Amazon Case Study: Growth Opportunities, Challenges, and Solutions

This case study report is an analysis of the Amazon.com Inc. The report describes opportunities for growth and development and issues and or constraints which could limit or prohibit the firm's growth and development.

CASE STUDY: AMAZON 1
Amazon Case Study: Growth Opportunities, Challenges, and Solutions
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CASE STUDY: AMAZON 2
Table of Contents
Executive Summary.........................................................................................................................3
Introduction......................................................................................................................................4
Stakeholders.................................................................................................................................4
Amazon Competitors...................................................................................................................6
Objectives.....................................................................................................................................6
Methodology....................................................................................................................................6
Growth opportunities for Amazon...................................................................................................7
Market penetration: Whole Foods Online Products and Personalization....................................7
Product Development: Amazon and Healthcare..........................................................................8
Market Penetration: Amazon and Advertising.............................................................................9
Market Development: International Markets.............................................................................10
Constraints and Challenges that impact Amazon growth and Development................................10
Amazon’s main resources..............................................................................................................13
Amazon Alternatives that Failed...................................................................................................14
Recommended Solutions and Implementation..............................................................................15
Recommendations..........................................................................................................................17
Conclusion.....................................................................................................................................19
References......................................................................................................................................20

CASE STUDY: AMAZON 3
Executive Summary
Amazon.com, Inc is an e-commerce giant and has also diversified into different sectors
such as cloud computing. It headquarters is in Settle, Washington, United States. Amazon offers
various products through the internet. These products include books, electronics, movies, games
and music. It is also involved in the food market. The company is also a search technology and a
digital advertising platform. Amazon is close to being a trillion-dollar come and is one of the
most powerful businesses in the globe. Amazon initially started retailing in the United states but
has expanded to international countries.
This case study report is an analysis of the Amazon.com Inc. The report describes
opportunities for growth and development and issues and or constraints which could limit or
prohibit the firm's growth and development. It also explores the resources the firm needs to attain
this potential growth and evaluates obstacles or limitations to achieving the growth and
development. It also identifies possible solutions to these problems and selects the best solution.

CASE STUDY: AMAZON 4
Introduction
Amazon was established on July 5, 1994 by its current CEO and Chairman Jeff Bezos.
The Amazon websites are designed in a way that it allows Amazon and third parties to sell their
unique wide range of products. Amazon has a lot of competition from other online retailers but
still has a strong base of online retailers who still purchase from them. The principle competitive
factors for Amazon against its competitors is the price, convenience, fast and reliable fulfillment,
and selection. The low range of the company's brand products and the thin profit margin are
some of the weaknesses of Amazon. These weaknesses act as an impediment to the company's
greatness in the competitive online retail market.
Stakeholders
Stakeholders of an organization are persons or groups who have a stake on
organization’s activities and resources. Stakeholders influence the operations of a company while
the company also influences the stakeholders. Amazon, operating on a global scale, faces widely
varying stakeholders' interests. In satisfying its globally distributed stakeholders, Amazon
maintains its top-notch market position as the leading e-commerce company. Amazon interlinks
its stakeholders’ interests with CSR initiatives1. Amazon’s CSR activities are designed and
aligned to satisfy the interests of stakeholders groups namely customers, employees and the
communities. The other stakeholders are Government Agencies and suppliers2.
A. Customers
The most important stakeholders' group for Amazon is the customers, and they give them
the highest priority. It considers its customers as core determinants of its online business since
the customers directly affect the company's revenues. Amazon's vision and mission statement
relays the importance of the customers and considers customers as central to its operations3. The
interests of Amazon customers are the convenience of service, fair pricing, and online
transactions security. The company meets these interests through an emphasis on service and
evolutionary technology. Amazon employees are well trained to utilize technology to its full
potential while ensuring customer's convenience. The company provides fair pricing by
allowing competition among sellers on their online website and also by implementing the
market-based pricing strategy.
1 Werther Jr., W. B, and D Chandler. Strategic corporate social responsibility: Stakeholders in a global
environment. California: Sage Publications, 2010.
2 O'Brien, K. "Amazon’s Most Important Stakeholders." Huffington Post. August 27, 2015.
https://www.huffingtonpost.com/great-work-cultures/amazons-most-important-st_b_8051946.html
(accessed October 7, 2018).
3 Amazon. Vision and Mission Statement. 2018. https://www.amazon.jobs/en/working/working-amazon.

