Case Study: Microeconomic Analysis: Supply and Demand
Running head: WEEK 4 SUSETTE KELO ET AL., V CITY OF NE LONDON CONNECTICUT, ET AL 1
Market Structure, Market Power & Profitability
Introduction:
In week three lecture, we examined the different characteristics of market structures, their affect, competition and pricing in the industry. We examined monopoly, oligopoly, perfect competition and imperfect competition. There are several factors that defines the categories of an organization. These factors include the organization size and it’s worth. Perfect competition is the most desirable and monopoly is the lease desirable. This week I will continue the discussion of Amazon. To many consumers, Amazon is a one stop online store, making the online shopping experience with Amazon convenient.
Although there are some rumors that Amazon is a monopoly structure, Amazon can't be declared a monopoly because it doesn't exhibit monopolistic behavior, defined as "when one provider is the dominant provider in the market and that provider is able to prevent others from offering competing products and services ("Is Amazon A Monopoly? Donald Trump Thinks So", 2019)."
Data
The widening gap over the past year between Amazon and so-called store-based retailers is particularly striking.
It’s important to note that Amazon still only boasts a 5 percent share of total retail sales, excluding food, across the country, according to data from the U.S. Census Bureau, Sanderson said.
But this is coupled with big names in the retail space — Wal-Mart, Costco, Home Depot, Target — seen as losing market share as their margins shrink and dollars shift back to Jeff Bezos’ company, the analyst added (Thomas, 2019).
(Thomas, 2019)
The data above indicates that amazon is taking over online shopping. Amazon has created a fast-growing economy that directly and indirectly impacts the economic.
Analysis
It is important to note that despite its large size, unlike many other companies with hierarchical organizational structure, Amazon remains highly flexible to adapt to frequent changes in the external marketplace. Moreover, the online retail giant leads changes in external business environment, it has caused disruptive innovation in e-commerce and currently it is about to cause a disruptive innovation in global logistics industry. This is mainly due to visionary and efficient leadership by Amazon founder and CEO Jeff Bezos ("Examples of Oligopoly Markets", 2019).
In my research, I found that a few products that Amazon offers to their customer online can be found on other online websites such as, eBay, Walmart, Staples, Kmart & many products you just conduct a goggle search for any product. This is clear example that Amazon is an Oligopoly market structure. Today, half of all U.S. households are subscribed to the membership program Amazon Prime, half of all online shopping searches start directly on Amazon, and Amazon captures nearly one in every two dollars that Americans spend online. Amazon sells more books, toys, and by next year, apparel and consumer electronics than any retailer online or off and is investing heavily in its grocery business.
As a retailer, its market power now rivals or exceeds that of Walmart, and it stands only to grow: Within five years, one-fifth of the U.S.’s $3.6 trillion retail market will have shifted online, and Amazon is on track to capture two-thirds of that share("Amazon's Growing Power In The U.S. Economy", 2019).
Conclusion
In my opinion Amazon has expanded its services to ensure that consumers receive their packages securely, Amazon lock boxes are available in your local stores. Having a secure way of receiving your package and avoiding the wait at home adds more to Amazon market. Amazon online services operates in the competitive market structure. It is evident that different consumers like to shop using Amazon online services because of the competitive pricing of their products. Amazon is competitive and offers prices that are affordable compared to another online store.
References
Amazon's Growing Power In The U.S. Economy. (2019). Retrieved 29 July 2019, from
Dudovskiy, J. (2019). Amazon Organizational Structure - Research-Methodology. Retrieved 29
July 2019, from https://research-methodology.net/amazon-organizational-structure-2/
Is Amazon A Monopoly? Donald Trump Thinks So. (2019). Retrieved 29 July 2019, from
Thomas, L. (2019). This chart shows how quickly Amazon is 'eating the retail world'. Retrieved
29 July 2019, from https://www.cnbc.com/2017/07/07/amazon-is-eating-the-retail-world.html