An In-depth Analysis of Amazon's E-commerce Business Model

This report provides a detailed analysis of Amazon's business model, exploring various aspects of its e-commerce operations. It begins with an introduction to e-commerce, highlighting key technologies and security considerations like encryption and payment methods. The report then offers an overview of Amazon's organizational journey, from its inception to its evolution as a major online retailer, emphasizing its business model, which includes direct sales, a platform for third-party sellers, and the Amazon Prime subscription service. The analysis delves into Amazon's website, discussing its content, hardware infrastructure, software, and security issues. It also examines the payment and transaction processes, detailing various e-payment systems like debit cards, credit cards, and digital wallets. The report concludes with discussion and recommendations for e-commerce websites and a summary of individual contributions from team members. The report covers aspects like the role of e-commerce software, security threats, and recommendations for e-commerce websites.

Amazon’s Bussiness model

Contents
1. Introduction..............................................................................................................................2
2. Organization Overview............................................................................................................2
3. Business Model........................................................................................................................3
4. Website.....................................................................................................................................4
4.1. Website contents...............................................................................................................4
4.2. Hardware Infrastructure....................................................................................................4
4.3. Software............................................................................................................................5
4.4. Security issues...................................................................................................................6
4.5. Payments/Transaction process..........................................................................................7
5. Discussion/Recommendations..................................................................................................7
6. Individual Contribution Summary............................................................................................8
7. Reference..................................................................................................................................9
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1. Introduction
E-commerce is the process of buying and selling of products in the Internet. The
technologies which plays the major role in the E-commerce activity known as mobile commerce,
electronic funds transfer, and automated data collection systems. Preferably modern electronic
commerce uses World Wide Web and other technologies such as e-mail. Ecommerce software is
an engine which is under the process of online store, which makes it easy by managing inventory
that adds or remove the products. It arrives in two different flavors with the different categories
of each.it also explains about the privacy, integrity, authentication, non-repudiation which are
considered as the security issues (Ebel, Bretschneider and Leimeister, 2016). Encryption method
which is also used in the process of the e-commerce that converts the normal message into the
encrypted text that should be easy for the hacker to decode. It was also divided into two types
know as public key encryption, symmetric key encryption. Payment and the transaction methods
also can be preferred in this process which is said or called as Modes of e-payment system. Few
modes which includes various transaction modes such as Debit card, credit card, Digital wallet,
E-cash or e-money, Mobile payment and electronic fund transfer. It also gives the various
recommendations for the e-commerce website.
2. Organization Overview
The journey of Amazon begins with the founder's hard work and his own saving, loan
from the bank and family (Crowne, 2012). It starts with the aim of selling or buying books and
especially other media. It is very helpful for online retailers and for the other individuals who are
very interested in their selling products of goods for homes, offices, cars, and others. To
personalize the buyer experience the company makes the various attempts, which is considered
as the monster among the online retails with the huge number of the products. The
entrepreneurship is given to the Amazon for the $1 million after 1996. They don't mistrust on its
internal strength to occupy the market. Finally, Acknowledgment was given by the Amazon that
they ensured that only stock market is provided by them which is considered as the kind of
financing that it was looking for which went public on NASDAQ in the May 1997. According to
today's share, it is esteemed at about $268. With the dotcom crash, the stock price plunged to just
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$5.97 in the year 2001. In this process, the Amazon closed the two depositories and lay off 15%
of the staff members. In late 2001 is the company achieved the profit though it notwithstanding
the dotcom crisis. Even though the company is profited with their income it doesn't announce or
paid cash dividends on common stock (Four-Closure: How Amazon, Apple, Facebook & Google
Are Driving Business Model Innovation, 2012). It is eventually a terminal core for selling the
goods on the web, it is very helpful for all retailers for selling their product in this big platform.
It also finds a good platform for the third-party sellers or small companies and retailers like
Toys’ Us, used goods and products, since in the year 2000. By understanding the consumers very
well the Amazon employees should personalize the customer's experience and give the
company's overall approa (Kim and Min, 2015) ch. To mesmerize the personal customers it
produces the discount and special offers for the featured product.
