Operations Management and Amazon's Global Retail Dominance Analysis

This report provides a comprehensive analysis of Amazon's business operations, its evolution from an online bookseller to a global retail giant, and the impact of its strategies on the retail industry. The report examines Amazon's expansion into various sectors, its globalization efforts, and the aspects of its operations management that facilitate this growth. It explores the implications of Amazon's marketplace, focusing on the relationship between smaller sellers and consumers and the potential for e-commerce to replace in-person shopping. Furthermore, the report assesses the long-term effects of Amazon's increased presence in the Australian retail industry, considering its potential impact on local businesses and market dynamics. The analysis is supported by academic research and contemporary publications to provide a well-rounded perspective on Amazon's influence in the global market.

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Operations Management and Decision Making Modela
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1. Amazon began as an online book retailer. How has it grown to be known as the
"everything store"?
The history of Amazon is perhaps one of the most iconic one. The company was
established in 1994 by Jeff Bezos as an online book retailer. Since then, Amazon has grown to
unprecedented heights becoming the largest e-commerce and cloud computing company in the
world with a market value of over 400 Billion US dollars and more than 260,000 employees all
around the globe.
Amazon foundation started in bookselling in the e-commerce platform. The idea of
focusing primarily on books was to build capability and competency before venturing into other
products (McGurl, 2016, pp.450). The focusing on books was the right decision by Amazon
since books have a universal appeal and are easy to ship. The success of the books business gave
Amazon the experience, capability and customer understanding to grow its online platform.
Amazon redefined its business operations from bookselling and ventured into selling
movies, music, toys, and electronics. It further mastered its complex distribution network and
further expanded into clothes, jewelry and apparel, sporting goods, software, and automotive
parts. Just after Amazon had established itself as the top retailer in the online platform, the
founder Jeff Bezos established versatile technology that featured into cloud computing platform
that is known as Amazon Web services (Ritala, Golnam and Wegmann, 2014, pp.240).
Additionally, Amazon ventured into incremental innovation and added a host of new other
services such as prime pantry, subscribe and save, prime now, Amazon Fresh, Amazon Go, and
prime music. One of its radical innovation was the introduction of Amazon echo and Alexa,
which are hardware for digital voice assistance and natural language processing.

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In early 1994 before the onsets of online platforms, Bezos realized the importance of
digital commerce in changing global business. Bezos saw the need for investing in logistics in
order to monetize this emerging gap (Bhatt, et al., 2015, pp.5107). This led to Amazon focusing
more on growth and expansion at the expense of profit. Bezos reinvested huge chunks of the
revenue in building an empire that touched in whole different aspects of human lives (Zhu and
Liu, 2018, pp.2620). The company continually pump cash into innovative programs such as
Alexa, Amazon prime services and Amazon web services. Additionally Amazon has ventured
into many countries in the world, acquired Whole food, introduce Kindle reading device,
launched a website for selling art, produced tablet computers, and invested in production of TV
shows and much more (Zhu and Liu, 2018, pp.2620). This supports Amazon as an “everything
store.” The Amazon web service has also handled computer infrastructures for many company
and institutions. There is no limit to the growth of Amazon.
Amazon can be described as a conglomerate of companies that are held together by
extraordinary leadership. This is because Amazon combines different aspects of the supply chain
in its business be it consumer retail products, entertainment, cloud computing, data science,
healthcare, and even robotics. In relation to supply chain management, I think Jeff Bezos has
extraordinary insight in term of the growth of the company. It would have been easier for
Amazon management to relax and enjoy the profit of their business and the competitive
advantage. However under the leadership of Jeff Bezos, Amazon shift focus into the provision of
robust and technical support to other companies. This later proved to be a smart move by the
emergence of the smartphone frenzy consequently increasing the demand for server space from
app developers. Amazon had established itself among other tech giants such as Microsoft and
Google. Amazon business model may appear to be disconnected and arbitrary but the operation

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of the company complement each other. For example, the company provision of hardware such
as tablets, computer, and accessories, and kindles, augment its delivery services. Amazon has
established itself in the global fintech industry, consequently lowering the barricades to entry for
fintech startups.
2. What aspects of Amazon's operations management are based on the increased
globalization of world trade?
Amazon continues to attract new customers to its giant e-commerce platform with the
introduction of new product and services. Amazon seeks to continually expand into the global
markets and is more interested in expansion and growth as opposed to making huge profits (Liu
and Papageorgiou, 2013, pp.370). Amazon global strategy is to reach far and wide into different
nations and states of the world. Among the aspects that Amazon focuses on its operation to fulfill
globalization include the following.
Amazon has launched a new feature known as international shopping feature. This
feature will enable the consumers to get an array of products shipped to them at any part of the
world from the United States (Kantor and Streitfeld, 2015, pp.75). The feature has been
developed to encourage consumers to purchase product outside of their home market. Currently,
the feature is available in English, German, Portuguese, Spanish, Chinese and Brazilian.
Additionally, to enhance globalization, consumers will be able to shop in different
currencies. The international feature currently enables customers to shop using 25 different
currencies and plans are underway to increase more currencies and language options. The feature
will also show the cost for shipping, pricing, and import tax for each product purchased.