CASE STUDY: AMAZON 5
B. Employees
Employees are the second group of Amazon’s stakeholders and are considered as vital
determinants of the company’s performance as well its CSR practices and programs4. The
employees’ interests in a company are career development and competitive remuneration. The
human resources of Amazon facilitate the development and implementation of new ideas to
improve the company's efficiency which results in the competitive advantage of the other e-
commerce industry competitors. Appropriate compensation policy and leadership development
are the plans used by Amazon to satisfy the interests of employees. The compensation policy is
designed based on the high growth potential of the company. For instance, the company gives
high compensation to Information technology personnel involved in the development and
maintenance of its e-commerce business information systems' assets. The expansion of the
company's business globally creates opportunities for employees' career development mainly
those in the leadership and management levels.
C. Communities
The communities as Amazon’s stakeholders are vital to the company because they
influence consumers’ perception on the company’s products and services. Development support
is the primary interests of communities5. The areas for development support include healthcare,
environment and education sectors. Amazon Smile is Amazon's primary community support
program through which they donate a specific percentage of its revenues to charitable
organizations. Therefore, through the philanthropic programs the interests of communities as the
stakeholders of Amazon are satisfied.
D. Government Agencies
The government Agencies that is an Amazon stakeholder include Federal communication
commission, which defines the broadband required to meet the large communication needs and
desires of customers.
E. Suppliers
The suppliers for Amazon include partnerships which it has formed and the sellers that
provide their products for sale by the company6.
4 Peloza, J, and J Shang. " How can corporate social responsibility activities create value for stakeholders?
A systematic review." Journal of the Academy of Marketing Science 39, no. 1 (2011): 117-135.
5 Ditlev-Simonsen, C. D, and F Wenstop. " How stakeholders view stakeholders as CSR motivators."
Social Responsibility Journal 9, no. 1 (2013): 137-147.
6 Rodrigo. "Stakeholder Mapping ." The WritePass Journal. November 13, 2016.
https://writepass.com/journal/2016/11/stakeholder-mapping/ (accessed October 7, 2018).

CASE STUDY: AMAZON 6
Amazon Competitors
There exist various online retailers who have become notable by operating through an
online presence only including Amazon, e-bay, and Alibaba.com. The top competitors to
Amazon are Wal-Mart, Alibaba, and Google. Alibaba acts as a middleman between the sellers,
and the buyers facilitate the exchange of goods7. Also, Alibaba has a PayPal-like financial
service, AliPay and has emerged as a competitor in the Chinese financial system. Amazon is the
second competitor to Amazon and competes in the discount stores industry. Google is the third
competitor to Amazon, and it deals in the internet software industry.
Objectives
Outlined below are the case study’s objectives to be achieved:
a) To describes opportunities for growth and development for Amazon.com Inc
b) To identify and explore constraints which could limit or prohibit the Amazon.com Inc
growth and development.
c) To explore the resources Amazon.com needs to attain this potential growth and evaluates
obstacles or limitations to achieving these resources.
d) To identify possible solutions to these problems and provide recommendations.
Methodology
We adopted informal ways to undertake case study on Amazon.com Inc. Information was
gathered through the below steps:
i. We researched the available case studies about Amazon.com formulated by other as well
as articles on Amazon.com and noted key areas on Amazon growth opportunities and
challenges, resources, and strategies.
ii. We also watched a lot of videos based on merchant and customer reviews, also videos on
Amazon.com Inc strategies,
iii. Finally, we then read and validated the gathered information on Amazon.com website,
and Amazon.com Inc Annual reports.
Analysis
7 Investopedia. The Difference Between Amazon And Alibaba's Business Models. August 2, 2016.
http://www.investopedia.com/articles/investing/061215/difference-between-amazon-and-alibabas-
business-models.asp (accessed March 27, 2017).

