Amazon Inc. is ranked as one of the most successful and innovative companies in the world with a relatively young history that dates back to the 1990s. Its pace of growth is enormous and, perhaps, it is fair to say that the services of this enterprise helped millions to deliver their Christmas presents on time, bring pleasure to their homes, and save much time, energy, and money. The presented report aims to develop a portfolio of this business model with a specific focus on the current trends prevailing in its development and future prospects.
Brief Historical Overview of the Company
Amazon was established in 1994 by Jeff Bezos (Stone, 2013). Currently, it is a multinational company with its headquarters located in Seattle. The business model of the company implies digitalizing the commerce combined with quick delivery up to the customer’s door. Currently, it is the largest online retailer in the world following the B2C business model with the projected growth up to 85% of the whole market (Turban, King, Lee, Liang & Turban, 2015). The company was named after the river Amazonia as Bezos believed that his business would eventually become exotic and different from the rest of the competitors present on the market at that time to the same extent (Stone, 2013). Originally, however, it was started as the online bookstore that also traded some related items such as CDs, video games, and other entertainment tools. Years later, it evolved into the enormous online store that sells the items from all over the world and offers the shipping to millions of customers.
Amazon is frequently referred to as the partial e-commerce company since its operations are processed in the cloud whereas having their outcome in the delivery of a real-time product to the customer. At the same time, some of the goods, such as electronic books, games, music, and others can be instantly downloaded by the customer and, in this regard, the firm is purely virtual (Stone, 2013). The markets covered by the enterprise extend far beyond the territory of the USA and reach Western Europe, Japan, Brazil, Japan, India, and China (Salam, 2016). Its mission is to become «Earth’s most customer-centric company for four primary customer sets: consumers, sellers, enterprises, and content creators» (Amazon, 2017).
Global Network Planning and Logistics
Logistics at Amazon is another evolving pattern that allows the company to improve its operations on the ongoing basis while reducing the production-related costs. Starting from 2015, the firm set a strategy for launching its own network of transporting services with the purpose of reducing its dependence on the outside partners such as DHL and UPS (Castelli, Manzoni, Vanneschi, & Popovic, 2017). In most cases, it was stressed that the new system was established in order to develop the transportation net and not to replace others from the logistics system, though, most probably, in case of the successful launching, the company would definitely cover these services as well (Castelli et al., 2017). Besides, obviously, Amazon aimed to limit the risks related to the partners and the inability to transport the needed items. In the financial report published in 2015, the firm referred to itself as the transportation service company for the first time (Amazon.com, 2015). While advancing this strategy, it also leased the aircraft in order to advance the delivery of the packages to the clients in terms of time.
Another ambitious goal set in regard to the logistics system implies gaining more control over delivery time. The experts assert that the market that includes delivery processes estimates to $400 billion (Castelli, et al. 2017). Therefore, Amazon aims to preserve its market share within it more profoundly. Other plans provide for the acquisitions of certain transportation hubs to serve the needs of the customers residing in various parts of the planet. In particular, it might purchase some of the German airports in order to establish its business practices within the European market.
Considering Amazon’s ambitions of the global network planning, the recent leaking of the corporate documents has definitely clarified the situation (Li & Pemg, 2017). Within the internal environment, these plans were generally referred to as Dragon Boat that is intended to launch a new business called Global Supply Chain by Amazon that will compete with the FedEx and UPS (Kim, 2016). The scheme also involves the atomization of the entire international supply chain and the elimination of the legacy waste that is associated with document operation and freight booking. It will strengthen the control over the entire process of delivery starting from the initial choice of the product to its delivery to the end customer in the USA.
