Information Systems and Digital Strategies: A Case Study of Amazon

This report examines Amazon's utilization of digital technology and information systems to enhance product and service value, customer base, and overall business strategy. It discusses various technologies such as Amazon Dash Button, Amazon Fresh, Amazon Fire TV, Amazon Fire Phone, and Ama...Read More

Information system and digital strategies
Running head: INFORMATION SYSTEMS AND DIGITAL STRATEGIES

INFORMATION SYSTEMS AND DIGITAL STRATEGIES 1
Executive Summary:
Amazon Inc. popularly known as Amazon is a cloud computing and e-commerce
company based in Seattle, Washington. It is the largest online retailer in terms of revenue and
the second largest company in terms of total sales after Alibaba Group. The purpose of
preparing this report is to find out the use of digital technology by Amazon and its
importance in increasing value of the products and services. This paper also describes the use
and importance of information technology to enhance customer base and to maintain it. This
report further includes various future changes and offerings that can be introduced by
Amazon with the help of information technology to provide services to the customer for
which they are paying. At the end of the report, recommendations and conclusions are
provided on the bases of the entire study.

INFORMATION SYSTEMS AND DIGITAL STRATEGIES 2
Table of Contents
Introduction:...............................................................................................................................3
Background of Company:..........................................................................................................3
Technology:................................................................................................................................4
Strategy:.....................................................................................................................................4
Amazon Dash Button:............................................................................................................5
Amazon Fresh:........................................................................................................................5
Amazon Fire TV:....................................................................................................................6
Amazon Fire Phone:...............................................................................................................6
Amazon Prime Air:.................................................................................................................6
Impact of new launches on the revenue of Amazon:.................................................................6
Objectives:..................................................................................................................................7
Customer Satisfaction acts as a king:.....................................................................................7
Use of database:......................................................................................................................8
Delivery time:.........................................................................................................................8
Market Development:.............................................................................................................8
Recommendations:.....................................................................................................................8
Conclusion:................................................................................................................................9
References:...............................................................................................................................11

INFORMATION SYSTEMS AND DIGITAL STRATEGIES 3
Introduction:
The evolution of digital technology in marketing practices has increased significantly in past
two decades. There are extensive advances in responsive and immersive website design,
video marketing, mobile commerce and e-commerce (Target, 2014). The introduction of
digital technology in marketing functions is modelling customer behaviour and interaction
with the brand. Customers are more practical and well-aware to the marketing techniques of
the sellers. But there are many ways by which businesses can use technologies to recognize
customers and their needs so that offerings can be customized accordingly (Fenwick &
Edwards, 2015). In terms of technology adoption and implementation, Amazon has certainly
proved itself as the most successful company in the e-commerce industry. Currently, Amazon
is working as world's largest online retailer having it's headquarter in Seattle and offices in
more than 16 countries. Amazon facilitates the consumers in more than 180 countries to shop
online through its online selling services and facilities. This report will cover the
identification of Amazon as a prime customer service provider with the use of digital
technology. Various market trends and technologies used by the Amazon will be discussed in
this report. Further, this report includes how Amazon uses the digital technology to cope up
with its business strategy. Some recommendations on the basis of whole discussion will also
be included at the end of the report to provide more specification about the use of digital
technology (Ferrell, et al., 2014).
Background of Company:
Amazon is the largest online and virtual retailer in the world which sells goods in more than
forty categories including books, electronics, groceries, jewellery and auto parts. Amazon can
be also described as a logistic platform, internet technology and e-commerce platform, an
incubator of internet start-up and a search technology. It was founded in 1994, by Jeff Bezos
with a vision to facilitate book lovers with a virtual book centre. As the time passes, Amazon
entered into other areas of consumer goods and has become world’s largest retailer in the
industry. According to the Annual report of Amazon 2013, Amazon provides service to four
types of consumers, costumes, content creators, enterprises, and sellers. It serves a customer
with the help of its website www.amazon.com. This site can also be accessed through mobile
and a separate app has also been developed by the company to make it easier for customers to
shop online through Amazon (Khan, 2016).

