EBAY Company Write up
Waqas Ahmed
example_for_amazon_company.docxAmazon.com
Executive Summary
Team Data Relations, is a database-consulting firm, whose task has been to revise the database of our client, Amazon.com. This project paper is based on the research and fact finding work done by our four person team who have garnered information over the past 3 months. This study serves as a source of information for developing a database model.
Amazon.com is a company that operates in the non-traditional environment of the Internet. This gives the company both great advantages, such as visibility to potential customers and investors, and great disadvantages - mainly large amounts of competition. Amazon uses the advantages of being a purely online merchant excellently; where it was merely a comprehensive bookseller at it’s founding, it now offers products in over a dozen categories and has revenues exceeding ten billion dollars each year. They have also eliminated much of the competition by absorbing it into the Amazon Marketplace, a virtual mall through which other vendors can use Amazon as a broker for a small fee.
Developing a purely online business like Amazon is far from a guaranteed success. Some risks are obvious to the customer, such as the issue of trust – why should a customer give all that information to a stranger who is only promising to send them a book at some point in the future when they could instead walk into any brick-and-mortar bookseller and anonymously exchange cash for a book in hand? Other risks are less tangible – how much should the company spread out its resources to protect against outages and lessen shipping times? Still more risks are purely financial – what areas and which product categories should Amazon expand into, and how much of their revenues can they use to finance these changes instead of padding their profits. Fortunately, Amazon is not a company of fools, and they have planned all along for these risks.
Being one of the largest online retailers is not a simple task. Even the simplest purchase made by a returning customer with most of the necessary information on file requires no less than ten steps from when he accesses the website to when he receives his purchase. Preferences are saved for each customer, recommendations made, reviews displayed, related items found, and so on. The amount of information that must be stored, organized, and outputted by Amazon’s databases to display one item to one viewer is enormous, but Amazon does it with aplomb. Even more goes on behind the scenes; as with any great production this works best when it is never seen by the audience, and so the customer is unaware of the blood, sweat, and tears Amazon’s workers go through to ensure that all this data is correct and up to date, that customers are getting the best deal possible, and that anything that is shipped will get where it needs to go.
In our analysis, we describe Amazon and its goals. We provide a framework for a comprehensive transaction-oriented database. The business rules of customer information, transaction and inventory management information are also explored. We believe we have developed a critical tool Amazon can use to achieve its goal as the "Earth's Biggest Bookstore."
Industry Background
Amazon.com started out to be the World’s Biggest Bookstore. It has become that and much, much more. It can now be classified as a broad sector retail business, providing items in the areas of books, music, movies, clothing, jewelry, home and garden, tools and automotive as well as other items. Amazon is a special type of retail business, which is completely online. They have no brick and mortar retail stores nor any outlets or centers. Yahoo Finance lists Amazon under the “Catalog and Mail Order” sector of retail.
Amazon was created to take advantage of the increasing use and popularity of the Internet as a retail medium. Amazon chose books as its first commodity for many reasons, one being that online booksellers would have virtually unlimited shelf space to “store” their wares. U.S. booksellers were relying on large superstores to do most of their selling but even then, they were limited in what they could carry at any one time. Amazon realized that it could offer a much larger selection of books, in fact all of the books in print, and not have to worry about over-stocking or any storage issues. With agreements with other booksellers, Amazon could offer the books and then get them from third-party resellers to ship to their customers. The cutting down of storage and purchasing costs could allow Amazon to provide lower costs to their customers.
Another lower cost would be in advertising. The traditional advertising avenues, print and visual media, would still be available but Amazon, being online, could have website advertising with links directly to their website or the products themselves. Amazon would get its name out there in the world of bookselling as well as have a place for others to sell their books. Amazon also saw an opportunity and offered their basic website structure and processes to private individuals and other booksellers, such as Borders. Borders customers could arrive at a website for Borders, see that it is run by Amazon and then have another avenue for purchasing books. Amazon would than be paid either as a web space provider or as a bookseller.
