Power point presentation amazon

Research Paper

Research Paper

Tim Elberse

Saint Thomas University

Why is Amazon so successful?

A great shopping experience is crucial for the company. Work hard, have fun, make history. Amazon's corporate slogan makes clear one of the most outstanding features of the company: ambition. "Bezos began selling books not by chance, but because it is a universal product, which has many references and our power is not concentrated in a few publishers, but his dream from the beginning was to create a catalog where you could find everything on Earth "says Franc Carreras, a marketing professor at Esade.

That ambition is also what has continuously led the company to grow and grow to gain market share, sacrificing profitability on many occasions in favor of a long-term vision that has supported an undeniable principle: the shopping experience. "The obsession with the customer is the great key to Amazon's success," says François Nuyts, his country manager in Spain.

THE CLIENT, FIRST PLACE

"The firm has always opted for loyalty although in the short term it was not profitable. In the end, not to stop selling everyday things, but in a very efficient and competitive way," says Philip Moscoso, Professor of Production, Technology and Operations Management from IESE.

In fact, one of the mantras that Jeff Bezos has always repeated defines well this thought: "Obsess for the client and not for the consumers". François Nuyts emphasizes this philosophy: "Look for competitive prices, we think about how to innovate, to make the purchase easier. Before considering financial aspects, in this company you have to ask yourself what you can do better for the customer".

The result of this approach has been some innovations that now seem common, but that were born on Amazon and helped to develop electronic commerce as we know it: the evaluation of products by buyers, wish lists, purchase in a click , the ease of making returns ... Although all these issues are not necessary to explain the success of the company without considering two other attributes: its huge catalog and having made an art of logistics.

MORE THINGS AND FASTER

Since Bezos sold his first book in 1995 from his garage - Fluid Concepts & Creative Analogies - Amazon's offer has not stopped growing. The company now has 32 different stores and 285 million customers, as well as 132 million physical references and another 35 million digital only on Amazon.es, where an average of 68,000 new products are found every day.

But Amazon stopped being a huge store to become a platform that includes retail (Amazon, Marketplace, BuyVIP, Zappos ...), content (Kindle, Fire, Fire TV, Game Studios ...), business services ( Amazon Web Services) or advertising (Amazon Media Group), among other business lines. The philosophy behind all of them is the same: if you want something, Amazon has it. Although the phrase is incomplete if we did not add: and we managed to arrive quickly.

Logistics is key for the company, since it helps reduce one of the weak points of electronic commerce with respect to physical stores, the time it takes to have the product. "The customer wants a complete service, he tells you where and when he wants it, and he doesn't care who will take it. Buy at Amazon and if something fails, we are responsible. That's why we have to control the whole process," they say. Fred Pattje, General Director of Operations of Amazon Spain. This manager points out the two basic aspects for the company's logistics work: processes and human capital. "We have more than 300 metrics from the moment the client places his order until he receives, and checks every day to refine our processes. That said, the commitment of people is equally important for the client to have his package the next day" , it states.

Amazon's network of logistics centers - more than 100 in the world - are the cornerstone of a harmonious process in which the company knows how long it will take to deliver a shipment since the customer clicks to confirm it. Already with a day delivery service in many cities -Madrid is the European city where it is most used- and works in different formulas -like drones- to increase its efficiency, being able to deliver bicycles in Manhattan in less than an hour. "That obsession with the times will lead them to even patent the distribution before ordering. It would consist of using their huge sales history to send trucks with products to areas where it is very possible that they will end up buying those items," says Franc Carreras.

THE 'AMAZONIA MODEL'

A large catalog and a good customer experience, with logistics as a cornerstone, explain the company's business model, which has not changed since that sketch that Jeff Bezos drew on a napkin in the 90s, when he seeks financing. Francois Nuyts explains the idea: "The first thing for a customer to enter in Amazon is the selection, to have what they are looking for. If that is fulfilled and we give them a good shopping experience, we will generate traffic. And with traffic, more sellers will want to have their products in our platform, which will in turn give us more selection and start over. The model feeds back and generates growth, which translates into scale, less costs and the possibility of offering better prices. And all this results in a better experience of customer ".

In addition, Amazon has some important advantages that make the company so unique and special from all the others. Amazon rewards customers. It provides customers with economic benefits and preferential services, in return for loyalty and for sharing information with them. This information then becomes a highly valuable resource in its data analytics systems, to further improve and optimize the customer experience.