INFORMATION SYSTEMS AND DIGITAL STRATEGIES 4
The Internet is a progressively significant universal medium for online markets. Amazon
used first-order completion system and website system in 1994 with the view to improving
safety and security. Amazon went live in 1995 by enabling customers to avail its services at a
doorstep (Donnelly, 2017). In 2000, Amazon spent $200 million on renovating the entire web
system. Amazon purchased these systems and technology logistics from Manugistics,
software for analyses from ‘Epiphany’ and new database management system from Oracle.
The main system developed by the Amazon is Simple Storage Service and Amazon Web
Service, through which Amazon is able to maintain its large number of customer base and
products in day to day practices. Amazon has a track record of utilizing regionalized
information technology infrastructure. Amazon has also introduced Amazon Web services so
that other business organizations could take advantage of investment and experience of
Amazon in maintaining large scale transactional and distributed Information technology
infrastructure. Amazon Web Services is functioning since 2006 and continuously serving
millions of worldwide customers (Arantes, et al., 2015).
Technology:
Amazon has adopted technology to develop its competitive advantages and to gain the
benefits of economies of scale. Amazon’s generic business strategy can also be termed as the
concentric diversified strategy. This strategy includes the use of technological advancement
while following the cost-leadership strategy in business operations to maximize the value for
its customers (Atchison, 2017).
This strategy has paid well to the Amazon and it can be said on the basis of this fact that it
has become world’s largest virtual online retailer. It is also enjoying the position of leader in
most of its operating market segments. It is a considerable fact that cost leadership strategy
allows the firm to follow a law of diminishing returns but managers of Amazon holds the
opinion that sustaining growth and increase in profitability is not possible once after plucking
the low hanging fruit (Grant & Jordan, 2015).
Strategy:
Amazon is following a well-planned strategy from a long time and it has been proved from
the success of this organization that its business strategy is paying well in the success of the
organization. The strategy followed by Amazon Inc. can be explained by the study of Ansoff
Matrix. In this study, Amazon has been assumed in the quadrant of Overall cost Leadership
and its persistent attention on costs is the main factor to examine the strategy.

INFORMATION SYSTEMS AND DIGITAL STRATEGIES 5
Additional measures taken by the company along with its strategy includes attractive
discounts to the regular members, facilitating timely and fast delivery, waiving off delivery
charges, not increasing the price because of state tax rates and making the experience of the
customer is as smooth and seamless as possible (Liu & Pichard, 2014).
The strategy of Amazon is driven upon the bases of competitive advantages and focuses on
improvement of technology, realizing the profits from economies of scale and increasing the
efficiencies from its synergies. Further, one of the main strategies used by Amazon is ‘Big
Data Analytics’ to map the behaviour of the consumer. Big data has been involving to such
extent by Amazon that in present time, the company is in the position to offer it as another
customer service. By using this analytics, Amazon can perceive and sense about customer
wants and frame its strategies according to them (Garcia, 2011).
Amazon has used its business strategies to develop various customer service related features.
All the new features developed by Amazon are the results of management of technological
advancement and business strategy.
Since innovation and technological advancement is in the DNA of Amazon, it is continuously
refining and adding technology that improves and enhances the involvement of the
customers. Amazon has launched a number of features in order to increase customer
satisfaction by adding value to products (Salam, 2016). Some of those important features are
as follows:
Amazon Dash Button:
Amazon launched dash button on 31st March 2015, which was first considered as April fool’s
joke. It is a small button that customers keep around the house which controls single function
at a time. Each button relates to a household need like razors, toilet paper, and the trash bag.
When the customer needs to repurchase the product, he simply pushes the related dash
button. The required product arrives at the doorstep of the customer in the pre-specified
quantity by him (Garcia, 2017).
Amazon Fresh:
This service was introduced in 2007 but was limited to some countries only, for a long time.
Since 2013, Amazon is expanding its subsidiaries and service of Amazon Fresh is also
increasing rapidly. It allows customers to place grocery related orders from company’s fresh
food inventory. The order arrives at the customer the very same day or the next day. The
rapid increase and growth has been observed in the revenue of Amazon after introducing

