History and Background
The selected company is Amazon, which is a technology firm headquartered in Seattle. Founded in 1994, the corporation was initially registered as Cadabra Inc. Today, it is more common as an e-commerce firm that offers goods and services related to artificial intelligence, computing, and digital services such as live streaming (Chan, 2015). Recently, the enterprise was identified as the most profitable retail company in the U.S., surpassing Walmart (Chan, 2015). Interestingly, the corporation is publicly listed on Wall Street and, as of today, has a share value of $3,196.84 per share (Amazon, 2020). The company’s main shareholder is its founder, Jeff Bezos, who is also considered one of the world’s wealthiest people. The company has ventured into strategic partnerships that have allowed it to develop over 16 successful products and services. Such business relationships include one with D.C. Comics, Toys ‘R’ Us, and Nike.
Amazon associates its success with its strong corporate mission. According to the firm’s website, its duty is “to continually raise the bar of the customer experience by using the internet and technology to help clients find, discover and buy anything, and empower businesses and content creators to maximize their success” (Amazon, 2020). Unpacking this statement reveals that the corporation desires to be the most client-centric in the world. Chan (2015) argues that customer behavior has been changing over the years, with more people looking for companies that offer more in terms of the client journey than other traditional approaches. In the recent past, the enterprise has revealed that this specific approach to client engagement has allowed customers to be the focal point of the goods and services they require.
The consumer loyalty and the constant growth of the business’ customer base are evident through their sales and profits growth. A brief analysis of this expansion reveals that the corporation has developed significantly in terms of products and services offered and profits. For example, the company started selling books online, but through research, added other elements such as music, toys, diapers, and even watches. The expansion that led to the various products and services can also be attributed, as mentioned, to strategic partnerships that the business attracted. For instance, they currently have a subsidiary that sells diapers only and targets parents. The firm’s ability to help consumers find whatever product they want makes the corporation that more valuable. In turn, this has led to massive profit growth. The company is currently estimated to collect $280 billion in revenue per year (Amazon, 2019). Apart from the revenue, the enterprise’s 2019 annual report reveals that it also has assets worth $225 billion and a net income of $11 billion (Amazon, 2019). The institution’s total equity stands at approximately $60 billion, with an operating cost of $14 billion.
Primarily, the company has invested fully in digital marketing and advertising. Chan (2015) explains that the firm does not advertise the individual products that can be found on their website, but their processes and convenience for the buyer. This has been achieved through targeted marketing processes such as sponsored search and email marketing. Arguably, the company collects much data from its clients that is then used for targeted marketing and advertising. The firm has also used its social media platforms to advertise its processes and how convenient they are to the public.
One specific event that helped shape Amazon to be the retail giant today is the opening of Microsoft Office in Seattle. This was a significant part of Amazon’s growth as it encouraged the company to relocate from Washington to Seattle, which has become a technological hub (Chan, 2015). A second notable event occurred in 1998 when the company went public. Initially, the company shares were significantly low. However, the company’s growth led the shares to move from the initial $18, and an eventual low of $1.96, to today’s price of over $3000 per share. This also profoundly affected the firm’s profits.
This section focuses on the strengths, weaknesses, opportunities, and threats of Amazon. One strength of Amazon is that it has a low charge structure. The premise arises from the fact that e-commerce averts some of the capital-intensive elements that traditional shops incur. For instance, Amazon does not store the different merchandise sold on the site. Therefore, the company does not need any storage space, unlike the traditional firms. The nature of the company, where it uses third party sellers, can also be perceived as a strength. Chan (2015) explains that these types of partners provide products that are not available on the Amazon Marketplace platform. Initially, the company allowed these types of sellers to sell directly on Amazon. However, recent developments have led to the establishment of Amazon Prime and Fulfilled by Amazon that target only third-party sellers. Chan (2015) explains that these clients make up 58% of Amazon’s clients. Therefore, one advantage of this is that it has led to the improvement of the bottom line.
