A. EXECUTIVE SUMMARY
1. Summary statement of the problem: Increased competition, a consistently poor economic environment and a possible repeal of the Internet sales tax exemption has forced Amazon.com to generate new strategies on how to remain competitive in the e-Commerce business. This issue seems to be, how to retain a competitive edge while minimizing costs and still remaining focused on the core vision of the company. The strategies focused on the services side of the company instead of the products side, as the services side was the best suited for new opportunities.
2. Summary statement of the recommended solution: Amazon.com has two solutions to entertain regarding their services division. The first solution is to invest in the business expansion of online auctions, as they identified a continued need for this type of transaction. The second solution was to create and implement a business-to business (B2B) exchange for suppliers, retailers, manufacturers and distributors. These solutions will be explained in depth in this case study.
Amazon.com was created in 1995 with the vision of CEO Jeff Bezos. The company had a primary product of online book sales but was seeking new ways to increase their foothold in the online retail niche. Since then, Amazon has become an online super mart that sells books, DVDs, videos, toys, electronics, household kitchen items and appliances, and home improvement items, to name a few. Through its marketplace services such as online auctions and zShops, the company created web-based marketplaces where buyers and sellers entered into transactions which involved an even wide range of products.
The case quoted Bezos, but I think the 2003 SEC filing from Amazon.com states the best company vision and strategy: “We seek to offer Earth’s Biggest Selection and to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online” ("Amzn - amazon.com," 2003).
The company sacrificed short-term profit margins to gain long-term growth, market share, and shareholder value as evidenced by the financial statements showing Amazon.com turning the first operating profit in 2002. The growth and market share were obtained by using cutting-edge patented software to give customers an easy, safe, hassle-free method of shopping without leaving the house. This provided Amazon.com with the reputation as one of the premier online retailers.
Amazon.com may have been a premier online retailer, however, there were many issues facing the online retailer. The first was the enormous boom of online competitors. They had to maintain a competitive edge without losing sight of their vision. The second was the tax moratorium which was up for review that could give state governments the ability to excise a tax on internet sales. Lastly, the poor economic condition of the nation was causing consumers to be thrifty with their spending (Collins, Mockler, & Gartenfeld, p. 1-15) II. ANALYSIS
A. ANALYSIS OF THE SITUATION
The management for Amazon.com is flexible to change strategies when opportunities arise. They are willing to modify their business model if an opportunity to expand in a new area exists. This is expected and successful because, “We’re thinking about ourselves as a technology company and a technology platform," says Mark Stabingas, Amazon.com’s vice president of worldwide business development and services sales. "The universe of opportunity is larger than if we just want to think about ourselves as a retail business" (Varon, 2003). 2. Operations
Amazon.com has a corporate headquarters in Seattle, WA, and distribution centers in New Castle, Delaware, Coffeyville, Kansas, Campbellsville, Kentucky and Lexington, Kentucky which allow it better ability to regionally segment the United States for faster order fulfillment. Since they operate online, they have...