The opinion piece published by the Los Angeles Times, “Amazon.com Is a 21st Century Deal with the Devil,” by Amy Koss states her central argument that Amazon is destroying jobs, malls, and stores in the outside world. I strongly disagree with the statement that Amazon is destroying jobs and stores because I believe Amazon brings convenience by allowing people to sell things they might not need that others do. According to Koss,” I also think that it is at the convenience of consumers who have a difficult time going outside because of a medical issue or if they’re just lazy because of the fact that they can order something and have it delivered to them in less than a few days with an even cheaper price tag. Online shopping on Amazon allows others to earn jobs as well because they might work from home and work for Amazon or they might deliver items to the consumer. Some people may even start their own online selling business on Amazon.
Amazon has been able to successfully provide its customers, everything they need, all in one place. It has managed relationships with millions of customers successfully because Amazon has built its CRM software in-house, so it is tailored to their requirements. They can instantly create a customized experience for their customers because made the process of purchasing easy, it has a simple user-friendly interface, stores user details such as location, previous purchases and shipping/ billing information. It provides relevant recommendations to the customers, which increases the sales. It makes customers feel valued through Prime and “Deal of the Day”
Amazon’s faults Amazon is killing America’s economy and is destroying retail companies everywhere. A lot of America’s finance situation is in the hands of Amazon. The website is developing a monopoly over almost every retail company. This creates a real threat to America's jobs. In fact, over the span of a two month period, over 60,000 retail jobs were lost.
Everyone has a favorite store that they prefer to shop at like Wal-Mart, Target, and BestBuy to name a few. However, when talking about favorite big name stores, Amazon can’t be left out of the equation. Amazon was founded in 1994 which put it as the youngest of retailers. However, with the boom of modern technology and internet, Amazon is now one of the biggest name when it comes to major retailers and is still continuing to grow bigger every year.
The number of online purchases, from Amazon alone, in the United States went from 25% in 2012 to 33% in 2015 and then 43% in 2016 which is huge given that they already control such a big part of the market already. Ebay is Amazon’s biggest competitor in this industry. In the second quarter of 2016 Amazon had made $30.4 billion in sales which was a 31% increase versus the second quarter of 2015. Ebay, in comparison, had made $2.23 billion in sales during the quarter which was a 6% increase from 2015. Amazon is growing at a rate that no other company is able to beat or match.
Many states within the United States have passed online shopping sales tax laws which have been designed to compel Amazon and other e-commerce retailers to collect both state and local sales taxes from their customers. In 2011, it was noted that Amazon only collected sales tax from five states, however in April of 2017, it was said that the company must collect sales tax from consumers in all states that currently have sales taxes. ANALYSIS OF STRATEGIC FACTORS In a December 2011 article written by Forbes contributor, Venkatesh Rao, he states that “the company [Amazon] is nothing if not deliberate and systematic in everything it does.” Rao goes on to say, unlike the other big companies that symbolize our times – Google, Apple, Facebook and Microsoft, Amazon did not rise to power by inventing a new product or service.
Customer satisfaction is what drives them to have a greater competitive advantage over other retailers such as Walmart. Amazon creates value for its customers by offering customers broad range of products to select from through their website and ensuring timely delivery of products. Amazon has a great technological advantage over Walmart, as their entire store front is virtual. Additionally, the implement virtual customer service teams which make customer service a breeze. Even so, Walmart has made some advances to keep up with the going technological trend.
We will also look at how Amazon builds trust with their customers to keep them coming back to shop. Additionally, this paper will analyze the internal strengths and weaknesses of each company and their strategies used to increase profitability and efficiency. By using each companies balance sheet, income statements, and financial ratio we will be able to see how each company is performing and if they are staying ahead of the competition. After looking at all aspects of both companies functionalities, we can the make recommendations of ways to improve their competitive advantage so that the companies continue to be front runners in their competitive markets. Mid-Term Exam Industry Overview
Amazon.com is the largest online retail company in the U.S. Amazon.com started out as an online bookstore that later started selling movies, music, audio books, electronics, furniture, food, apparel and now has its own line consumer electronics (MarketLine, 2015). It is a company that has speedily grown and will progressively grow each year. Amazon.com has a strong brand image that offers competitive advantage in the online retail business and helps attract customers. Amazon.com ranking in the top 100 global brands has improved from 2015 being at No.14 to moving to No.7 in 2016 (Edgar, 2016). Furthermore, Amazon.com products range is incredibly large; another major strength of the brand.
This situation in turn created a service differentiation for the company compared to its other competitors. First, the Amazon.com website has an attractive and customer-friendly interface. Fast and reliable delivery which allow the customers to receive their order within the same day in specific area has also been an incredible feature of the company. A no-nonsense returns policy is being implemented, too. To assist the customers in choosing their order, purchase suggestions based on their previous purchases and webpage viewing are given.
This is having a positive impact as by expanding their business and locating in Australia they are attracting more consumers. According to Morgan Stanley, prior to their expansion, Amazon already had $1 billion in sales in Australia. Amazon attracts consumers through their promises of low prices, vast variety and fast delivery and thus their market share in the Australian retail sector is expected to grow significantly. Despite their promises, fast delivery is not the easiest thing to do in Australia. Location has also had a negative impact on Amazon due to the large geographical spread of Australia.
Amazon’s competitive strategy is cost leadership. Amazon has achieved a lot on a great scale that it gets the best prices from its vendors so they can operate in very flexible and thin margins and sell their items easily at retail prices and make money. They also provide shipping products for a reasonable cheap price. They also have improved their warehouses by giving some space to other sellers who want to sell their items through Amazon. They differentiate and provide better quality than their competitors across the industry.
They are the prominent general retail stores with a physical presence. Both of these retailers have emerged as e-commerce centric due to the early adoption of e-commerce strategies. However, even those retail chains proved to be of no use to generate a tight competition with Amazon. In the long run, the growth of the e-commerce versions of these supply chains can pose a threat to Amazon. (Wahba, Phil) Advantages for an Amazon Customer Amazon adds value for money for the customer.
Expansion of core businesses Amazon consists of a divisional organisational structure consisting of different departments with different products along with services, thus, allowing appropriate focus on their resources and results. This allows them to monitor the organisation’s performance, making the organisation’s
Amazon has achieved many milestones from starting in the founder’s garage in 1994 to the growth in revenue to US$147.8 million in 1997 and then to the revenue growth of US$177.866 billion in 2017 (Amazon, 2018a, Amazon, 2018b and Jurevicius, 2018). These milestones were achieved through tenacious focused strategies of meeting their customers’ needs and wants. These strategies have maintained and expanded their customer base locally and internationally and have increased its market shares and profit over the last two decades. In addition, projection for the company’s growth and expansion for the next three to five years looks positive as it predicted to grow at the same rate with its expansion internationally and continued focused in satisfying consumers’ wants (Amazon, 2018a). Although, some factors such as governmental policies, legal issues and natural disasters could pose a threat to Amazon’s growth plans, the management team led by the founder and Chief Executive Officer (CEO) are working on mitigating the risk (Amazon, 2018a).