A SWOT analysis reveals that the company has several limitations that can be viewed as weaknesses. One such weakness is poor penetration into some growing markets. Chan (2015) argues that developing countries offer broad markets that are yet to be explored by numerous international companies, such as Amazon. Not only has the company failed to target possible clients in the third world countries, but also, it has completely ignored the possibility of entering these markets. The company has not integrated internationally friendly checkout options for its international clients as well. This is a disadvantage as it provides more competitive power to local companies that can make the consumer journey in the purchase of similar products easier. One can argue that Amazon’s business model can also be imitated easily. The risk with this is the fact that competitors can use the same model. It does not help in giving the firm a competitive edge.
Despite the weaknesses, the company has various opportunities for the management further to improve the firm’s standing in the market. One such opportunity is the branching into new developing zones. As mentioned previously, the company has so far ignored the need to penetrate developing continents such as Africa. Arguably, the developing world has a potential market for Amazon due to accessibility to the internet. This has led to more exposure in regards to different brands and options that the target audience would like to purchase. Indeed, Amazon’s user-friendly interface would also appeal to this market. It can be stated that the company also has opportunities in developing start-ups that are targeting the same industry. Currently, start-ups are creating significant competition in the sector. The larger e-commerce platforms have managed to control the market by investing or buying such start-ups (Chan, 2015). It is vital that Amazon also participate in such business relationships in order to remain on top.
The company also has several threats that can be highlighted. The first threat is the ever-changing technology. This affects a part of the company, the growth of artificial intelligence, and new computing advantages. This is a threat, as the company has to keep abreast of all the new technologies in order to remain the biggest shareholder of the market. Chan (2015) also explains that the growth of e-commerce and cloud computing companies are a threat to Amazon. Arguably, this is enhanced by the ever-changing technological advances and the different needs that push these creations. The additional fact that there are policies that encourage the growth of the industry through investing in similar up and coming e-commerce businesses is a threat to Amazon. As previously stated, more start-ups are introducing newer and better ways of engaging with clients through e-commerce. Therefore, the competition is not only in regards to the number of companies that offer the same services but also the quality guaranteed. Amazon has to ensure that it offers high-quality goods and services despite the fact that third party clients control some sections of the company.
An omnichannel analysis of Amazon reveals that the firm has used the strategy to enhance the customer experience. It is critical to note that the omnichannel approach does not necessarily mean that a client can access the company through a physical store, web, or social media. Binnie (2018) explains that this type of approach is a multi-channel approach. On the other hand, an omnichannel approach links all these elements to make the user journey more efficient. It can be broadly stated that the firm’s omnichannel approach has been highly effective in achieving customer-centric experience, as stipulated in the corporate mission statement. Whereas Amazon does not have physical shops, through its omnichannel approach, it developed pop-up kiosks for its clients. Piotrowicz and Cuthbertson (2018) explain that these stores are significantly small and have Amazon-related customer technology. For instance, they have Alexa installed to help clients around the store. One can argue that this has enhanced the corporation’s consumer-centric approach as it has provided a physical store for the market that prefers this over the online stores, but with the same concept used in the highly successful digital platforms.
The firm’s omnichannel approach has also been successful due to its Amazon Fresh Pick-Up approach. Two main things have to be considered when discussing this part of their omnichannel approach. The first is that initially, the company did not offer fresh produce because it did not have physical stores where buyers could pick the items. However, the introduction of the Amazon Fresh Pick-Up stores has allowed the business to broaden its products further and include fresh produce that can be picked on the same day. Interestingly, the same Amazon customer experience, through the firm’s related technology, gives similar buyer experience as their digital store. This is similar to their whole foods section, which also gives purchasers similar experiences. It is arguable that even though the omnichannel has been highly effective in ensuring a client-centric approach, it has not positively affected its bottom line.