CASE STUDY: AMAZON 7
Growth opportunities for Amazon
Growth opportunities for Amazon.com Inc exist in various growth aspects namely,
market penetration, product development, and market development.
Market penetration: Whole Foods Online Products and Personalization
Amazon has prime growth opportunity with Whole Foods Integration. Growth comes
from new consumers’ growth occurring due to increased convenience and competitive pricing.
Amazon integrated their Prime loyalty program to Whole Foods market which they acquired in
2017. The Prime loyalty program has accelerated the changing shoppers’ behavior. Amazon has
an estimated 80 million prime members in the United States, and 20 million of the Prime
members are shopping at Whole Foods. A study carried out by sense 360, revealed through its
behavioral data, depicted that 27% of Amazon consumers are more likely to visit Whole Foods
market than the non-Amazon consumers8. Value for money and attractive daily prices are the
biggest motivators for both Amazon shoppers and Whole Foods Shoppers. At Whole Foods,
Amazon offers new discounts and savings for Amazon Prime members only, the offer for prime
members only has then attracted more prime members who not only become Whole Foods
consumers but join the entire Amazon ecosystem. Also, the existing Amazon Prime members are
continuously being drawn to the Whole Foods Market due to the new discounts and savings. The
integration of Prime loyalty program with Whole Foods market has provided a competitive
advantage to Amazon over other retailers and also provides further growth opportunities for
Amazon.
The Amazon’s Whole Food and prime loyalty program integration strategy is affecting
every retailer and has made Amazon a direct competitor to US retailers and consumer products
manufacturers. Amazon has a growth opportunity when they take the Whole Foods Private Label
products online providing every shopper in the United States with shelf-stable products. Data-
decisioning is at the core of Amazon’s operations. Utilizing the prime integration Amazon is
collecting Whole Foods consumers identified grocery transaction data. Amazon has been known
to personalize every consumer’s interaction by providing the products it believes you want and
like by utilizing data from previous purchases, browsing, and searches.
The personalization techniques utilized by Amazon in its other products can be used in
the Whole Foods marketing coupled with taking Whole Foods Private Label products online, and
it will provide exploding growth opportunities for Amazon across the United States. Therefore,
strategic personalization which involves tailoring the products, information, and pricing to the
individual consumer will offer growth opportunities to Amazon in its Whole Food marketing.
8 Hawkins, G. "Real-Time Insights on Amazon Prime and Whole Foods Integration." Winsight Grocery
Business. August 14, 2018. https://www.winsightgrocerybusiness.com/retailers/real-time-insights-
amazon-prime-whole-foods-integration (accessed October 3, 2018).

CASE STUDY: AMAZON 8
Product Development: Amazon and Healthcare
Healthcare is a huge industry in the United States and around the globe and is guaranteed
to grow forever, and it provides a growth opportunity for Amazon. Amazon could utilize its
expertise undertaken everything from pharmaceutical supply chain to the Medicare management.
The United States prescription drug market is estimated to be 400 billion dollar market. Amazon
had plans to utilize its Amazon Marketplace to sell pharmaceutical drugs but abandoned the
strategy. In June Amazon acquired PillPack, a company which ships pills to a customer as well
as makes the individual packets of pills an individual is required to take daily9. Therefore, this
acquisition is a tremendous asset for Amazon's pharmaceutical plans since it is already licensed
to ship prescription in all the 50 states of the United States. Amazon can simplify the supply
chain and also improve cost expenses for manufacturers, patients, and payers. Through,
Amazon’s Business marketplace, the company has been selling medical supplies such as nylon
sutures and syringes to the U.S hospitals. The limited selection of medical supplies is sold
through its office, industrial and healthcare supplies section. Amazon is developing a tool that
will give the hospital a platform to make a comparison between its traditional suppliers and the
Amazon marketplace supplies. The tool is part of the implementation framework to attain its
objective of becoming a significant healthcare supplier to hospitals in the United States.
Therefore, medical supplies are the other major component for growth for Amazon.
Healthcare being an industry has two primary components; delivery aspect and
computational and data aspect. The delivery aspects of the healthcare sector involve interactions
between the specialist institutions, skilled personnel and the patients for services including
diagnosis, treatment, and nursing care. The computational and data aspects involve medical
records, tests, image scanning, and test results as well as administration. The computational and
data component of the healthcare industry is where Amazon can major for growth opportunities.
After all, collecting, manipulate and exploiting data is what Amazon comprehends and does.
Amazon teamed up with Berkshire Hathaway and JP Morgan bank to develop a not-for-profit
healthcare system with a designed mission of reducing the health care costs of their combined
estimated 1.2 million employees10. From the venture with Berkshire Hathaway, Amazon now has
more than 1.2 million employees diverse in age, socioeconomic status, and geography to
evaluate its products before releasing to its consumers. The data collected will be beneficial for
assessing solutions for specific use aspects such as chronic disease management as well as for
population demands such as pharmaceutical delivery. It will be difficult for traditional
9 Langreth, R, and Z Tracer. "Amazon Makes $1 Billion Splash in Health Care, Buying PillPack."
Bloomberg. June 28, 2018. https://www.bloomberg.com/news/articles/2018-06-28/amazon-makes-big-
foray-into-health-care-with-pillpack-purchase (accessed October 7, 2018).
10 LaVito, A, and J Cox. "Amazon, Berkshire Hathaway, and JPMorgan Chase to partner on US employee
health care." CNBC. January 30, 2018. https://www.cnbc.com/2018/01/30/amazon-berkshire-hathaway-
and-jpmorgan-chase-to-partner-on-us-employee-health-care.html (accessed October 7, 2018).