Product Design and Planning
Product design and planning basically provides a systematic approach towards the improvement of the services that are offered at Amazon. It is quite challenging to determine the key benefit that is granted by the company to its customer. However, in general, it still is considered as an online trader; therefore, the trade rates are monitored on the constant basis in order to follow the changes and respond to them constantly (Stone, 2013). In addition, developing these services, Amazon is conducting the surveys to track the needs of the customers, improve their experiences, and obtain a competitive advantage. One of the recent solutions offered by Amazon refers to the Amazon Lockers, which enable the customers to take their parcels at time when the post offices are closed (Henderson & Spencer, 2016) Many clients actually prefer this service as they stay long at work and have no opportunity to collect the delivery at the traditional post offices (Stone, 2013). In other words, the company works on minimizing its dependence on the outside partners and duplicates many of their functions just as in the case of transportation and logistics. Despite the fact that the planning is considered as sensitive and confidential information, it is easy to predict that Amazon will follow the same strategy in regard to all other services that it currently outsources to gain greater control over the key operations and ensure the best customers’ experience (Turban, et al., 2015). Undoubtedly, all of these innovations have a significant financial footprint that allows the firm to outdo its competitors.
Nowadays, inventory management is even more critical than before as the enterprises tend to experience high rates of uncertainty in customer demand, supplies as well as managing the economies of scale when it involves the larger shipments. Amazon also encounters numerous related risks including the constant increase in the number of orders, which eventually becomes a heavy burden, as well as the depletion of inventory that occurs more quickly than before (Stone, 2013). The completion of the spitting and routing orders become even more complex since their higher volume requires considerably more resources and energy to be invested. At the same time, the company works continually to improve its shipping practices within the markets where it serves. In particular, in the Eastern countries, it partners with the local enterprises allowing collecting the items and sending them to the customer directly (Turban, et al., 2015). All of these operations are undertaken with the help of the mobile application, which makes the business-related activities be processed even faster. Moreover, the supplies of the company are also managed through the electronic scanners and related systems, which helps to track the items and transfer them to the needed location.
Simplification of the transportation is also a critical task that the firm confronts at present due to the increase in the demand among the customers. The company also functions in accordance with the combination packaging principle, which provides that there are various warehouses in different locations within the country and when ordering an item, the customer is offered to a variety of the shipping options ranging in terms of their price, period of delivery, and other features (Turban, et al., 2015). Overall, the inventory management strategy at Amazon implies storing the high-demand products (Turban, et al., 2015). The company also promotes trade-offs between the cost reduction and the product availability. The increased inventory management system will assist in improving the product availability as well as the margin captures (Stone, 2013). The holdings costs, however, might grow, and more stocks will be required to satisfy customers’ demands for goods and quick delivery.
Information Use and Information Technology at Amazon
The constant advancements in the area of the information technology and data management allow Amazon to leverage it to strengthen its business practices significantly. With the help of computerized systems, Amazon successfully handles Big Data and tracks the page traffic, clicks, timing, the customers’ behavior while online, and the rest (Resca & Spagnoletti, 2014). Moreover, the company can share the supply and demand data with a number of its partners and distributors in order to manage operations even more successfully. In general, heavy investments into the informational technologies have been inherent for the firm as it emerged within the on-edge industry and made critical improvements in the areas of website management, search, customer engagement, transaction processes, and many others. As a result, Amazon, at the moment, possesses the most efficient technological infrastructure that allows the smooth processing of all activities (Resca & Spagnoletti, 2014). The information technologies and data management assist in minimizing the energy waste of the employees and save them for completing more important tasks that involve human intellect and empathy.
Furthermore, the information technologies that are used by the company can be certainly referred to as the competitive advantage allowing it to preserve and even conquer new market shares. Amazon Web Services offers the services to the corporate clients. Paying a fee, the corporations can have an access to the Amazon’s IT, which is positioned as an alternative revenue source for the enterprise.
Customer Service and Pricing Strategies
Customer’s service at Amazon has long been known for its excellence and clear priority settings. The company’s CEO has repeatedly stressed that the customer is the greatest value at the internal corporate environment and their preferences are driving the company, not the competitors or the pursuit of profits (Resca & Spagnoletti, 2014). Due to the increased assortment of products and various items, Amazon can react faster to the changes in customers’ needs and ensure a better match between the supply and the demand. Access, customization, and convenience could definitely be used as three features inherent in the Amazon retail platform (Resca & Spagnoletti, 2014). The customers are offered the personalized buyer’s experience combined with numerous additional services that might be convenient for the potential buyer. It also operates the search engine that suggests various products that are the most likely to satisfy customers’ needs in particular items.
