Amazon.Com Case Studies

Name PRASHANTH BALAKRISHNAN Student ID 071090070 Course BIS 541/03 MANAGING INFORMATION SYSTEMS Program CEMBA state of matter Executive Master of Business and Administration TMA 1 amazon. com- A Business History Tutor Prasanan P. T. Kannan entryway Date 07. March. 2009 pic TABLE OF CONTENTS ChapterTitlePage 1. 0Executive Summary 2. 0Problem Statement1 3. 0 abridgment of Causes 3. 1 amazons Debt 2-3 3. 2 Competition3-4 3. 3 Expansion4-6 4. 0Decision Criteria and substitute Solutions 4. 1 Reduce expenditure in inventories and better precaution7 in supply chain 4. Presenting a emulous edge to competitors7 4. 3 Expansionto Asia8 5. Recommended Solutions 5. 1 Technology Integration and R&D9 5. 2 Strategic Cost Analysis9 5. 3 Differentiation9 5. 4 entry10 5. 5 conjuror & Informative10-11 5. 6 Keep guests in the loop on everything11 5. 7 shipping & pitch shot11 5. 8 Expansion to Asia Region11-12 5. 9 Word-of m starth advertising12 6. 0 Expand the produce lines13 6. 0Appendices 14-16 7. 0References17 Executive Summary The conceive comprises of Amazon. om which started its history by selling books and now hotshot of the online market leaders glob entirelyy non just now for books exactly increases from various categories. Company started with a mission to be Earths most customer centric company. In array to gravel the largest and convenience online store for exclusively, there be major problems or threat organism go about by Amazon. com in succeeding its mission. The major problems ar Amazon tarry high amount of debt, its less(prenominal) initiative in not expanding to different developed countries, and in any case competition from opposite online retailers and peerless tough opponent is Barnes & Nobles.Many plans of actions bathroom be taken and somewhat of it is Amazon. com should decrease longterm debt by increasing expenditure on re await and development, increasing word-to-mouth advertisement and good customer good. Amazon. com shou ld also expand the five most commonality languages in Asian region. focusing marketing strategies on customer feedback to find out what Asian customers tend to defile and leaveing to reach on. Strategize freshly plan on improving sites to be informative and attractive as much as possible so Amazon. com should also adapt to the best technology where it coffin nail sustain as a strong innovator in ever increasing retailer market.Amazon. com also must strive to carry customers the best service in shipping and delivery as its an important setting in online business to out beat its entire competitors on this online industry. Problem Statement The main problem faced by Amazon. com now being an online retailer can be divided to three in overall. Amazon. com is in confronting huge debt behind their successful screen. Amazon. com is lack of expansion to other regions or Asia which be express as another big market for a huge online bookseller as Amazon. com.Another problem is the c ompetition being faced by them with one of the tough opponent as Barnes&Nobles. Analysis of the Problem Amazon. coms in Debt 3. 1 Amazons Debt unmatched of major causes of Amazons huge debt is its large expenditure. In mark to keep its advantageous position, Amazon has no choice but to continue to spend galactic amounts of money on sales & marketing, interrogation & development and general & administrative salutes. ( circumvent 1 & Table 2) One misstep, and its love affair withy investors and sources of capital could be over. (Kimberly Weisul, 1999) Competitors Although Amazon won the battle soon later on entering the online cd and music market, there are some competitions in other product lines that may be too immensely strong to beat. For example, in March of 1999, Amazon introduced an auction service. After a few months effort, its auction business performed slightly, indicating how difficult it is to challenge the giants eBay and Yahoo Auctions. Auction Sites 27-Sep-99 multiplier needed to equal eBay listings Amazon Auctions 4. 0% 15. 3 eBay 73. 60% Yahoo Auctions 21. 60% 3. 4 solution Auction Web sites and C. E Unterberg Towbin Consumer Behavior Amazon. com is widely regarded as having one of the best management aggroup of any internet company. However, there are some outside forces that are not easy to manipulate. protective covering as the number of mesh crimes increases, customers are becoming aware of the possible danger involved in the process of on-line shopping. This guarantor problem may not be difficult to improve since security technology is innovated quickly, but to convince customer of this is not as easy ? Etailers vs. retailers Another factor is strenuous to manage customer purchasing habits. Most consumers still prefer the capability of seeing a product before buying it. Additionally, the number of mass buying personal computers and that of the Internet population will at a date relate Amazons sale. . 