CASE STUDY: AMAZON 9
companies in the healthcare sector, to compete with Amazon whose strategy is independent on
making a profit since it makes a lot of money from its core operations such as AWS and prime.
Amazon could implement a platform for health benefits management by devolving into
claims management and billing. The current system for health benefits management involves
manual data entry, multiple steps, and intermediaries. Amazon can develop a technology that
structures and standardizes the payments and the administration back-end of claims, then various
organizations like pharmacies, PCPs and wellness companies can outsource claims processes to
Amazon. Amazon could also develop a platform for health services distribution provided small
health plans or employers. Therefore through such platforms, Amazon creates incentives from,
both front-end platform and back-end services. Also, Amazon can also adopt growing
opportunities in providing various services to Physicians, hospitals and healthcare providers.
Many institutions in the healthcare prefer to hire parties for implementation modern technology
systems solutions due to low implementation costs and low up-front costs. Amazon can develop
a back-end for healthcare providers by adopting a backward integration strategy. For example,
Amazon can implement a system into the EMR to input and output data. Also, Alexa can be
applied for voice applications in the healthcare system.
As the healthcare industry is becoming is a playground for go-betweens and for making
excessive profits, Amazon in its current state is well-positioned to transform the healthcare
sector. Therefore, Amazon has growth opportunities in the healthcare sector.
Market Penetration: Amazon and Advertising
In 2017, digital advertising business was $209 billion around the globe and is rapidly
increasing. The most lucrative market is the United States with advertisers spending $40.1 in
digital advertising during the first half of 201711.Amazon is among the top digital advertisers in
the US below the digital advertising league leaders GOOGLE and Facebook. Advertisers are
looking for a third advertising dominator and Amazon is likely to be their choice based on the
consumers’ insights the company has from its robust e-commerce business. Also, the company is
willing, to share consumers’ data unlike GOOGLE and Facebook, hence the other reason, for the
company to be selected by advertisers and hence digital advertising is a growth opportunity for
Amazon. The company does not yet sell advertisements through its voice assistant service,
Alexa, but it can exploit this area for further growth opportunities. Furthermore, the company
expands its advertising beyond the Amazon sites by collaborating with third-parties to advertise
on mobile screens and televisions.
Amazon allows companies to sponsor listings of products so they will show up at the top
of the relevant search results on its website store. Amazon can grow by offering advertisers
11 PWC. IAB Internet Advertising Revenue Report. Revenue Report, PWC, 2017.