The order management solutions used by Amazon tied the physical stores with online platforms. This further enhances the company’s omnichannel approach as all its consumers have to first interact with the brand online. Piotrowicz and Cuthbertson (2018) explain that a significant omnichannel strategy ensures that there is one point of contact before integrating the other aspects that impact customer journeys. Amazon uses its website as this initial point of contact. The buyer can engage the brand in regards to the products or services they need to select whether they want their orders delivered to their locations or prefer to go to the pick-up stores. The order management solution links all these aspects into a seamless single digital transaction for the client. It removes various pain points that the client would otherwise experience. For instance, the client does not need to go to a different page to select the stores closest to them as their location tag narrows this down. Arguably, the solutions employed have not only made work easier for the purchaser who is placing an order but also for the third-party sellers who are using the same platform.
Other elements of the firm’s omnichannel that must be considered include their point of sale, order broker solutions, and merchandising. In regards to the former, the company carefully selects products and services that are to be associated with its brand. As Piotrowicz and Cuthbertson (2018) observe, even the third-party sellers have to be carefully vetted to ensure they are legitimate and truthful about the goods and services they offer. In an attempt to further enhance the consumer-centric approach, the firm also values customer input to make their experiences better (Piotrowicz & Cuthbertson, 2018). This includes giving refunds for damaged or changed products. Arguably, by ensuring that the buyer’s needs come first, the business has been able to slowly progress towards making Amazon the most client-centric firm in the world as denoted in their corporate mission.
Amazon’s primary competitor is Walmart. As mentioned previously, Walmart was initially considered the biggest and most profitable retail company in the US. However, it has since been surpassed by Amazon, pushing the former to the second position. The companies have various similarities and differences in their retail strategies. One similarity is that they both have focused on making their businesses all about the user journey. Clinehens (2019) argues that an efficient buyer journey not only attracts new clients to a brand, but also ensures customer loyalty. Therefore, one can argue that the success of both Walmart and Amazon can be attributed to their strategic purchaser journeys. On the same not, both companies have arguably removed significant barriers that their clients faced initially in e-commerce. This has further cemented both companies standing in the market and industry.
A second similarity of the strategies employed by both Amazon and Walmart is that they both use emotive marketing and advertising. Debatably, this approach to advertising has worked for both due to the fact that a significant percentage of their audiences are loyal. Clinehens (2019) explains that emotive advertising focuses on the emotions of the consumer. Even though they use different primary channels for advertising, both Amazon and Walmart advertise their process and simplicity in order to appeal to the emotive aspect of marketing.
Despite the similarities, the two retailers are also highly different. First, whereas Amazon is first an e-commerce company, Walmart is primarily a brick-and-mortar store. The premise means that the former firm has focused fully on providing services through the digital space while the latter has physical stores all over the country. Further, Walmart holds a larger percentage of buyers that prefer physical stores even though Amazon has opened up a few stores across the country. Interestingly, Amazon has had to close down some physical stores due to the fact that they received little attention in the market. On the other hand, Walmart has recently entered the e-commerce retailing sector and has little experience in the same. This realization also reveals that the two companies have different strategies as both are trying to enter into spaces that they do not hold strong share.
The two companies are currently using different omnichannel strategies to reach out to their clients and ensure a seamless experience. It is arguable that both companies have heavily invested in their omnichannel, therefore, the approach affects both businesses significantly. As mentioned, Amazon has had to close down some physical shops due to low sales and usage of the same. On the other hand, Walmart is still struggling to fully penetrate the digital space due to a lack of proper experience in the same.
Disputably, Walmart has a positive future. There are several things that make such a prediction possible. The first is the adoption of e-commerce. Indeed, currently, the company is lagging behind in regards to penetrating the e-commerce industry. This is due to its late entry into the space. However, there is a lot of potential in the digital area, and the corporation can still gain advantages over its competitors, such as Amazon. These benefits can experiment in terms of marketing and consumer engagements through online platforms. Walmart has to ensure that its customer involvement is above that of its competitors in order to gain traction and take back its number one spot in the retail market.
