Amazon vs Alibaba: Business Models

This assignment requires a comparative analysis of the business models employed by Amazon and Alibaba. Students need to delve into each company's strategies, identify their core competencies, and assess their respective strengths and weaknesses. The analysis should consider various aspects such as e-commerce platforms, logistics networks, payment systems, and customer experience.

BUSINESS PROJECT
COMPANY ENVIRONMENT AND COMPETITION ANALYSIS
AMAZON.COM
YIP CHUI HA
LSM STUDENT ID:206059
BUSINESS PROJECT
BA (HONS) BUSINESS AND MANAGEMENT (TOP-UP)
THE UNIVERSITY OF NOTHAMPTON
18 Mar 2018
Business Project
Company Environment and Competition analysis

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Amazon.com

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Table of Content
Introduction........................................................................................................... 3
Market Overview.................................................................................................... 5
Alibaba V/s Amazon-Competitive analysis.............................................................6
Company History................................................................................................ 6
Company Philosophy.......................................................................................... 6
Business Models................................................................................................. 7
Geographical Focus............................................................................................ 7
Product Sales...................................................................................................... 8
Service and Fee revenues..................................................................................9
Road Ahead........................................................................................................ 9
Gaining competitive advantage.............................................................................9
Adaptability...................................................................................................... 10
Strategy............................................................................................................ 10
Challenges Faced by Amazon-Trading internationally.........................................10
PESTLE analysis-Amazon..................................................................................11
Political Factors............................................................................................. 11
Economic Factors.......................................................................................... 12
Socio cultural Factors.................................................................................... 12
Technological Factors....................................................................................13
Legal Factors................................................................................................. 13
Environmental Factors...................................................................................14

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Other challenges faced by Amazon..................................................................14
Logistics........................................................................................................ 14
Cultural complexities..................................................................................... 14
Language barriers and communication styles...............................................15
Cost calculation and Global pricing strategy.................................................15
Strategy for Amazon to enhance the business....................................................16
Usage of Data to upsell.................................................................................... 16
Enhanced brand experience for the consumers...............................................16
A loyalty program with serious benefits...........................................................16
Google Ad’s...................................................................................................... 16
Diversify into cloud based business..................................................................17
Amazon marketing communications................................................................17
Amazon Partnership strategy...........................................................................17
Data driven automation.................................................................................... 17
Focus on Artificial intelligence and machine learning.......................................18
Conclusion........................................................................................................... 18
References........................................................................................................... 20

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Introduction
E-commerce is one of the most talked about business word since last decade, a
lot of credit can be given to Amazon.com to take e-commerce to the heights
envisioned and should be appreciated for starting something so relevant for the
entire world. Amazon.com is one of the largest online marketplace connecting
buyers and sellers (Bhatt, Patel, Chheda & Gawande, 2015). The company which
was started at the back of a garage way back in 1994 by the present visionary
Jeff Bezos now has emerged as the largest e-commerce player in the market.
Amazon was launched initially as an online book store, few years later the
company forayed into DVD, Games, Lifestyle, Clothing, Consumer durable, web
services and what not, the company currently boasts of more than millions of
products listed on its website, finely curated to make easy browsing for its
customers(Smith, Rupp & Offodile, 2017). The company operates through three
segments across the globe; North America, International and Amazon web
services. One of the most astonishing features of Amazon’s business model is
that it operates on Marketplace model, which means that it does not hold or
control any inventory of its own; it just provides a platform where the sellers can
sell their good to the buyers (Kristensen, Penner, Nguyen, Moy & Lam, 2017)

