Amazon vs. Walmart Alexandra Tikhonkikh Professor N. Kentish Metropolitan College of New York
The case study Amazon vs. Walmart is illustrated several concepts, which was described in the chapter. One of them is a sales Revenue Model where companies get revenue by selling goods, information, or services to customers. Like Amazon.com which sells books, music, and other products. Another one is e-tailer model. It is close to the typical bricks-and-mortar storefront, except that customers only need to connect to the Internet to check their items and place an order. The value scheme of e-tailers is to provide convenient, low-cost shopping 24/7, offering large assortments and consumer choice. Some e-tailers, such as Walmart.com, indicated to as “bricks-and-clicks,” are divisions of existing physical stores and have the same products. Others, however, exist only in the virtual world, without any ties to physical locations like Amazon.com.
Before we going to analyze Amazon and Walmart.com using the value chain and competitive forces models, we suppose to describe these two concepts. Business Value Chain Model include: 1) views firms as series of activities that add value to products or services, 2) highlights activities, 3) primary activities vs. secondary activities, 4) regulate how information systems could advance customer and supplier disintermediation at each step of development, 5) utilize benchmarking. Michael Porter’s competitive forces model provides general view of firm, its competitors, and environment. It also substitutes products and services. The model include customers and suppliers, moreover, it contains traditional competitors and new market entrants. Besides, five competitive forces shape fate of firm.
Amazon.com started as on line bookseller, but has expended into a wide variety of media, electronics, and other general merchandise categories in support of its business strategy. Amazon’s value chain includes primary and support activities. Primary activities are very important for business, because those needed to manufacture a product or services for the end users. These activities typically include: 1) service: basically meant by after-sales support like user training, install applications, customer support and etc., 2) operations: manufacturing the product, 3) inbound logistics: receiving goods from supplier and storing those goods, 4) outbound logistics: sending goods to wholesalers, retailers or directly to the end customer, 5) marketing and sales: product needed to be sold to the end customer, to understand customer requirements and also to promote goods. Support activities help to facilitate or assist the primary activities of producing product. There are four category: 1) Procurement: purchasing raw material and other items used in operations, 2) Human Resource Management : recruiting, hiring, firing, training, developing, compensating, 3) Technological Development : research and development, process automation, software, hardware, equipment, etc., 4) Infrastructure : may include accounting, legal, finance, planning, public affairs, government relations, quality assurance and general management. As to Amazon’s competitive advantages from a value chain there are several strategies of development like strong technological infrastructure with a single platform, high investments in technology development for example Kindle, the best leverage digital products, great product forecasting system, print on demand, constantly imploring suggestions on new products, easy and fast payment system, 24/7 operations, free returns within 30 days. Amazon.com competes with product specific retailers; online marketplace and mass merchandise retailers. This creates an...