Innovation in Amazon

This paper explores an imaginary innovative product owned by Amazon, the largest ecommerce company in the world. It covers three hot topics about innovation in Amazon, idea for an innovative product, streamlining of innovation with current capabilities of Amazon, design thinking for the innovation, user involvement, fast integration-time, cost and resources, prototyping and testing capabilities, and cross functional management.

Running head: INNOVATION IN AMAZON
Innovation in Amazon
Name of the Student
Name of the University
Author note

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INNOVATION IN AMAZON
Table of Contents
1. Introduction:................................................................................................................................1
Part 1.1. Three hot topic about innovation in Amazon:...................................................................1
Part 1.2. Idea for an innovative product:.........................................................................................2
Part 1.3. Streamlining of innovation with current capabilities of Amazon:....................................2
Part 2.2. Body:.................................................................................................................................3
Part 2.1. Design thinking for the innovation:..................................................................................3
Part 2.2. User involvement:.............................................................................................................6
Part 2.3. Fast integration-time, cost and resources:.........................................................................7
Part 2.4. Prototyping and testing capabilities:.................................................................................8
Prototype:.....................................................................................................................................8
Testing capability:.......................................................................................................................9
Part 2.5. Cross functional management:........................................................................................10

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1. Introduction:
Innovation can be defined as development of a new idea or product to serve an
emerging need in the market. Sisodia (2016) mentions in this respect that innovation has
emerged as one of the most important drivers of sustainability in the global industry. The
ecommerce industry is one of the most innovative industry in the world led by multinational
ecommerce companies with immense financial and technological base to bolster their
innovations. The paper would delve into an imaginary innovative product which would be owned
by none other than Amazon, the largest ecommerce company in the world. An exploration of
three topics regarding the company would set the background of the study.
Part 1.1. Three hot topic about innovation in Amazon:
Hot topic 1: Free Food isn’t enough—How Amazon beats Google in Innovation:
The article published in the Forbes magazine sets the perfect stage for the study by
comparing between Amazon and Google on the parameter of innovation. The article mentions
that the innovation score of Amazon is 166.3 compared to 95 achieved by Google (Forbes.com,
2018). This innovative power of Amazon can be attributed to the power of the company to base
its innovation on customers’ needs and employ experts for short span of time to utilise their
talents.
Hot topic 2: Amazon's arrival set to shake up Australia's retail sector:
The second article taken into account was published by The British Broadcasting
Corporation and advertises Amazon’s power to influence its competitors even in market where
ecommerce giant enters newly (BBC.com. 2018). The article points out that when Amazon
declared its intention of entering the Australian ecommerce market, the share price of resident

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Australian retail chains dipped. This dip shows that ecommerce is not only capable of
influencing the revenue generation of its competitors but also their capital generation.
Hot topic 3: Amazon’s Third-Party Sellers Hit By Hackers:
The article containing the aforementioned title was published in the Walls Street Journal
and points out the darker side of ecommerce business of Amazon, cyber theft. The article
mentions that hackers are targeting the third party sellers of Amazon and stealing the financial
resources by making fake deals. The article further mentions this data theft is detrimentally
effecting the brand image and customer satisfaction of Amazon (WSJ.com, 2018).
Part 1.2. Idea for an innovative product:
The innovative product which Amazon would develop is a secured payment gateways.
The gateway would require the customers put in their identity details in order to enter the portal
of Amazon. The portal would only allow customers carry on further functions like ordering of
items subject to the authentication of the details by specific government body which had issued
the identity proof whose details have been used. The payment gateway would enable customers
make payment secure and reduce cyber theft. It can also be pointed out that the product portfolio
of Amazon is vast consisting of both consumer goods as well as industrial goods. Thus, the
innovative payment gateway would provide security of payment to both domestic consumers and
industrial consumers. Thus, in other words the payment gateway would be totally aligned
with global product portfolio of Amazon.
Part 1.3. Streamlining of innovation with current capabilities of Amazon:
The new innovative payment system is perfectly aligned with the current capabilities of
Amazon. Wang, Li and Wang (2015) point out that in order to take maximum advantage from

