Introduction
Amazon is an online retail business established by Jeff Bezos in 1994 as first Cadabra focusing on selling books. The company went online in 1995 selling books and later ventured in other businesses such as supplying music and videos to entertain their customer. The name Amazon was related to the Amazon River because it is the largest river in the world and Jeff wanted to initiate the comparison of Amazon Company being the largest online retail business. The letter "A" in Amazon was also to represent the company at the top notch of the alphabetical lists. At the price of $18.00 per share, Amazon's stock was introduced to its customers in 1997 under the Nasdaq symbol AMZN. Over the past 10 years, Amazon's stock prices have increased from around $20 a share to nearly $170 per share. The last optimum level in stock prices began in 2008 and the company is still marked as the largest online retail business in the world.
According to Srnicek (255), Amazon's target for the stock price is to attain $400. Amazon has never looked back since its commencement. It is the largest online retail business in the world with over $ 85 billion in yearly sales. The renowned achievement of Amazon Company is accounted for its remarkable sale of books. Amazon's logo is the name of the company itself. The name has an arrow below it with a smile shape, pointing from the letter "A" in the Amazon word to letter "Z" in the same word. The logo represents the company's ability to offer service in all alphabets from A-Z and satisfy the needs of its customers by putting a smile on their faces.
Functional-Level Strategies That Amazon Has Pursued to Boost Its Efficiency
Amazon has gone out of its way several times to attain the goal of satisfying the needs of its customers Its efficiency is weighed by the number of inputs that it takes to enhance a certain output (Ravichandran 30). As such, Amazon's efficiency is inclined to functional-level strategies. Some of the functional levels of strategies it has utilized to boost efficiency include production and information system. Production is the incorporation of flexible manufacturing systems such as automation. Automation, in this case, propels the making of technology and its approach to manage the production and delivery of products and services (Ravichandran 33).
Information system, on the other hand, is electronic systems used to generate efficiency of Amazon's activities (Tollin and Lars Bech 5). It is utilized to automate processes to limit the costs of processing data in Amazon Company. This is evident in a purchase of KIVA system, an organization that creates warehouse robots for Amazon in 2013 to propel supply centers facilitating as an effect of staff needed per supply center by 30-40 percent and magnifies productivity accordingly (Tollin and Lars Bech 11). Amazon has also extended its cashier-less grocery store chains and distribution of drones.
Consequently, Amazon hit an all-time reduction in the number of seasonal employees to be hired in the company. In 2017, a decline of 20, 000 employees was visible. The initiation of robots in the system echoes the negative impact of hiring employees. As such, Amazon which was once configured for human contribution is gradually shrinking, making it for people to embrace automation as the ideal goal to constantly reach consumer satisfaction. Amazon, however, emphasizes that automation is only present for the augmentation of work and not to limit job creation for people.
Functional-Level Strategies to Boost Customer Responsiveness
Material management is used by Amazon as a way to boost its customer responsiveness. Amazon's focal point is on order fulfillment instead of inventory due to its power to invest completely in a system of supply centers. This licenses Amazon to decrease inventory-holding prices with the product in stock always at hand (Um et al. 1839). This also improves the production process of products through economies of scale which is the decrease in unit cost as a result of Amazon's large scale output.
Amazon has made a competitive advantage by subsidizing in Kiva, a stock picking system. This attributed to Amazon reducing its employees at supply centers. Additionally, Amazon initiated the Kindle product which the company made money from by selling it. It also made money off magazines and book sales to accompany the Kindle product. According to Zhou and Wenjing (15), Amazon propels customer initiatives to facilitate customer responsiveness. Bezos remarks that Amazon ensures the customer is happy with the products and services from start to end, the company evaluates customers and provides feedbacks and initiates personalized Amazon-style recommendations.
Customers being happy calls for proper services offered to the customer from when the customer orders a product or service until the delivery of the product. In this case, Amazon ensures that a good rapport is maintained between the customers and the employees by being courteous and friendly to the customers and ensuring every step in the process is handled without mistakes. Amazon evaluating customers and providing feedback to its customers entails surveying the customers and finding out from them about the experience they had shopping in Amazon. The company accepts both positive and negative comments. The negative comments are handled personally with the founder of Amazon Company, Jeff Bezos. Initiating personalized Amazon-style recommendations demands Amazon Company to utilize its CRM software, in which they capture all interactions they have with their customers. Based on this information, Amazon critically reviews the information and may include sending their customers' personalized gift cards and placing offers to their deals.
