An Introduction to Amazon

Industry Performance

Amazon is an American E-commerce organization that was developed by Jeff Bezos in the year 1994 and today it is one of the biggest companies in the world. Amazon is a company that provide various kinds of services to their consumers, for example, online retailing, shopping, and cloud-based services (Baugh, Ben-David, & Park, 2014). In the year 2015 e-commerce industry surpassed as the most leading company in the United State and it is the 3^rd most valuable public organization in the U.S. In the year 2016 this organization developed cloud computing and designed the AWS process to provide cloud-based services. In this modern generation, most of IT organization use Amazon web service to handle a large amount of data. It is analysed that in the last four years e-commerce industry changed the way of communication and increased their value in the field of online retailing.

Today, e-commerce industry is performing very well because most the customers purchase any product online and this organization provided better retailing services to their users. Recently e-commerce industry released the advanced technology that is amazon prime membership that attracted numbers of consumers. The main feature of this prime technology is that they provide a one-day delivery facility by which consumers can receive their products in less time. Around 100 million individuals use this service in the world (Buehler, Coublucq, Hariton, Langus, & Valletti, 2017). They also changed their application and added few features like Amazon pay balance, mobile recharge, electricity bill and many more that increased their values in the market. It is estimated that the sales from foods have increased by 43% per year but in the year 2018, this rate jumped 46% to $30.7 billion (Correll, et al., 2018). In the year 2015, through market capitalization, this organization crossed Wal-Mart as the most valuable online retailer in the United State and it is the 5^th most important public organization in the world. The business model of e-commerce industry clarifies the key partners, key activities, customer segment, revenue streams and key accomplices. In the year 2008, this organization produced their vision that is persistently focused on consumers experience by providing products into a low price, and a wide selection of merchandise (Khan, Alam, & Alam, 2015).

Amazon is an online retail company which is a 3^rd most valuable company in the United States but there are many players in this sector, for example, eBay, Wal-Mart, wish.com, Costco Wholesale Corporation and Kroger Company. According to a recent survey it is identified that Amazon is one of the biggest players in the sector of E-commerce and it also provided web services to their consumers. All these originations are ranked according to the sale figures and financial statements and Wal-Mart is the world largest retail industry after Amazon that reported revenue of $485.7 billion in the year 2015 (Dholakia, Dholakia, & Chattopadhyay, 2018). It operates almost 11,453 stores in total 27 countries but recently Amazon increased their market and around 12,400 stores operated in around 29 countries. The Costco wholesale is also an online retailer that operates in only 9 countries and it reported revenue of $112.5 billion in the year 2914 which is very less as compared to the Amazon industry. It is investigated that Amazon is the leader in the area of the retailer and other e-commerce industries are not close to the volume of Amazon. eBay has around 6.5% of the market, Wal-Mart has 3.7%, best buy has 1.3% but Amazon has 7.9% which is very high as compare to other (Kumar, Dass, & Kumar, 2015).  

Amazon’s Services

Amazon is the biggest e-commerce organization through revenue in the U.S. as of the year 2017. This organization generally operates in the main three general segments, for example, media, electronics and merchandise. Oligopoly is one major kind of competition exists in the E-commerce industry and Amazon is leading the competition as their products and services offering are huge through which they target a larger part of the target market. In the media segments, there are several competitors of Amazon such as eBay, Netflix, Time Warner cable, Apple, and Google. In the sector of electronic, there are many competitors, for example, best buy, family dollar, WMT, BIG, and systeMacs (Kumar, Dass, & Kumar, 2015). In the third segment, Amazon competes with few of the world biggest companies involving CDW, CNXW, NSIT, ORCL, and CTXS. Amazon generally focuses on the selling books and also provides cloud-based services to their consumers. The online retailer’s development is being driven by that of Amazon Prime, which presently purportedly has half of the American families. Add to that the quick infiltration of Alexa driven man-made reasoning (AI) gadgets, which sold at seven times the rate of a year age’s Prime Day and not exclusively is Amazon building deals, they are reinforcing their biological system (Paharia, Avery, & Keinan, 2014).

