Amazon's Growth from Bookseller to Everything Store

OPERATION
MANAGEMENT
AND
DECISION MAKING

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Amazon growth from Bookseller to everything store
Right now, Amazon is the biggest e-commerce company in the world, but it was not so from
the start. It is right now one of the biggest success stories in the digital era. This company
launched as an online book retailer in 1994 and now it is the world’s largest cloud computing
and e-commerce Company having the market capitalisation of approx. USD 400B having
over 260,000 employees (Ritala, Golnam and Wegmann, 2014). Several factors that made it
successful have been illustrated in the points:
Jeff Bezos’s made a foundation decisions to initially launch e-commerce platform with a
higher focus on the book segment and he built capability and competency before they
expanded into other product range. The success of the book gave them experience, customer
understanding, capability to enlarge its e-commerce platform which helped them in right now
selling of 500 million products alone in US.
They have invested a huge amount of money in their research and development works to find
out new areas of opportunity. It spends around 11.7% of its net sales i.e. around $12.5 billion
on its research and development (Brandt, 2011). With the introduction of technology such as
Amazon Web Services have allowed them to its cloud computing market, digital voice
assistance (Alexa) helped them in customer support while video on demand helped them in
TV industry. Due to R & D, company was not only able to enhance its product range but also
added services such as Prime Pantry, Prime now, prime music etc.
Jeff Bezos and their senior management team are able to support this high amount of
reinvestment within the firm through different sources of financial discipline. Jeff Bezos is
consistent in maintaining the revenue growth of the company and he has given revenue as
priority over profitability and the generated capital is again invested in business for achieving
higher growth rate. He has been expert in consolidating its investors that the profit is not their
major goal and due to this, till 2003 company was unable to gain profits (Pinch, 2012). Even
in 2015, the profit was only 0.5% but the net revenue was very high. He is able to persuade
thier investors that it is not that Amazon is totally unprofitable.
One of the most important aspects that made their business successful was its Business model
as it was driven by an essential leadership principle ‘customer obsession’. They create value
for their customers by offering products at highly lower prices. They provide flexibility,
convenience and full customer support which makes their business highly successful. They
are driving down the cost by economies of scale at its fulfilment centres (Palaniappan, 2018).

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They are using customer data in bulk so as to know about each and every customer and hence
they market products accordingly. Every likes, interests, previous searches are being recorded
so as to give personalised services to its customers. In this the use of AWS makes the
business model more effective. This is how they are able to enhance their customer
satisfaction level which has made it the first choice of the people in the internet marketing.
Aspects of Amazon’s operations management are based on increased globalisation of
world trade
Amazon has been able to do operations management in an appropriate manner. This is the
major reason why Amazon has been successful over the years. The major aspects in its
operation management that are based on increased globalisation of world trade are:
Process and capacity design: They have been changing their technology from time to time.
Design of goods and services is according to the global environment and the demand of the
people worldwide. The way in which they are delivering the services to the customers is
highly influenced by their global players. They are also providing goods to people according
to the global market demands. Since in globalisation the role of technology is very much
significant hence the company has also ensured that for delivering their products from one
part to another, it is crucial to enhance their technology platforms (Skalicky and Crossley,
2015). For delivering services at the global levels irrespective of the place where it has been
ordered and the place where they will have to deliver it can be easily done when the advanced
technologies is used by the company.
Supply chain management: Due to increase in globalisation of the world trade, it is seen
that people are ordering from the different parts of the world and it is the efficiency of the
supply chain management that makes the company to deliver it on time. They understand the
importance of delivering things on time and way logistics have to be maintained so as to
maintain the quality of the products (Reid and Sanders, 2015). Due to increase in the
globalisation more companies are coming up with high quality products. In this environment,
it is essential that this company also maintain the quality of the products and services they
deliver.
Scheduling and maintenance: Company believes in short term and immediate delivery of
the products. This is essential for satisfying the needs of the market. In the decision areas
such as involvement of suppliers, company needs to select local suppliers hence making more