Amazon is a U.S based online retailer established in 1994. It has expanded immensely over the years and sells everything from washing powder to books. The Australians have been able to shop on Amazon.com, but in 2017 the company has expanded it’s presence. The company has officially opened it’s center in Melbourne. Amazon is able to achieve it’s strategic goal of diversification and expansion by growing continuously.
The Human Activity System (HAS) helps Amazon in gaining vision and mission successfully. The HAS is a system which is just theoretical and expresses some useful human activities. It is a conceptual model of the human activity and does not integrate with the real world activity. The people in the HAS are affected because of being in the system. The system is also affected because of their participation in the system. The HAS has a role in serving the purpose of members and communal entity. The system serves it’s environment in which it is entrenched.
The information system of Amazon has a significant role in the operations of the business. The information system is helpful in providing better services to the consumers. The implementation of HAS in the information system of the Amazon can result in gaining a competitive advantage. It helps to attract more customers. This report includes the overall analysis of the business of Amazon Australia. The analysis is made possible with the help of value chain, competitive strategy, and the information system. A new information system is suggested to add value to the Amazon Australia.
Australia is a fastest growing marketplace which represents the fastest growth of the Amazon in Australia. Amazon had an Australian site before it’s recent launch. The company was already popular in Australia before it’s launch. As Australians have been buying from the U.S site for many years. But the launch of amazon.com.au brings a lot to the Australian customers. Amazon offers products at a lower price with free shipping along with the quick delivery.
Amazon provides twenty-three categories of products at Australia. The product category includes a computer, books, accessories, beauty products, baby care products, home, and kitchen appliances. Amazon has announced it’s entry into the Australian retail market and valued at USD 300 billion. The company also intended to launch ‘Amazon marketplace’ for the third-party retailers in the country. The Prime subscription service has been launched in Australia. Amazon focuses on the customer’s experience. It is the job of the company to make every aspect of the customers experience a little better. Amazon strives to be better which is used as a market strategy of the company (De Guinea, Titah & Léger, 2014). In this aspect, the company focuses on the quality and price of the products. It conducts research and development activities for the product quality and also makes use of innovative technologies.
There are five basic organizational forms as per the Mintzberg’s classification such as machine organization, entrepreneurial organization, innovative organization, divisional organization and professional organization. Amazon makes use of the divisional structure as it’s organizational form. It integrates the internal and external elements and redesigns for the scope of further improvement. Amazon divides it’s business and products into the divisions to promote management of each division. The divisions are regulated by the centralized control. It defines more control over the operations and the business units, unlike other structures. In the case of Amazon, it’s headquarter is located in Washington and it’s branches are spread worldwide.
The value chain analysis assists in identifying business activities which can create value and competitive advantage for the business. It is also helpful to Amazon in evaluating it’s primary and secondary activities which creates value for the products. It is also the best way to reduce cost and increase profitability. The value chain analysis of the company can be defined by using Porter’s value chain model:
Inbound logistics: Amazon does not have any long-term contracts with the vendors; it takes full responsibility for logistics, customer services, and the product returns. The company uses logistics services to serve a company’s marketplace.
Operations: The operations are divided into the three categories, Australia, international and Amazon Web Services (AWS). The company has successfully opened a fulfillment center in Melbourne. The AWS deals with the global sales of cloud computing, online servers, database and additional services for the start-ups.
Outbound logistics: The company has started it’s own air delivery business. This effort is made by the Amazon in order to gain independency in logistics from the third parties. The Amazon Prime air and Amazon Flex has been also announced by the company. the company aims to attract more customers by differentiating it’s products and services.
Marketing and sales: The marketing expenses of the Amazon include advertising and other promotional costs. These expenses help the company to serve customers in an efficient way. The Amazon marketing services are used by the vendors in the country which helps them to boost sales through performance-based advertising (Coelho & Laporte, 2014).
Service: The company focuses on making the customer’s experience better which helps the company in value creation. There are two variations by the company, Amazon marketplace, and Prime. The company also offers coaching programs to the sellers which are helpful in getting opportunities for the selling selections and the competitive pricing.
