Analysis of Amazon Prime Membership as an Innovation

The report analyzes the success and impact of Amazon Prime membership as an innovative service. It discusses the market analysis, market entry strategy, financing model, and barriers faced by Amazon. The report also highlights the key takeaways from the analysis.

Running head: ENTREPRENEURSHIP AND INNOVATION
ENTREPRENEURSHIP AND INNOVATION
Name of the Student
Name of the University
Author Note

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Executive Summary
The report is based on the analysis of an innovation that has commercial success in the
market within a short period of time. The major innovation that has been taken into
consideration for study in the report is the Amazon Prime membership. The services that are
offered to the customers as a part of Prime membership mainly include streaming of movies,
faster delivery and better experiences as well. The industry and the key players in the
technology sector have been analysed in the report in detail. The market entry strategy of
Amazon in various countries have been discussed in detail as well. The financing model that
is implemented by Amazon is also a major part of the discussion that has been made in the
report. The barriers faced by Amazon in technology industry is an important part of the
discussion. The key learning that is gained with the help of the analysis is mainly related to
the methods by which an organization can uphold its operations in a profitable manner with
the help of differentiated services and products offered to the customers.

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Table of Contents
Introduction....................................................................................................................3
About the company........................................................................................................3
Innovation that has gained commercial success.............................................................3
Analysis of the market and the key players...................................................................4
Strategy of market entry chosen for the innovation.......................................................5
Financing model chosen for the innovation...................................................................6
Barriers faced in the process of innovation implementation..........................................6
Key takeaways gained from the analysis.......................................................................7
Conclusion......................................................................................................................8
References......................................................................................................................9

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Introduction
Organizations operating in the modern business environment aim at implementing
various types of innovations that include non-technological, radical, incremental, process or
product based in nature. Innovation provides support the organizations to gain competitive
edge in the industry over the other firms. The companies can also gain various means that are
implemented in order to gain effective progression and adaptation as well (Fernández-Mesa
& Alegre, 2015). Innovation is also based on the proper combination that is developed
between the levels of creativity within the organizations and changes that are implemented as
well. The report will be based on an innovation that has been commercially successful and
the ways by which it has influenced the organization (Elg et al. 2015).
About the company
Amazon.com is a global technology based organization of American origin that has
its base in Seattle, Washington. The organization focusses on the development of various
services that include cloud computing, digital streaming, artificial intelligence. The
innovative service that has been chosen for analysis based on the operations of Amazon in the
industry is Amazon Prime. The Prime membership is able to provide various facilities to the
Prime members that include faster delivery for the selected purchases, TV shows and music
related services and exclusive shopping deals as well (Amazon.com. 2019). The customers
are also provided with more number of option based on the products or services that they
wish to purchase.
Innovation that has gained commercial success
Innovation has always been a significant part of the evolution that has been
experienced by Amazon from an online bookstore to a publishing service, cloud computing
service provider and a global market place as well. Best inventors from all over the world

4ENTREPRENEURSHIP AND INNOVATION
have come together in Amazon in order to build the new technologies and the services that
have the ability to improve lives of the customers in an effective way (Gehman & Soublière,
2017). The teams that have been formed by Amazon in different areas or countries play a key
part in increasing the levels of innovation within the country. The development of Prime
membership based services have been able to play a key part in the proper improvement of
experiences that are offered to the customers. The movie and music streaming services are
able to play the most important part in the ways by which Amazon has maintained its position
in the technology industry (Gërguri‐Rashiti et al., 2017).
Analysis of the market and the key players
Amazon is facing major levels of competition from the various organizations that are
operating in the online retail industry. The major competitors of Amazon in the e-commerce
industry include e-Bay, Home Depot, Walmart, Flipkart, Alibaba and Target. The physical
retail organizations are also able to offer major levels of competition to Amazon in the
operations that are developed in the e-commerce industry. Walmart is a major competitor of
Amazon based on the growth of physical stores in order to reach the customers faster.
Amazon Prime membership based program has played a major role in development of
popular scheme that has also seen huge adoption among the consumers (Huijbens et al.,
2017).
The faster services that are offered to Prime members and Rewards that are gained by
customers are considered to be major aspects that have an influence on the success gained by
the Prime services of Amazon. However, the organization has started major competition from
many other organizations that are providing similar types of services in comparison to the
Prime membership facilities. The three major competitors of Amazon.com that offer
subscription services to the customers include Target.com, Walmart.com and Jet.com.

