Amazon 5

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IT Semester Project
Amazon.com

Industry Description
The online retail industry engages in the selling of final products to end users through e-commerce. One of the most well known companies in this industry is Amazon which specializes in three major product and service groups: web hosting, digital content, and tangible product items. The web hosting service provides resources on which to host web applications. These resources include Amazon elastic computer cloud, Amazon simple storage service, Amazon relational database service, Amazon Simple Data Base, Amazon Cloud Front, Amazon Simple Queue Service, and Amazon Mechanical Trunk. These resources provide IT infrastructure services to business on a demand based need. Amazon’s digital content consists of portable e-reader content including books, newspapers, magazines, and blogs. It also includes a digital instant streaming video service and downloadable audio and music files. Amazon’s tangible product retail services are known as Amazon Marketplace, which provide final products to end users through e-commerce. This sells fixed price items and allows third party sellers to market new and used products from the same platform for a fee based off the final sell. Amazon has an extensive customer review service of its products, has efficient delivery options, a proficient customer service commitment, and a fee based membership option, “Amazon Prime,” which provides customers with various incentives including free shipping. Amazon also has a developed marketing system which includes affiliates through third party sellers on other websites. Amazon also provides a drop shipping service for other companies, Amazon Fulfillment. The competitive forces of Amazon include the threat of new entrants into online retail and IT solution business. Amazon does have significant barriers against this force, including patented technologies and unique distribution centers. Amazon also faces rivalry among existing companies which offer similar products to Amazon, including webhosting and IT infrastructure service companies, digital media e-commerce companies, and other major online retail companies like Walmart.com, Half.com, Ebay.com and others. Existing competitors also include retail of used items or third party seller websites. Competitive forces also include the bargaining power of buyers, which consists of buyers who use the internet to find coupon codes, exclusive sales, etc, to purchase items from other online retailers. Although Amazon has minimized this competitive force by offering goods at low prices, there are online sites that can generate discounted products for the savvy customer. Amazon also faces competition from the bargaining power of suppliers, particularly in sectors whose suppliers object to having Amazon offer items at below market price or object to having their items sold on a broad based internet platform. Amazon also faces the threat of product substitutes, such as existing brick and mortar stores which can offer a live retail shopping experience. Finally, it also faces the force of complementors, or industries which affect business practices. These forces may include technology and internet changes, economic changes, government regulation changes, and culture changes. The value chain of Amazon consists of its inbound logistics, which includes its use of warehousing, drop shippers, and third party sellers. Operations include Amazon’s use of technology to enhance the shopping experience of customers including its “one click checkout.” Outbound logistics include Amazon’s various delivery options and methods, including methodical analysis of various postal carriers for each purchase, next day delivery, standard delivery and free delivery options, as well as third party shippers. Marketing and Sales consist of offering various quality and price options such as scaled prices based on the quality of items, ranging from used to new. This also includes using strategic...
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