Firm’s infrastructure: The infrastructure is one of the support activities of the Amazon which has led to the web-scale business. It includes the customer data which comprises all the information an records of the customers, vendors and the suppliers.
Human resource: Amazon Australia has provided training to the employees and hired experienced employees of it’s existing chain in other countries (Whittington, 2014). The company also hires people on a temporary basis than full-time employees so that segments can be better targeted and costs of production can be reduced.
Technology advancement: Amazon Australia uses innovated technologies to differentiate itself and serve customers in a better way. In this concern, the company invests in R and D activities in order to gain a competitive advantage. The personalized recommendation is one of the improved aspects of the company in the case of the technology (Disney, Maltz, Wang & Warburton, 2016).
Procurement: The procurement professionals add value to the supply chain of the company through the constant improvement. The company has restocked it’s distribution centers from various suppliers. The suppliers acquire non inventory goods for the fulfillment centers.
The competitive strategy of Amazon can be understood by Porter’s competitive forces model.
Bargaining power of suppliers: The bargaining power of the suppliers at Amazon is low to medium. Amazon has dominance when it comes to the supply chain. The number of the suppliers is huge and they do business as per the rules defined by the company. The company can easily switch between the suppliers.
Bargaining power of buyers: The bargaining power of buyers is medium to high. The company focuses on the customer’s centric approach by maintaining the quality of the products. The number of the competitors of the company is skyrocketing and the switching costs for the customers is low (Urquhart & Fernandez, 2016).
The threat of the substitute products: The threat of the substitute products is high in the case of Amazon. It is because a number of brands have entered into the online retail. The advantage which differentiates company is it’s excellent customer service. The customers can effortlessly switch to other brands.
The threat of new entrants: The threat of the new entrants is low for the Amazon. The explosion of the digital technology has introduced several changes in the retail industry. There are various new brands which have entered into the e-retail. There are various companies which are giving major competition to the Amazon such as Alibaba, Flipkart, e-bay and more.
Rivalry: The level of rivalry is high in the Australian retail industry. The company faces immense competition from the competitors like Coles and Woolworths. The rivalries are also struggling for the market share and causing competitive pressure.
The major problem faced by the Amazon is the insufficiency of the stock. The inaccurate stock level can destroy the image of the company. For instance, when the consumers made a purchase online, they check for the approximate time of the delivery. The company checks the stock levels and make use of a delivery calculator in order to analyze the time required for the delivery (Trung & Lee, 2016). If the stock level is not appropriately maintained by the company then it’s trust can be destroyed. In this case, Amazon is required to maintain an accurate level of stock. The company should not reflect the stock which is currently not available.
The consumers and the retailers who sell products are the primary stakeholders in the business to consumer electronic commerce. The secondary stakeholders are the executives who manage the whole process of procuring products for the delivery. It has been observed that consumers face the situation of the insufficient stock (Cippitelli, Gasparrini, Gambi & Spinsante, 2016). The retailers are also not able to update stocks on time.
Other stakeholders identified are the persons who are involved in the branding promotions of the Amazon in it’s marketing department. The sales department is responsible for managing sales which is offered to the customers. The IT personnel has an important role in incorporating the e-commerce system with the ERP systems. It is linked to the inventory management, execution, and management of the Amazon (Sölvell, 2015). The operation team has involvement in ensuring that e-commerce facilitates efficiency for the business.
The departments in the company face the issue of poor feedbacks also the ineffective management results in the deteriorating goodwill of the Amazon. The issue is also faced regarding the distraction of the interest of the consumers towards other companies (E. Dobbs, 2014).
