A case report prepared for
MG 495 Business Policy
(Fall I 2012)
26 August 2012
Amazon.com: An E-Commerce Retailer
Selling nothing but books is how Amazon.com started its business in 1995, now is acknowledged as the leading online retailer in the world. In addition, its new line of products is the compact disc, digital video disc and movie videos, to include many other products from retail partners from around the world as partnership agreements, which sell their goods through the Amazon.com website. This agreement known as “powered by Amazon,” allows partnered companies to use Amazon.com website capabilities and technology to order and purchase products. Retailers that have played a part in powered by Amazon partnership are Toys ‘R’ Us and Target. A. EXECUTIVE SUMMARY
1. Summary statement of the problem: Even though Amazon.com implemented a viable corporate strategy by increased market share, expanded product offering, and overall sales growth, yet still faces the pressure from the stock market to continue to produce steady profits. Coming from a combination of trimmed customer confidence level and a larger unemployment rate, these two areas make the retail future of Amazon.com to seem unclear.
2. Summary statement of the recommended solution: Due to its low overhead, the more sales that Amazon.com had, the bigger the increase in profit margin on the items it sold. (Collins, Mockler, & Gartenfeld, 2003, p. 3). Also collecting sale payments right away and floating partner retailer’s payments 30 to 40 days, in order to generate a great amount of working capital. Maximize the competitive advantage of not having a retail operating expenses to sell products and services. The introduction of the zShops concept to small and midsized companies provided them a website to sell their products in a partnership.
B. THE SITUATION
The use of the internet as a buying and selling venue became a norm for many people globally; just a few clicks and you are done with your product or service purchase. “Part of the way Amazon.com did this was by developing the 1-Click Ordering method, which it patented. The 1-Click Ordering method allowed its customers to store their billing and shipping information on the company’s website. Customers could choose how to pay for their purchases, such as by using credit cards, and choose among multiple shipping addresses, such as home and work”. (Collins, Mockler, & Gartenfeld, 2003, p. 9). Amazon partnered with major shipping companies, such as FedEx, UPS and USPS; and was able to offer a variety of shipping options, and for nominal fees it made an easy process for customers. Free standard shipping with a purchase over $25, included the ability to track your purchases and verify the delivery status from the website of the shipping companies. The corporate strategies of Amazon.com about technology encompassed creating and enhancing its exclusive business software, or purchasing a commercially developed software for other applications, where the customer was allowed to receive one or more shipments status and track the progress of a single order. “One of the biggest concerns online shoppers had, was that their billing and credit card information were not secure and could be hacked into during the course of a transaction. To help allay this fear, Amazon.com used Secure Sockets Layer (SSL) software, an encryption technology program. This software was the industry standard and considered to be among the best software available at the time for secure online commerce transactions”. (Collins, Mockler, & Gartenfeld, 2003, p. 10). This software enabled the encryption of all customers’ personal identifying information, credit cards numbers and address, so it could be transmitted over the internet in a secure...