CASE STUDY: AMAZON
10
better algorithm and data to ensure that the advertiser’s product pops in front of the ideal
consumer.
Market Development: International Markets
Amazon’s principal strategy for growth and development is in market development. The
core objective of market development is the entry into new markets and growth in the already
exploited markets. Amazon.com Inc originally offered its services and products only in America
it has expanded and currently operates retail online shops in various countries including
Australia, UK, Canada, India, and China. Amazon considers FBA services as a significant
aspect in its foreign establishments12. Each new market, the e-commerce giant exploits is taken
as growth opportunity. The strategic objective associated with the company's international
expansion is to develop new online retail shopping area that match the market, Amazon is
exploiting13. Therefore, international markets offer opportunities for growth and development for
Amazon. Com Inc.
Constraints and Challenges that impact Amazon growth and
Development
I. Channel expansion and High-growth pains
Amazon has been scaling up operations rapidly and diversifying into new services,
products and acquisition like the Whole Foods. The expansion and diversification present a
unique set of challenges and positions the company in a risk-vulnerable position. The company is
significantly expanding its global operations including expanding the products and services
offered as well as scaling-up of infrastructure to support the expanding retail and service
operations. The significant and rapid expansion and diversification raises the issue of complexity
within the company which results in a major strain to the company's management, operations,
personnel, financial resources, technical performance, systems, internal financial controls, and
reporting functions. With the expansion, the company may not effectively manage the growth
which then could have major consequences on the company’s brand image, reputation, growth
and revenues.
II. International Operations Risks
12 Camhi, J, and S Pandolph. "Amazon's earnings point to international expansion." Business Insider. May
1, 2017. https://www.businessinsider.com/amazons-earnings-point-to-international-expansion-2017-5?
IR=T (accessed October 4, 2018).
13 Raj Panta, K, and R Shama. "Case Study of E-Commerce on Amazon.com." Degree Report, Department
of Bachelor Science in Computer Science and Information Technology, Lumbini ICT College, Nawalparasi,
Nepal, 2017.

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One of the biggest constraint or challenge to Amazon growth and development is risks
associated with international operations. The risks to be faced by the e-commerce giant in its
global operations growth and development are outlined as follows;
Business licensing across borders: Licenses, permits, and certifications may be required for the
import and export of certain products. Failure to comply or possess these documents will then
result in adverse impacts on the business.
Local political and economic conditions: Each of the international collaboration is subject to the
negativity of the changing political and economic conditions including the geopolitical events
such as war and terrorism14.
International regulations on E-commerce: the international regulations arising from international
sales include export laws, taxes, and governing bodies15.
Currency exchange regulations and restrictions: Depending on the country, limitations of funds
investment may exist as well as restrictions on exchange rate values and foreign currency
exchange.
Cultural and language differences: In international operations when staffing is necessary, cultural
and language differences will be difficult to navigate, and communication-related risks can
result.
Access to the Internet and Net neutrality: Net neutrality and access to the internet are some of the
major threats to e-commerce expansion and growth in international borders. Amazon and its
affiliate’s sales in India and China are regulated.
III. Seasonality and Holiday Strain
14 Al Imran, A. A STUDY ON AMAZON: INFORMATION SYSTEMS, BUSINESS STRATEGIES, AND e-
CRM. Technical Report, Bangladesh: University of Malaysia, 2015.
15 Rao, L. "Amazon May Face Regulatory Hurdles In India." Fortune. April 8, 2016.
http://fortune.com/2016/04/08/amazon-regulatory-hurdles-india/ (accessed October 7, 2018).

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Amazon faces a massive influx of orders and traffic on holidays mainly the year-end
holiday. The uptick in the customers’ volume on these holidays imposes various challenges and
Amazon has to prepare for aspects such as16.
Increased shopping costs' planning: Amazon has to formulate a strategy to meet the needs of last-
minute shoppers and express delivery which involves increased costs.
Demand forecasting; Amazon carries evaluation of inventory to ensure it does not sell out which
then can impact the company negatively.
Crash risks associated with increased traffic: For increased traffic volume, extra bandwidth is
added while making sure the site does not crash which then will negatively impact the sales and
reputation.
IV. Government Regulations
Government regulations result in various legislative issues which then impact on the
growth and development of Amazon17.
Data protection: Regulations and changes on policies on data protection will impact the company
as it will require increased investments on strategies for data security and monitoring for risks
mitigation.
Energy consumption; Major government regulations and policies changes can significantly
impact all the operations from manufacturing to shipping.
Taxation: Increase in online retail taxes will impact the company revenues affecting its growth
and development.
Online Payment services: Changes to online payments will extensively impact Amazon as an
online retailer. Also, the digital currencies and systems such as bitcoin and blockchain will pose
a disruption to the Amazon system.
V. Rapidly Evolving Business Model
16 Moore, K. "The 19 E-commerce Growth Challenges of 2018, Outlined by Amazon's Annual Report."
BigCommerce. 2018. https://www.bigcommerce.com/blog/amazon-annual-report/ (accessed October 4,
2018).
17 Mac, R. "Amazon Identifies A New Business Risk: Trump's Trade Policies." Forbes. February 10, 2017.
https://www.forbes.com/sites/ryanmac/2017/02/10/amazon-identifies-a-new-business-risk-trumps-
trade-policies/#315524aa2651 (accessed October 7, 2018).

