Innovation Strategy at Amazon

Running head: INNOVATION STRATEGY 1
Innovation Strategy
Name
Institution

INNOVATION STRATEGY 2
Table of Contents
Executive Summary.......................................................................................................................2
Introduction....................................................................................................................................3
Amazon Innovation trend.............................................................................................................4
Organizational Environment........................................................................................................6
Innovation trend............................................................................................................................7
Innovation strategy........................................................................................................................7
Innovation capability.....................................................................................................................8
Innovation value creation and capture........................................................................................8
How the creation of an innovation strategy ensures strategic alignment.................................9
Importance of strategic alignment...............................................................................................9
References.....................................................................................................................................10

INNOVATION STRATEGY 3
Executive Summary
This report is an innovation strategy focusing on Amazon as an online store. The report
discusses how design thinking is significant and how it has influenced innovation trend at
Amazon. The report provides a brief outlook of Amazon Company and background regarding its
innovation trend. Besides, the report focuses on various concepts such as organizational
environment, innovation trend, innovation strategy, innovation capabilities and innovation value
creation and capture. Also, the report discusses the relationship between these concepts. Lastly,
the report provided a description of how creation of an innovation strategy ensures strategic
alignment within organization as well as its significance.
Introduction
Amazon is one of the biggest retail outlet in the world and is based in Seattle,
Washington. The company is the largest in e-commerce marketplace and cloud computing
platform across the world by both revenue and market capitalization. Amazon was founded by
Jeff Bezos in 1994 as a bookstore and later grew to include other products categories. Ever since,
the company has grown to host a wide range of products on its online e-commerce platform.
Besides, Amazon is considered to be the second largest employer in the United States. In 2002,
the company started Amazon Web Services which offered a number of services to marketers and
developers. Later in 2006, the company grew and began to rent computer processors and data
storage through the internet (Halpern, Zhu & Reddi, 2016).
In the same year, the company launched its fulfillment by Amazon because it managed its
inventory from a single location. Amazon partnered with Kiva Systems to automate its
inventory. Similarly, the company has managed to form strategic alliances with various
businesses. Among some of the notable partnership include Toys “R” US, borders Group, DC

INNOVATION STRATEGY 4
Comics, United States Postal Service, Nike, AmazonFresh and Apple Inc. The website began
attracting huge number of visitors annually. According to statistics by the United States
government in December 2017, Amazon website received 197 million visitors. However, the
results generated by its search engine are partly as a result of promotional content.
The company depends on multi-level sales strategy which is responsible for majority of
its revenue. The company began its strategy by targeting business-to-business consumer
relationship as well as business-to-business between the company and its suppliers. In addition,
the company allows anyone to sell their products on its platform. Besides, it has an affiliate
program where affiliates earn through posting links of products and earn commissions for
directing customers to make purchases. Other e-commerce sellers have resorted to selling their
items on amazon as well as their website in order to increase sales. Another sales strategy that
the company uses is drop shipping where people advertise products on amazon and they order
from other members when a sale is made. The drop shippers often have millions of products and
are characterized with large transaction numbers that makes them appear like businesses that
have been around for a long time. The company lobbies the United States government on various
issues such as enforcement of sales taxes, transportation safety, privacy and data protection as
well as intellectual property.
Amazon Innovation trend
Amazon relies on the principle of customer first and an iterative approach that has
ensured the company’s success over the years. Amazon began as an online book seller but has
since transformed how business is conducted. Amazon has been successful in its innovation
endeavors beyond wildest imagination of other e-commerce platforms. Common innovations
include cloud web based services, drone delivery in their supply chain and Academy Award for