It is also arguable that the business has a bright future due to the growth of omnichannel. Many companies realize that the seamless linking between their online and physical presence is key in ensuring the improvement of the bottom line. Walmart has to ensure that their online presence is also effective in order to take advantage of the benefits of omnichannel. The company has to hire the best talents and test different modern ways to better engage with their clients online, even when their physical stores are their biggest asset. It can be added that the firm’s outlook is also positive as more people are looking into online shopping even for groceries, which is Walmart’s biggest product.
One short term recommendation for Amazon is that the corporation stops creating more physical spaces. The recommendation is contradictory to the concept of omnichannel. However, the firm must do more research on the type of physical spaces that will attract their target customers. Currently, the stores have not made much difference in regards to boosting the firm’s sales. Due to this, several stores have been closed in various states, as mentioned earlier. The company must consider what the client needs in regards to a physical store in order to create the best experience for its target market. This recommendation can be described as conservative and one that requires little funds.
A second short term but aggressive suggestion for the business is penetration into developing countries. As stated previously, the company has not been keen on reaching buyers in third world countries. These customers are currently able to purchase products through Amazon and use third parties to get the products delivered to their countries. The enterprise can make international clients’ user journey as efficient and straightforward as for its buyers in the US market. Additionally, the firm has to ensure that payment options provided for international users are easily accessed. This recommendation will require significant investment in advertising and marketing and creating partnerships that allow international shipping.
An intermediate-term recommendation is the establishment of pick-up stores in all the US states. This is a mid-term plan due to two things. First, the spaces will be purely for picking up products purchased online. Therefore, it further cements the corporation’s omnichannel approach. It is important to note that whereas there are people who prefer either digital or brick-and-mortar, there are some products that a significant percentage of the target market prefers to see, feel, and then order. As explained earlier, Amazon is trying to sell fresh produce through its platforms. This sector is already saturated with megastores, such as Walmart. However, Amazon has the advantage of allowing the consumers to order these products online and either get them delivered at their locations or pick them up from an identified store. The physical store is for the part of the market that has to see the groceries first to ensure freshness. This is an aggressive approach to their intermediate plan and will require significant funds.
A more conservative yet intermediate-term recommendation is for the firm to use its database to conduct a study that will inform on the physical stores. The idea to have stores that incorporate Amazon technology and offer the services and goods that the public is interested in is a crucial part of its expansion plan. One can argue that in order to do this efficiently, the management has to conduct a full study of the market and their reactions towards such stores. The research will also help the corporation identify some of the immediate needs of their target audience. The recommendation will require limited funds as the company already has an extensive database.
Bearing all these in mind, one can argue that a viable long term strategy to make the retailer bigger and better is to consider brick-and-mortar as part of their omnichannel. Indeed, whereas this has been tested, the approach towards the same was not made well. The suggested research will allow management to know how many stores are needed and how the physical spaces will look like after design. The long-term recommendation is capital intensive as it is expected that the study will also reveal that the size of the stores will be larger than what has been done so far. It is essential to point out that the business tries to lower costs for the physical stores as much as possible by reducing the size of the space. However, borrowing from stores such as Walmart, despite the efficiency of Amazon tech such as Alexa, people still associate physical stores with human assistants who can help them locate their preferred items.
Amazon. (2020). About us. Web.
Amazon. Annual report 2019. Web.
Binnie, L. (2018). The future of omni-channel retail: Predictions in the age of Amazon. Emerald Lake Books.
Chan, I. (2015). Examining the cost of Amazon.com’s success using the triple bottom line. Humboldt State University.
Clinehens, L. J. (2019). CX that sings: An introduction to customer journey mapping. Jennifer Clinehens.
Piotrowicz, W., & Cuthbertson, R. (2018). Exploring omnichannel retailing: Common expectations and diverse realities. Springer.