3. Business Model
When we attempt to sell something on the largest online marketer on the world,
the business model of Amazon has lots of components to be managed. The products are sold
directly from the company (Lindgren, Valter and Prasad, 2019). The inventory is a vast network
with storehouses on the company and the buyers buy their products from Amazon's online
storefront with the cost price added to goods. Many customers view the product to be less in cost
and so ready to purchase and shipping. Amazon is a platform for the other retailers to sell their
products for the buyers. The products sold by the Amazon's partner retailers are not items
available common or with the higher purchase price that is a benefit to make a profit. The retailer
partners of Amazon has no fee for the sales of products and does not reserve the commission
for sales. The business model is based on the subscription that is made through Amazon Prime
Service to the small electronics under a single brand name. While using the Amazon Prime
account the customer has to pay the fee annually for the free shipping for the same-day or for
two-day for suitable products and an access media streaming like digital movies or music
(Lippman, 2003). Amazon also get earnings on the e-reader, e-book, and the Kindle and
applications on mobile was given to the owner of Kindle.
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4. Website
4.1. Website contents
The eCommerce website is about the purpose, design, and attribute. The products and
categories that are sold must be large in quantity on the eCommerce websites. The satisfaction
of the product to the customer and the website owner makes the website effective and
serviceable.
1. The sellers and products must be vast and easy content management.
2. The payment processing should be in multiple ways for worldwide customer.
3. A checkout must be easy.
4. The orders and cart items are emails integrated for the customer (Peprah and Giachetti,
2017).
5. The buyers and owners of the e-Commerce website have a machine learning algorithm.
6. The software Chabot is used to discard the service and waiting time for the customer.
4.2. Hardware Infrastructure
1. The E-business shows the structure of the hardware (servers and client PCs) in an
organization and the network are used in both hardware and software to link the delivery
services for the e-business and also in a partner and customer.
2. The infrastructure involves the network architecture, hardware, and software where it is
located. It is considered the method of data and documents are entire through the e-business.
The elements are suited in the company and it is managed by the applications, data servers,
and networks.
3. The e-business infrastructure is more important in the process of reviewing new
technology investments (Roma and Ragaglia, 2016). The interest is to support the changes
in the business to complete.
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4.3. Software
The engine called eCommerce software the online stores are easy to control and products
are removed, taxes are calculated and the other requirements to manage the website and to carry
out the order. The eCommerce software is used to simplify the complex activities to make the
user interface easy to access the non-technical backgrounds to overview the whole operation on
eCommerce. The eCommerce software has many aspects and features and a complex machine
for the online business. The processes that run are stored on a particular location is the purpose
of eCommerce software (Teece, 2017). If the platform did not satisfy the given task the
combination with the supreme service provider it has the potential to run the business completely
on various services. The ERP, 3PL, Accounting software and social media like Facebook,
Pinterest and Twitter are connected to the eCommerce software for the sharing of data without
manually.
 On-Premise: The on-site is installed and directed by the developer to fix the manual
updates, problem fixing and for troubleshooting. For the improvement in the flexibility in
the hosted solutions, the merchants used on-premise solutions.
 SaaS: Software such as Service solutions does not directly control on a technical point of
view. The requirement for the development are added designs and custom features for
upgrade, spot and integrating the new feature automatically or with a single click. The
hosted e-Commerce software is developed for flexible and personalized satisfied online
retailers. The SaaS software launches the 1/3 of the time and in less cost than the on
premise solution in e-Commerce software.
4.4. Security issues
The buying and selling of goods or services on electrical systems like the internet and
computer networks are defined as e-Commerce. It is commonly used for sales and enterprise
function on the business. The electronic trade has an enormous level of increase on the internet.
The transfer on the electronic fund, management of supply chain, marketing on the internet,
internet of electronic data, inventory management system, and collecting data automatically is
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conducted through e-Commerce. The sales on the US has reached $175billion in 2007 and
increased to $335 billion by 2012 (Wirl, 2017). The enormous development in the e-Commerce
has connected with the security threats but the system has four requirements for the e-
Commerce:
 Privacy- Provided facts are transferred and they should be taken from the uncertified
association.
 Integrity- the transferred facts should not be differed or connected with
 Authentication- The identities of both the transmitter and the sender must be proved.
 Non-repudiation- The transmitted information requires the proof that is received.
