Analysis of Amazon

This report provides an analysis of Amazon as an e-commerce store, including key issues, desired outcomes, and recommendations for success in the evolving market.

Analysis of Amazon 0
Title: Analysis of Amazon
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Analysis of Amazon 1
Executive Summary
Amazon is considered as one of the influential companies of web-based commerce. This is not
the first organization to capitalize on using the World Wide Web. However, whenever the
customers think of shopping over the web, Amazon is the first brand that comes in their mind.
This report summarizes an introduction to Amazon as an e-commerce store. An overview has
been given about the key issues, which are relevant to the company. A brief overview has been
given about the desired outcomes. Some recommendations have also been provided to support
the innovation in the technology that is growing access to the web. This is followed by a
conclusion.

Analysis of Amazon 2
Contents
Introduction......................................................................................................................................3
Key Issue Identification...................................................................................................................3
Desired Outcomes............................................................................................................................6
Recommendations............................................................................................................................8
Conclusion.....................................................................................................................................10
References......................................................................................................................................11
Appendix........................................................................................................................................13
Appendix A............................................................................................................................................13
Appendix B............................................................................................................................................14

Analysis of Amazon 3
Introduction
Amazon Company is closely associated with the E-commerce phenomenon. The
company is located in Seattle, WA and started as a bookseller, selling books to Walmart, an
online portal of selling products. The products that Walmart deals with include Music CDs,
Games and Toys, Hardware and Tools and Cookware. This company has grown at an
exponential rate and the revenue of the company has increased from one hundred and fifty
million dollars to three billion dollars in the year 2001. There has been a rise in the revenue,
which has led to an increase in the operational profits as well. The company is continually
making quarterly profits. The story of Amazon is being repeated and it is an urban legend. Jeff
Bezos is the founder of the company. The virtual retail market is considered as the mainstream
commerce framework. The ease of shipping, buying, and availability of retailers from local ships
to virtual retailers, such as Whole Foods has been changing the market practices. This structure
drives consumerism and is successful as an e-commerce store. However, there are a series of
challenges that are being faced by the company. Entrepreneurs or organizations need to adapt to
the difficulties and understand all the trends to succeed in this evolving market.
Key Issue Identification
There are certain key issues, which are faced by the company. These are persistent in the e-
commerce industry. Amazon is considered as one of the biggest e-commerce online portals in the
entire globe (Sugianto and Rooslani Tojib, 2007). A detailed analysis of the Amazon has been
conducted which are relevant to online strategic implications and are explained as follows-

Analysis of Amazon 4
1. Expansion of Channels and Changing Business Model- The Amazon Company is
continually scaling up the operations and diversifying with its new products and services.
The company has been expanding its verticals. This includes Whole Foods acquisition and its
rapid growth is imposing the challenges, which can put the company open to risk. This
expansion increases the business complexity and puts the strain on management, systems,
operations, personnel, technical performance, reporting functions and financial control. With
the expansion of channels, the business model of Amazon will be ever evolving and should
focus on changes to understand how to evolve in the rapidly changing e-commerce industry;
and this can have a lot of impact over the business (Datta, 2010).
2. International Expansion Risk- One of the significant issues for Amazon is related to the
expansion of the new international market. However, the market may not have the operating
experience and cannot be benefitted through the first market advantages. Moreover, it is very
expensive to establish, maintain international operations as well as websites and promote the
brand internationally (Hajibayova, 2013). There are additional risks that have been identified,
i.e. retailers also have an international expansion, which is needed to be considered. The
political and economic situations, business licensing, international regulations that are
imposed on e-commerce, and the cultural differences, restrictions over currency exchanges
and neutrality should also be taken into consideration. Multilingual chat-bots have been
popped across the server. They do not have any sign of slowing down and are instrumental in
the expansion of organizations that will benefit through customer service in its native
language. Customers are being reached through Omni-channel strategy. This can be
considered as the multi-channel approach to marketing and sales that aim to provide the
customers with a better shopping experience. Big brands have been branching for covering

Analysis of Amazon 5
the narrower niches. The market has been going smaller and businesses need to explore how
it can become a successful venture with its own target market (Tahat, 2009).
3. Data Fulfillment Optimization- Amazon has identified the key issues of optimizing the data
and fulfillment centers. However, this is one of the relatable concerns for e-commerce
retailers. The company needs to focus on predicting consumer demand. This also implies
operating the fulfillment network, which can result in insufficient fulfillment as well as data
center capacity (Shmueli, 2008). Otherwise, this may result in enhanced costs as well as
impairment charges and harm the business in different ways. An online retailer needs to
focus on the inventory, which is optimized. This will lower the shipping costs through
fulfillment centers. This has developed a strong association with the shipping organizations
and negotiated the terms as well (Vilalta, 2012).
4. Holiday Strain and Seasonality- Amazon Company has identified the holiday strain and
seasonality as a key issue. There is massive traffic as well as orders during the fourth quarter.
This is mainly due to the year-end shopping by customers. However, the peak is also noticed
at other times of the year. Retailers will be required to prepare for the holiday strain and
seasonality through forecasting the demand for inventory. There must be enough stock and
shipping costs tend to go high. The customers can face slow speed due to traffic and website
outages. In addition, the company needs to prepare for increased needs for staffing
requirements. In the year 2019, the site performance has been monitored and this is a key
need for e-commerce organizations. This implies an extension of SEO services as well as
user experiences (Groh, 2016).
5. Government Regulations- With changing laws, trade agreements, and political unrest, there
is an increase in the number of government regulations. This will have a lot of impact on