There are main five forces analyses of amazon for example

• Bargaining power of Amazon
• Power of buyers
• The threat of substitute products
• The threat of new entrants
• Rivalry in the industry

Amazon is a very biggest company that has grown very fast in the last few years and it provides their services in around 185 countries. The haggling control of amazon supplier is little to average because it has the higher pointer when it derives to their source restraint. While the Amazon suppliers are very large and these suppliers work according to the rules and regulation provided by Amazon organization. There are following points where amazon generally focuses such as:

• Health and security in the area of products
• The right to legal advantages
• Prevention of forced labour
• Fair and ethical operations

The bargaining power of buyers at Amazon organization is medium to high and it also focuses on user’s satisfaction and the quality of products. The switching costs for the consumers are very less and it is observed that the numbers of Amazon competitors has increased in the last few years (Ritala, Golnam, & Wegmann, 2014). The threat of substitute products for amazon industry is very high because there are many other retail companies provide e-commerce services. Therefore, the main benefit of Amazon competitive is their consumer services as compare to the brand name.

The threat of new entrants is very low for Amazon Company because modern digital innovation has brought few changes to the retail organizations. Numbers of latest brands have arrived in the area of online retailing. It is investigated that the level of rivalry in the amazon industry is very large because the rate of players in the sector e-commerce has increased. There are main two important competitors of Amazon such as Wal-Mart and Costco because they are very popular in the sector of online retailing.

There are main two competitors of Amazon Company such as eBay and Wal-Mart and it is observed that in the year 2016 the market share of Amazon was 34%. But in the year 2017, this rate was increased by 3% and it is studied that in the year 2021 this rate will be grown by around 15%. The share market of eBay in the United State in the year 2017 decreased by 8% which is very less as compared to the Amazon. But Wal-Mart is growing very fast and in the year 2017 the share market was increased by 20% and it had 800 billion shares in the United States. eBay is an e-commerce company that provide electronics and refurbished services to their consumers and Wal-Mart provides grocery products such as Beverages, Bread, Candy, Gum, and many more. But Amazon is a combination of both electronic and grocery product due to which their market shares are growing very fast. If they increase their business and provide other e-commerce services to their users then they can improve their values in the market. 

References

Baugh, B., Ben-David, I., & Park, H. (2014). The” Amazon Tax”: Empirical Evidence from Amazon and Main Street Retailers. National Bureau of Economic Research.

Buehler, B., Coublucq, D., Hariton, C., Langus, G., & Valletti, T. (2017). Recent Developments at DG Competition: 2016/2017. Review of industrial organization, 51(4), 397-422.

Correll, N., Bekris, K. E., Berenson, D., Brock, O., Caruso, A., Hauser, K., … & Wurman, P. R. (2018). Analysis and observations from the first Amazon picking challenge. IEEE Transactions on Automation Science and Engineering, 15(1), 172-188.

Dholakia, R. R., Dholakia, N., & Chattopadhyay, A. (2018). Indigenous marketing practices and theories in emerging economies: Consumer behaviour and retail transformations in India. Journal of Business Research, 86, 406-415.

Khan, U. A., Alam, M. N., & Alam, S. (2015). A critical analysis of the internal and external environment of Apple Inc. International Journal of Economics, Commerce and Management, 3(6), 955-961.

Kumar, P., Dass, M., & Kumar, S. (2015). From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity. Business Horizons, 58(4), 469-481.

Paharia, N., Avery, J., & Keinan, A. (2014). Positioning brands against large competitors to increase sales. Journal of Marketing Research, 51(6), 647-656.

Ritala, P., Golnam, A., & Wegmann, A. (2014). Coopetition-based business models: The case of Amazon. com. Industrial Marketing Management, 43(2), 236-249.