INFORMATION SYSTEMS AND DIGITAL STRATEGIES 6
Amazon Fresh service by Amazon. It attracts the customers because of its feasibility and
facility of home delivery of best quality products (Willman, 2018).
Amazon Fire TV:
It is a streaming audio and video player. It means, it picks up content (music, videos, games)
from the internet and displays the content on the customer’s TV. It is available in two
models: Amazon Fire TV and Fire TV Stick. First one comes in form of a small box with a
connected HDMI cable where another one can be directly plugged into the TV. Fire TV box
supports HDR and 4K Ultra HD video and Fire Stick supports 1080p videos only. This is the
reason because of which Fire Stick is available at low prices than Fire TV (Horn, 2014).
Amazon Fire Phone:
It was the first step of Amazon to enter the market of smartphone. Amazon Fire Phone was
announced on June 18, 2014. In initial days of launching the phone, Amazon sold its 35000
units and earned a good revenue but in long run, it was regarded as one of the biggest
mistakes of Amazon (Heater, 2017).
Amazon Prime Air:
Along with all above services, a drone-based delivery system is in the process of
development by Amazon. It has been named as Amazon Prime Air by the company.
According to Jeff Bezos, CEO of Amazon, this drone delivery system will use Miniature
Unmanned Air vehicle (UAV) technology to fly orders to customers. Drones will also be
connected to the internet to identify the location and order number provided by customers.
This is one of the most innovative services which can prove extremely beneficial in terms of
revenue as well as innovation (kesteloo, 2018).
Impact of new launches on the revenue of Amazon:
Amazon uses a pack of innovative approach as its business strategy aims to grow its business
and to provide valuable services. The company is tightening its control on the marketplace
and it is also in the practice of reinventing the core features of e-commerce. Introduction of
Amazon Dash Button was definitely a new and innovative strategic idea used by Amazon.
These buttons become very popular in the first three months after launching in the market.
After it, the demand for these buttons is continuously stable in the market (Anon., 2018). It
can be said that Amazon Dash Button worked for Amazon as no profit no loss investment.
On the other hand, Amazon Fresh is continuously growing and most demanding service of
Amazon. Net sales of the year 2017 went rise up to 31% to 177.9 billion, 136 billion in the

INFORMATION SYSTEMS AND DIGITAL STRATEGIES 7
last year. Amazon fresh was liked by the majority of customers. Subscriptions to Amazon
Prime also increased after launching this service. Food and grocery were one of the main
areas in which e-commerce facilities were not effective and customers did not like to shop
grocery products online. In such situations, Amazon invested in cresting Amazon Fresh
system with same day delivery service and got success in building customer’s confidence
(Montag, 2017).
Amazon Fire TV is one of the most successful services provided by the Amazon. Customers
use Amazon fire TV and Sticks with various modes like television, laptop, and mobile. In
America, Amazon Fire TV is the fastest growing internet connect TV device. Amazon’s
success in increasing digital video subscribers is driven by three main factors: the success of
fire video streaming devices, existence and standalone video service and its major investment
in original content. Amazon Fire TV is expected to be used by more than 25.8 million
consumers by 2020. This is one of the major symbols of the grand success of Amazon's
business strategy along with its innovative ideas (Dudovskiy, 2017).
Other business strategy used by Amazon includes centralized leadership and effective control
over its all departments. Amazon also uses types of robotics in its warehouse to make an ease
in the management of working time. It has large size robots with large robotic arms which
can easily move large pallets available in the stock. Similarly, it also has small size robots
that help in completing other tasks according to their capacity. At the end of the year 2017,
Amazon had more than 45000 robots in its stock to simplify the processes (Shead, 2017).
Objectives:
Amazon formulates its business strategies with consideration of following important factors:
Customer Satisfaction acts as a king:
According to the CEO of Amazon, to win and to get success in present demanding consumer
based market, a company must provide customer focused and digital marketing experience.
While other competitors firms are stressed to find out their digital marketing techniques,
Amazon has found several models to emulate. It is a well-known aspect that business firms
that provide extraordinary customer service and satisfaction tend to earn higher revenues,
customer’s confidence and loyalty (Report, 2017). According to the strategy of Amazon, a
company can only grow if it keeps its customer happy with its services.