Analysis of Amazon 6
companies like Amazon and also e-commerce retailers. Businesses need to keep the eyes
over legislative concerns, such as taxation, data protection, virtual payment services as well
as restrictions that surround the energy consumption. E-Commerce giants have launched
various online payment options. However, customers are demanding varying payment forms
and easy checkout experiences. This is a great need to streamline business operations and
enhance the ways for consumers in the year 2019 (Lee, 2017).
Desired Outcomes
Amazon investors have a strong belief that it can sustain the dominance in the year 2019 and
can also extend its business in various lines, such as video, advertising, and other platforms. The
potential outcomes or goals have been identified as follows (Alabi, 2017) -
1. E-commerce Growth- Amazon has been showing ten percent growth every year.
Different businesses operations are taking over the online stores at this high margin. This
operating segment makes more than fifty percent of the revenue. There is a substantial
slowdown that can weigh over consolidated growth in profits and revenues (Gilbert,
2009).
2. Exceptional International Performance- According to the reports, there have been
fifteen percent growth during the time of Diwali and also through Souq.com. Investors
are looking for various options as on how Amazon performs internationally this year
(Ryan, 2015).
3. Sustaining External Competition- Amazon is considered as the undisputed leader of e-
commerce. There are rivals, such as Walmart that have become more aggressive and
trying to capture the market share of Amazon. The company needs to focus on the price

Analysis of Amazon 7
matching through rival’s pricing strategy and promotions. However, Walmart is taking
advantage of a less aggressive stance of Amazon. The approach that must be adopted by
the Amazon is profit focused rather than growth focused. The investors need to deepen
the virtual presence and enhance productivity levels (Ashraf, Hussain and Hussain,
2013).
4. Balancing Investments and Profits-The Amazon company is making efforts in the
health care industry. This has been consistently in news. Amazon is working hard to
balance investments and earnings. The company has been taking new initiatives in every
domain, such as payments, healthcare, logistics and this has been making continuous
headlines. There has been a concern among the investors that the next investment
variation can happen. However, making investments in the new lines of business and new
technologies can generate rewards later. This is an investment strategy, which weighs
over the Amazon earnings growth (Keikha and Sadeq, 2015).
5. Dealing with Stringent Government Scrutiny- With the new government approaching
in, there has been fresh scrutiny of e-commerce giants. The Amazon needs to follow the
taxation and regulation rules which embodies its overseas expansion. Privacy and
regulatory concerns will be related as an outcome and lawmakers need to step up the
scrutiny of big tech companies like Amazon (Deulkar and Shelke, 2017) n.
The company expects an uneven amount of net sales to take place in the fourth quarter.
The popular products must be restocked in ample amounts. In a scenario, the company fails to
meet customer demands; this will have a huge impact on its future growth and revenues. In case,
the products are overstocked, the company will require taking the important inventory
markdowns and this will incur the commitment costs and ultimately results in reducing the

Analysis of Amazon 8
profitability. The company will be expecting an increase in net shipping cost, which is mainly
due to the split shipments and complimentary upgrades. In a scenario, when the company will be
accessing the website within a given time period, the company can experience the system
interruptions and this will make the online platform unavailable and prevent the fulfilling orders
(Datta, 2010).
Strategic Recommendations
The customer-centric Amazon Company shows a huge emphasis and this can be attributed to
its success. The customers’ journey is long and shoppers are immediately provided with what
they want. The significant aspect is focusing obsessively on customers. The goal can be
customer-centric. There a few strategic recommendations for Amazon, which are as follows-
1. Email Marketing- One of the arguable aspects of Amazon is its marketing channels and
one such important medium is email marketing. There are companies, which are sending
out the email blasts. Amazon has been developing a refined email strategy. The company
needs to leave no opportunity within the market and take advantage of transactional
email. There are various kinds of marketing and transactional emails. The messages will
get Amazon account holders to get accustomed to website and leads to continuing
purchasing. Amazon has continually pioneered the product recommendation emails and
this includes purchase history, location, past order value, and website browsing. The
Amazon company needs to pay focus on personalized product recommendations.
2. Reviews and Ratings-Amazon have been pioneering in different segments. The
company is first to place the review system on its site. The company needs to focus over
customer ratings and this can increase the revenue by 20 percent. Shoppers always trust