2 Competition Michael Porters Model ? Supplier Amazon started to build its own distribution centers in different locations and moving the products directly form the factory crystalize of than from other distributors such that Amazon can lower its marginal constitutes. (Chao Janice C. Rice, Brandi S. Dec 8, 1999) ? Consumers Amazon. com continues to spend a spread of money in advertisement to reach customers as soundly as to increase customer awareness of eCommerce in general and brand name in particular. (Chao Janice C. Rice, Brandi S.Dec 8, 1999) ? Substitutes The Substitute of eCommerce, the traditional retailers, is still to a greater extent attractive than the Etailers. For example, we as consumers more than than likely would rather go to the bookstore and browse through a book before we buy it. (Chao Janice C. Rice, Brandi S. Dec 8, 1999 ) 3. 3 Expansion Lack of Spanish website version (Latino and Hispanic Americans are the fastest-growing online ethnic group) Amazon. com is ver y less popular or it can said there are people without knowing the existence of Amazon. om Website is not more expanded with more languages options where currently there are options only for Canada, United Kingdom, Ger some, Japan, France and China (www. amazon. com) Competition with Barnes& Nobles Amazon. com Weakness ? Difficulties of handling large number of customers ? Limited operational history ? certification awareness ? Low margins in the sector ? Risk of introduction of wrong new categories which could damage companys brand ? Companys stomached free shipping abilityiness affect future(a) financial outcome ? Certain products (high volume/weight) have high shipping be which could confront with local offline retailersThreats ? eBay, Barnes & Nobles, and Wal-Mart ? Population segment not targeted to on-line sales collectable to their lack of internet inlet ? Weak economic performance of Germany and France in the last year ? Competition will increase due to the low bar riers to entry in the market offline companies are coming online ? Heavy investments in Partnerships (Dustin Nadeau & Donatas Sumyla. April 2006) Barnes and Nobles and Amazon. com are competing, but both stores and other online stores recognize what works and are studying one another often duplicating one anothers business strategies.This has resulted in them having more similarities than differences and it helps the consumers find similarities across the Web such as When a description of an item is given, Amazon and Barnes and Nobles both place the shopping cart option conspicuously displayed to the upper, right portion of the screen. This makes it very efficient and useable for the viewer and they do not have to search around the page for this button. (Clementina Imobhio May 5, 2001) In pricing, both Amazon. com and Barnesandnobles. com display the average price or their items supra their own discounted rates so that the users feel as though they are saving money. (Clementina I mobhio May 5, 2001) twain sites are Flexible, there is an option of buying things at a later date and placing them in the shopping cart temporarily. This option is called the wish list and it is displayed just beneath the Add to Cart button. Users can access this saved information and access it on their next visit. (Clementina Imobhio May 5, 2001) Both sites offer Security that provides safe shopping, privacy and efficiency by requiring customers to join as members at a certain vizor during a transaction.Membership is free and requires an email address, full name, home address and phone number. It allowing customers to accommodate an order status and helps provide a history of what they bought. (Clementina Imobhio May 5, 2001) Both sites are very Scalable, allowing for a huge selection of items to be added to the product catalog or taken away. A Field size of it is accommodated in the database. (Clementina Imobhio May 5, 2001) 4. 0 Alternative Solutions 4. 1 Reduce expenditure in inventories and better management in supply chain ?Use increased income to pay down long-term debt ? Keep run be low (efficiencies of scales) ? Increase expenditure on Research & Development arena ? Strategic cost analysis ( WOU , MIS notes) ? Determining Differentiation ( WOU , MIS notes) 4. 2 Presenting a competitive edge to competitors Create more expertise in marketing and more product launches compared to competitors Do a more through research on the customers needs and come up with something new that has its own brand and establishes as only Amazon. om could have the product. (Sujan Sarkar. April 23, 2007) A new Strategy on only books should be brought up in order to outcome one tough opponent as Barnes & Nobles. For example, Amazon. coms booths can be set up in country sides where there is no access for Internet and give knowledge to country people that there also business through online. This is because giving more exposure and awareness to people might be a busine ss opportunity as well. Product review information Customers would have n a clear description, synopsis and other customers review on the book as it gives a clear rating of the book and there wont be any sort of disappointments for them after purchase. 4. 3 Expansion to Asia Create different website versions based on the five most common language in Asian region Focus marketing strategies on customer feedback to find out what Asian customers tend to buy. Word of mouth advertisement (Onder Savas Devrim Dirik. January 9, 2003) Continue expanding its product lines 5. 