INFORMATION SYSTEMS AND DIGITAL STRATEGIES 8
Use of database:
Amazon has developed expertized techniques in tracking consumer's behavioural trends at a
rough level to understand different segments of its target audience. The products which are
purchased by the shoppers as well as the products which are being picked up by the shoppers
but not purchased, both can be examined to understand the consumer behaviour related to
available products and services (Preston & Moaddeli, 2017).
Delivery time:
According to the CEO of Amazon, while developing the business strategy of Amazon Fresh,
one thing that was considered includes delivery time of grocery products. Because the
customer can manage delay in delivery of other products but food and beverages are
necessary to be delivered within a day or very next day. Amazon is a well-known service
provider in terms of the delivery system. In terms of delivery time, other online delivery
systems are far behind as compared to Amazon. Development of drone system is one of the
most important examples to understand the investment made by Amazon in its delivery
system (Mennem, 2010).
Market Development:
Amazon always aims at entering into new areas of the market. It frames all its business
strategies in such a way so that a large area of the market can be covered with the help of
product diversification. Amazon also reacts proactively when there is a need for market
diversification. However, entering the new market is riskier than launching a new product but
it is said greater risks always results in higher revenue. Product and market diversification
both are main important aspects of Amazon business development strategy. From the time of
commencement of the company, it has been entered into various new markets. Earlier
Amazon was only working on providing online books to the consumer. As the time passes
and needs of the consumer increased, Amazon entered into new markets and diversified its
products. It also undertakes some decisions as experiments but most of its experiments have
been proved beneficial to the company (Rainer & Cegielski, 2010).
Recommendations:
It is clear from the above study that Amazon is an emerging company which is continuously
earning higher revenue as compared to its competitors. Although all the strategic
advancement adopted by the Amazon have resulted beneficial for the company. It should also
be noted that the company has also introduced some services like Dash Buttons and use of

INFORMATION SYSTEMS AND DIGITAL STRATEGIES 9
robots in the warehouses are not appraising one. Dash button did not receive customer
attraction for a long time and Amazon had to suffer a huge loss because of this dissatisfaction
of consumers (Klaus, 2013). Therefore, it can be recommended that either direct launching of
these type of services, Amazon should firstly launch these services on trial bases so that loss
of revenue and customer faith, both can be eliminated. On the other hand, it is also needs to
recommend that use of robots in the warehouses can be the reason for increasing
unemployment in the countries in which Amazon has its warehouses. It also increases the
cost of production and it directly affects the price of products. Management of Amazon
should try to avid to use of robots in their functioning because it involves a huge amount of
sum that can be invested in other important areas of business including research and
development department, market development and delivery system (Izogo & Ozo, 2015).
Conclusion:
On the bases of above report, it can be concluded that the business strategies developed by
Amazon are based on their customer preferences. These strategies are performed with the
help of technological advancement. Use of extraordinary technologies helps the company to
keep its customers connected to it. It can be found from the above discussion that company
spends a lot in order to maintain its customer satisfaction. Amazon does not provide services
only to the customer but it also analyses their shopping trend which helps it in maintaining
the supply of products according to their demands. Amazon has introduced a number of
customer service products that are not only related to the basic need of customers but also
they are related to their entertainment and physiological needs. After analysing the increasing
trend of profit of Amazon, it can be concluded that Amazon can become a leading service
provider virtual company by the use of its innovative ideas and technology advancement.
It is also to be noted that Amazon has adopted a number of new technologies very first time
which were not adopted by any of the organization. It concludes that management of Amazon
does not follow the rat race prevails in the market. It is the company that provides fully new
and innovative services to its customers. Amazon has developed a faith and trust among the
consumers to the great extent and in order to maintain that trust, it will have to serve its
customer in the best way. The study also concludes that increasing trend of online shopping
also resulted in the attractive offers, discounts and customer satisfaction. Amazon is working
as e leading virtual online shopping company at international level and it may continue its
leadership by emphasizing customer orientation and technological advancements.

INFORMATION SYSTEMS AND DIGITAL STRATEGIES 10

INFORMATION SYSTEMS AND DIGITAL STRATEGIES 11
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