Amazon Case Study Amazon Faces

Amazon Case Study

Amazon faces increasingly higher levels of price, product and service competition globally, with its main business model being assailed from several different directions at once. As traditional book publishers fear disintermediation of their channels, they are moving to e-commerce strategies very quickly. Traditional e-commerce vendors are also quickly moving into books, CDs, music and many other products that are ideally suited for being shipped long distances to consumers. eBay, the global leader in auctions, also becomes a dominant competitor in the time period of the case study in addition to these sources of competition, retailers including Barnes & Noble are challenging Amazon by underscoring the unique in-bookstore experience of being in their stores. From the highly price-driven competitors to those with deep expertise in book publishing and distribution, Amazon is facing an increasingly challenging competitive market. To counter these challenges, Amazon needs to define a clear, differentiated product and service strategy, extending their business model into new areas to continually fuel new growth.

2. Summary statement of the recommended solution:

The best possible alterative for Amazon is to pursue being a business-to-business (B2B) exchange for suppliers, distributors, manufacturers and retailers to use. This is the best possible alterative for several reasons, the most significant being that is capitalizes and builds on the core strength the company ha gained in distributed order management, fulfillment and complex distributed order processing. All of these areas are essential to their book business, as the case explains. Further supporting this direction is the company's core strengths in the rapidly growing area of cloud computing infrastructure. Amazon Web Services is a very successful, high growth business and one that complements the concept and business model of a B2B exchange exceptionally well. In addition to all of these factors, there is the ability of Amazon to introduce the B2B exchange to its corporate accounts globally to gain rapid adoption and financial growth of the new business unit.

THE SITUATION

Amazon has quickly grown from an online retailer to a global platform for e-commerce, e-commerce hosting, cloud computing, logistics and 3rd party e-commerce services, in addition to its core business of online retailing. The multi-faceted success of Amazon can be traced to Jeff Bezo's prescient insight into the future of e-commerce to the foundational level. Mr. Bezos defined three criterion for choosing the location of Amazon's corporate headquarters. These included having the necessary programming talent to develop software, closeness to a major book wholesaler, and a state with little or no sales tax. He found all three in abundance in the Seattle, Washington area and launched his company there. These three factors also gave Amazon the ability to accomplish another key objective Jeff Bezos, had and that was to get big fast, at all costs. He believed that scale would prove to be a significant differentiator over time, and it has. The intensive level of development effort on the core intellectual property of Amazon, namely the distributed order management, supply chain, logistics an d integration to wholesales, also has been the catalyst of many of the ancillary services the company also is selling during the case study's timeframe.