The information success model which is DeLone- McLean Model was developed by William H. DeLone and Ephraim R. McLean in 1992. It is an information system (IS) which offers a complete understanding of the information systems by recognition and explaining the relationship among the 6 most significant magnitudes of the success along with the evaluation of the information systems (Popovi?, Hackney, Coelho & Jakli?, 2014). The IS model can be combined with the issue in HAS to assess the problem of the insufficient inventory in Amazon. It can be explained by the following aspects:
The problem of the inaccurate inventory is linked to the usage of the systems in the proper way. The systems are not updated regarding requirements of the inventory (Herbon, Levner & Cheng, 2014). Hence, it affects the satisfaction of users and the benefits which the system is capable of providing.
The process of managerial decision making is dependent upon the accuracy of the IS to gather and process data as per the IS. The efficiency signifies the method by which inputs are being used in the system. In the case of inaccurate inventory, the IS adopted by the company should accurately process data in order to convey the message of mismanagement inventory system. The IS should be managed at the time so that consumers can enjoy the best experience during shop at Amazon. The system is evaluated by it’s efficiency to know the desired output. The system is required to produce accurate results as preferred by the consumers (Jouini, Rabai & Aissa, 2014).
The new information system will assist Amazon to track inventory and effectively fulfill orders and restructure the management of the consumer’s segment. The information system will have a master file for the management of the stock (Hashem, et. al. 2015). It will act as a central source for managing the inventory data. It will affect both primary and support activities of Amazon as it comprises the sales department. This department offers updated data of the consumers and the order history. The other stakeholders and staff will be able to synchronize to the ERP system of the company (Mason, 2017).
The marketing department of the Amazon will also have the option to get connected to the retailers and it will assist them in communicating directly to the retail consumers. The IT team should execute a manageable sales order system to enhance sales and for driving the business forward (Galliers & Leidner, 2014).
The information system includes the sufficient data and the information in order to track the levels of inventory, sales, orders, and deliveries. The software exhibits the information related to product identification, service management, reordering point, and stock tracking. The inventory management software generates knowledge related to tracking and identification of products and report of restocking (Chatterjee, Sarker & Valacich, 2015). It can incorporate inventory management to the site of Amazon through the centralized accessing of the inventory.
The components of the new information system can be classified as:
The call center and consumer service can be categorized into the front end which includes functions such as payment card industry compliance. It helps the industry in enhancing their customer base by resolving queries of the customers (Giri, Maitra, Amin & Srivastava, 2015). The back end application manages order and makes sure that all the orders are fulfilled on time. On the other hand, real-time inventory management plays a significant role in making customers happy. Such customers can be helpful to the company in staying loyal to it.
It is vital for the Amazon to have an adequate stock of core products. It can be made possible by installing a new inventory management system. It will help in managing inventory as per just in time inventory management. It is helpful to the stockholders in managing supply and demand of the stock so that consumers can have a memorable experience. The installation of the new inventory management system will have effects on the overall business functions such as finance, marketing, operations and accounting (Liu, 2015).
There are various measures for the evaluation of the aspects like efficiency and efficacy of the new information system. To estimate the task completion time, the invested time should be evaluated in completing a task (Homburg, Jozi? & Kuehnl, 2017). Another concern is the satisfaction of the staff. The capability of the staff in completing a task is the landmark of the inventory management program. The satisfaction of the vendors is also a concern which should be consistently observed.
The recommendations are given concerning the better management of the demand and supply of stock with the scheduled listings, product catalog building and consumer feedback management (Lowry, D’Arcy, Hammer & Moody, 2016). There should be a digital marketing channel to get the products posted over the internet.
The IS is useful in providing enhanced services to the consumers. It avoids the mistakes like overselling single product to two consumers. It occurs when the levels of the inventory are not updated constantly. It results in updating stocks in the real-time (Hanseth & Lyytinen, 2016).
Conclusion
From the above report, it can be concluded that it is not an easy task to lead as an e-commerce company. The company is required to improve it’s every aspect in order to gain a competitive advantage. The implementation of the new information system ensures that Amazon will have a cost advantage in it’s various stages and the experience of the customers also going to be better. In order to maintain the adequate inventory, the company is required to effectively integrate IS with the supply chain. It will help management as well as getting real-time information.
References and Citations
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