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innovations, business organisations have to align their innovations with their business
capabilities. As far as Amazon is concerned, the ecommerce company operates in more than a
hundred countries either directly or through third party retailers which distribute Amazon
products (Amazon.com, 2018). The third party payment gateways are already under threat of
hackers (WSJ.com, 2018). Moreover, the ecommerce is already spreading its direct presence in
the global markets by entering markets like Australia (BBC.com. 2018). The ecommerce giant is
also required to maintain its global position as the top innovating company in order to retain its
top position even in new markets like Australia (Forbes.com, 2018). This clearly shows that the
payment gateway would secure the company and its customers from cyber thefts.
Part 2.2. Body:
Part 2.1. Design thinking for the innovation:
The innovative product which Amazon would be introducing in the market would be highly
advanced payment gateway which would enable Amazon encounter data theft reported in the
third articles. The payment gateway would be linked to Amazon, government and banks.
Whenever a customer would attempt making payments, the new portal would require the
customers to fill up their basic details as per an identity proof. The customers would be required
to input his identify proof details like any number of any document issued by national
government. The website of Amazon instantly would send an authentication mail to the authority
issuing the identity proof whose number have been mentioned. The customer can shop online
and make payments only after the auto generated confirmation from the government body is
received. The customers would not be able to access the products of Amazon if the confirmation
from the concerned government authority does not come. The third party retailers and firms
using the payment gateway would have to input their respective employer identification number

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issued by the Internal Revenue Services (Irs.gov, 2018). The payment system would enable
Amazon and governments track the ecommerce usage as well as identify hackers. This
innovation would enable Amazon to secure its third party sellers and boost its customer
satisfaction in new markets as pointed out by the third and second articles respectively.

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Domestic users
Corporate users
Input details and identification
number issued by Govt. of US Input details and identification
number issued by IRS
Amazon
payment
gateway
Verified and confirmed by
auto-confirmation system, of
Govt Verified and
confirmed
Verification
and
confirmation
declined
Portal and gateway stops
working
Payment
proceed
Figure 1. Diagram showing working of innovative payment gateway of Amazon
(Source:Author)

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INNOVATION IN AMAZON
Part 2.2. User involvement:
The new innovative payment gateway would require involvement of the users to attribute
it with success. Amazon should promote the payment gateway and its features on its official
website. This would create awareness among both the industrial consumers and the domestic
consumers. The company then should educate the consumers about the advantages of using the
payment gateway. The consumers should be educated about the increasing online cash thefts and
the need to use a more secure payment gateway. Thus, the company instead of forcing the
gateway upon consumers should create awareness among the latter. This would create a more
natural acceptance among consumers about the highly secured payment gateway. The consumers
would also start using Amazon payment gateways to make more purchases in order to enjoy high
level of payment security. The highly secured and innovative payment gateway due to its high
level of security would also enable the ecommerce giant attract customers of other ecommerce
companies. Thus, user involvement would enable Amazon attract more consumers and receive
more orders online. This would boost its sales of products and boost its revenue generation. This
enhanced security would boost the brand image of Amazon in the market as an ethical and
customer centric organisation. This strong corporate image would boost the share price of
Amazon shares and enable the ecommerce giant to attract more capital. Thus, the innovative
payment gateway would boost both revenue and capital generation of Amazon.

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Figure 2. Cycle showing customer involvement in new payment gateway and business outcomes
(Source: Author)
Part 2.3. Fast integration-time, cost and resources:
The time required for Amazon to develop the innovative and high security payment
gateway would be around two years. This is because as shown in figure 1, the payment gateway
would require approval from the Government of the United States of America on one hand and
approval of the participating banks on the other. Similarly, Amazon would require to initiate a
pilot project to develop the payment gateway and require consent of the shareholders. The
project initiation stage of the project would require the company conduct a financial and
technological feasibility of the gateway. Then it would also require formation of a high level
supervisory board and project team to oversee the payment gateway project. This would be
Payment gateway
Secure payments
Customer
involvement anbd
trust
Strong makret
image
More online
orders
More revenue
generation
More capital
generation
Stronger
operations of
Amazon