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Amazon earned revenue of 136 Billion in the year 2016 and it employees over
lakh people working in its offices which are situated across 13 counties, although
the company ships product in almost 185 countries and merchants from over
100 countries list their product on its website (Chen & Wilson, 2016). It is really
an impossible task to even imagine how the company effortless operates its
business operation which is spread across so many countries, despite the
plethora of countries the company is operating in, Amazon still remain one of the
most valued and customer centric company in the world. How much ever the
competition may be rising, Amazon always pulls out best practices to woo the
customers and its consistent innovation in improving the customer service keeps
its way ahead of all its competitors(Schmidlin, 2014). Amazon has been also
making tremendous contribution to the world by its cloud services, also called as
Amazon web services, is apparently even bigger than the Microsoft (Schein,
2017)
The purpose of the report here is to do a comparative analysis of how Amazon is
competing in the market and understanding of its competitive position. The
report will also highlight how Amazon is leveraging its competitive edge to
provide additional benefits for its customers and still sustain its position of
leader. The report will also highlight the challenges company faces or has been
facing in its entire journey while trading across borders. In the era of
globalization, when the entire world is accessible at a click, there still are
challenges in setting up a business in other countries. PESTLE analysis will help
in understanding the various macro environmental forces to consider while
evaluating business opportunity. At the end of the report certain strategies will
be recommended to Amazon on how to enhance its existing business and
maintain the competitive edge over its competitors.

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Competitive Position
In a world with a population of 7billion, where the internet penetration is almost
51 %( 3.65 Billion), e-commerce sector is bound to grow at a humongous rate.
The current market projection for the growth in e-commerce is expected to be
around 20% CAGR, which implies there is a huge untapped market and so are
the areas of improvement(Turban, Outland, King, Lee, Liang & Turban,2017) A
plethora of players are operating in the e-commerce sector, some of whom are a
strong competition to Amazon.
The company has been leveraging the power of diversification strategy, which
can be seen from its diverse interest by expanding into the online streaming
market, manufacturer of consumer’s electronics such as Firefly and Echo and a
sizable extension of Amazon web services. Further, Porter’s 5 force model will
help in understanding how the company is operating and keeping its competitive
edge in this evolving market. Porter analysis is a true reflection of Amazon’s
competing strategy since its existence in the e-commerce market; the model is
discussed in the later section of the report, highlighting its effectiveness in
competing against the market forces and competition (Soper, 2016)
Certain players like Flipkart in India, E-Bay in the USA and other countries,
Alibaba, Paytm are major competitors of Amazon. The company has to stay on its
feet at all times to sustain its established position of leader. It has been in the
news recently that Wal-Mart, the largest retail player is looking to enter in the e-
commerce market, and this will further intensify the competition (Christin, 2015).
The e-commerce market primarily caters to the B2C customer segment which
includes the online retail and shopping. In one of the recent studies conducted
by Rauken (Marketing agency) in 2016, approximately 1.61 billion people from
across the globe purchased goods online generating a total turnover of 1.9
Trillion USD. If at all projections are an indication the e-commerce market is
touted to jump to 4.06 trillion by 2020.All these facts thereby implies the scope
and the ever increasing competition to gain a sizable pie of the e-commerce
market (DaCosta, 2016)
Amazon has a different approach to enter international market, the strategy of
the company is to “ Go global and think local”, the company customizes its

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product and services to better suit the domestic market. It conducts an
environmental analysis which helps the company to define its marketing mix.
Determining the 7P of marketing is half job done, the other half is done by
analysing the competition in the market, understand the product offering of the
current service providers and then fill the lacunae in the present market offering.
In order to remain competitive in the market, Amazon focuses on the
differentiation and cost leadership strategy. Cost leadership helps the company
to give the products at the least rate, and differentiator strategy helps the
company to offer differentiated services. Amazon prime, Amazon web services &
Online grocery stores are some of the example of its differentiated
strategy(Steenkamp, 2017).
Alibaba V/s Amazon-Competitive analysis
Alibaba and Amazon are undoubtedly the two largest e-commerce companies in
the world. Although, if numbers have to be believed, Amazon is way ahead of
Alibaba because of its global expansion business strategy, and market
dominance in the US and other big markets.
Another differentiating factor between both the companies is its web platforms,
Amazon is a closed system which manages everything related to the warehouse,
suppliers, customers and the logistics. On the other hand, Alibaba is an open
platform which gives power to individual stakeholders. Hence, it can be seen that
Alibaba wants to empower the people who are registered on the platform, while
Amazon wants to control the same to deliver maximum productivity to the
clients(Choi, 2017).
Jeff Bezos, who is seen as one of the greatest visionary of its times was always
clear of the philosophy for Amazon. He wanted Amazon to be remembered as
customer-centric organization, an organization which focuses all its operation,
policies and procedures around its customers. The same is highly visible by its
excellent customer service, despite the vastness of the business; it never forgets
to pay attention to even its smallest customer. Amazon’s pricing, delivery,
customer support is both impressive and in a fitment with customer seeking
values. Amazon is really obsessed with the pricing, the quality of products and

