Figure 1: Generic Strategic Options
Amazon.com operates using a Hybrid Business Strategy which combines two of the abovethree strategies depending on the Business sectors it is operating within. According tocommon belief, a ll three strategies can’t be combined especially cost leadership and differentiation as
‘differentiation is usually costly...
conversely; cost leadership often requiresa firm to forego some differentiation by standardising the product, reducing marketing overhead, and the like’
(Porter, 2004, p. 18).Within the period of 2009-2012, the one market that Amazon tapped into and turned itself into a global leader was the e-book reader market. The Hybrid strategy used towards this wasthe Cost Leadership and Focus Strategy where Amazon.com created its very own e-book reader called the Kindle of which an estimated ‘200 million units
have been shippedworldwide since 2009 and another 1 billion are predicted to ship over the next five years ’
(Forbes, 2013). In terms of Kindle, Amazon introduced a new product within an alreadyexisting niche market, but made it small and innovative and advertised it through its alreadyexisting large customer base giving it the competitive advantage and attractiveness it requiredto shift units in bulk.Kindle, a very recent innovation, has propelled Amazon to new heights within the e-commerce business. Despite the innovative Kindle receiving the Reader’s Choice award for
the best e-book reader 3 years in a row (Gottesman, 2013), Amazon has kept the cost of thisdevice affordable, hence sticking to their core emphasis of providing low-cost products totheir customers in trying to achieve customer satisfaction. Apart from Kindle, Amazoninnovates in other ways such as One-Click Ordering system, Vouchers and Amazon Primewhich includes one day delivery.Regardless of Cost leadership and Differentiation strategies, within business circles, believedto be not going hand in hand, Amazon has always found itself dealing with products withinniche markets and being sold at reasonable prices through sellers with huge access toeconomies of scale. Amazon has discovered ways to reduce cost not only without hurtingtheir differentiation but by actually raising it, by using practices that are both efficient andeffective or by employing a different technology (Porter, 2004, p. 18). For example, Beats
Headphones are one of the most high-end Headphones available within the Music market butwhole-sale sellers can be found on Amazon selling them at much lower price compared to theactual MRP.Amazon, along with keeping the cost-down for the customers, also bases its warehouses inrural areas where the land is much cheaper than industrial estates or urban areas where land prices can be inflated. ‘
Amazon has tried to stress how many jobs it is creating across thecountr y at a time of economic malaise’ through these warehouses, with one of them situated in Rugeley, Staffordshire. (Roberts, 2013)Therefore, Amazon.com prides itself to be one of the major players in the world in providingqualit y products through good service. Good service in Amazon’s case is the competitive advantage for selling products. Amazon.com has built a four pillar strategy to guide and reach Bezos’ vision. These pillars are Selection comprising of va st selection of retail products;Price which is consistent and continuously offers products with no sacrifice to quality with aguaranteed on-time delivery; Convenience, for example offering customers review andfeedback forms on all products (Stockport, 2010, p. 575) and finally; Technologicalcapabilities in terms of logistics of delivering goods according to customers preference,innovation within the e-reader and tablet market, AWS (Amazon Web Services) whichinclude Cloud Computing and Digital content such as Amazon MP3 Music store (Stockport,2010, pp. 577-578). 2.2 Corporate Level Strategy
The above three customers: Consumers, Sellersand Developers (&...
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