Amazon's e-business model and competitive market strategies

Amazon's eBusiness Model

Assessing the Potential of Amazon.com's E-Business Model

Amazon.com continues to expand well beyond the boundaries of its initial business model that focused only on books to today including merchandise, suppliers for businesses, and consumables. The common thread that unifies all of these elements together however is the unique customer experience that Amazon.com strives to deliver, all in the context of responsive service (Pine, Gilmore, 2008, et.al.). For Amazon.com to successfully expand into entirely new markets it must stay focused on and continually committed to its customer-driven innovation, which over time has become part of its brand (Crosby, Masland, 2009, et.al.). The intent of this analysis is to evaluate whether or not Amazon lost part of its identity by expanding into markets beyond books, and recommend how Amazon can continue to protect its brand as well. Recommendations for Barnes & Nobile and Borders are also included based on the analysis completed in Appendix A which includes a Website Comparison Table. Finally, the multichannel strategies of Dell are used as the basis for evaluating if Amazon should move into a distribution-centric business model with retail locations as well.

Assessing if Amazon's Product Strategies are an Asset or Liability

After reading the latest Amazon.com annual report and analyzing their series of filings with the Securities & Exchange (SEC) Commission, the breadth and depth of options available to Amazon.com are daunting. It is evident after reading over these material that the company sees itself as an enabler of commerce and computing platforms first, an online retailer second. Amazon's strategic focus is not on products, but on processes, and how to monetize those processes into profitable online services and programs including Amazon Web Services (Feigenbaum, Parkes, Pennock, 2009, pp. 70-71). From reading over several quarters of filings with the SEC, it is clear that Amazon wants to move faster in the direction of transforming their expertise in e-commerce, virtualization of servers, hosting, website usability and reference engine technology than on penetrating a new product category as a retailer (DataMonitor, 2010, pp. 7, 23, 24, 27).

The proliferation of products and the acquisition of Zappos, a leader in online retailing of shoes are seen more as a means to fully use the platforms in place already for managing a multitude of categories, less about entering a given market. With a stable platform for managing many different types of products, support and service requirements, Amazon can easily scale from one product or service to another. As a result, the expanding into different markets well beyond books does not dilute their brand or identity. Paradoxically it shows that Amazon has exceptional control over e-commerce processes it relies on.

Amazon.com Online Brand Implications

From the initial launch of their personalization technology and through the decades of fine-tuning of their reputation management systems, the Amazon brand has been more focused on a unique online experience, less about having product mix dictate their identity (Wang, Doong, Foxall, 2010, et.al.). The Amazon.com brand is defined by the experiences customers have over time and less on price (Pine, Gilmore, 2008, et.al.). By concentrating on excelling at process and online reputation systems, Amazon has created a unique and trusted experience on their sites. This trust has created greater customer loyalty than any of the other online book retailers and serves as the catalyst of their competitive strength today. How Amazon can protect its brand is to continually focus on how best to streamline these processes, from distributed order management and pricing management to services and returns management, to ensure the excellence of their customers' experience. Amazon will need to continually improve these core e-commerce processes, systems and platforms while also continually improving website usability (Hausman, Siekpe, 2009, et.al.) to strengthen and promote their brand. What is unique about the Amazon brand is that it is fueled by the recommendations of customers regarding the quality and performance of the products they buy (Cook, 2008, pp. 60, 61). In that sense, it is the most interactive brand of the three compared in this analysis. In conclusion, Amazon needs to continually focus on improving and optimizing the processes, systems, and platforms it has in place to support a widening array of products and services, realizing it is the web experience, not the product, which is core to their brand (Pine, Gilmore, 2008, et.al.).

Barnes & Noble and Borders Market Share Strategies

Both companies were late to enter e-commerce as a channel and both have paid for it in terms of technology leadership over time. Despite this, both have the opportunity to regain market share without attempting to imitate Amazon, which is what Barnes & Noble continues to do (Hall, Gupta, 2010, pp. 9 -12). Instead, Barnes & Noble needs to revamp their online website experience and seek to bring in entirely new partners that compliment what their customers are looking for online. It needs to partner with Wi-Fi providers, create a broader array of electronic items, expand into offering additional electronic readers, and in short redefine itself not at the product level, but at the experience one. The same holds true for Borders, which is even more frozen in its approach to marketing, imitating Yahoo in the structure of its website and search (Saranow, 2003, et.al.). Barnes & Noble could be much more focused on how to create a unique, differentiated experience that draws customers into their stores. Modeling the excellent multichannel media strategies of Disney relies on to draw guests to their theme parks would be a better approach than attempting to imitate Amazon. Yet Barnes & Nobile and Borders stay product-centric in their messaging, missing a major opportunity to redefine their brands at the customer experience level. The bottom line is that both need to redefine their value based on the unique experiences they are capable of delivering (Pine, Gilmore, 2008, et.al.).