E-Business Model of Amazon. com–Assignment #2 Questions and Answers Discuss whether or not Amazon has lost its identity by expanding into markets well beyond books. After reviewing the Amazon. com annual report, I feel that it has not lost its identity by expanding into different online markets beyond selling books. Online merchandising is a large and lucrative market that most competitors are taking advantage of this profitable business. Furthermore, online commerce has saved time and money for consumers, so Amazon made the right business decision to pursue this window of opportunity.
Next, Amazon is more competitive than any other online bookstore such as Barnes and Noble and Borders. After browsing the Barnes and Noble and Border websites and reading their reviews, I feel that Amazon ranks high in content, professionalism, effectiveness, and functionality as shown in Table 1. Amazon has a diverse collection of products, its customer service support is both professional and effective, and the functionality of its website is easy to navigate. The goal of Amazon is to bring new value to its consumers through online commerce and merchandising and continue to solidify and extend its brand and customer base (Amazon. om, Inc. , 2009). Recommend what Amazon should do to protect its brand. Many current and potential competitors of Amazon have greater resources, longer histories, more consumers, and greater brand recognition (Amazon. com, Inc. , 2009). Amazon strives to develop and maintain brand loyalty among consumers because it has created a successful system of personalized marketing (Alsop, 2001). Personalized marketing is a strategy that tries to make a unique product offering for each consumer.
Therefore, Amazon will have to continue to invest aggressively to expand and leverage its customer base, brand, and infrastructure as it moves to establish an enduring franchise (Amazon. com, Inc. , 2009). Next, Amazon must continue to focus on selection, price, and convenience of products (Amazon. com, Inc. , 2009). Also, Amazon must continue to offer services and tools with quality, speed, and reliability to its sellers and developer services (Amazon. com, Inc. , 2009). Amazon will have to continue to secure long-term vendor relationships and devote more resources to technology and marketing (Amazon. om, Inc. , 2009). Next, Amazon will have to enter into more commercial agreements, business relationships, or alliances that will strengthen its competitive position (Amazon. com, Inc. , 2009). Three operational strategies that can continue to help Amazon enhance its competitive advantage, includes cost-leadership, customer differentiation, and focus strategies (Saunders, 2001). Consumer satisfaction and operational frugality complement the operational strategies of Amazon in achieving and maintaining an effective competitive advantage (Spann, Tse, and Er, 2004).
In the cost-leadership strategy, Amazon should continue to ensure that it offers the same quality products as other companies for a considerably lesser price (Spann et al. , 2004). Next, consumers can recognize and differentiate the products of Amazon from its competitors through design and quality, so Amazon should always select a differentiator that is different from the competitor (Spann et al. , 2004). The focus strategy takes the cost-leadership and customer differentiation strategies and applies it to a niche within the market (Saunders, 2001).
Amazon needs to continue to focus on outstanding customer service as a niche but not the whole market because each niche has its own demand and requirement (Spann et al. , 2004). Technology, distribution, consumers, and products are entailed in the focus strategy as well. Amazon has to expand its business through the distribution arena to a more worldwide customer base (Spann et al. , 2004). Finally, Amazon has to make good investment decisions but consider execution risks and growth challenges (Amazon. com, Inc. , 2009).
Recommend what Barnes and Noble and Borders should do to recapture some of their online market share. Since Amazon has a competitive edge over Barnes and Noble and Borders in most aspects of online merchandising, they have to develop innovative strategies to increase their online market share. These strategies include increasing their marketing campaign, expanding into the international growth segment, nurturing existing vendor relationships, establishing new long-term vendor relationships, and adding new product categories. Barnes and Nobles and Borders must be competitive in their book pricing.
Since the book business has gone digital, whichever online company can sell the most e-readers will also be in the best position to sell books to customers. Barnes and Nobles and Borders will have to develop low cost e-readers that can compete with the popular Kindle e-reader created by Amazon. Also, Barnes and Nobles and Borders should enable consumers to read digital books on different devices, including the iPod and cellular phones. I think that Barnes and Noble and Borders can utilize some creative strategies that most consumers may find appealing.
First, Barnes and Noble and Borders can increase rewards for loyal shoppers by offering them discounts based on multiple orders made in a certain time-frame, or even give them a discount for orders made on their birthday. Furthermore, Barnes and Noble and Borders can offer online rewards to their nearest retail store location which is advantageous to both companies since Amazon does not have retail stores. Also, Barnes and Noble and Borders can set up online seminars hosted by published and unpublished authors for their consumers.
Barnes and Noble and Borders could be the brand that help authors translate their experiences into online games, online documentaries, or even online music. Furthermore, Barnes and Noble and Borders can offer online classes that cover a range of different book subjects. For instance, a talented chef can teach a cooking class, a nutritionist can teach a healthy living class, or a teacher can give a class or read a book to children. Ultimately, Barnes and Nobles and Borders will have to accept business risks when developing alternatives to increase their online market share.
Finally, an acquisition or merger may have to be an option for both Barnes and Nobles and Borders. At one time, Dell sold computers exclusively online, and now, the same computers are available in retail stores (e. g. , Wal-Mart). Discuss whether or not you foresee Amazon expanding its channel of distribution to include retail locations. I can foresee Amazon expanding its online market to different major retail locations. As stated previously, the distribution focus is one of the focus strategies that Amazon is utilizing to protect its brand and to stay competitive.
Most automotive repair shops utilize same day deliveries, and this distribution strategy can become a model for Amazon. Amazon can offer same day delivery to partner retail locations for consumers that order products online. Also, Amazon may become a multichannel retailer that sells products directly to consumers through more than one distribution channel. There are business risks associated with developing this kind of distribution process, but Amazon will develop operating efficiencies to overcome these risks and improve the process. Table 1 ————————————————-
Similarities and Differences Between Barnes and Noble, Amazon, and Borders Websites ————————————————- Criteria www. amazon. com www. borders. com www. barnesandnoble. com Functionality 1 22 Design 2 2 1 Content 1 2 2 Originality 2 2 2 Professionalism 1 2 2 ———————————————— Effectiveness 1 2 2 Note. 1 = Best, 2 = Good, and 3 = Poor. References Alsop, S. (2001, April). I’m betting on amazon. com. Fortune, 143(9). Retrieved October 22, 2010, from http://money. cnn. com/magazines/fortune/fortune_archive/2001/04/30/ 301918/index. htm Amazon. com, Inc. (2009). 2009 amazon. com annual report. Retrieved October 26, 2010, from http://phx. corporate-ir. et/phoenix. zhtml? c=97664&p=irol-reportsannual Olsina, L. , Lafuente, G. , & Rossi, G. (2000). E-commerce site evaluation: A case study. E-commerce and Web Technologies, 1875, 239-252. doi: 10. 1007/3-540-44463-7_21 Saunders, R. (2001). Business the amazon. com way: Secrets of the world’s most astonishing web business. Great Britain: Capstone Publishing Ltd. Spann, S. , Tse, S. , & Er, J. (2004). In M/Cyclopedia of new media. Retrieved October 22, 2010, from http://wiki. media-culture. org. au/index. php/Amazon_-_business_Model