Moreover, Amazon is unbeatable in terms of the immediacy in which purchases are received. The customer journey of search – select – pay – possess is near-instantaneous. Sophisticated supply chain management and data analytics systems ensure optimum inventory management, Use of sensors and tracking monitoring equipment are important tools in the very efficient delivery systems, being improved further through the implementation of drone deliveries. Amazon's Marketplace hosts millions of small-business sellers. Last year, merchandise sold by those third-party retailers exceeded sales by Amazon itself (73% of small-business merchants are considering joining marketplaces at Amazon or eBay). It is a net positive to small businesses. Amazon has brought big damage to large retail chains, the ones that had put many small business out of businesses in the first place.The company allows small retailers to sell on its platform, thus providing them incomparable online exposure. Almost half of internet users in the US live in a household with an Amazon Prime membership, and the site gets more than 2 billion visitors every month giving them enormous reach.

Small business get lots of benefits from Amazon. Sales, marketing and branding power. 73 percent of small business owners considered selling on Amazon in 2017 and more than a million small businesses in the US already use it.

Amazon, and other online marketplaces, provide a great sales platform. Parties that might otherwise not reach the customer in an efficient and massive way can now reach huge customer platforms.

Amazon pushes Innovation. What truly sets Amazon apart is its brand promise to be “Earth’s biggest selection and the Earth’s most customer-centric company.” Take its Prime video services, with original and award-winning TV shows and movies, or its cloud computing service, which is so successful that it is now expanding to handle classified CIA data. If the promise of the internet is to provide users with what we need, when we need it – whether product- or service-related – then Amazon has proven that those who have the data can deliver on this promise.

This model has created a giant that has huge amounts of information about how its customers are, which allows it to refine its innovations, but without giving up the culture of trial and error. "One thing in which we are especially different is in the ruling. I think we are the best place on earth to fail (and we have a lot of practice). The ruling is a twin of innovation," Bezos said in his last letter to shareholders . The example is Marketplace, which now represents 40% of what Amazon sells, but which worked for the third. "Amazon Auctions was a failure, and in the Z Shops nobody entered," they recognize in the firm.

Like any other company, Amazon also has its disadvantages. The company has seemingly suppressed unions in its warehouses and has been criticized by labor rights activists about the harsh conditions in Amazon’s warehouses and factories. Amazon when it raised minimum wages, did so at the expense of workers’ benefits and incentives. In addition, the company fights tax laws that would support local economies. Amazon is widely known to be a low tax payer due to all kinds of advantageous tax treatments it has negotiated in the U.S. and abroad. In terms of contamination the company Is mostly powered by fossil fuels. Although Amazon, as one of the biggest cloud storage hosts on the internet, uses some 50% clean energy, it still uses a substantial portion from coal and gas. It Creates excessive packaging waste. Amazon, as many other online sales channels, has created a lot of packaging waste. Further enriches world’s richest man, Jeff Bezos, contributing to wealth inequality. This argument could be considered somewhat short sighted as it puts one person against an enormous amount of people who have benefitted from his invention and made many people better of.

Another point to take into consideration, is that it penalizes small businesses that use its platforms. Amazon is accused of undermining local economies and to be bad for small businesses. Becoming a monopoly hurts shoppers With Amazon’s recent acquisition of Whole Foods, the company could be showing traits of becoming a monopoly on successfully merchandising convenience,: shoppers would ultimately lose out as monopolies kill competition. It distructs jobs, especially salespeople and shop owners have been losing their jobs. There are 1.2 million fewer people working in the retail industry because of the successes of Amazon (and other online retailers). These numbers will likely keep rising, as Amazon expands to target other goods sectors, including providing delivery services for restaurant-prepared meals. Consistent statistics are hard to get, and Amazon is not alone, it is part of a trend, and it has generated lots of direct and indirect jobs itself.

Shopping on Amazon isn’t as safe as shopping offline. Shopping on Amazon requires users to input their personal information, which puts shoppers at risk. While this is not an Amazon-specific issue, the company makes matters worse with its current privacy policy. This policy reserves the right to share your personal information with other companies, should it decide one day to do so.

Too many advertisements. Amazon.com is filled with ads that prompt the user to buy another product, based on the user’s unique purchase history. They might drive users to make unwanted and perhaps unbudgeted impulse buys, which can have very negative economic consequences on consumers living beyond their means.

Using subsidized services. Especially the abuse of US Post’s subsidized delivery services has been an important success factor in Amazon’s rise to dominance and is a widely criticized point.

Manages an enormous amount of personal data of its clients. These data are highly valuable, especially in a world with increasing use of big data and AI. This makes the company potentially vulnerable to data attacks, and gives it an enormous potential control to influence its clients’ buying behavior.

And what will be Amazon's challenges for the future? "The expansion to China and India has not gone as they would like, they have to stabilize their organizational culture in a company that grows at a dizzying pace and it will not be easy for them to adapt to the transition from e-commerce to mobile commerce," says Philip Moscoso , which despite this sentence: "They are in the best position to face all these challenges."

Work Cited

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