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thus keeps very few suppliers and maintains a very strict vendor selection
process (Allen, 2015)
Alibaba’s business strategy is more focussed on being a cost leader, it believes
in giving the lowest cost products to the customers, which is also the USP of the
company. Hence, in accordance to the Porter’s generic competitive advantage,
the company has chosen cost leadership as the viable strategy towards business
sustainability. On the contrary, Amazon focuses on Cost leadership and brings
differentiation in its services by including services like Amazon prime, Amazon
music, one day delivery gurantee and many more. The company is focussed on
the broad market, thus it makes more sense to be a cost leader and keep its
product and services highly differentiated(Li, 2018).
Business Models
Alibaba in the USA has been best known for their B2B platform which connects
the Chinese manufacturers to businesses, and is registered as Alibaba.com, but
the beauty is that it does not make sizable revenue from US or any other market
as a matter of fact. Alibaba has been making almost 80% of its money from the
Chinese market alone now that is something to be really proud of. Taobao which
is a division of Alibaba is where they make majority of the money. The model of
Taobao is similar to E-Bay, where the company allows small businesses and
consumers to list their merchandize for sale. Taobao mall, another great division
of Alibaba has a business model like that of Amazon, it also does not hold any

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inventory and just connects the buyers with sellers (Viswanadham, 2017). It is
really an understatement to say that the Chinese market is dominated by
Alibaba, because the sales which Amazon does from USA market is nowhere
even close to what Alibaba makes from only the China market(Ojha, 2016)
Amazon as has been said earlier operates on a marketplace where third party
players sell their goods on its platform .Recently Amazon has also been storing
and manufacturing some of the products out of its unfathomable line of
inventory and is directly competing with the players who are selling on its
website. Amazon and Alibaba both have cloud services, although the cloud
services of Amazon are much bigger than Alibaba. Lastly, Amazon believes in
innovation while Alibaba focuses on growing and expanding the business by
helping small businesses (Gupte, 2018)
Geographical Focus
As explained earlier that Amazon has base in almost 12 countries and ships
product to approx. 180 countries. Whereas, in case of Alibaba, the biggest
market is China, from where it extracts almost 80% of its sales. Thus on one
hand is Amazon which is focussing on all the possible business location to spread
its business and push the envelope of services, Alibaba is focussing mostly in the
Asian market (Lorenzo, 2017)

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Product Sales
Alibaba’s revenue in the year 2016 soared to a new high; this new record can be
contributed to the zeal of Chinese buyers, who have been buying almost
everything online. Alibaba saw an increase of 56% in its revenue to reach 22.96
Billion USD. The increasing revenue does not necessarily means that the
company is in profit; it reported a loss of 9.9 billion Yuan, approximately more
than double from last year (Baba, 2016) The Company though increased the
number of consumers on its platform and has added few more Asian countries as
a part of its momentum regime. The company has also exceled at its cloud
services, adding more than 500 million new customers (Kaplan & Montiel, 2016)
Amazon made revenue of 136 Billion USD and despite making losses in the new
markets such as India, the company is steadily moving into a profit zone. The
goods sold on the website have been increased by a margin of 30% and a
considerable number of buyers have also increased (Rossman, 2016). Amazon
web services can also be seen as a pillar of strength for Amazon; it has been
spinning money for the company and is the largest player in cloud services.
However, if the number of product sales have to be seen, Amazon has not yet
disclosed the number of product which is sold in the year 2016, however revenue
wise the company is much ahead of Alibaba(Yenni, Pan & Cui,2017)
Service and Fee revenues
Both Amazon and Alibaba work on a commission model, they charge the sellers
for every transaction which happens through their website. ALibaba despite
charging commission to the sellers also earns revenue through Google ads. On
the other hand, Amazon earns its revenue only from seller’s commission and by
selling its own good on the website (Chen, 2014)
ALibaba charges somewhere between 3-5% as commission fee, whereas in case
of Amazon the commission ranges somewhere between 6% to 20%. Hence, it
can be said that Amazon makes more money in comparison to Alibaba, which is
then further utilized in improving its customer service (Khammuang, 2015)
Road Ahead
There are no two doubts that it is a matter of time when both these giants will
clash head on. Alibaba dominates the China market and Amazon is the

