional ways of conducting business where customers received services and products and face-to-face interactions. The company transformed consumer expectations and industry standards. Presently, no customer wants to pay for shipping any longer (Castelli et al., 2017). With the introduction of one-day free shipping at the firm, retailers are rushing towards delivering promptly and adopting the same plan as Amazon. The other competitors have realized the need for speedy delivery, which has increased competition for the online retail firm hence explaining partly its decision to venture to become a high-tech firm. The decision would expand the scope of rivalry for the organization.

Recommendations

Notably, competition is the primary challenge facing Amazon. Beating this competition requires a robust competitive rivalry force, which the company could acquire by emphasizing competitive advantage (Lai et al., 2012). The organization should continue building its brand image. Amazon Company can address the external factors of competition by focusing on the service quality first, which will attract customers hence increasing profits regardless of the existence of perquisites such as free distribution. Reducing counterfeits is essential for online retailers to improve customers’ experiences using websites (Lai et al., 2012). The threat of substitution can be counteracted by ensuring that the services offered are attractive. Rather than shifting its focus to becoming a high-tech player, Amazon could use these recommendations to improve its present offerings as a retailing giant.

Alternative Recommendations

The operations at Amazon can continue expanding based on its strength as a retailing giant. For instance, the firm can continue growing by expanding to a new e-commerce market in developing and emerging economies. At the same time, the organization must keep revising its strategies. Some of the techniques that ought to be reviewed include immediate replenishing of products to ensure that such measures do not cut down the profits and revenues accrued in the organization. The company can continue diversifying its offerings to strengthen itself as a retailing giant. The best technique would be to develop new partnerships to extend market reach and reinforce the firm’s operations against competition and strategic issues.

Conclusion

Amazon is the world’s largest online retail firm. The organization started as a book-selling firm in 1994. However, under the leadership of Jeff Bezos, the Company diversified to include a variety of products distributed and sold to millions of customers worldwide. The company is in a dilemma of whether to venture to become a high-tech player or remain a retailing giant. The proposition made in the analysis is that Amazon could first review its present offerings and consider diversifying them hence strengthening its position as a retailing giant further. The conclusion derived is that a company in such a place as Amazon should utilize its strength to its advantage before considering decisions involving a change of tactics and operations.

References

Castelli, M., Manzoni, L., Vanneschi, L., & Popovic, A. (2017). An expert system for extracting knowledge from customers’ reviews: The case of Amazon.com, Inc. Expert Systems with Applications, 84, 117–126. https://doi.org/10.1016/j.eswa.2017.05.008

Lai, G., Liu, H., & Xiao, W. (2018). “Fulfilled by Amazon”: A strategic perspective of competition at the E-commerce platform. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3270958

Smith, D. A, Rupp, T. W., & Offodile, F. O. (2017). Amazon.com, Inc.: Retailing giant to high-tech player? Digital Commons. https://digitalcommons.kennesaw.edu/cgi/viewcontent.cgi?article=1155&context=ama_proceedings