The Encryption is defined as converting the original messages into the text (encrypted),
that shows the complicated one to understand the hacker to decode the difficulties. The important
idea is to show the security and safety of the data and transmission. Encryption shows the
various ability but it is on the content and the needs. There are some of the capability in e-
commerce are:-
1. Public key encryption
2. Symmetric key encryption
The Secure Socket Layer shows the security model used and developing the e-commerce
business in the payment channel. In SSL, the data are communicated, client and the server
information is verified and the message is integrated to TCP/IP connections. The code of the
design to damage the information and interaction between the applications.
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4.5. Payments/Transaction process
E-commerce is opened up a world for both entrepreneurs and shoppers and tenders the
benefits of speed, an array of an object (choose from the option) and facility to shop, pay and
receive the purchases from the home, office or in action (Yang, 2011). An e-commerce payment
system plays an important role in online business and has a facility to the smooth exchange of
money and goods.
Modes of E-payment System
In the e-commerce payment system(s) are used to show the few payment models:
 Debit card: The debit cards had the facility for transactions and are accepted by the
merchants. The customer can succeed the e-payment has an efficient account balance.
 Credit card: It is the common one for the e-payment and is accepted by the merchants.
 Digital wallet: Saves the personal and information of banking for the quick payment.
 Mobile payment: Allows the transaction’s (via) text message. It can be used without the
use of cash or cards.
 E-cash or e-money: E-cash refers the convenient and speedy for the payment method (e-
cash).The amount is transferred to the financial body to another
 Electronic fund transfer: The popular method to transfer the money from one bank to
another using an ATM.
5. Discussion/Recommendations
• Establish mobile ready automation system.
• Concentrate on SEO techniques
• Use a multichannel marketing system for better effectiveness.
• Establish effective communication channel.
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6. Individual Contribution Summary
In the below-given table, the individual contribution of all the three team members is
shown.
Student name  Initial problem investigation
 Data collection for the analysis
 Carried out the research about Amazon.
Student name  Conducted study about the Amazon business model
 Collected details about their services
 Reviewed the Amazon's website.
Student name  Studied security issues involved in the e-commerce
business.
 Collected information about the mitigation techniques
followed by Amazon
 Conducted a review of their payments and
transactions processes.
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7. Reference
Crowne, E. (2012). Preserving the Amazon (Patent): Federal Court of Appeal Rules Business
Methods Patentable in Canada. SSRN Electronic Journal.
Ebel, P., Bretschneider, U. and Leimeister, J. (2016). Leveraging virtual business model
innovation: a framework for designing business model development tools. Information Systems
Journal, 26(5), pp.519-550.
Four-Closure: How Amazon, Apple, Facebook & Google Are Driving Business Model
Innovation. (2012). Chinese Business Review, 11(11).
Kim, S. and Min, S. (2015). Business Model Innovation Performance: When does Adding a New
Business Model Benefit an Incumbent?. Strategic Entrepreneurship Journal, 9(1), pp.34-57.
Lindgren, P., Valter, P. and Prasad, R. (2019). Advanced Business Model Innovation Supported
by Artificial Intelligence, Deep Learning, Multi Business Model Patterns and a Multi Business
Model Library. Wireless Personal Communications.
Lippman, B. (2003). Retail revenue management — Competitive strategy for grocery
retailers. Journal of Revenue and Pricing Management, 2(3), pp.229-233.
Peprah, A. and Giachetti, C. (2017). Business Model Adaptation to Institutional Voids: The Case
of Jumia, the Amazon of Africa. Academy of Management Proceedings, 2017(1), p.13620.
Roma, P. and Ragaglia, D. (2016). Revenue models, in-app purchase, and the app performance:
Evidence from Apple’s App Store and Google Play. Electronic Commerce Research and
Applications, 17, pp.173-190.
Teece, D. (2017). A Model for Success: A business model is more than just a business plan.
Avoid future headaches by reviewing the key elements of good business model design. IESE
Insight, (32), pp.6-6.
Wirl, F. (2017). Agency Model and Wholesale Pricing: Apple versus Amazon in the E-Book
Market. International Journal of the Economics of Business, 25(2), pp.243-264.
Yang, J. (2011). What is New York’s Amazon Tax on Internet Commerce?. International
Journal of E-Business Research, 7(4), pp.50-61.
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