Real-Time Case 2
Brief History of Amazon.com
Jeff Bezos, an entrepreneur, created Amazon.com in 1994; the business was originally run out of his garage in Washington. With the additional investments from Nick Hanauer and Tom Alburg, Bezos was able to create the more user-friendly website that we are used to. As Amazon.com’s customer base began to grow Bezos realized that he was going to have to add variety to the products Amazon.com offered. Bezos hit on a successful idea when he added the feature that allowed customers to write their own book reviews. In 1997, Amazon.com went public and it continued to increase its product lines to include CDs, movies, and toys to its inventories. Amazon.com was profitable, but in 2001, Amazon.com reported a fiscal loss and over a couple of years they laid off over 1000 workers. But, this set back did not discourage Bezos instead he came up with the idea of joining forces with other retailers to sell their products online through Amazon.com. So, through hard work and determination Bezos has been able to turn the simple online bookstore from its early beginnings into the global phenomenon that is Amazon.com. Competition and Industry
An industry is the group of companies that produces competing products or services that a company operates in. Amazon.com has a wide variety of products and services so it is difficult to pin down exactly what industry Amazon.com competes. According to Yahoo Finance, Amazon.com’s industry market is Catalog & Mail Order Houses. But, we believe that Amazon.com is so much more. A key part of industry is competition. Amazon.com has such diversity that they don’t appear to have traditional competition. Amazon.com’s competition comes from the different segments of its business. EBay is Amazon.com’s prime competition for its online auction services. Barnes & Noble and Books-A-Million are Amazon.com’s primary competition for its book sales. But, no one company has stepped forward to be able to compete with Amazon.com as a whole. SWOT
Amazon.com has become the king of its own private little industry. The only problem with being the king is that everyone wants your throne. While Amazon.com has many strengths and opportunities it has threats and weaknesses, too. Strengths:
•Customer relationship management and information technology – Amazon.com compiles data on its customers and this enables them to offer specific items and/or bundles of items to individuals •Amazon.com is a profitable company. They have a large portion of the market share. •Amazon.com is a recognizable brand name. It is a global brand name. Amazon.com inspires trust in its customers. Weaknesses:
•Too much diversity in their product line and Amazon.com could risk damaging its brand name. There is the potential for confusing their clients •Shipping costs could be a deciding factor on whether a customer buys from Amazon.com or goes to a traditional store. More online retailers are offering free or discounted shipping and some, such as Wal-Mart, offer site-to-store free shipping.
•The ability to further expand into Global markets. Amazon.com bought Joyo.com in 2004; effectively, moving into the Chinese market. •Amazon.com can use its expertise to mentor other major store groups. Amazon.com has had collaborations with Target, Toy-R-Us and the NBA. •Amazon.com can pair up with the public sector to offer services to their customers. Amazon.com working in conjunction with the British Library in London has created a service that allows their customers to search for rare or antique books.
•By mentoring other major store groups Amazon.com could potentially create a true competitor. •International companies may pose potential threats as Amazon.com expands into their territories.
Amazon.com has become a tremendously successful e-tailor without ever having an actual physical store. Part of the...