0 Recommended Solution & carrying into action 5. Technology Integration and R&D Amazon. com should increase expenditure in the research and development arena. We guess that Amazon should swot itself for additional telecommunications implementations such as high speed internet and network security. These types of implementation, though representative of considerable R&D costs, are probably most significant factors that etailers must prepare for near future. As users, connections increase in speed, any delays on the part of the etailer they are connecting to will become obvious and less tolerable.Amazon can stay ahead of the pack by preparing a peculiar and comfortable interface for the users. 5. 2 Strategic Cost Analysis Amazon. com should also use Strategic cost analysis process where identify the firms measure chain, diagnose the key elements that drive the costs of each value activity, identify competitors value chains, develop a strategy to lower relative costs by controlling cost drivers, ensure that any cost reduction does not erode speciality in service and test the cost reductions if its sustainable in the end of the analysis. . 3 Differentiation They should also consider by costs by determining Differentiation where the process goes as determine who the satisfying buyer is, identify buyers value chain and put in rank order the buyers reason to purchase, asses the current potentia l sources of diffentiation, identify the cost of these resources, design a value chain to maximize value relative costs, test for sustainiablity and reduce costs in activities that do not affect the chosen forms of differentiation. 5. Inventory There are schedules built to be extremely user-friendly, and most offer great support along the way of usage for online businesses to maintain the book database. Amazon should invest in software to best highlight and maintain the data on the site and importantly back up systems. Keep inventory accurate and up to date This is also an important aspect that Amazon can out beat its competitors with as this is first step towards building a long-term relationship with that customer.Inventory of the books stock-out and sold out will be kept up to date on the site. 5. 5 Visionary & Informative A picture is worth a thousand words Uploading pictures by decreasing explanations or descriptions could attract customers attraction and curiosity in explorin g the book. Somehow it boosts up sales compared to other online booksellers who give attention in words. Product Review Information In case of books, editorial reviews are provided by the company and it applies for all books. Customers can also rate each others review.A rating is placed against each review so that customers can decide whether to read or not based on that. Most online booksellers do not include this but they display the customers satisfaction on the delivery service provided by them which is less important to boost up sales. mint out there want to pay you for your books Amazon should use own merchant service broadsheet or a service offered by a listing site, make sure that customers can buy books quickly and painlessly with a credit card while you have them on the brink of finalizing said purchase.Dont judge a book by its cover First impressions are permanent impressions. When a customer receives the book theyve ordered, make sure the first thing they see is a prod uct and package that you are proud to have supplied by using use clean, new boxes without writing (or envelopes for low-cost paperbacks) for shipments. Customers will be expecting an excellent service but if its vice versa then they are chances for them to switch to other online retailers. 5. 6 Keep customers in the loop on everythingAmazon should update the status of order to customers on the order made and also keep them in loop by e-mail the listing service directly with questions about their orders and keep updating the latest events and new stocks of books through emails. 5. 7 Shipping & Delivery Follow-up After shipping out an item to the customer, Amazon should send them an e-mail a daytime or two after expecting that theyll receive their package, asking them if theyve received it and are satisfied, and reminding them that there customer rep are there to help should they have any questions about their order.This is also a great time to remind them that you have similar items in stock or to offer them a coupon towards future purchases. 5. 8 Expansion to Asia Region Amazon should strive to expand its expertise to Asia region as well as high potentials are there which huge population. Education is becoming one important aspect in Asia and lack of important reference books are perpetually a problem in many parts of Asia. It should diversify its marketing capability in Asia too to capture the market. Amazon is very less popular in Asia regions. Amazon. om should take Asia to consider for its business expansion. Amazon could also diversify its marketing and research ability to expand mostly to the developed countries of other territory. In order to grow big and always sustain in the market and competition, Amazon should takes this sort of steps to expand. Inter subject Sites Amazon. com has got an added advantage of international sites on Canada, United Kingdom, Germany, Japan, France and China. All about what the customers have to do to browse the site wit h their language is by clicking to their national site.For example, if you clink Japan, immediately the whole website will change its descriptions and instructions into Japanese language. This is not at all applicable for a customer in Malaysia or any other regions of Asia. It should expand and add more languages options in its site to accumulate its customers. Giving customers what they want is also one strategy not all online business can do but if this can be proven in Amazons case then it have all the potential to be the one. 5. 