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undisputed market leader in the USA. Both the companies have created
economies of scale and are consistently moving ahead. Jack Ma in recent
interview has shared his views about investing in the US market; this could pose
a serious threat to Amazon. Alibaba has a very scalable business model and with
its paced momentum, it would be really interesting to see what happens in the
future. As of now, Amazon leads the market at all front, plus its excellent
customer services and customer centric approach wins the heart of its each and
every customer (Etemad, 2017)
Gaining competitive advantage
In one of the recent interviews in 2017, Jeff Bezos said that if one has to
understand how to learn and work with people, they actually have to start
working with them, and not for them. Amazon is so exclusive with its data
analytics and social listening that it is impossible for the company to miss any
piece of relevant information (Belavina, Girotra & Kabra, 2016). Good or bad,
Amazon analyses the root of the problem and makes a point that it never
happens again. However there are certain things which have helped Amazon in
gaining a competitive advantage because of its business activity (Nwogugu,
2015)
Adaptability-Amazon is always adapting to the changing business environment
and the technology. It is way ahead of the curve and never misses on any radical
innovation which can drastically improve its business operation and customer
satisfaction. Hence, evolution has been a key factor of Amazon success (Chopra,
2016)
Strategy- Amazon has been spot on with almost all its strategic moves,
expanding to the Asian market, investing sizable assets In the developing
economies, its consumer oriented vision and strategies, Amazon’s exclusive
products(Alexa) are some of the examples of its well-crafted strategy. The
company channels all of its efforts both through online and offline tools and
leverages the same for the customer’s advantage. Cost leadership has been
always the strategy of Amazon, its tries hard to negotiate with the sellers so that
the buyers get the lowest possible price for the product. It has been leader owing
to its cost leadership strategy. Further combined with customer focus approach
does the wonder for the e-commerce giant. The potential of Amazon is possibly

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limitless, it is in the world to create a disruption and change for the good
(Oreskovic, 2016)
Challenges Faced by Amazon-Trading internationally
As mentioned earlier in the report that Amazon delivers product to more than 1.6
billion people out of the total population of 7 Billion. The company delivers
almost too every other country but has a base in only 12-14 countries. Any
multinational company while trading has to consider a lot of factors, factors
which are really crucial for that particular country or continent. Failing to comply
with the legal formalities can lead to abolishment from the said market. Amazon
has been facing certain challenges with the China market and few others, owing
to the government regulations and China being a closed economy (Tian, 2016).
In a bid to understand the challenges which a MNC could face, it is really
important to understand the PESTLE framework given by Kotler way back in 90s.
PESTLE analysis-Amazon
PESTLE analysis is one of the most fundamental model which helps in analysing
the macro environment for any organization. The model considers Political,
economic, social, technological, legal and environmental factors which can
change the shape of any business, also very important while trading
internationally.

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Political Factors
The business model of Amazon makes it fall under the scrutiny of political
influence. This force focuses on the governmental activity and how it could
politics can pose a strong challenge for Amazon. The following factors are
important in the trading internationally:
 Political stability of developed countries (Opportunity)
 Government support towards e-commerce sector (Opportunity & Threat)
 Increasing governmental efforts on cyber security (Opportunity)
At the helm of Political instability the company is unable to perform at its best,
the company is under the scrutiny of the government which keeps on changing,
which can force the company to alter their business model or even exit the
country.
Amazon benefits strongly from the political stability of the nations. Political
stability helps the company to diversify the business and also expand to other
developed markets. Markets like US serve beneficial to Amazon as the company
has the leverage to open a brick and mortar model to leverage its e-commerce
business. In the similar manner, government support towards the e-commerce
industry is a big plus point, as there are less restriction and it’s more like an
open economy. This can also be a potential threat because it leads to more
players in the industry (Salam, 2016)
Economic Factors
Amazon business hugely depends upon the economies of the nation and also on
the disposable income of the population. Based on the rationale the above points
have to be understood:
 Economic stability of highly developed markets (Opportunity )
 Increasing disposable income in developing countries
 Potential economic recession of China
Economic challenges for Amazon can be related to the inflation of the economy,
it affect the e-commerce player considerably. At the same time, exchange rate
fluctuation, shortage of labour supply can also affect the company and be an
obstacle in its growth. An example of the economic factors can be seen from the