Amazon also has an advantage over brick-and-mortar booksellers is that they can offer its extensive product lineup at the time its convenient to the customer. Amazon’s website is open 24 hours a day, 7 days a week. No one needs to go to a store to look for books and order them if not in stock. The customer can easily look for and order a book at 10 am or at 3 am, as the need or desire strikes them. With the ease of ordering comes the ease of payment. Amazon takes credit cards, checks, money orders and even purchase orders from companies and institutions. Once you set up an account, most books and other products are but a mouse-click away.
Unlike other Mail Order or Catalog retail companies, Amazon can take advantage of the Internet and use email as a form of communication, both to confirm orders and purchases as well as to contact customers with delivery information. Being an online retailer, Amazon has taken advantage of the ease of use of the Internet in its business dealings. Instead of relying on the mail service to send out catalogs, Amazon can let customers arrive at its home through word of mouth and can also contact former customers via email to entice them back to purchasing. The Internet is certainly the way for catalog selling to move, because it has many advantages and can still maintain its character of ease and convenience. In creating a database for Amazon, we need to keep this ease and convenience in mind as we design and create a flexible, easy to use, adaptable database.
In examining an organization’s need for adequate information systems, it is first necessary to determine what areas the system must be capable of covering. For businesses, information systems must succeed in covering a number of broad areas: customer data, operations data, supplier/partner/collaborate data, and financial performance data. Internal systems for business operations are an area that Amazon has heavily invested both its attention and its resources since inception.
Since its beginnings, Amazon has directed much of its attention to building upon business processes in gaining a competitive advantage in the world of online retail. With Amazon responsible for over 1.7 million orders a day, their operations can only become more complex if their implemented systems are found to be inefficient. Therefore, the use of adequate information systems within Amazon allows for accurate and timely information essential to daily operations and remains a significant factor to Amazon’s overall success.
A corporation predominantly dependent on online sales must respond to change in order to succeed in its arena. Rapid technological change remains a threat to any organization wanting to remain competitive and profitable in an environment that is continually changing. Amazon has recognized this phenomenon since its beginnings, committing itself to enhancing its accommodations by not only developing its own systems but relying upon technologies licensed from third parties in carrying out its functions. Proprietary technologies are utilized along with these licensed technologies in providing a customer experience that allows its ordering process to be extremely user friendly and simple even for customers who are not prone to online shopping. This is a key feature of Amazon's design and information systems strategy, recognized by its ease of use and straightforward ordering process known as 1-click ordering.
Amazon is comprised of a multitude of systems responsible for everything from tracking sales and furnishing recommendations to providing secure logins and authentication to customers. By tracking all sales of its customers, Amazon strategically markets products to customers based upon historical data. This not only encourages sales and increase profits for the corporation but it allows Amazon to recognize trends, allowing it many advantages over competitors. In regards to security, Amazon must operate similarly to any business dealing with sensitive consumer data, with great care. Consumers must be ensured their information is secure and private if Amazon wishes to retain a lucrative position in the industry. This requires the use of third parties who are competent and knowledgeable in areas that Amazon wants to outsource.
Amazon has also receives a great deal of success from its affiliate program, becoming both a reseller of services as well as a retailer. Opening its system to retailers such as Borders has not only allowed Amazon a portion of proceeds from such sales but such strategic alliances allow them to compete more effectively with other organizations in the industry. By embracing competition, Amazon has become an outlet for many businesses that under other circumstances would be competing for market share.
By focusing on the long run and constantly studying new technologies to help in its business processes Amazon have created an overall business model that overshadows that of many online retailers in the industry today. In addition, by realizing its core competencies as well as its business requirements Amazon has been realistic in its scope, outsourcing whenever necessary. In doing so it has remained focused on its overall objectives while allowing itself to explore other opportunities, services, and challenges.