Pricing has been historically an instrument for leveraging the competitive advantage. The company has permanently been conducting a diversified price management in order to fit into the different demands of the customers that ranged in terms of their income, demographic characteristics, preferences, and many others (Ragas & Culp, 2014). The pricing variety that was developed by the Amazon allowed the company to attract various customers regardless of their income and background (Stone, 2013).
In general, the pricing strategy used by the Amazon is extremely flexible. It offers the instruments that allow the companies to adjust their prices in accordance with the customers’ purchasing abilities as well as propose the products that satisfy their demand (Cone Communications, & Echo Research, 2013). Through the developed partnerships and arrangements, the firm has also successfully addressed seasonality of prices with the vendors and the suppliers, in addition to the seasonal sales. The Amazon serves as the marketplace that is also multidimensional in terms of the services that it can offer to the customer (Cone Communications, & Echo Research, 2013). As many retailers, it also manages to successfully respond to the seasonal peaks and implements manners to overcome the problem of the product unavailability as well as the following extended time for its delivery. Off-peak discounts offered at the platform urging the customers to purchase their Christmas or other gifts beforehand are an additional instrument that the company utilizes to optimize its business process and decrease the workload during the peak periods.
Besides, the firm is quite effective and transparent in its communications and interactions with the customers. The seasonal peaks often result in the confusions with the parcels and the extended delivery time. Frequently, such mistakes are not attributed directly to the Amazon since it has established a network of partnerships and its vendors, suppliers or distributors might have certain difficulties in meeting their obligations affecting the delivery and the time framework required (Resca & Spagnoletti, 2014). On the other hand, it warns the customers that the purchasing during the peak periods might result in the greater expenses as the company might charge an extra fee due to the overload at work.
Ethical and Environmental Policy
Despite the forwardness that has been inherent for Amazon for years, the company is still insufficiently innovative in regard to the sustainability and ethics concerns. It has been criticized for brutal workers’ treatment, unsustainable practices, and other ecological issues. Corporate responsibility programs were not developed at the firm to the same extent as those of its competitors. Consequently, currently, when CSR is a must-trend, it definitely deteriorates the reputation of the company. It might be outclassed by its key competitors including Apple, Wal-Mart, and others (Taylor, 2014). Besides, the company has not published its sustainability report or does not reveal the level of carbon emissions. In terms of business ethics, on the contrary to its key competitors, the company does not disclose its suppliers and partners. National media often refer to it as the brutal place for work. Therefore, it should be stressed that currently, the company lacks the sustainability strategy as well as the ethical approach to the business processes as well as work ethics (Taylor, 2014). Much should be implemented to improve Amazon’s reputation as an employer and a company with the innovative design thinking. The firm is recommended to adopt the CSR strategy that will enhance its ecological footprint and make the work ethics more adjacent to the modern standards.
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In conclusion, Amazon Inc. is, indeed, a company with strong customer-oriented services that prioritizes and heavily invests in the innovations and informational technologies. It allows making its growth sustainable and ensuring the dominance not only within the national market but also beyond its borders. Furthermore, the company strictly follows the policy of gaining more control over the key processes and eliminating the number of partners that it should depend upon. Such a strategy is pursued, again, to guarantee the excellent customers’ service and the ongoing expansion of its market share. Moreover, the sub-products that emerge as a result of Amazon’s growth of productivity are also considered as additional revenue streams, allowing it to re-invest them into the innovation development. Generally, its perspectives are quite positive as it is a future-oriented company, though with a weak ethical position. Therefore, much effort should be devoted to improving the public image of Amazon as a fair employer respecting the rights and the freedoms of its employees.