Analysis of Amazon 9
the user-generated content, which is more than the information through retailers as well
as manufacturers (Jansen, Sobel and Cook, 2011).
3. Customer Loyalty- With relevance to the value proposition, Amazon marketing can be
fueled through customer loyalty programs. Amazon can be a successful venture through
legend stuff. The company can increase its membership base by fifty percent. However,
the enterprise has not released the numbers regarding the revenue. Amazon is seeking
approximately five to ten percent increase in the profits through customer loyalty
solutions. Loyalty program customers will be spending ten to twenty percent more when
compared to non-members. This tends to rise in the number of loyal clients through fiver
to twenty percent. The loyalty program has been augmented through referral marketing
programs. The Amazon needs to explore this fully so the growth will be better. The
company needs to shift from conventional loyalty programs to enhanced brand advocacy
elucidations.
4. Digitization of Real World and Interactive Experience-The Amazon Company needs
to focus on providing the customers with digital experiences. The company is expected to
use a number of brands with technology and make the visitors engaged. As more number
of customers are doing shopping; this will become significant for the businesses and can
adopt the mobile-first tactic. However, it has been predicted that smartphones will be
accounting for one hundred and seventy billion dollars. Mobile first requires the updating
checking process, ensure that this is user-friendly, and can accelerate the mobile pages.
This framework will enable to create a super-fast website across the smartphone devices.
5. Automation- The e-commerce giants will gain through automation. Automation refers to
the application of technology and its creation too. This involves streamlining the different

Analysis of Amazon 10
processes, which includes marketing and sales, production and inventory management.
The Amazon company needs to optimize the supply chain and can offer better delivery
services.
Conclusion
The company Amazon creates a holistic experience for its shoppers. Starting from order
delivery, everything can be found on the website of Amazon. The presence of echo smart
assistance and dash refill options, Amazon has been extending live spaces. The marketing
program of Amazon is seamlessly connected. Amazon needs to institute certain sort of rewards
system, which is based on the engagement process; this will loop everything from the review
writing until shopper’s social networking activity in a central hub on Amazon’s website.
However, account holders can be given rewards for taking a few actions such as sharing photos
and referring friends towards the prime membership, this makes Amazon being social. The
invention of these actions and making a connection to all the prime accounts of customers is
significant from the viewpoint of investors. Amazon will be able to store more user data and this
will also involve the enhanced engagement. The company will gain a high-profit market share
with reference to higher repeat purchase rates as well as average order value.

Analysis of Amazon 11
References
Alabi, K. (2017). Decentralization as a Tool for Securing Ecommerce and Business
Processes. SSRN Electronic Journal.
Ashraf, J., Hussain, O. and Hussain, F. (2013). Empirical analysis of domain ontology usage on
the Web: eCommerce domain in focus. Concurrency and Computation: Practice and
Experience, 26(5), pp.1157-1184.
Datta, P. (2010). A preliminary study of ecommerce adoption in developing
countries. Information Systems Journal, 21(1), pp.3-32.
Datta, P. (2010). A preliminary study of ecommerce adoption in developing
countries. Information Systems Journal, 21(1), pp.3-32.
Deulkar, H. and Shelke, R. (2017). Missing Item Prediction and Its Recommendation Based on
Users Approach in Ecommerce. International Journal of Trend in Scientific Research and
Development, Volume-1(Issue-4), pp.425-428.
Gilbert, B. (2009). PCI Compliance for Outsourced eCommerce Applications. SSRN Electronic
Journal.
Groh, M. (2016). Essay on Corporate Social Responsibility in Ecommerce Companies. SSRN
Electronic Journal.
Hajibayova, L. (2013). Blog, news, ecommerce: Does genre matter for taggers?. NASKO, 4(1).
Jansen, B., Sobel, K. and Cook, G. (2011). Classifying ecommerce information sharing
behaviour by youths on social networking sites. Journal of Information Science, 37(2), pp.120-
136.

Analysis of Amazon 12
Keikha, Z. and Sadeq, M. (2015). The E-readiness Assessment Pattern Designing with an
Approach to Ecommerce (a Case Study Conducted in Sistan and Balouchestan Province of
Iran). International Journal of Engineering Research, 4(2), pp.85-92.
Lee, K. (2017). Ecommerce and Firm Performance: Evidence from Korea. SSRN Electronic
Journal.
Ryan, M. (2015). The Sesquidecennial of portal. portal: Libraries and the Academy, 15(1), pp.1-
4.
Shmueli, G. (2008). Statistical Inference with Large (eCommerce) Datasets. SSRN Electronic
Journal.
Sugianto, L. and Rooslani Tojib, D. (2007). Ecommerce: Portal power. Monash Business
Review, 3(1), pp.25-25.
Tahat, D. (2009). Factors Affecting eCommerce Contract Law. SSRN Electronic Journal.
Vilalta, A. (2012). Online Dispute Resolution & eCommerce. IN3 Working Paper Series.

Analysis of Amazon 13
Appendix
Appendix A
The Amazon Sales has been accounted for 13 percent and operating income accounts for 50
percent.

Analysis of Amazon 14
Appendix B
The above graph shows Amazon’s profits in international markets.