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largest market of India and China. India is a price sensitive market, thus Amazon
has to reduce its prices to penetrate the tier 1 and 2 market of India. In the
similar manner, it is extremely impossible to succeed in the Chinese market on
the basis of Price, it is a proven failed strategy to compete in the Chinese
market(Pisano, 2017).
Economic stability of the developed nations is a big advantage for Amazon;
stable economies bring with itself an economically stable environment, thus
benefitting Amazon. In the similar manner it has been seen that the disposable
income of people living in the developing nations has been increasing
considerably, thus creating opportunity for Amazon. Alibaba has captured around
84% of the online sale in China, Amazon is looking to strengthen its efforts in
China, but the outlook of China does not seem that promising, which could
possibly alter game plan for Amazon (He, 2015)
Socio cultural Factors
This is another element of PESTLE, which if not analysed before entering into a
new market can become a big challenge for the company. The following points
have to be kept in mind as part of socio cultural factors:
 Increasing wealth disparity(Threat)
 Increasing consumerism in developing countries (Opportunities)
 Increasing online buying habits (Opportunity)
Increasing wealth disparity for Amazon may create problem for Amazon as the
difference between rich and poor will increase a lot, which will create bipolarity
in their buying behaviour. Developing markets like Asia are serving a good
purpose for Amazon due to increase online activity, smartphone penetration and
increasing disposable income, certainly a plus point for Amazon. Increase in
disposable income of people in developed and developing nations will further
increase the buying at the largest e-commerce website.
Technological Factors
Technology is another factor which can create possibilities or absolutely rubbish
the possibility of Amazon foraying into international waters. Amazon’s entire
business is tech based and hence this factor plays an important role in the
following ways for Amazon:

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 Obsolete technology (Threat & Opportunity)
 Increased IT efficiency (Opportunity)
 Increasing cybercrime (Threat)
As the world is progressing at a speed unimaginable, the technology is getting
obsolete faster than imagined. This is both an opportunity and threat for
Amazon. The company has to stay ahead of the curve and keep reinventing the
technology wheel and come up with radical innovation to convert the threat as
an opportunity. In the process, the fear of new entrant entering the market
would become less. Cybercrime is a threat to all the e-commerce companies,
attacks like DDos and Ransom ware can destroy the industry by destroying the
faith of the people in the sector. Hence, growing cybercrime is a major threat in
the face of Amazon (Kahn, 2018)
Legal Factors
Amazon has to concur with the legal formalities, requirement and regulation of
any nation before it even thinks of venturing into their waters. The following
factors have to be considered while evaluating legal fundamentals
 Increasing product regulation (Opportunity)
 Ease of import and export regulation(opportunity)
The market entry restrictions, fair wages policy and employment laws can create
legal challenges for Amazon, thus the company has to abide by the entire legal
requirement before even planning to enter a country to expand its business
operations. For example, Chinese market is a difficult market to enter because of
a number of legal regulations and its policy of promoting the local companies. At
the other time, India is a favourable market as the vision of India is to go digital,
hence the focus of the government is to provide an environment of sustainability
and growth to e-commerce and digital companies(Sindi & Roe, 2017).
Increasing product regulation for Amazon will benefit the entire e-commerce
sector because it will prevent counterfeiting of goods and abolish the poor
quality goods from the market. Certain countries have stringent regulation in
terms of export and import due to prevention of the interest of their local
manufacturers, but in most of the countries, in order to promote trade, the
barrier are few, thus creating an opportunity for Amazon.