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Amazon has also launched its first debit card known as “Amazon Rechargeable.” This
feature aims at encouraging customers from different part of the world to shop with Amazon
even if they do not have bank accounts. This program is first being rolled out in Mexico before it
is internalized into other countries. This payment option is more convenient and is a great
alternative to the cash option. The card can be loaded with cash at multiple convenience stores
and consumers can go ahead and purchase goods on the e-commerce platforms.
Technology has highly facilitated connectivity into the global economy, therefore
facilitating globalization. Amazon understands the critical role played by technology and
consequently, it has developed the Amazon app. The App has functionalities for shopping,
watching movies, listening to music and enjoying the services of Alexa, Amazon digital
assistance (Zhu and Furr, 2016, pp.75). This app is preferred mostly by millennials and is ranked
at the top of the list of most loved apps. Consumers can, therefore, interact with Amazon from
any part of the world and ease their shopping experience.
Amazon global strategy is based on the innovation operation of the company to connect
the customers from different part of the world. In its supply chain, Amazon is tapping into the
traditional brick and mortar market space and is trying to attract consumers to e-commerce in its
platform. The introduction of a debit card, different currencies as a mode of payments and the
international shopping feature promotes globalization by connecting more customers from
different countries. Additionally, Amazon has introduced different languages in its app
facilitating better communication with customers from different countries. The objective of
Amazon to expand into more global market enhances world connectivity and globalization.

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3. 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?
Economics relies heavily on the rule of demand and supply. E-commerce is thriving as
there is an increase in demand due to an increase in technology more so access to the internet.
The role of physical stores is not disappearing but changing with the emerging trends. The
advent of e-commerce platforms is creating a shift in how manufacturers use their physical store
space. Physical stores are, therefore, modified to create demand rather than fulfill demand.
E-commerce giants such as Amazon is not a replacement of the physical stores. The ways
of operations of stores have changed but this has not resulted in the total overhaul of brick and
mortar systems (Pozzi, 2013, pp.572). It has become increasingly hard for regular stores to keep
up with consumer needs, as consumers are now more informed in relation to prices and product
features. This is because of the easy access to product reviews online.
However, e-commerce cannot replace in-person shopping experience because the
consumer cannot feel the product on online platforms as opposed to physical stores.
Additionally, some of the products displayed in online platforms claim the product may vary
from the displayed pictures (Akter and Wamba, 2016, pp.180). Another aspect is that in physical
stores, consumers get the product they want instantly and they do not have to wait for days to
have the product shipped to them (Nasiri, Zolfaghari and Davoudpour, 2014, pp.40). Product in
the e-commerce platform does not have a human touch experience. The touch of the product one
wants to buy instill some kind of confidence in the mind of the consumer.

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E-commerce can be described as a business without emotion aspects. Consumers using
these platforms may be purchasing something they need without putting their hearts to it. Most
of the online retailers such as Amazon have established the existence of such needs (Cavallo,
2017, pp.300). Amazon has started using pop-up stores to push its Kindle line. The company
wants to reach consumers in ways that are practically impossible in its online platform.
E-commerce offers control on pricing and distribution but the product itself is an
important factor to the consumer. According to consumer psychologist Phillip Graves,
consumers are inclined to buy products that they are familiar with in the online platform. If the
item in question is not familiar to them, many prefer to buy it in physical stores.
Small business enterprise should be strategic in making use of both channels to promote
and price their products (Gupta, 2014, pp.8). Those owners who understand the mechanism of
how each channel works can meet consumer expectations and optimize sales.
Objectively, technology should act as a tool for serving the business and not replacing
customer service, merchandising, marketing or partnership. E-Commerce cannot replace in-
person store experience but rather compliment the mode of operation for any business.
4. What are (or could be) the real long-term implications of the increased presence of
Amazon to the Australian Retail Industry?
The imminent arrival of Amazon into the Australian market has resulted in the share
prices of some of the major companies in Australia to take a plunge. The Australian business
environment has described Amazon as “the worst corporate citizen” that threatens to impact on
the business of many companies (Chopra and Sodhi, 2014, pp.75). Amazon has the potential of
undercutting retail rivals because it is favored by the economies of scale. Amazon generates

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much a lot of revenue more than Wesfarmers and Woolworths combined (Pandit and Poojari,
2014, pp.10). The convenience exhibited by Amazon due to their all-encompassing product and
rapid shipping time will provide a big challenge to many retail companies in Australia (Tan and
Carrillo, 2017, pp.735). This is because the consumers can access a foray of product at one stop
rather than visiting many small businesses, consequently saving on time.
The latest technologies of Amazon such as delivery drones, robotics and voice-activated
virtual assistant that give consumers recommendation on what to buy and Amazon Prime
membership that gives consumers membership package to videos and music may attract many
consumers to the e-commerce giant.
The emergence of online shopping has exposed the Australian retail industry to global
competition. Other retail companies such as eBay and Kogan have already established
themselves in the Australian market. The onset of Amazon into the Australian market will put
huge pressure on prices because Amazon has financial capabilities and can forego profit.
Amazon is an online giant, bigger than most of the local retailers in Australia combined.
Majority of discount stores in Australia such as Kmart and Target are at the risk of losing
earnings amounting to over 400 million US dollars by 2026 due to fast delivery options, wide
range of product in Amazon platforms and, low pricing strategy that is synonymous with
Amazon (Panagiotelis, Smith and Danaher, 2014, pp.20). It has become a lot easy to shop from
Amazon because of the prime membership feature, Alexa assistant and echo device technology
that gives the buyer protection. Such great customer support facilitates can position Amazon
strategically into the Australian retail market giving the company a great competitive advantage
over other retail players in Australia.

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However, some retail business in Australia may benefit from the entry of Amazon into
the Australian market (Slater, 2015, pp.20). This is because Amazon will provide a platform for
the business to promote their products. Additionally, many E-web companies may experience
business growth because of Amazon arrival.
The arrival of Amazon into the Australian retail space may put a lot of retail players
under pressure. It is imperative for the retail industry in Australia to remain competitive by
focusing on their consumer needs and maintain the quality of their product. By coming up with
strategic approaches, the retail players in Australia can remain in the market regardless of the
entry of Amazon into the market.

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