TO: Jeff Bezos, Founder & CEO, Amazon.com
SUBJECT: Amazon.com Analysis
Amazon.com was founded as an online bookstore in July, 1995 and went public in May 1997. In June, 1998 Amazon.com launched its music store. Since then Amazon.com has become the most prominent Internet retailer. Over time Amazon.com has added several products including electronics, health and beauty products, house wares, kitchenware’s, music, tools, toys, videos, and several services such as auctions, 1-Click ordering, and zShops. Amazon.com has expanded nationally and internationally and now operates several customer service and distribution centers in the United States and international web sites that serve customers around the world.
One problem that founder and CEO, Bezos faced, was how to turn Amazon.com into a consistent moneymaker in the immediate, intermediate, and long-term time frames, while also continuing to pursue the corporate objective of expansion at reasonable costs.
In order to overcome the hurdles currently facing Amazon.com, I offer the following recommendations:
1. Develop and implement a B2B exchange for supplier’s manufacturers, distributors, and retailers to use.
2. Amazon should expand its online auctions.
3. Develop an effective differentiating enterprise wide strategy to survive and prosper over the competition for the long-term future.
4. Amazon should use a web-based model to personalize service.
5. Increase advertisement to have brand awareness.
I. The Company’s Current Objectives and Current Strategy
The company’s oft-stated goal is sacrificing short-term profits for building long-term growth, market share, and increased shareholder value. Amazon’s internal goals were to focus on increased market share, expand product offerings, and overall sales growth. Promotional activities, including promotional alliances and advertising, were important devices employed early on by Amazon in their attempt to attract visitors. The strategic factors facing Amazon are the management strategy. The focus is on proving the viability of the business model. Bezos attempted to produce an operting profit by cutting expenses, in particular advertising.
II. The Company’s Current Strengths and Weaknesses
Amazon has entered into contracts with numerous retail partners, like The Gap and Eddie Bauer, to sell their goods through Amazon.com’s website. This type of partnership is known as the powered by Amazon and allows companies to use the technology, which in turn creates more business for the website. Another strength of Amazon is the number of households with internet access is expected to increase as time passes world wide. The company identifies keys to success and uses them to gain a advantage over their competitors by partnering with other online retailers because of their technology and distribution centers. Also they partnered with brick-and-mortar retailers who did not have the e-commerce expertise. This helped them take advantage of the competition because of the stock market collapse and internet stocks, most .com company’s cumulated losses and ended up going bankrupt.
Pressure from the stock market as well as decreased customer confidence levels and an increase in the unemployment rate were weaknesses the company faced. Another weakness is the lack of face to face customer service. The goal of Amazon is to gain market share and not to produce a profit. From a financial position, this could be a weakness for the company at the time.
III. The Company’s Current Environmental Opportunities and Threats
The company reacts to opportunities and threats by building a place where people can come to discover anything they might want. They realize they can’t sell everything people want directly, so they do this in partnership with third party sellers in...