Amazon Case Study

Amazon Case Study

Key Business Sectors

Amazon has a total of five successful business segments currently. One of the leading business segments is the cloud infrastructure enabled by Amazon’s web services. Leading streaming services such as HBO, Netflix, and Disney rely on Amazon’s cloud infrastructure to power their streams (Wells et al., 2015). Another notable Amazon business segment is the e-commerce business market. In e-commerce, Amazon leads with a large market share of 41%. It is followed at a distance by the likes of Walmart and eBay, which have a single-digit percentage point in market share. The third business segment Amazon focuses on is advertisement, which accounts for a significant part of its revenue. Amazon makes the second most revenue from advertising, only dwarfed by Google, but doing better than popular social media networks such as Facebook (Wells et al., 2015). Amazon also runs successful streaming services through Amazon Prime, having the second most subscribers after Netflix. The fifth successful Amazon business segment is logistics and distribution since independent sellers rely on the company’s infrastructure to move their products.

Strategic Choices in the Next 5-10 Years

As per the SWOT analysis (See – Appendix), one of the current weaknesses facing Amazon is its limited brick-and-mortar presence. This makes it hard for the company to expand non-online revenue and opportunities for investment. Given that Amazon competes with retailers such as Walmart, which has a vast brick-and-mortar presence, this weakness somehow reduces Amazon’s competitive leverage. Nonetheless, the company made the first step to establishing a physical presence through the acquisition of Whole Foods Market (Wells et al., 2015). Based on the success attained so far since the acquisition of Whole Foods, Amazon will bolster its revenue and competitive advantage by acquiring more physical locations in the next 5-10 years.

Also, Amazon should consider expanding its international presence. In particular, emerging markets in developing countries present one of the most viable opportunities to expand. The company should align its brick-and-mortar expansion with this strategy, such that most of the new physical locations are located in emerging markets. This move will go a long way in enhancing Amazon’s revenue and offering it new markets. Besides, Amazon should consider creating new partnerships with other firms to expand its market share. Such partnerships will go a long way in helping the company reach more customers and market its electronic and service offerings (Peter & Donnelly, 2021). While forming partnerships, Amazon should consider only partnering with firms that have established themselves as corporate citizens, as this will go a long way to boost its corporate social responsibility profile.

Recommended Business Strategies

One of the business strategies that will go a long way to improve Amazon’s success is focusing on customer service. Most buyers want to purchase their products from a business where they feel valued, even if that means they will part with more money (Peter & Donnelly, 2021). Among the actions that will enable Amazon to create a customer-centric culture is maintaining a responsive customer service team that will promptly respond to customer queries. Once the company establishes a solid customer service team, word will go around about such a development leading to more sales.

Moreover, Amazon should focus on the low pricing strategy. Although there are other considerations buyers consider apart from price, pricing remains one of the most influential factors. Peter and Donnelly (2021) attribute Walmart’s success to its low pricing strategies. Amazon may replicate this strategy to compete more effectively with industry peers and push for more sales.

Further, Amazon should tap into the promotional influences available to bolster sales and create loyal customers. Advertising, sales promotions, the use of salespeople, and publicity are some of the most effective ways the company may use to reach new customers and influence them to stay loyal (Peter & Donnelly, 2021). It is also worth noting that customers constantly receive new information from marketers and constantly screen it for the best deal. Amazon can run sponsored campaigns for specific products to bolster visibility and influence new sales.

References

1. Paul Peter, & Donnelly, J. H. (2021). A preface to marketing management. Mcgraw-Hill Education.

Wells, J. R., Weinstock, B., Ellsworth, G., & Danskin, G. (2015). Amazon.com, 2021. Www.hbs.edu. https://www.hbs.edu/faculty/Pages/item.aspx?num=49324

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Background:

Amazon began in the late 1990s as an online bookseller in a highly fragmented market for books and associated reading materials (periodicals, audiobooks, etc.). By the early 2000s, Amazon was a successful online business with other product lines, including music, games, and housewares. The company’s early success was fueled by affiliations with small retailers nationwide who could advertise and sell on the Amazon.com website. Amazon also developed an easy-to-use navigation and search function and kept detailed records on prospects and customers. The consumer information permits Amazon to promote products that appeal to each consumer individually based on a prior history of searches and purchases. The company has expanded internationally, added product lines and services, and continued to grow both top-line revenue and bottom-line profits. Today, its founder, Jeff Bezos, is one of the richest individuals in the world.

Amazon Case Study

Amazon has also been accused of driving booksellers like Borders out of business and creating an online sales juggernaut that has pressured Walmart, Target, and other large retailers into creating their own online businesses to remain competitive. Amazon was drawing criticism from across the political spectrum in the United States, with calls for it to be broken up. The European Union was also investigating its practices. On February 2, 2021, Amazon reported that company founder and CEO Jeff Bezos would step down from his role and become executive chairman of the board. Andy Jassy, the leader of Amazon Web Services (AWS), will become the new CEO. Therefore, the company is at a strategic crossroads.

Assignment Directions:

Read the Amazon.com, 2021 case study. Create a SWOT analysis for Amazon based on the case study. Define two or three items for each quadrant of the SWOT. In a 500-750-word paper, describe the strategic decisions facing Amazon and recommend strategic actions. Address the following in the paper:

Briefly summarize the key business sectors currently in the Amazon portfolio.
Make recommendations for the strategic choices that will work best for Amazon in the next 5-10 years based upon your assessment of strategic issues and problem.
Recommend three to five business strategies focusing on the elements of the marketing mix (product/service, price, promotion, place [distribution], people, processes, and physical evidence) to justify your choices.
Include the SWOT analysis as an appendix for the paper.