An E-business Analysis of Amazon

Running head: THE EVERYTHING STORE 1

An E-business Analysis of Amazon

Janeen Vurro

BUS 352 e-Business

Instructor: Ralph Tremonti

January 24, 2016

THE EVERYTHING STORE 2

Advanced technology has altered the way we complete many tasks in the world today.

The internet has had and continues to have a huge impact on the world. This technology has

especially changed the way many organizations do business. In fact today companies have the

ability to solely conduct their business through the use of e-commerce. This form of business is

very beneficial to a great number of companies.

There are many e-commerce business that have been successful by establishing this

ability to conduct business over the web. One business that has been able to prove they have

what it takes in the e-commerce society is Amazon. This e-commerce business, founded by Jeff

Bezos started in his garage, then quickly moved to a building in Seattle, Washington in 1995.


The initial focus was on only selling books online. One great feature that Amazon had

implemented right from the start was that their supplies were shipped from wholesales and

publishes, which made a warehouse unnecessary, and then allowing for money to roll in quicker.

This great business idea little by little was proving to be a success. The next step that Bezos

wanted to master was to make the Amazon.com website as customer friendly as possible

(FundingUniverse, n.d.). This idea then developed into Amazon’s prevailing search capabilities.

The next feature Bezos constructed was to implement a 10-30 percent discount on a number of

items, allowing the prices to be very affordable. Other great ideas of Bezos included the option to

gift wrap, email notifications of when new books in customer’s favorite subjects arrived, and

allowing customers the ability to write and read comments about the products that they

purchased (FundingUniverse, n.d.). All these ideas were established from the first few years of

business to ensure success and customer satisfaction.

The selling of books online with a strong focus on the web design quickly brought

Amazon to the top. This high success rate encouraged Bezos to go bigger with what Amazon can

offer. The first improvement was a new distribution center in New Castle, Delaware, hence

establishing a distribution center on the east coast as well as the west coast. This new location

allowed for a quicker processing and shipping rate. With Bezos’ strong dedication to expansion

and marketing Amazon was able to establish the title of being the first e-commerce business to

secure one million customers by 1997 (FundingUniverse, n.d.). Day after day Amazon was

quickly becoming a victorious e-commerce business, making millions upon millions.

Amazon seemed to be making it, however, their quick expansion and the high amounts of

marketing was so costly that Amazon was not able to make a profit thus far. To mend this issue

Amazon than decides to sell online music and movies as well. By 1999 Amazon adapts to sell


toys, electronics, tools, and hardware through third party establishments, including, Toysrus,

Target, Circuit City, The Borders Group, Virgin Wines, Expedia, Hotwire, and National Leisure

Group (FundingUniverse, n.d.). The results were astonishing providing a 5 million dollar profit

by 2001 (FundingUniverse, n.d.). The next expansion was to sell clothing apparel as well.

Amazon joined forces with The Gap and Land’s End, which at forced cost Amazon to lose

money, but by 2002 they were able to secure a three million dollar net profit (FundingUniverse,

n.d.). Bezos ideas were proving to be successful, but as soon as he made money he spent more

money on more ideas.

As money rolled in Amazon continued to expand adding more and more merchandize,

and establishing more and more partnerships. The next big change was the launch of Amazon

Prime, providing students with unlimited free express shipping for a yearly price of $79

(FundingUniverse, n.d.). Moving on to the next huge development was the introduction of the

very first Kindle in 2007 (FundingUniverse, n.d.). The Kindle swiftly became one of the most

popular electronic e-book readers. The sole introduction of the Kindly increased sales by 38

percent (Jeff Bezos Biography, 2013). Furthermore by the year 2010 Amazon’s profits more than

doubled. Bezos made a lot of good decisions to keep up with technology. Amazon Prime grew to

being available to all who are interested and it even offers television shows and movie streaming

as well as music streaming. Bezos acknowledges what is popular and builds that onto his

business.

Another business aspect that Bezos achieved with Amazon was his ability to determine

the appropriate needs for the company and the customers to target. One great feature Bezos

implemented was that he provided such a broad assortment of products and services. This helped

with the needs of the company by building a huge inventory, which in return will build more


sales. This quality is also very beneficial for building the number of customers, for that there is

virtually a product or service for everyone from Amazon. Another great development Bezos

constructed to improve the company and the number of customers was the creation of the

customer ratings section for the products they had purchased. This aspect is great with helping a

customer that is unsure about the value of a product become positive they want to purchase it.