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Environmental Factors
The company may be an online store but it is affected by the environmental
factors as well, the factors which can either strengthen the position of Amazon or
doom it for a lifetime, The factors which have to be kept in mind while evaluating
this force are:
 Rising interest in environmental programs (Opportunity)
 Rising emphasis on business sustainability (Opportunity)
 Increasing popularity of low carbon cycles (Opportunity)
Amazon through its CSR activities can contribute towards the benefit of the
environment, the company can itself start using packaging material which is
environmental friendly, strengthening its position in the market, and set up a
milestone for the competitors to achieve. Business sustainability is in direct co-
relation with following good environmental protection processes. The company
can achieve business sustainability by complying with the environmental laws
and adopting the best practices. Amazon can introduce low carbon cycle
processes in its business operations to further give a boost to its position in the
nation.
These are the factors any company has to consider when trading internationally,
all the factors have to be evaluated at the onset of business planning, without
the evaluation of these steps the company can get into the gutters.
Other challenges faced by Amazon
Logistics- Another key challenge at the hand of Amazon is figuring out the right
logistic partner for the business operation. In absence of a reliable and
trustworthy logistic partner company will not be in a position to live up to the
expectation it has set for the customers.
Cultural complexities- Cultural complexities are challenging when selling
overseas, the company has to be well aware of its target customers, their
preference, and the existing completion and so on. People tend to have different
behavioural online habits thus it becomes a challenge for the company to have
beforehand knowledge about the cultural and the habits of the population.

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Language barriers and communication styles- Amazon is a MNC based out
of USA, the company is truly American in the way it conducts itself, and so is the
communication strategy. But the company has to understand the language, the
feeling sentiments and emotions of people from different countries in order to
deliver a highly contextual integrated marketing campaign; else all the money
the company will spend in the marketing will just go down the drain (Crane &
Matten, 2016)
Cost calculation and Global pricing strategy- Every market is different in its
composition, structure, norms and protocols, hence it is advised to study each
market in depth before entering into it. Pricing is a very crucial factor when it
comes to entering into a foreign market. Company has to evaluate the price
sensitivity of the market and accordingly set the price of the products. Amazon
has attained cost leadership, but in order to achieve success in the Asian
markets the company has to further reduce the cost to combat the local
manufacturers and players like Flipkart in India and Alibaba in China (Woo, Keith
& Thornton)
Supply chain risks and labour exploitation- Every country has labour protection
laws, in certain countries the laws are stringent and in other they are company
friendly. Amazon has to understand the problems in advance regarding labour
before evaluation a country for growth. Supply chain is a huge contributing factor
of success for Amazon, thus it has to ensure it gets the right suppliers on
platform, suppliers which are credible and can be trusted to deliver great
products with absolute surety.
In coalition all these are some of the biggest roadblocks or challenge Amazon
has to face while evaluating the idea of trading internationally. Other factors like
currency factors, cultural differences, buying behaviour and competition have to
be considered while evaluating the chances of business momentum and
sustainability.
Strategy for Amazon to enhance the business
The company’s strategy has always been to maximize the benefit of its biggest
stakeholders, which in the case of Amazon is Customers. Company uses
customer centric strategy to attract the customers and retain them. Another

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strategy which company uses is to bring innovation in its processes and
technology. The company keeps on updating its technology to better suit the
needs of the customers and enhance the capability of the company to provide
quality products to the customers at lowest price. Hence, it can be said that the
overall strategy of the company is the result of its marketing mix or its 7 P
analysis.
Usage of Data to upsell
A lot of e-commerce companies exist in the online, but there are only few who
take leverage of the growing platform. Consumers these days have gotten into a
habit where there look for products online, either with the intention of buying
them later or buy from retail stores. Amazon has to be very cautious and not
leave such customers in a rag. They have to remarket the same product they
were interested in on all the possible webpages he goes onto, remarketing and
retargeting will help Amazon to regain the lost customers and increase its sales.
Big data analytics can thus be of great help, analysing and breaking the data into
small chain for analysis will help Amazon to take better control of its consumers.
Enhanced brand experience for the consumers
Amazon is known across the globe for its excellent customer service and
customer centric approach, the company is synonymous with trusted delivery of
good quality of products. All the mentioned points create a mind map for
Amazon. The next step is to ensure that Amazon works on improving the
customer experience when they deal with the company, the experience can be
improved by addressing the emotions, sentiments and pain points of the
customers. The brand experience will further help Amazon to increase customer
satisfaction.