9 Word-of mouth advertisement Amazon also should increase its word-of mouth advertisement.This might seem odd for an industry leader to rely upon such a quaint tactics as this, but we truly believe that in the world of Internet this is a powerful tool. We are quick to visit sites that our friends identify as being fabulous, and Amazon might capitalize on this by rewarding its customers who can reel in a new prospects. 6. 0 Expand the product lines Amazon should expand its product lines. Givens Amazons batch and its unique position in the etailer industry, the cost associated with entering new markets is significantly lower than that of its competitors.There is no reasons to let this advantage slip away unused. Conclusion In order to stay focus on business Amazon. com has various ways and strategies that can be implemented with proper organizations communication networks. Financial reports should be reviewed annually and quarterly if necessary to come up with decisions whether to boost up sales or to maintain on a certain criteria for the wellness of business. Amazon. com also should have a frequent customer feedback program where they could exchange view on the services and products most desired to be acquired online by customers.Top take management meetings should be initiated to assure goals are achieved. A proper corrective action should be hardened after the first year if annual objectives werent accomplished. However there are difficulties and competitions to overcome, and how companies attack these difficulties will separate the winners form the losers. Appendix AMAZON. COM, INC. HISTORICAL INCOME STATEMENTS (in millions, except per share data)(quarterly information unaudited) Amazon. com Investor Relations Calendar historic period Ended December 31, 2008 2007 2006 2005 2004 2003 2002 Media $ 5,350 $ 4,630 $ 3,582 $ 3,046 $ 2,589 $ 2,270 Other 448 326 263 222 130 110 International Media 5,734 4,612 3,485 2,885 2,513 1,780 Other 94 57 20 8 2 - Consolidated Media 11,084 9,242 7,067 5,931 5,102 4,050 Other 542 383 283 230 132 110 Table 2- Source www. amazon. com (Investors Relations) wide-cut U. S. Home, Work and University Locations, curious Visitors (000) Source comScore Media Metrix Rank Property Unique Visitors Rank Property Unique Visitors (000) (000) Total Internet Total Audience 191,863 1 Google Sites 151,010 26 Target Corporation 28,628 2 YahooSites 146,131 27 Time Warner Excluding AOL 27,209 3 Microsoft Sites 125,568 28 Weatherbug Property 26,944 4 AOL LLC 108,441 29 Bank of America 26,322 5 Fox Interactive Media 90,510 30 United Online, Inc 26,048 6 Ask Network 74,742 31 Gorilla Nation 25,585 7 eBay 72,160 32 AT&T, Inc. 25,574 8 Amazon Sites 64,768 33 Answers. com Sites 25,563 9 Wikipedia Foundation Sites 62,737 34 Demand Media 25,447 10 FACEBOOK. COM 57,232 35 CareerBuilder LLC 24,750 11 Glam Media 55,293 36 Everyday Health 24,717 12 Turner Network 54,877 37 Shopzilla. com Sites 24,097 13 Apple Inc. 54,194 38 Photobucket. com LLC 23,928 14 CBS Corporation 53,539 39 WordPress 23,730 15 New York Times Digital 49,110 40 Real. com Network 23,359 16 Viacom Digital 46,510 41 Expedia Inc 22,703 17 Weather Channel, The 40,056 42 JPMorgan Chase Property 22,399 18 craigslist, inc. 39,437 43 giant star Worldwide 22,244 19 A T&T Interactive Network 38,184 44 Gannett Sites 21,829 20 Adobe Sites 35,315 45 WorldNow ABC Owned Sites 21,586 21 Comcast Corporation 33,940 46 WebMD Health 21,185 22 Wal-Mart 33,513 47 iVillage. com The Womens Network 21,002 23 Superpages. com Network 32,558 48 NBC Universal 20,974 24 Verizon Communications Corporation 32,412 49 WhitePages 19,351 25 Disney Online 30,345 50 ESPN 19,266 Table 3 Media Matrix http//www. comscore. com References 1 Chao Janice C. Rice, Brandi S. Dec 8, 1999 http//www. rhsmith. umd. du/faculty/jbailey/ents630/amazon. pdf 2 Dustin Nadeau & Donatas Sumyla. April 2006- Amazon. Com Inc 2004. (Accessed Feb 20, 2009) 3 Clementina Imobhio May 5, 2001 E-Transaction Shopping Carts Comparison (Accessed Feb 20, 2009) 4 Paul Larson. February 14, Amazon. com Motley break up Research, Stock Report http//www. fool. com/search/index. aspx? go=1&site=USMF&q=amazon. com (Accessed Feb 16, 2009) 5 Onder Savas Devrim Dirik. January 9, 2003 Informat? on Management (Accessed Feb 16, 2009) 6 Strategic Analysis of Amazon. com (Accessed Feb 19, 2009) 7 www. wikinvest. com/wiki/E-Commerce, (Accessed Feb 20, 2009) 8 www. ikinvest. com/stock/Amazon. com_(AMZN), (Accessed Feb 20, 2009) 9 www. wikinvest. com/stock/Barnes_%26_Noble_(BKS), (Accessed Feb 20, 2009) 10 Sujan Sarkar. April 23, 2007 Amazon vs. Barnes & Noble www. santarosa. edu/ssarkar/cs66sp07/fprj/abn. htm (Accessed Feb 16, 2009) 11 Table 1- Source www. amazon. com (Investors Relations) (Accessed Feb 17, 2009) 12 Table 2- Source www. amazon. com (Investors Relations) (Accessed Feb 17, 2009) 13 Table 3 Media Matrix http//www. comscore. com (Accessed Feb 17, 2009) AMAZON Supplier New Entrance Substitute Consumers