Introduction
Amazon.com is a leader in the sphere of e-commerce globally because of using the effective strategies of promoting products with paying much attention to the customers’ needs and interests. The company was founded by Jeffrey Bezos in 1995. Bezos focused on the company’s development as a leader in the industry of selling books with the help of Internet platforms. When Amazon.com was established as the global online bookstore, there were no competitors within the industry in relation to online sales.
The market only started to develop that is why all the strategies used by Amazan.com during that period can be discussed as successful because of the concentration on progress and innovation. Today, Amazon.com proposes a wide range of products for their customers following the principles of high-quality, innovation, and personalization (Amazon.com, Inc. – Financial and strategic analysis review 2012). Moreover, the general strategy used by Amazon.com during the period of 1995-2009 can be discussed as customer-centric, and this approach was also followed in 2009-2012. The effectiveness of strategies used by Amazon.com during the periods of 1995-2007, 2007-2009, and 2009-2012 depends on the priorities in relation to the industry’s development, market competition, approaches utilized regarding the company’s strategic business units, strategic capabilities, and resources, and realized diversification.
Amazon.com Strategy (2007-early 2009). The Strategic Business Units
The strategy of Amazon.com realized during the period of 2007-early 2009 depends on improving the work of the company’s definite strategic business units. It is possible to determine such strategic business units that are important for the company’s growth as the customer groups, the assortment of products and services provided, the orientation to competitors within the industry, and the aspect of geography and location. The strategy followed by Amazon.com during the discussed period can be evaluated only with references to the company’s successes in developing definite strategic business units (Kangas 2003; Leiber 2011).
Amazon.com is positioned as a customer-centric company that is why much attention is paid to the improvement of relations with customers regarding their attraction and satisfaction. The basic sale strategies depend on knowing the customer and improving his or her experience with the company. Thus, the company orients to three groups of customers which needs and interests as well as experience are taken into account (Murph 2009). These groups are consumer customers, seller customers, and developer customers.
Thus, all the categories of people whose activities can be connected with Amazon.com are important for developing the company’s effective customer-centric strategy (Stockport 2010, p. 574). The other significant aspect of the strategy is responding to the customer needs which can be possible only with references to three basic principles which are selection, price, and convenience. The orientation of the company’s leaders can be discussed as effective without references to time periods (Stockport 2010, p. 575).
To meet the customer’s needs, it is necessary to provide them with a great assortment. This business unit is developed within the company effectively with references to the possibilities of innovation. Today, Amazon.com proposes a range of products from books to electronics and jewelry. Furthermore, the expansion in the assortment is connected with the expansion of the services provided. Thus, during the period of 2007- early 2009, Amazon.com concentrated on providing specific Amazon Web Services and launching new associated sites. These actions resulted in attracting more customers. Moreover, the strategies which were connected with geography and location were also improved with references to the market expansion. From this point, the network was expanded to Europe and Japan along with founding new fulfillment centers.
One more important strategic business unit which regulates the position of the company within the industry is the orientation to competitors. Amazon.com continues to take the leading position within the market in spite of the fact that such strong competitors as Barnes and Noble and e-Bay operate online. Furthermore, the strategy used by Amazon.com should be more customer-friendly than the methods used by physical-world competitors. The level of customer loyalty in relation to Amazon.com supports the idea the used customer-centric strategy works successfully (Ungson 2008).
Strategic Capabilities and Resources of Amazon.com
The further growth of Amazon.com as the leader within the market is based on the effective use of the company’s capabilities and resources. During the period of 2007- early 2009, the company’s progress depended on the focus on technologies and innovation along with proposing new sites and services for the customers, on the service expansion regarding the digital content offerings, and enhancing the accessibility of the company’s customers. Furthermore, it is important to pay attention to the company’s resources in relation to the staff of Amazon.com and on the company’s interest in beneficial acquisitions (Stockport 2010).
Amazon.com as the developed customer-centric company can achieve further progress focusing on innovation as the main concept associated with the industry in which Amazon.com operates and with the customers’ needs. The period of 2007- early 2009 is characterised by the company’s concentration on technological innovation in order to attract customers and improve their experience with the company. From this perspective, all the company’s strategies developed to reduce costs and provide customers with low-price policy were connected with the achievements on research and technological innovation.
Proposing new technologies and improving the developed ones, Amazon.com also focused on the customers’ interests in relation to improving the possibilities of the company’s sites on presenting the customer’s opinions on the products or services and on the organization of the sale processes (SWOT analysis Amazon 2013).
The strategic capabilities of Amazon.com depend on the effective research and development processes associated with proposing technological innovations. Thus, the company’s customers reacted positively to Kindle products and to improving Amazon Web Services because the traditional principles of high quality, low price, great assortment, and convenience were followed. It is possible to state that the company’s strategy is effective because of finding the balance between tradition and brand loyalty and innovation. The Cloud Computing, the digital content offerings, and improvements of accessibility with references to expanding the possibilities of the company’s web sites resulted in attracting more customers and gaining real profits (Schepp 2009).
