Nowadays, online retail companies are growing considerably. We are witnessing a strong demand for products through their website as a customer feel lot of convenience in placing orders. Amazon Company is one of the major retail online selling company, incorporated on 28th May 1996, provides a number of goods and facilities through its websites. Amazon.com is a U.S. company, located in Seattle, Washington. It is the one of the major online retailer company in the United States.
The company believes that the sale of different and usable goods and facilities over the Network can offer different useful benefits, to customers, with better range, constancy, sensible appraising and shopper gratification (Bag, 2016). The Amazon.com stores, suggests a number of forms of contents to develop the customers shopping practice and inspire purchases. The company international section emphases on retail sales of customer’s products with the seller and contributions, through a number of international websites.
The case study of Amazon.com Company in terms of business analysis is not an easy task as Amazon, is known for the largest online retailer in the world. Amazon has designed its individual productions by means of digital know-how and doesn’t have to open any store in real at prime location, thus giving an edge to online retail company physical to sell discounted products. Amazon believes in low cost retailing and it’s included those products that are sold at the nominal price at a minimum profit (Koester, 2015).
In the beginning, the company started dealing with an online bookseller and expanded its business into movies, and music, and now ultimately into electronics and household products. Exploring new ideas is the main key to the success of Amazon business. A number of tests are held relating to marketing, product price, delivery charges, etc.
Amazon business is considered to be the greatest buyer-centric company where public can bargain and determine almost whatever they need to purchase online. Amazon continues to grow in the field of vast selection, at a low price and buyer comfort (Leavy, 2006). Amazon business works with different vendors and offers facilities that allow vendors or sellers to sell products on their website. It offers computer-generated shelf space to other retailers and to individual sellers. Now a day’s small business, individual sellers increases their sales and influence innovative clients by leveraging the effect of Amazon business.
The Amazon Company also introduces an online auction service entitled Amazon Auction. It started offering with toys and electronic products and then divided its product offering into the separate individual section on their site. This made easier for customers to shop for specific item chosen from needed section. (Lee & van Wyk, 2014).
In 2006 the Amazon company launched, Amazon Web Service which is commonly recognized as cloud computing. The main plus point of cloud computing and Amazon Web Services is that the company has a skill and talent to encourage a new business structure and turn capital structure overheads into variable costs (Martinez Ramos, 2004). Now businesses have no longer need to plan and deliver it in action, using AWS industries can take the benefit of Amazon‘s experts and saving of measure to access of funds when their business wants them, and sending consequences faster and at a lower price. Today, AWS delivers reliable, nominal price structure in the cloud that powers a number of other companies, various customers’ businesses around the whole world (Martinez Ramos, 2004).
For the book lovers, Amazon introduces the first Kindle in 2007, a portable reader that wirelessly downloads the number of books, magazines, blogs and other documents. Amazon introduces the first Fire Tablet it becomes the most fruitful product introduce by the Amazon company. The Amazon.com believes in innovative technology thoughts and advance equipment that expands the purchasers, sellers, and developers around the world.
Logistics and supply chain management as an area of study has been getting increasing care from experts over the last two decades since it may lead to the reduced operational cost, improve delivery performance and increases customer approval stage, thereby making Amazon business more inexpensive in terms of cost, quality, and delivery of products (Akçetin & Yurtay, 2015). The importance of logistics and supply chain management is increasing as Amazon.com is manufacturing and distributing their products on a global scale, and at this condition making a supply chain is complex to manage.
From its opening year as one of the first online spending website, Amazon.com has given the impression on the logistics of spreading as essential to the online retail experience It's progressing has been enormous. While in the commencement years the company delivers books, now it sells almost each and everything in the whole year (Golicic & Sebastiao, 2011). Much of the success comes down to supply chain management. Certainly, Amazon business is gradually becoming a logistic company, as it enables the loading and sale of goods from third party suppliers. Its supply chain management is simple and active which starts with an order by the customer.
A company like Amazon, a current supply chain organization system requires proper planning and operational model, and effective communication between different partners and third parties. In supply chain management, proper planning, production, distribution and customer service must be included.
Logistic process links the relationship between manufacturing and consumption of the products. It is an essential part of the supply chain and is useful for planning and operating model system successfully (Huang & Li, 2009). As the Amazon.com foremost goal line is to deliver finest facilities to the customer at least cost supply chain management helps in fulfilling the goal at the right product at the right place and at the proper time (Huang & Li, 2009). Logistic process organizes all activity elaborate in acquiring, distributing products and customer satisfaction and deliver the essential level of customer service in a well-organized, and cost active manner.
The Amazon business strategy is to participate in variety, authenticity and price of retail products. Its aim is to become the global best company. The company has built their own supply chain that supports their corporate strategy. Its overall strategy resulted from an innovative supply chain design, creative management techniques, and emphasis on cost effective methods.
Let’s discuss the Amazon. Com’s supply chain variation through its operational models.
The Amazon Company does not have an individual retail accumulation and it morally activates as an online retailer. Customers order through online that serve as a computer-generated storefront. The product is delivered through the network of distribution through wholesalers and the third parties. This effective model agrees with Amazon.com strategy of range, price, and comfort. In the Amazon business operating model, a huge amount of shoppers orders their goods. As a result, Amazon company, to keep in mind price low for the customers though sustaining success. As the number of customers and orders increased, Amazon.com information technology and distribution assets are exploited more successfully (Gazda & MalindÅ¾ák, 2012). This results in the company to maintain its profit sharing ratio at a low-cost price. Thus, Amazon com supply chain gives importance on providing outstanding facilities to customers through the product availability and range of selecting of service. The combination of customer service and comfort on which they strive at a cheap price.
