Analyzing Amazon's Operational Strategies and Global Expansion

Desklib provides past papers and solved assignments for students. This report analyzes Amazon's impact on the Australian retail industry.

Operations Management and Decision-
Making Models
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Contents
Introduction....................................................................................................................................3
Amazon began as an online book retailer. How has it grown to be known as the "everything
store"?...........................................................................................................................................4
What aspects of Amazon's operations management are based on the increased globalisation of
world trade?...................................................................................................................................5
Amazon’s marketplace focuses on smaller sellers and manufacturers by linking them with a
huge customer base and fulfillment program. Can e-commerce ever truly replace the in-person
shopping experience?...................................................................................................................6
What are (or could be) the real long-term implications of the increased presence of Amazon to
the Australian Retail Industry?.......................................................................................................7
Conclusion.....................................................................................................................................8
References....................................................................................................................................9
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Introduction
It is seen that the arrival of e-commerce has given rise to many retail industries. One of such
industries is Amazon which was started in a garage by Jeff Bozos but today is the largest e-
commerce retail industry present in the world. There are both positive and negative factors that
an individual may encounter as when comparing e-commerce shopping with traditional
shopping. Amazon is planning on penetrating into the Australian market from which the retail
industries in Australia have both positive and negative reactions.
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Amazon began as an on-line book retailer. How has it grown to be known as the
"everything store"?
The journey of Amazon has been a long and tedious one. Jeff Bezos, the owner of Amazon, has
created this large multinational marketplace in the e-commerce market. The start of Amazon
began as an online book store. Jeff Bezos was a big fan of technology and completed his
studies from Princeton in computer science. While doing all of this Jeff missed out on the whole
internet phase of books and hence created an online store to sell books. There were many
names decided before Amazon but at last this name was taken as it comes up first when
searched in Google and also means unique. Amazon.com was fully launched in 1995 and had
more collections available than its competitors. This would allow Amazon to grow in the sector
and make itself aware among the audience. The business at this time was still operating from
the garage of Jeff Bezos. It later located its office to Seattle which would grow so rapidly that it
became one of the most popular names in 1997. The shareholders of Amazon were reluctant to
invest their money into this company as they did not like the future plans that were presented by
Jeff Bezos. Around 1997 it had opened one of its largest warehouses in Delaware. As Amazon
started to grow its main accomplishment was that it had sold its millionth copy which showed
that its growth strategy was effective. Jeff Bezos received "Man of Year" award in 1999 for
making the awareness of online shopping grow. In the year 2000 the company had been
transformed from selling books to selling everything that one can think of. The main factor that
was involved in Amazon's growth is that whatever profits that were made were instantly used for
the growth of the company. The profits were not kept aside for future causes. Amazon kept on
pushing in the markets because it wanted to grow and develop more than it wanted to make
profits like other companies. Another factor is that Jeff Bezos is more of a goal oriented person
who pushes the employees of the organisation to reach the objectives in anyhow conditions.
This is considered to be an effective approach but it does not take into concern the value of the
employees. Amazon's customer relationship management was a good strategy that helped the
company to grow to new levels ( Anshari et al. 2018). Customer relation management shows
how a company should manage its operational processes so that it can increase the number of
the stakeholders thus resulting in the company's development. Amazon used various customer
relationship management tools like websites so that the customers could have a better
understanding of what the company is and what type of products it sells. The internet was a
huge factor that made Amazon switch from selling a book to selling somewhat of everything.
The customer relationship management strategy showed that big companies like Amazon would
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need to collect big amounts of data and analyse them to understand the targeted audience in a
better way.
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What aspects of Amazon's operations management are based on the increased
globalisation of world trade?
Amazon has changed the way in which companies have started to sell their products across the
globe in the e-commerce industry. As there was a rapid growth of Amazon it would see that
international consumers were also dealt with. One of the major strategy that was used by
Amazon to grow and develop ways to use innovative techniques in its supply chain. Amazon
prime which was first seen in 2004 helped the customers receive their parcels in a faster way.
Because of this continuous effort that Amazon has implemented to provide service to the
customers in the fastest way possible has become an issue for its competitors. This has also
caused the change in the globe as now organisations have been more focused on increasing
their supply chain so that they can provide services across the globe. One of the main factors of
operations management is how much capacity it provides to the customers. Amazon's strategy
was to make sure that the customers were provided a number of products. The customers could
order a bundle of products at the same time and get them delivered on the same date or on
different dates. This has increased globalisation of trade as more and more people are buying
from Amazon due to this service. Amazon also provides a delivery service in which the product
can be delivered in two days with extra cost across the globe. This has caused a major
disruption among the competitors of Amazon worldwide. Another way that Amazon's operations
management has increased the globalisation of world trade is that it has operating offices and
warehouses across the world. This is done because Amazon would store the products in its
warehouses and provide them to the customers on a quick basis. This operation shows that
products from other countries can be sent to other ones for meeting the customers need. One of
the strategies that are used by Amazon in operation management is that warehouses are made
on the basis of the population. If the population of any country is high and developed then the
warehouse's size will depend on it. This is the strategy that Amazon use when trade and selling
of products become international. Amazons inventory management is also dependent on
operations management as it needs to keep a balance between how much goods are stored in
the warehouse and how many are being ordered by the customers. Global trade comes into
play here as Amazon needs to make sure that the warehouses it has developed internationally
need to be maintained in such a way that they can satisfy the customers. Trade has been
globalised by operations management as Amazon is one of the biggest e-commerce retailers
today with it shipping more products across the globe than any other organisation. Amazon
does not think before selling a new product. If the product is gains awareness then both the
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company and Amazon would benefit from these sales. Also the retail industries do not have to
put too much thought into the I.T sector as the online operation is of sales.