There are customers that go into extreme detail oriented description of products, including the

pros and cons of it, which brings a sense to trust to the new purchaser (Beard, 2014). Amazon

also provides personalized emails, which are emails tailored to the customer’s likes (Beard,

2014). This can really grasp a person’s attention. For example if you were looking for a certain

product on Amazon, but come to the conclusion that you are not ready to buy it just yet, Amazon

will send you an email saying that product has decreased in value, or other products that relate to

it. A person is more likely to open an email that is geared towards what their demands are. In the

end if customer needs are satisfied then the needs of the company are satisfied too.

There were many strategies that Bezos developed to advance his e-commerce business,

all of which are guided by the internet. Bezos knew he wanted an e-commerce business before he

even knew what he wanted to sell. In the video, “Amazing Amazon Story-Jeff Bezos Full

Speech” by Corporate Valley (2013) Jeff Bezos stated, “The wakeup call that lead to starting

Amazon.com was finding that web usage in the spring of 1994 was growing at 2300 percent a

year, and things just do not grow that fast.” Bezos then relied on having a complete

understanding of how to use the internet for business success, rather than just knowing what the

internet does (Earl & Feeny, 2000). Moving on, as online shopping became more popular, Bezos

expanded his product line. All sales were made through Amazon.com. Bezos’ business strategy

evolved around the internet, without it Amazon.com would cease to exist.


The internet also had a great impact on the strategic information systems that Bezos used

to compete in the market. When developing and running an e-commerce business it is vital to

understand the information systems. Bezos started out using website systems and other

fulfillment systems independently to guide security measures, but as technology advanced Bezos

continued to upgrade his information systems (Imran, 2014). This is very important for Amazon

to stay successful, the systems used needs to be secure and fast so customers will have trust in

Amazon. A great system that Amazon uses is called Smart Analysis Search (SAS), this system

allows them to analysis behavioral patterns and in return helps them detect fraud (Imran, 2014).

Amazon uses the technology advances to benefit their security measures, and they constantly

monitor the website for fraudulent activity.

Amazon also has a good grasp on the Information and Communication Technology

Strategy it uses. Since Amazon has to be running effectively 24 hours a day every day, it is very

important for Amazon to use a reliable form of ICT. One of the major forms of ICT that a lot of

successful e-commerce businesses us is called Amazon Web Services (AWS). AWS is a service

that allows for its clients, like Amazon, to grow as much as they like by constructing the

appropriate computer power as part of the software they write (Hilder, 2013). This service is

available through the internet and anyone can use it, they just pay as they go. The service is a

cloud based service and it allows access to servers, storage, databases, and application services

over the internet, and a company or person only pays for what they use (What is Cloud

Computing?, 2016). Amazon also AWS as its EC security system. Amazon has constructed its

own very successful ICT services and they even share it with the rest of the world.

Amazon is proven to be a very successful e-commerce business therefore they must have

established some great e-commerce strategies to accomplish this. One e-commerce strategy the


Bezos used for his company was to let the customers help keep the website up to date. For

example the customer reviews not only give a second opinion to purchasing a product, but it also

gives the website a great amount of unique content (Peabody, 2010). This is a great form of word

of mouth advertising for a product. The next effective strategy Amazon uses is the simplicity of

navigating through the website. For instance, Amazon.com has a simple and easy navigation bar

located on the left side of the page, a visible search box at the top, and it exhibits different page

layouts for different products (Peabody, 2010). Another great strategy is how Amazon

personalizes a customer’s shopping experience. By keeping track of what a person is interested

in helps Amazon build an affected relationship with that person. There are so many resources

that Amazon uses to build on its e-commerce strategy.

Knowledge management has also been a big impact on Amazon’s success. This is proven

by how Amazon using on portal for their on service. By keeping everything the same in the way

Amazon manages their websites and services allows for familiarity and easy use for the

customers (Rosenberg, 2014). The next good management implication is the consistency of the

details of the products as well as the product reviews (Rosenberg, 2014). Consistency helps

speed up the shopping process. Another great management skill presented is the simplicity and

fast paced transactions. Amazon offers customers to store in their payment information allowing

transactions to be completed in just one click. Managers of Amazon knows the importance of

keeping everything simply and uses that to benefit the company.

As Amazon grew and expanded its inventory they become known as the everything store.