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INNOVATION IN AMAZON
followed by project planning and acquisition of the resources like software and manpower. The
company may be required to conduct open innovation with third party firms. The next process
would execution of the project followed by project closure. Amazon would also have to monitor
and test the actual benefit of the innovative payment gateway both profit wise and security wise.
Thus it is evident that Amazon would require to invest immense amount of cost towards
development of the innovative new gateway. The following are the resources and cost structure
of the high security payment gateway.
Resources Cost type(variable, semi
variable or fixed)($)
Technological
Software Variable
Hardware Variable
Manpower
Own manpower(salary+project related
payment) Semi-variable
Contractors variable
Engineers and experts variable
Open innovation partners Fixed
Financial resources
Loan from bank Fixed
Interest on loans fixed
Laboratories Fixed
Employee training facilities Fixed/variable
Stationary variable
Conference facilities Fixed
Part 2.4. Prototyping and testing capabilities:
Prototype:
Amazon should release a prototype of the payment gateway in its home market, the US to
test its capability in securing payments. The prototype should enable the customers to make
payments securely and fast. The company at a later stage can expand the prototype of payment

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gateway into selected markets where it has high level of operations. The selected countries can
be Canada, Europe and Asian nations like China and Japan. Amazon should avoid releasing this
prototype in very poor markets with low level of technological development. The company
should also limit the access to the payment and its control to itself. The company at a later stage
can expand the security level of the prototype. The extension of security level can consist of
receiving confirmation from banks as well especially while processing payments of high value.
Similarly, the innovative payment gateway can enable sending instant message to banks and
police in case of any failure of identity authentication. This would enable the police and the
banks track the specific customers. This would enable efficient tracking and reducing of
cybercrime.
Testing capability:
Amazon should test the actual capability of the payment gateway in ensuring secure
payment. The company can attempt proxy hacking into the gateway and record the actual
number of successful hacking as well as hackings tracked.
Testing No of successful hacking Hacking tracked
1 0 1
2 1 1
3 0 0
4 1 1
5 1 1
6 0 0
7 1 1
8 1 1
9 0 0
10 0 1
Total 5 7

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The above table shows a model test of capability of the innovative hacking gateway. 1
means successful while 0 means failure. The above table shows that out of 10 attempts, 5 are
successful while 3 are not traceable. Now, if the minimum success rate is decided at 6, the test
fails by 1 mark. Thus, this shows that the innovative gateways fails the quality test.
Part 2.5. Cross functional management:
The departments of Amazon should collaborate to development the payment gateway.
The apex management should first form a plan to conduct the project and ensure participation of
all departments. The finance department should allocate sufficient funding towards the project.
Similarly, the marketing department should take the responsibility of involving the customers in
the process. The technological department should submit reports regarding software which have
to be acquired from third party. The apex management of Amazon should hold meetings with the
government bodies both in federal and state level. The shareholders should be involved and their
consent should be acquired. Similarly, the lower level employees should also be involved.

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References:
Amazon.com. (2018). Retrieved from https://www.amazon.com/s/ref=nb_sb_noss?url=search-
alias%3Dfashion-boys-intl-ship&field-keywords=
BBC.com. (2018). Retrieved from https://www.bbc.com/news/business-42233752
Irs.gov. (2018). Retrieved from https://www.irs.gov/payments/view-your-tax-account
McMillan, L. (2018). WSJ.com. Retrieved from https://www.wsj.com/articles/amazon-coms-
third-party-sellers-hit-by-hackers-1491816600
Mourdoukoutas, P. (2018). Forbes.com. Retrieved from
https://www.forbes.com/sites/panosmourdoukoutas/2018/05/03/free-food-isnt-enough-
how-amazon-beats-google-in-innovation/#4a60d96d2075
Sisodia, S. (2016). Identification of growth driving factors for ecommerce 2.0 at Tata unistore
ltd. NIFT.
Wang, S., Li, P., & Wang, Y. (2015, June). How do IT Competence, Organizational Agility and
Entrepreneurial Actions Coevolve: The Case of Entrepreneurial Etailers on Ecommerce
Platforms. In The Fourteenth Wuhan International Conference on E-business.