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Focus on the Ansoff Matrix
Amazon is one company which uses a number of strategic tools to deploy new
strategies in its business model. One such application is the usage of Ansoff
matrix. In accordance with the matrix, the company has to focus on product
development of Echo and Kindle, these products have the ability to disrupt the
entire technology market. Similarly, Amazon has just entered into the Australian
market, and presently the response is lukewarm in the region, the company has
to speed up its marketing and promotion as a part of its market development
plan(Gassmann, 2017).
Diversify into cloud based business-Amazon has been doing terrific in its
cloud business, Amazon web services is already earning good moolah for the
company. Amazon has to continuously think of new ways to leverage the
technology for improving the entire spectrum of e-commerce services. The cloud
services can be used to drive more content on its Amazon prime services and
store a lot of customer data for further analysis.
Amazon marketing communications- Amazon has been widely known for its
marketing campaigns throughout the year. The company partners with the best
media agency which understands the mission and vision of company and
together they create some really brilliant marketing campaigns. However a lot of
improvement can still be done with the campaigns, for example the company

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still does not combine all the communication channels in sync to deliver a highly
targeted message to its consumers.
Amazon Partnership strategy-Amazon is a very smart player, it recognized in
its early days of business that if it has to grow, it certainly has to do more than
what others have been doing. The company since then went into numerous
partnership programs to consolidate its market share in a particular category. It
charges renowned publishers for selling their books on the store, because of the
partnership strategy. The company has always been careful in making partners,
it has to further revisits the strategy and add more partners on the platform to
cover a large market share and utilize the existing database.
Data driven automation-Data driven automation plays a very key role in the
21st century. Automated search advertising and bidding system have benefitted
Amazon a lot. Further the automation can be applied in delivering promotional
content to the consumers. Data driven automation gives an opportunity to tweak
the content according to the taste and preference of the customers.
Focus on Artificial intelligence and machine learning-Artificial intelligence
and machine learning are the things of future. Technology companies can exploit
the power of machine learning to refine the searches for any customer. Program
will automatically update itself after understanding the taste and preference of
the customers it realized from the search history. This is definitely going to be a
breakthrough in enhancing customer experience.
Conclusion
Amazon.com was founded in the year 1994 in Seattle by Jeff Bezos, ever since
the company has been steadily climbing the charts of success. The strength of
Amazon can be owed to its deep rooted customer-centric approach; the
company focuses all its strategies and policies in and around the customer.
Amazon is one of the very few companies which offer great pride in delivering
excellent service to its customers. From the perspective of the report, Amazon
weakness lies in not being able to manage its operational and marketing costs;
these are the biggest problematic cost centres which Amazon has to take care of
currently to earn profits for the company. E-Commerce is touted to grow at a
CAGR of 20%, this implies unimaginable propensity for growth at Amazon.

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Development of the Asian market, ease of government regulation I trade
practices are some of the opportunities that Amazon has to take advantage of.
Amazon faces threat from a long list of players emerging in the online sector,
players who are breaking the market by offering bad quality products, some of
them are exceedingly doing well and giving a strong competition to Amazon.
As discussed in the earlier section regarding the growth strategy of Amazon, the
company should focus on the Ansoff matrix and give impetus to the product
development of Alexa and Kindle, in accordance with the market development
focus on the Australian and other such markets and in order to penetrate the
market, the company has to craft some value based loyalty benefits and price
leadership. The company is already a cost leader in most of the markets,
especially Asian market, however in accordance with the Porter’s generic
strategies model, slight differentiation in services by the use of Prime, drone
services, AWS etc, the company can really capture the sentiments of the market
and achieve business momentum
The competitive advantage of Amazon can be cited to its excellent customer
service, fast deliveries, supplier selection criteria and its marketing
communication. The findings of the PESTLE analysis shows that the political
instability of the nation can pose a strong challenge to Amazon, in the similar
manner, the changing exchange rates, market fluctuation, declining economy
are the challenges at the hands of Amazon. Rising labour costs, increased
government intervention on the employment laws are further challenges which
Amazon has to tackle in the present and the coming future.
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