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Amazon in rapid growth faces various risks and challenges which may constraint further
growth and development. Technology is advancing at an alarming rate, and this poses a certain
amount of risk to Amazon even with its adaptability and agility to these changes. Stock value is
volatile and influenced by various events and Amazon being a public traded company has to
answer to investors. The e-commerce industry practices such as the way consumers undertake
research, learn and, conduct shopping always vary, so adapting and forecasting for these trends
can be complicated and pricey to the company which then will hinder its growth and
development.
Amazon’s main resources
According to Gerry et al. (2014), resources are the assets that a company possess and can
utilize to undertake its operations and to attain its strategic objectives18. Amazon resources
include human capital, financial and technological resources.
Human Capital
The presence of a strong and effective leadership imposes a great responsibility on the
company’s leadership and management because leadership implies the overall performance
capacity19. Amazon as of September 2018 had 566,000 employees and over 260 million
customers20. Amazon always undertakes several employee empowerment programmes to focus
and channel the staff expertise, motivation, experience, innovation, and knowledge. The
employee empowerment programmes include Career Choices which involves paying for
employees to undertake courses in demands fields, Pay to Quit which involves employees being
offered money to quit and encouraged to think about their careers and hence eliminating the
unhealthy sections of the company. The utilization of these resources by Amazon.com Inc
provides the effective services to its customers. For growth and development, Amazon requires
more human capital. As Amazon internationally expands and diversifies, human capital is
necessary.
Physical resources
18 Gerry, J, R Whittington, K Scholes, D Angwin, and P Regner. Exploring Strategy. 10th Edition. London:
Pearson, 2014.
19 Guppta, Kavi. "How Jeff Bezos Maintains Amazon’s Killer Company Culture." Strategyzer. June 27,
2016. http://blog.strategyzer.com/posts/2016/6/23/how-jeff-bezos-maintains-amazons-killer-company-
culture (accessed March 27, 2017).
20 Schloser, K. "Amazon now employs 566,000 people worldwide — a 66 percent jump from a year ago."
GekWire. 2018. https://www.geekwire.com/2018/amazon-now-employs-566000-people-worldwide-66-
percent-jump-year-ago/ (accessed October 7, 2018).

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The physical resources of Amazon include digital merchandise, customer databases,
fulfillment centers, patents (for example the one Click Payment System), shipping infrastructure
and Technological resources (include computing system and online resources). Amazon requires
physical resources such as fulfillment centers and technological infrastructures in various regions
outside the United States21. Amazon possesses a robust technological infrastructure with a single
platform.
Amazon's human resources and facilities are the core components of the company's flexible and
robust supply chain. The combination of the human resources, technological resources and
financial resources associated with Amazon.com Inc play a vital role in the prosperity of the
company as well as for growth and development. Therefore, Amazon requires enormous
financial resources, physical resources and human capital for growth and development.
Financial Resources
Amazon has annual revenue of 192 Billion dollars and has raised a total of 56 million dollars in
funding22.
Amazon Alternatives that Failed
Amazon has become an e-commerce juggernaut over two decades since its inception in
1994 and has ventured into different verticals. It has also become a cloud computing behemoth.
While some of the Amazon’s alternatives for growth and development have been successful,
some failed, and others rejected.
i. Fire Phone
Amazon released its Smartphone, Fire Phone in July 2014 and its debut price was $199.
The phone needed to be technically advanced and coolest to date but did not quite pick up due to
competition from Androids and iPhones. The company further cut the price to, but it did not sell
too. From the Fire phone failure, Amazon wrote-off $170 Million loss. By September of 2015,
when the supply Fire phone ran-out, it was no longer available for sale23.
ii. Amazon WebPay Services
21 Bluschke, N. "Amazon's Role in the Retail Industry." Bachelor Thesis, Modul Vienna University, Vienna,
2016.
22 Owler. Amazon's Competitors, Revenue, Number of Employees, Funding, and Acquisitions. 2018.
https://www.owler.com/company/amazon (accessed October 5, 2018).
23 Kim, W.C, R Mauborgne, and Y.O Koo. Successes and Failures of Amazon's Growth Strategies: Causes
and Consequences. Harvard Business Review, 2017.