Achieving a name like this implies that there is no limit to the type of customer Amazon can

satisfy. The only quality a potential customer needs to possess to be an Amazon customer is

knowledge of the internet. Amazon promotes to all internet users all over the world. Amazon has


also proven to be a very effectively navigated and functional e-commerce business. Amazon has

been able to continuously provide a flawless company by keeping up with technology changes.

With no considerations to worry about Amazon is able to focus more on customer expansion.

Amazon consistently uses technology to its advantage. Amazon uses technology in every

aspect of the business. For instance it keeps up with security services. It even stays connected

with up to date programs and servers to satisfy the ability to sell and for customers to shop 24/7.

Amazon also stays up to date with the kinds of technology that are being used the most by

people. For example Amazon offers television and music streaming to satisfy that demand as

well as the online shopping demand. Amazon has always used technology to their advantage to

satisfy the demands of customers.

With any business whether an e-commerce business or an actually store front business

there are a great amount of laws necessary to follow. One of the major laws that Amazon has

been faced with in the recent years involves requiring Amazon to charge state tax. States have

been frustrated that they have been losing billions of dollars from online businesses not charging

state tax (Brunner, 2012). This fight against the states and online retailers like Amazon have

resulted the mandated added state tax to the bills of customers, these taxes depending on the

residency of the shopper. By obeying this law Amazon’s prices become more expensive, which

in then takes away from one of Amazon’s known benefits, low priced merchandize. Laws like

this can have a negative effect on Amazon sales, but staying ahead with technology and great

customer services can be enough to keep Amazon on top.

There are several significant metrics that Bezos uses to keep Amazon a successful e-

commerce business. First is his focus on the customers. Bezos has his companies goals tracked

and 80 percent of the goals are focused around the customers (Executive Leadership, 2013).


Another task Bezos partakes in is having his employees debate one another to figure out which

of the metrics is worth building (Executive Leadership, 2013). Next since Bezos relies so highly

on measuring production he is able to monitor when there is something that is started to frustrate

a customer and takes measures to eliminate it right away (Executive Leadership, 2013). A good

business metric is to pay attention to your customers. Finally the last metric that Bezos is

devoted to is taking risks. From the start Bezos has been taking risks and spending a great

amount of money, and these risks have so far been proven a success.

Amazon has been proven to be successful not only in the United States, but they continue

to strive all over the world. However expanding an e-commerce business globally comes with

certain limitations. A major limitation is the way different countries do their online shopping. For

example in Brazil people pay for their online purchases in installments, and in Russia people do

not pay for their products until they arrive on their doorstep (Kucera, 2013). Other than small

roadblocks like that Amazon as been able to operate in more countries around the world than any

other business.

Starting in a garage Bezos has been able to take risks after risks to establish on of the

most successful e-commerce businesses in the world. Having a strong focus on the necessary

technology needed to keep its customers happy has been a huge benefit towards success. Bezos

understands how to use the internet to his business’ advantage, and he will continue to build on

his inventory and services to maintain his nickname, the everything store.


References

Amazon. (2016). What is Cloud Computing? Retrieved from Amazon Web Services:

https://aws.amazon.com/what-is-cloud-computing/

Amazon.com, Inc. History. (n.d.). Retrieved from FUNDINGUNIVERSE:

http://www.fundinguniverse.com/company-histories/amazon-com-inc-history/

Beard, R. (2014). Learning from Amazon: How to improve the ecommerce customer experience. Client

Heartbeat.

Brunner, J. (2012). States fight back against Amazon.com’s tax deals. The Seattle Times.

Feeny, M. E. (2000). How To Be a CEO for the Information Age. MIT Sloan Management Review.

Imran, A. A. (2014). A study on Amazon: infromation systems, buisness strategies and e-crm. Research

Gate, 1-13.


Jeff Bezos Biography. (2013, September 30). Retrieved from Academy of Achievement:

http://www.achievement.org/autodoc/page/bez0bio-1

Kucera, D. (2013). High on global e-commerce growth. BloomberBuisness.

Leadership, E. (2013). Inside Amazon’s ‘culture of metrics’. Business Management Daily.

Peabody, B. (2010). 6 E-Commerce Strategies to Steal From Amazon. CBS News, 1-7.

Rosenberg, M. (2014). The Knowledge management genius of Amazon.com. Learning Solutions

Magazine.

Strategy, I. a. (2013). Why Amazon web services is the most disruptive development in ICT since the

personal computer. Nail Soup LTD.

Valley, C. (2013, May 27). Amazing Amazon story-Jeff Bezos full speech. Academy of Achievement.

An E-business Analysis of Amazon

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