Amazon Case Study
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Brandy Hopkins
January 25, 2006
Case Study of Amazon.com – Individual
Marcus Myers
Seminar in Business
ADM495; BSM259
History
The launch of Amazon.com in July of 1995 was the creation of a new and bold way of doing business on the Internet. Amazon.com forced the traditional physical world brick and mortar retailer in the book industry to change the way they target the industrys consumers and then epitomized Business-2-Consumer e-retailing. Although, Amazon.com started as an online bookstore, according to eRetailNews , they have since spread its wings into other industries such as music, DVD, toys, videos etc
Subsequently, this has created a multitude of direct competitors for Amazon.com in several different industries. As Amazon.com continues to grow and create new alliances with other industrys leaders, the competition for global online market share grows intensively.
Amazon.com SWOT analysis is based on a report conducted by eRetailNews. The Internet Retailing Report titled “New vs. Old: The battle between traditional retail and dotcoms”, eRetailNews. Additionally, I will cover Amazon.com marketing and business strategies, the trends and forces in the online business-2-consumers industries, Amazon.com technology and financial information.
Amazon.com SWOT Analysis (according to eRetailNews, The Internet Retailing Report, 2000; Titled: New vs. Old: The battle between traditional retail and dotcoms – Mini eRetail Scorecard)
Strengths
Well established web brand
Loyal customers base of over 12million shoppers
Distribution facilities to handle growth and fulfillment
Leader in use of technology to delivery targeted content
Excellent offline customer service
Building international presence in markets outside of the USA
Has moved away form being a low price supplier of books toward a focus on delivering outstanding service at a price
Weaknesses
Amazon.com brand has been diluted by entering a wide number of product segments, increasing competition
Need to restructure business to drive toward profitability has meant upward pressure on prices
No offline brand presence
Insufficient community added value
Now competes as a mass merchant, allowing specialty stores to identify with particular segment, e.g. Barnes and Noble – books, eToys – Toys, Home Depot – Tools.
Customers need to return products through third parry delivery services, even for ToysRUs merchandise
No telephone support
Opportunities
Opportunity to establish itself as a global mass merchant leader in the online shopping arena
Building community events around the brand would help create brand affinity as well as loyalty
Establish 24×7 hour telephone support for customers and order processing
Frequent shopper discounts will increase retention and repeat purchases
Further offline partnerships can potentially help Amazon by allowing customers to return products offline stores
Threats
Success in mass merchandising typically requires low prices
Diversification of product assortment may result in diluting the brand identity leaving shoppers unsure of what Amazon.com stands for
Shopping bots make it easy to find books, music and videos at lower process elsewhere
Amazons lack in-depth community leaves it exposed to customer being attracted to competitors with more in-depth content
Barnes and Noble may establish itself as the worlds dominant book eRetailer with its ability to provide better services and a physical presence
Summary
Based on the scorecard analysis conducted by eRetailNews, the report shows that Amazon.com is strong in some areas but has created self-imposed weaknesses by over expanding itself into a number of product segments,