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Amazon’s marketplace focuses on smaller sellers and manufacturers by linking them
with a huge customer base and fulfillment program. Can e-commerce ever truly replace
the in-person shopping experience?
The rise of e-commerce has affected the way people do their shopping which has led to a
negative impact on physical stores. As the world is growing it can be seen that the use of the
internet on laptops as well as on smartphones has increased. Online e-commerce websites
offer more variety of products and designs that cannot be seen in physical stores. In the age
where millennials are on the rise it is not hard to see that they prefer to shop online rather than
going to the stores itself. Shopping online can be done at anyplace from anywhere and if an
individual wants to buy a product from another country then they can simply go only and buy
that specific product. Physical shopping or nowadays known as traditional shopping in the form
of shopping that includes buying of goods directly from stores and includes face to face contact
with people. One of the major benefits of e-commerce is that it is time-consuming and can save
money. No travelling cost in incurred as the shopping can be done from home. An individual can
compare the prices of the same product on various sites and then choose the one that is most
beneficial for them. The process that is involved in traditional shopping is that anyone can follow
but in e-commerce it requires knowledge of how to use the internet and the technological device
properly. Another benefit of e-commerce is that it is available twenty-four hours and so that
shopping can be done anytime but traditional shopping has to be done on a specific time basis.
It is also seen that maintenance of e-commerce stores does not require that much of expenses
while the expenses incurred in opening a physical store are a lot.
The main benefit which is received by e-commerce is for small business. Large retail e-
commerce giants like Amazon take small business and sell their products online. This beneficial
for the business as it would gain exposure and awareness in the market. The business could
also see which market its product best runs in and which audiences it should target more.
E-commerce will not overtake physical shopping in the future as there are some aspects of
physical shopping that cannot be done effectively in e-commerce. One of these aspects is that
bargaining cannot be done on e-commerce shopping. Proper face-to-face communication is
required for this aspect because the message can be fully comprehended through this type of
communication. Another aspect which is seen is that customers are sometimes hesitant before
buying electronic products online. They cannot determine the quality of it and are not fully
confident that it will be given in one piece, it might turn out to be broken. It is important for some
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people to inspect a product properly before they buy it. It can be seen that though people do
prefer shopping online and that e-commerce benefits small business but physical shopping
cannot be that easily replaced as it has plus points in itself which will be difficult to be followed
by the e-commerce industry (Finkelstein H 2018).
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What are (or could be) the real long-term implications of the increased presence of
Amazon to the Australian Retail Industry?
The Australian retail industry has been hit hard as Amazon has announced its arrival. It is seen
that since the entry of Amazon shopping online has gone up by high numbers. A high number of
retailers have already lost their supplier because now these suppliers want to link their brands
which Amazon. Payment methods have also made a huge drawback to the retailers as in
Australia, Amazon has introduced a term being that the customer can buy the product and it can
be paid later for. A survey was conducted in Australia that showed people have switched from
physical shopping to online shopping since the arrival of Amazon and the clothing as well as the
electronics industry has faced losses in their sectors.
The strategy that Amazon used in Australia was similar to the one that is used in Spain and
Canada. In both of these countries the online shopping factor was in such a low state that it was
difficult and sort of impossible for e-commerce to exist. But Amazon introduced its Prime service
in which it had a super-fast delivery with the best quality. This rose the e-commerce industry in
both these countries and Amazon is planning to implement the same strategy in Australia.
Some of the retailers think that Amazon could help in benefiting their business while other big
retail giants are still scared of this process to occur. One of the major competitors of Amazon in
Australia which is Australian Post has started to change its policy so that it can provide better
and effective services to its customers. One thing it has done is that it has started to provide
services to remote locations across Australia (Opray M 2017).
There are some businesses in Australia who are eagerly waiting for Amazon to arrive. This is
because these businesses want to become online but there is a whole lot of work that is to be
done and rules and regulations that need to be followed. If Amazon arrives in Australia then
these businesses could directly sell their products on the website of Amazon. This would help
them grow and the public of Australia would become more aware of that brand. Small business
will definitely benefit from Amazon as most of the times Amazons targets small business so that
it can take their products for a smaller cost.
The problem with Amazon coming into Australia is that there the people are going to see
fluctuations in the prices of the product or in other words there is going to be a price war. Larger
retail companies have started to change their prices but this should not be done as these retail
companies should focus more on their customers so that they can stay loyal.
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Conclusion
It can be seen that Amazon has use e-commerce as its tool and has risen to new levels that
nobody really thought it would. Its plan to venture into the Australian market is met already by
various competitors who feel that the company may cause harm to the local businesses. In
conclusion it can be seen that the e-commerce industry can help in the growth and development
of small retail businesses.
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