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Amazon introduced WebPay in 2007, a service similar to PayPal that allowed a person
using the service to transfer money for free to his friends 24. The service was shut down in 2014,
with Amazon citing, copying as the reason for shutting down since other companies were
introducing similar services to the market.
iii. Destinations
Destinations was an Amazon microsite for selling hotel deals that the company tried to
utilize it to venture into the travel industry, but it did not succeed.
iv. Amazon Local
In 2011, Amazon launched a hub for daily deals following the success of Groupon. The
local deals were embraced by customers when it kicked-off, but the novelty quickly wore off.
Amazon shut down the hub on 18 December 201425. Amazon did not make its services on
Amazon local unique either through technological innovation or through better and diversify
deals hence the reason for wearing-off.
Recommended Solutions and Implementation
1. Technology Integration and Research and Development
Amazon.com Inc should increase their budget in the research and development arena. Additional
telecommunications innovations such as network security and high-speed internet should be
implemented by Amazon, as it is what retailers soon will be encountering. As the number of
consumers increase and connections increase in speed, retailers must be aware of their speeds
since any delays on their side be less tolerable to the customers. Therefore, to stay ahead of the
competitors, Amazon should prepare a comfortable and unique consumer interface.
2. Scandinavian and Asian Expansion
Expansion into Scandinavian countries is the proposed solution for international
expansion because it aligns with corporate goals by utilizing the strengths and opportunities of
the company and the environment. The Scandinavian market is untapped, and the expansion will
result in new company customers and provide better customer experience the Scandinavians
customers resulting in loyalty and customer development. The cons associated with the
24 Borison, R. "Here Are 10 of Amazon's Biggest Failures." TheStreet. November 13, 2015.
https://www.thestreet.com/story/13364106/1/here-are-10-of-amazon-s-biggest-failures.html (accessed
October 5, 2018).
25 Kline, D.B. "Amazon.com Inc.'s 3 Biggest Product Failures." The Motley Fool. November 8, 2015.
https://www.fool.com/investing/general/2015/11/08/amazoncom-incs-3-biggest-product-failures.aspx
(accessed October 5, 2018).

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Scandinavian markets include up-to-date technological infrastructure, the high internet
consumption, high income per capita and also great importation and exportation potential.
Amazon is less popular in various countries in Asia, and they should explore that market by
applying the techniques they implemented in India.
There exist obstacles or limitations that could hinder Amazon's International expansion;
Technical Infrastructure: For international expansion, local infrastructure limitations are one of
the barriers to obtaining the infrastructure required for products and services delivery. Sites
launched in various international markets may not be hosted by servers in those countries due to
reasons such as local infrastructure limitations. In other global markets, local hosting or geo-
based server balancing may be expensive. In such markets, it is Imperative for Amazon to find
turn-key vendor that provides geo-load balancing and dedicated IT resources. Therefore, local
infrastructure limitations in other international markets act as obstacles for attaining the technical
infrastructure required for Amazon growth and development in international markets.
Logistics: Logistics is associated with the products and services as resources of an organization.
International markets are associated with regulations and policies such as import regulations,
taxes, tariffs and export laws26. Other regulations are related to shipping, for example, some
countries prohibit and restrict the shipping of certain items. Also, other international markets are
well known for corruption, supporting terrorism or positioned in disaster-prone areas. These
situations can result in unreliable e-commerce transactions and delivery. There exist various
methods to mitigate the stated risks associated with certain international markets. Choosing
fulfillment needs that accommodate the expansion needs of Amazon is the solution for risks
related to international markets27. The company can also collaborate with a vendor who is
already conversant with the marketplace and the challenges associated with that market to
educate the company on the best practices in those markets.
In-market support: International markets have customer support needs. The existing human
capital of the company will be faced with various cultural and language barriers in non-English
speaking countries. Localized versions of the designed mode of communication for customers’
service should also be implemented for in-market support.
3. Up-to-Date Inventory and Visionary and Informative
26 Whiteman, C. "4 Obstacles Hindering International E-commerce Growth." Multichanell Merchant.
September 24, 2015. https://multichannelmerchant.com/blog/4-obstacles-hindering-international-
ecommerce-growth/ (accessed October 4, 2018).
27 Li, Y, and R Fan. "The coordination of E-commerce and Logistics: A case study of Amazon.com."
Bachelor's Thesis, Department of Industrial Development, IT and Land management, 2014.