Functional-Level Strategies to Boost Product Quality
Amazon boosts its product quality by stressing elements connected with a product offering, for instance, timely delivery, and product accessibility. Amazon views the quality of the product as genuine and excellent not damaged or expired (Garner 65). Amazon has been availing quality products to its customers and this explains its worldwide service as the largest online retail business. The feedback programs of Amazon play a pivotal role in this case because Amazon can access information that proclaims dissatisfaction experienced by its customers and initiate a program to avail quality products to its customer.
What Product Quality Mean for Amazon
The concept of product quality is not necessarily in the product itself but on every aspect that surrounds the product; production, packaging, distribution, availability, and accuracy of product delivery, that is, a customer gets what they ordered. For Amazon, product quality encompasses product price and cost, the product use and purpose, standard quality that is not harmful to customers' health, product value for purpose and use experience.
How Innovation Has Helped Amazon Improve Its Efficiency, Customer Responsiveness, and Product Quality
Innovation is basically evolving an already existing idea into a useful and valuable solution and in the case of a business or management practice; innovation is in simple terms, bracing changing tides and remaining relevant in a world that's constantly changing (Srnicek 256). As an online platform, Amazon has continually remained relevant and competitive since being founded in 1995 as an online retailer for books. Amazon has evolved over the years and is now offering a wide range of products resulting in an increase in its customer base to almost 250 million users. Not only has Amazon offset the book-retailing industry, but it has also strengthened and marked its niche in the market by coming up with innovative ways of digitizing books through a Kindle Digital Reader. This app is multi-purpose and can be used on any device as it enables fast download of any digital media to be it books, films or music. So, no more long walks to the library or book store.
To improve its efficiency and customer responsiveness, Amazon has also invested in a number of distribution centers (The United States alone has about 40 centers). The online marketer applies the use of state-of-the-art software that analyses the purchasing habits of customers and advice the company on what to stock, where to store the product in the distribution network, how to price the products and when to mark the product down for shifting. This software is so accurate such that it reduces inventory and consequently lessens the time used to deliver products to consumers while still reducing the delivery costs. These favorable economies of scale ensure that Amazon remains efficient by swiftly responding to customers' orders. In addition, Amazon had in 2012 purchased Kiva, a mobile robotic manufacturing company, to manufacture robots that could be used in picking products from shelves and delivering them to packaging centers. This has tremendously saved time and improved production levels hence improved product quality.
Recommendations as to How Amazon Can Sustain Its Competitive Advantage in the Online Retail Business
Competitive advantage is what makes a business entity stand out among its competitors. This is in reference to the products and services offered by the said company. In simple terms, the it-factor that makes a business or company unique. Sustaining competitive advantage is basically keeping up with changing times such as new technologies, a shift in the market, government policies and so on. Simply evolving with change and time.
For Amazon to sustain its dominance in the online retail business, some of the following recommendations would be suitable:
- Defining its target market, what the target market's needs are what products they need and how these products add value to their lives. Understanding the target market is key in guiding Amazon on the key products that it needs to stock on to establish and maintain customer loyalty. This is how demand can be created and consequently dominance in the online market.
- Amazon should identify its real competitors keeping in mind that competition may not always exist in one's area of specialization. Competition exists everywhere. Keeping tabs on its competitors will enable Amazon to identify and fill the gaps left by these competitors hence drawing more clients to it.
- Amazon should create a channel through which customers may feel 'wanted'. This is developing customer intimacy. Customers need to feel that they belong and in as much as Amazon is online based, it can still customize products to meet customers' needs and preferences. Since a digital inventory exists, Amazon can use the data on customers' purchasing patterns to determine what the customer prefers to gift long-standing and loyal customers. Amazon should also pay attention to customer feedback to know the loopholes that exist in its online service delivery.
Work Cited
Garner, Blake A. "Amazon in the Global Market." Journal of Marketing and Management 9.2 (2018): 63-73.
Ravichandran, T. "Exploring the relationships between IT competence, innovation capacity, and organizational agility." The Journal of Strategic Information Systems 27.1 (2018): 22-42.
Srnicek, Nick. "The challenges of platform capitalism: Understanding the logic of a new business model." Juncture 23.4 (2017): 254-257.
Tollin, Karin, and Lars Bech Christensen. "Sustainability marketing commitment: Empirical insights about its drivers at the corporate and functional level of marketing." Journal of Business Ethics (2017): 1-21.
Um, Juneho, et al. "Aligning product variety with supply chain and business strategy." International Journal of Productivity and Performance Management 67.9 (2018): 1837-1853.
Zhou, Wenqi, and Wenjing Duan. "An empirical study of how third-party websites influence the...
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