Now let’s explain the scale, scope to support the Amazon.com operational aims of product convenience, and its consumption and efficiency in support of the Amazon business strategy.
Amazon business realizes numerous benefits from innovative measures to influence the scale in their supply chain. In Amazon business, huge and computerized services with important information technology savings are shaped with high primary fixed costs, but the comparatively low marginal cost of satisfying an extra order (Gazda & MalindÅ¾ák, 2012). Hence, economies of scale are appreciated as the number of orders is increased.
The Amazon Company offers various items for sale in different categories of products. The company defines its model to support its strategy of the business and provide differently and a large range of products.
Amazon also provides a stage to third parties to sell their products. Through this operating model, it becomes easy for the customers to find a range of goods at Amazon.com (Flynn et al., 2016). This network allows the Amazon to increase the range that it has available without sustaining logistic costs.
Amazon gives more supports in range through partnerships with the vendors. Amazon offers the e-commerce stage and order realization for Target.com. This is helpful for an Amazon business model that allow more list of ranges, without a big investment in stock, though there is an opportunity cost to carrying the inventory in the storeroom (Flynn et al., 2016).
Amazon .com is the customer-centred company. The buyer facility involvement throughout the online purchasing process is a part of the Amazon business from other competitive company. It traits a share of its reducing realization cost to an upgrading in order accurateness, which in turns has reduced its customer calls (Priem & Swink, 2012). The Amazon Company has financed a huge amount in technology and methods that confirm that logistics facility stages are encountered. The Amazon business operates its equipment set-up to deliver their regular customers with direct perceptibility concerning a predictable delivery date for an order.
Amazon business also stretches assurances for third party delivery service, which donates to the costs, but encourages their attention to service. Service window management is a technique where Amazon business stabilities cost and logistics customers’ provision. Amazon.com recently offer free carriage charges in order for $25 or more (Rezaye Abbasi Charkhi et al., 2015). The program helps to determine income increase through customer satisfaction and possibly increasing the units of an order to fulfill the free carriage orders.
Amazon operating models are manufactured on teamwork through technology among the partners in its prolonged supply chain. Amazon business operates technology to associate with its drop shipper to know stock availability for order tracking. Moreover, Amazon.com generates a supply chain stage that linked the third party and other buyers (Rezaye Abbasi Charkhi et al., 2015). Technology modernization is a central principle at Amazon company in generating buyer value from the shopping involvement to the logistics behind order realization. Investment in the Amazon.com website, as well as supply chain support applications, such as their advanced warehouse management system, helps to allow their effective and planned supply chain creativities.
The Amazon Company has an opportunity for the growth and increasing its revenue at present and in future. However, it is important to acknowledge the main challenges that occur in the Amazon. Com chase of further market share gains from other established retailers. In the future, the company has to face profitability pressure to increase the price of its prime service. There will be healthy competition with a number of retailers fighting for market share (Esper & Russell Crook, 2014). Amazon.com currently challenged Wal-Mart’s highly observed supply experience; they come for the low prices. More and more frequently, consumers are doing price comparisons online and then purchasing cheaper products from Amazon.com. Amazon assured to deliver the product on next day order online. In this response to competition, Wal-Mart announced its same-day delivery strategy for online customers. Wal-Mart is one of the main challenges of Amazon Company as it includes grocery delivery services and is trying to achieve the aim of the same day delivery process (Rezaye Abbasi Charkhi et al., 2015).
As the chief opponent of Amazon.com is the Wal-Mart. The Amazon Company operates their scale, scope, and service in a combined way to confirm stock obtainability and drive down supply chain cost to provide the range, comfort and low-cost price experience on which they participate (Esper & Russell Crook, 2014).
The table shows how the supply chain stages that are the service, scale, and scope. These stages support Amazon.com as the main pillar for the shopper, understanding of comfort range and price to sustain strategies of Amazon.
Amzon.com creativity in attaining economies of scale in realization and transportation is supported and strengthened by service window management creativity. These innovative thoughts lead the company to decrease the cost that can be operated to improve profit through lower prices. Scope and services join together to allow a customer to find a huge range of products on Amazon.com with all-in-one implementation. Amazon key intention is the buyer gratification with well-being at low cost through the final delivery of the product (Cross, 2000). In Amazon business supply chain management enables the business objectives of nonstop progress and better revenue.
Amazon does not compete the challenges by accusing lower price but in its place makes its significant profit by paying a focused approach. Amazon avoids the high inventory-caring cost of niche items while also creating competitive advantage by selling to niche customers. Customers are authentic to Amazon because they know they can find their needy product at Amazon.com without any problem.
Hence we concluded that Amazon does not stock everything that is sold through online as another part of its retail strategy is to assist as the network for other retailers to sell their products. It maintains its image as a journey's end website, but doesn’t have to maintain an inventory of low-cost selling products. This approach has made Amazon company a leading long lasting retailer company, expanding its range of products with low-cost price without compromising the relief and gratification of customers (Cross, 2000). Amazon.com, the main operational goal is to deliver a better service, where a purchaser can always find the products and items for which they are searching and the nominal price they are willing to pay. It uses of scale, service and scope through innovative operational models, a partnership with third parties, and supply chain method efficiencies enable them to provide range, comfort, and competing for the price. Amazon businesses attain supply chain superiority through concentrating supply chain thoughts on specific goals that sustenance and strengthen their continuing modest business strategy.
The Amazon value suggestion of price and suitability hold correct and proper in all of its product categories, allowing it to spread it into a new market and develops its customer relationships. The company has occupied online retail with an honestly standard traditional retail business model over the internet, by means of its purchase influence and economic funds to control the market position.
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