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17
To keep a long-lasting relationship with consumers, Amazon should always keep an up to
date inventory and very accurate28. Also, Amazon should utilize pictures other than descriptions
in portraying their products. Images are more attractive, and the consumers will be convinced to
check the product.
4. Keep customers on the loop every product and service
Amazon should continuously update the status of the orders to the customers and keeping
them on the loop by email and also updating the consumers through the emails on the last
content and books.
5. Shipping and Delivery
Amazon should conduct follow-up after shipping out a product to a consumer. The
company should send an email to the consumer after a day or two of expecting the delivery to the
client and ask the consumer if they have received their package and remind them that a customer
representative is available in case they require any explanations.
6. Advertisement by Word of mouth
In this technological age, one-on-one advertising is a potent technique. Human beings are
always swift to visit sites that are identified by their colleagues as awesome and marvelous.
Amazon can exploit this technique by rewarding individuals who bring in new customers. This
can be attained through referral codes or coupons during a specific season.
Recommendations
1. Develop more brick-and-mortar stores to tap on those customers who do not utilize
online stores as well to improve competitiveness with other retailers such as Wal-Mart.
90% of retail income is from Brick-and-mortar stores even though, e-commerce retail
28 Li, Y, and R Fan. "The coordination of E-commerce and Logistics: A case study of Amazon.com."
Bachelor's Thesis, Department of Industrial Development, IT and Land management, 2014.

CASE STUDY: AMAZON
18
development is remarkable29. Brick-and-mortar stores improve brand popularity and
increase the market reach.
2. Amazon should continuously undertake stringent measures to counteract cybercrime
against online operations and also to counteract counterfeiting. The issue of
counterfeiting arises since the business model of Amazon is easily imitable. Amazon can
address counterfeiting by developing technological measures and policies. For instance,
production evaluation procedures.
3. Amazon needs to cut their processing cost and handle their processing cost in-house to
main their cutting edges which provide them with cutting cost as well as deal with the
shrinking margins.
4. To deal with the shrinking margins and to maintain their cutting edge, Amazon needs to
reduce the payment processing costs and to deal with their transaction in-house as much
as they can. Amazon should develop a PayPal-like environment for money transfer
within, in and out of Amazon will result in a miniature economy which they can control30.
Conclusion
In conclusion, Amazon.com Inc has embraced innovation and since its inception in 1995,
it evolved into e-commerce giant and also diversified into different sectors such as cloud
computing. Amazon meets the interests of its stakeholders through various corporate social
responsibility initiatives, and these stakeholders include customers, employees, partnerships,
29 Buckley, C, P DeFina, and L Root. WALMART VS AMAZON. Economist 2016 Investment Case
Competition, the University of Hawaii at Manoa, Real Vision, 2016.
30 Rajappa, K, G.T Sack Kie, W Sullivan, D Wilson, A Agarwal, and R Thakur. Evolving E-Commerce Market
Dynamics: Changing Merchant Payment Needs and the Impact on Banks. Capgemini, 2013.

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19
government agencies, suppliers and outside communities. Amazon top three competitors in the
retailer sector are Alibaba, Wal-Mart, and Google. Strategic personalization which involves
tailoring the products, information, and pricing to the individual consumer will provide growth
opportunities for Amazon in its Whole Food marketing. Amazon requires enormous financial
resources, physical resources and human capital for growth and development. Fire phones and
Amazon local are some of the Amazon’s flops in its strategies to expand and develop.
Technology Integration and Research and Development and international markets are some of
the solutions to keys issues facing Amazon growth and development. One of the biggest
constraint or challenge to Amazon growth and development is risks associated with international
operations which include government regulation, shipping, and delivery problems as well as the
political and economic landscape of such global markets. The principle competitive factors for
Amazon against its competitors is the price, convenience, fast and reliable fulfillment, and
selection. Therefore, utilizing these principle aspects, Amazon continues to expand and generate
enormous revenues while also expanding into various industries like healthcare.
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