5ENTREPRENEURSHIP AND INNOVATION
Walmart has been providing the subscription of faster delivery services to the customers
without any additional costs (Jelonek, 2015).
Strategy of market entry chosen for the innovation
UPPSALA internationalization strategy has been applied by Amazon in order to
select the market and the entry mode for going international. The use of UPPSALA model by
Amazon is mainly based on the four major aspects that it needs to take into consideration
while entering a new market area. The knowledge related to levels of market commitment is
considered to be a significant aspect that is related to the internationalization of the firm in
foreign markets. The decisions that are taken by the marketers in the industry are mainly
based on the methods by which commitment of resources can have an influence on
knowledge of an organization based on foreign market (Kasemsap, 2016).
The start of operations of an organization in a foreign market is based on the impact
that various resources have on the knowledge gained by them. The company has started its
operations in Australia by exporting the products in order to attract the customers. The
experimentation that is conducted by the organization is followed by the proper development
of the business centre of Amazon.com. The strategy of Greenfield investments has been
applied by Amazon for the purpose of developing its operations in the country. The market
entry strategy of Greenfield investment is mainly related to the formation of separate business
centres in the foreign markets (Kuratko, Hornsby & Hayton, 2015).
The development of business centres will further lead to the development of products
that can fulfil the demands and needs of the customers. Amazon has decided to implement a
two-pronged strategy in order to enter the Australian retail market. The competitive
environment that had been developed in the Australian retail industry had an influence on the
development and implementation of market entry strategy of the organization. The

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organization has aimed at implementing the strategy in such a manner that is able to provide a
marketplace to the organizations and the first party products that are offered to the customers
directly as well (Matthews & Brueggemann, 2015). Amazon has taken into consideration
some key points that have an impact on the entry strategy. Amazon listened to the needs of
customers and provided them with the best levels of experiences. The first party products are
offered to the customers on a wholesale basis. The development of an active Marketplace is
considered to be an important aspect related to opportunities that are offered to the small
sellers (Piperopoulos, 2016).
Financing model chosen for the innovation
The three statement financing mode has been used by Amazon.com in order to gain
finances for the development of products and services. The equity levels of stakeholders are a
major part of the focus that is able to play a key part in the development of financing model
that has been used by Amazon. The debts are held constant by Amazon.com and have
eliminated the needs based on support that is required for a debt schedule. The interest rates
that are used in projected periods are eliminated from the most of recent historical periods as
quotient of the total debt and the interest expense as well (Rexhepi, Hisrich & Ramadani,
2019).
Barriers faced in the process of innovation implementation
Amazon has been able to expand its operations and has maintained high levels of
growth with the support that is provided by the various business centres and the fulfilment
centres of the firm. The attractive and efficient operations of Amazon still have to face major
issues based on the entry in various countries (Tracey & Stott, 2017). The key challenges that
are being faced by Amazon in launching the Prime Membership are as follows,
 Barriers to entry.

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 Pay-outs that are limited to two weeks.
 Selling environment that is highly competitive in nature.
 Difficulty related to acquiring positive feedback.
 Risking the levels of inventory that can be deemed as restricted or unsellable.
 The increase in levels of fees and the complications in various procedures.
 Requires the usage of various third-party based software tools that can be
competitive with the other sellers (Tsai & Lei, 2016).
The entry of new sellers in Amazon is considered to be a major factor that is able to
influence the ways by which the platform allows new sellers to join. The lack of proper
regulations is considered to be a major factor that has an impact on the sales of Amazon. The
firm has thereby started developing strict regulations based on the entry of new sellers in the
platform (Warnier, Lecocq & Demil, 2018). The content that is offered by Amazon to the
Prime members can play an important role in ensuring growth of the firm in an effective way.
The competition is also considered to be a major issue that is being faced by Amazon Prime.
The major competitors of Amazon Prime in the industry include Netflix. Netflix is able to
offer major levels of competition to the content that is offered by Prime to the customers
(Welter & Gartner, 2016).
Key takeaways gained from the analysis
The innovative product that has been offered by Amazon to the customers is able to
attract huge customers towards the organization. The Prime services have been able to offer
major facilities to the customers based on free delivery and offering products within lower
periods of time. The major learning that has been gained from the analysis made in the report
is mainly based on the methods by which customer base can be developed in an organization
with the help of proper innovations that have the ability to increase customer value (Yunis,

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Tarhini & Kassar, 2018). The enhancement of customer value is mainly based on the
development of experiences and high value that is provided to them as well. Customer value
has been able to gain high levels of importance in the last few years due to increase in
competition in the industry. The proper differentiation of an organization from its competitors
is mainly possible with the help of value that is offered to the customers (Warnier, Lecocq &
Demil, 2018). The experiences that are gained by customers have a higher impact on them in
comparison to the prices of products that are provided to them. Amazon has aimed at the
development of a larger customer base with the help of better services and high quality
products that have the ability to increase value of the customers (Matthews & Brueggemann,
2015).
Conclusion
The report can be settled by stating an organization like Amazon that operates in the
highly competitive e-commerce and technology industry needs to keep innovating its services
in order to uphold the consumer base. The organization needs to satisfy the customers and
provide them with higher value in order to ensure the proper profitability of the organization.
The company will also be able to uphold its place in the industry with the help of innovative
services that are provided to the customers. The Prime membership is considered to be a
significant aspect that is a part of the competitive edge that is gained by Amazon in the e-
commerce industry.

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References
Amazon.com. (2019). Amazon.com: Online Shopping for Electronics, Apparel, Computers,
Books, DVDs & more. Retrieved 31 August 2019, from https://www.amazon.com/
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Gehman, J., & Soublière, J. F. (2017). Cultural entrepreneurship: from making culture to
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