Amazon.com's E-Business Model
Amazon.com's E-Business Model
Today’s internet offers a virtual world of opportunity and while venture capitalists are more prudent about offering funding for dotcom businesses, driven entrepreneurs with good ideas are still devising ways to build solid businesses that harness the power of the internet. Amazon.com is one such e-business. It reaches millions of people worldwide and by utilizing smart business practices; Amazon.com staked its claim to a piece of cyberspace and became a billion-dollar business. Its success can be attributed to being an e-business that is innovative, smart, and quick to react to the changing consumer interests. The purpose of this paper is to discuss the pros and cons of Amazon’s growth and diversification of business and specialization. It will give a determination on the impact on Amazon.com if the company was to split up its brands, becoming a family of brands. The paper will also give a brief overview of Barnes and Noble and Borders and will show a determination as to whether or not these companies can extend their markets in the same way as Amazon.com. Lastly, this paper will show whether or not it would be a good idea for Amazon.com to extend their distribution chain to include some brick and mortar outlets. Pros and cons of Amazon’s growth and diversification and specialization Amazon.com, a Fortune 500 American e-commerce company, is the largest online retailer in America whose revenues are triple those of its nearest competitor. Amazon serves a worldwide audience and its website is available in English, Chinese, French, German and Japanese. Amazon websites get around 615 million visitors annually because of its strong brand and reliability (http://www.webhostingreport.com/learn/amazon.html). Amazon began as an online bookstore. This gave it the advantage of having more titles than the traditional brick-and-mortar stores. Choosing to go online proved to be a plus for the company because its success allowed the business to expand its consumer products. From its book selling roots, Amazon has branched into clothing, gourmet foods, jewelry, baby products and apparel, beauty products, sporting goods, music CD’s, DVD’s, video tapes, home appliances and electronics, and much more. Following the dot com bubble burst in 2001, Amazon remained while other internet companies went under, and eventually “made a $ 5 million profit in the last quarter of 2001. The next year it turned in a profit of $ 3.9 billion. In December 2008 Amazon replaced Merrill Lynch on the S&P 100 after it was taken over by Bank of America (WebHostingReport.com., 2010).” Amazon is credited with popularizing online shopping. Amazon understands the importance of adjusting to consumer needs in this ever-changing society. It understands how to turn a “bad” into a “good” because of its great business sense and knowledge. For example, Amazon experimented with online auctioning but the innovation was unsuccessful because it was unable to break eBay’s stranglehold on this area. However, out of this Amazon launched Amazon Marketplace; a hugely successful service that allows customers to sell used CD’s, books, DVD’s and other products. Amazon marketplace sells new items as well. To further entice its customers, Amazon launched a system that would seamlessly ship goods bought on its site. The shipping program is called Amazon Prime. This offers unlimited shipping for a flat rate fee paid annually. This program was launched in the US in 2005 and has since expanded to cover Japan, France, the United Kingdom and Germany. Amazon continues to search for new and innovative ways to capitalize growth and increase revenue. Brofman (Arden, 2009) was cited as saying, “just because your idea might seem a little out of the ordinary, don’t quit if you’re a believer” (p.4). Recently, Amazon expanded its business branch to include film production; something that seems unheard of for an online...
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