However, the success of Amazon.com is impossible without the efforts of the talented staff. The company’s development and improvement is based on the skills and abilities of the persons who participate in research and development processes along with launching new services or proposing new products. As a result, Amazon.com relies on the strategic approach to recruitment because of the necessity to hire the professionals in their sphere who are oriented to productivity and the company’s progress (Epstein 2004; Stockport 2010, p. 576). Moreover, it is important to discuss the company’s strategic approach to acquisition and alliances. Amazon.com chose to orient to alliances with the other companies as a successful way to contribute to the company’s development in relation to innovation and technologies. The financial problems of the company observed during 2008 because of the global crisis were also overcome with references to the company’s effective strategies oriented to acquisition.
The Diversification Strategy of Amazon.com
The focus on innovation and technologies is closely connected with the company’s developed diversification strategy. The most vivid example of this strategy is the company’s choice to present Kindle products. Amazon Kindle as the hardware device is one of the most successful products proposed by the company because of focusing on satisfying the customers’ needs in a complex with references to their desire to buy electronic books and read them with the help of the specific device (Borders returns to online sales, drops Amazon 2008).
The development of Amazon Kindle contributed to stimulating the associated sales of books in the most popular online bookstore. Amazon Kindle as the reading device is characterized by many features interesting for the customers because of the focus on the product’s convenience. Having been presented in 2007, Amazon Kindle is one of the leading products in the industry, and its improved version of Kindle 2 was launched in 2009 in order to provide the customers with more possibilities to choose books and the ways of reading them according to their needs and interests (Stockport 2010).
The development of Amazon Kindle is based on the results of the perfect examination of the customer experience. From this point, the orientation to a diversification strategy is explained with the company’s needs and priorities. The popularity of Kindle exceeded the expectations of the company’s leaders because of based on an effective and well-developed strategy according to which the interests of the customers are taken into consideration (Miller 2010).
The other aspects of the diversification strategy used by Amazon.com are associated with launching such products and services as the improved Amazon Web Services and digital contents. Proposing new services, music stores, and computer clouding, Amazon.com focused on the expansion of the market possibilities and on attracting new consumers. From this perspective, the financial and strategic advantages of using a diversification approach are obvious. Amazon.com chose to focus on services that were not proposed to the customers earlier (Amazon EBS, A New Artists Store). As a result, the interests of the customers in the products increased stimulating the growth of profits (Amazon flexible payments service 2013; Vasquez 2009).
The Future Strategy for Amazon.com
Having analyzed the aspects of the company’s development after 2009, it is possible to note that the future strategy of Amazon.com should be oriented to improving the operational efficiency, using strategic acquisitions, exploring new possibilities for the provision of retailing services, and to focusing more on innovation and technologies because of the frequent development of the competitive industry within which Amazon.com operates today (Amazon annual report 2008 2009; Amazon annual report 2009 2010). The current strategies used by Amazon.com are based on winning the competitive advantage within the industry because of the frequent progress of the technology-based markets and fields. Amazon.com preserves concentrating on long-term goals as the main feature of the company’s fundamental approach. The effective strategy for Amazon.com should be based on the combination of traditional approaches with flexibility, speed, and innovation while developing new products and services. Thus, the new strategy can be discussed as the combination of expansion strategy with orienting to the competitive advantage (Amazon annual report 2010 2011; Amazon annual report 2011 2012).
It is important to find the balance between customers-consumers, sellers, and developers in order to provide the conditions for the successful realization of the strategy. Certain recommendations can include the following items:
- the focus on the assortment, low prices, and convenience should be preserved as the main priority of the company because of the real effects of the strategy to attract customers-consumers who form the main segment of customers in Amazon.com;
- sellers can be provided with access to specific web sites developed by Amazon.com in order to regulate this segment of the market additionally;
- Amazon Web Services used by developers are developed today, but the improvement is necessary with references to using the latest technologies. To preserve the balance between customers, it is important to satisfy the needs of developers as well as sellers and to improve the work web sites along with the assortment of proposed services.
Amazon.com relies on generic strategies in relation to the company’s development when it is possible to refer to the expansion strategies in order to win new markets and satisfy the customers’ needs globally. In spite of the fact that Amazon.com operates globally, the company experiences difficulties in relation to exploring new markets geographically. Nevertheless, the previously realized steps in this direction can contribute to the further effective use of the strategy (Amazon associates 2013). It is possible to state that Amazon.com preserves the balance between tradition and innovation while realizing the generic strategies, but new approaches can be also beneficial for the company’s development and avoiding the critical financial situations as it was during the crisis development in 2008 (Amason 2010). The improvement of the company’s international activities can contribute to increasing profits and revenues.
Amazon.com is the leading company within the industry of e-commerce which strategies are chosen to respond to the economic trends and to the customers’ needs and requirements. The brand loyalty in relation to the company depends on the efforts of the company’s leaders to find the balance between reputation and tradition and innovation as an important feature of the modern world.
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