The evolution of digital technology in marketing practices has increased significantly in past two decades. There are extensive advances in responsive and immersive website design, video marketing, mobile commerce and e-commerce (Target, 2014). The introduction of digital technology in marketing functions is modelling customer behaviour and interaction with the brand. Customers are more practical and well-aware to the marketing techniques of the sellers. But there are many ways by which businesses can use technologies to recognize customers and their needs so that offerings can be customized accordingly (Fenwick & Edwards, 2015). In terms of technology adoption and implementation, Amazon has certainly proved itself as the most successful company in the e-commerce industry. Currently, Amazon is working as world’s largest online retailer having it’s headquarter in Seattle and offices in more than 16 countries. Amazon facilitates the consumers in more than 180 countries to shop online through its online selling services and facilities. This report will cover the identification of Amazon as a prime customer service provider with the use of digital technology. Various market trends and technologies used by the Amazon will be discussed in this report. Further, this report includes how Amazon uses the digital technology to cope up with its business strategy. Some recommendations on the basis of whole discussion will also be included at the end of the report to provide more specification about the use of digital technology (Ferrell, et al., 2014).
Amazon is the largest online and virtual retailer in the world which sells goods in more than forty categories including books, electronics, groceries, jewellery and auto parts. Amazon can be also described as a logistic platform, internet technology and e-commerce platform, an incubator of internet start-up and a search technology. It was founded in 1994, by Jeff Bezos with a vision to facilitate book lovers with a virtual book centre. As the time passes, Amazon entered into other areas of consumer goods and has become world’s largest retailer in the industry. According to the Annual report of Amazon 2013, Amazon provides service to four types of consumers, costumes, content creators, enterprises, and sellers. It serves a customer with the help of its website www.amazon.com. This site can also be accessed through mobile and a separate app has also been developed by the company to make it easier for customers to shop online through Amazon (Khan, 2016).
The Internet is a progressively significant universal medium for online markets. Amazon used first-order completion system and website system in 1994 with the view to improving safety and security. Amazon went live in 1995 by enabling customers to avail its services at a doorstep (Donnelly, 2017). In 2000, Amazon spent $200 million on renovating the entire web system. Amazon purchased these systems and technology logistics from Manugistics, software for analyses from ‘Epiphany’ and new database management system from Oracle. The main system developed by the Amazon is Simple Storage Service and Amazon Web Service, through which Amazon is able to maintain its large number of customer base and products in day to day practices. Amazon has a track record of utilizing regionalized information technology infrastructure. Amazon has also introduced Amazon Web services so that other business organizations could take advantage of investment and experience of Amazon in maintaining large scale transactional and distributed Information technology infrastructure. Amazon Web Services is functioning since 2006 and continuously serving millions of worldwide customers (Arantes, et al., 2015).
Amazon has adopted technology to develop its competitive advantages and to gain the benefits of economies of scale. Amazon’s generic business strategy can also be termed as the concentric diversified strategy. This strategy includes the use of technological advancement while following the cost-leadership strategy in business operations to maximize the value for its customers (Atchison, 2017).
This strategy has paid well to the Amazon and it can be said on the basis of this fact that it has become world’s largest virtual online retailer. It is also enjoying the position of leader in most of its operating market segments. It is a considerable fact that cost leadership strategy allows the firm to follow a law of diminishing returns but managers of Amazon holds the opinion that sustaining growth and increase in profitability is not possible once after plucking the low hanging fruit (Grant & Jordan, 2015).
Amazon is following a well-planned strategy from a long time and it has been proved from the success of this organization that its business strategy is paying well in the success of the organization. The strategy followed by Amazon Inc. can be explained by the study of Ansoff Matrix. In this study, Amazon has been assumed in the quadrant of Overall cost Leadership and its persistent attention on costs is the main factor to examine the strategy.
Additional measures taken by the company along with its strategy includes attractive discounts to the regular members, facilitating timely and fast delivery, waiving off delivery charges, not increasing the price because of state tax rates and making the experience of the customer is as smooth and seamless as possible (Liu & Pichard, 2014).
The strategy of Amazon is driven upon the bases of competitive advantages and focuses on improvement of technology, realizing the profits from economies of scale and increasing the efficiencies from its synergies. Further, one of the main strategies used by Amazon is ‘Big Data Analytics’ to map the behaviour of the consumer. Big data has been involving to such extent by Amazon that in present time, the company is in the position to offer it as another customer service. By using this analytics, Amazon can perceive and sense about customer wants and frame its strategies according to them (Garcia, 2011).
Amazon has used its business strategies to develop various customer service related features. All the new features developed by Amazon are the results of management of technological advancement and business strategy.
Since innovation and technological advancement is in the DNA of Amazon, it is continuously refining and adding technology that improves and enhances the involvement of the customers. Amazon has launched a number of features in order to increase customer satisfaction by adding value to products (Salam, 2016). Some of those important features are as follows:
Amazon launched dash button on 31st March 2015, which was first considered as April fool’s joke. It is a small button that customers keep around the house which controls single function at a time. Each button relates to a household need like razors, toilet paper, and the trash bag. When the customer needs to repurchase the product, he simply pushes the related dash button. The required product arrives at the doorstep of the customer in the pre-specified quantity by him (Garcia, 2017).
This service was introduced in 2007 but was limited to some countries only, for a long time. Since 2013, Amazon is expanding its subsidiaries and service of Amazon Fresh is also increasing rapidly. It allows customers to place grocery related orders from company’s fresh food inventory. The order arrives at the customer the very same day or the next day. The rapid increase and growth has been observed in the revenue of Amazon after introducing Amazon Fresh service by Amazon. It attracts the customers because of its feasibility and facility of home delivery of best quality products (Willman, 2018).
It is a streaming audio and video player. It means, it picks up content (music, videos, games) from the internet and displays the content on the customer’s TV. It is available in two models: Amazon Fire TV and Fire TV Stick. First one comes in form of a small box with a connected HDMI cable where another one can be directly plugged into the TV. Fire TV box supports HDR and 4K Ultra HD video and Fire Stick supports 1080p videos only. This is the reason because of which Fire Stick is available at low prices than Fire TV (Horn, 2014).
It was the first step of Amazon to enter the market of smartphone. Amazon Fire Phone was announced on June 18, 2014. In initial days of launching the phone, Amazon sold its 35000 units and earned a good revenue but in long run, it was regarded as one of the biggest mistakes of Amazon (Heater, 2017).
Along with all above services, a drone-based delivery system is in the process of development by Amazon. It has been named as Amazon Prime Air by the company. According to Jeff Bezos, CEO of Amazon, this drone delivery system will use Miniature Unmanned Air vehicle (UAV) technology to fly orders to customers. Drones will also be connected to the internet to identify the location and order number provided by customers. This is one of the most innovative services which can prove extremely beneficial in terms of revenue as well as innovation (kesteloo, 2018).
Amazon uses a pack of innovative approach as its business strategy aims to grow its business and to provide valuable services. The company is tightening its control on the marketplace and it is also in the practice of reinventing the core features of e-commerce. Introduction of Amazon Dash Button was definitely a new and innovative strategic idea used by Amazon. These buttons become very popular in the first three months after launching in the market. After it, the demand for these buttons is continuously stable in the market (Anon., 2018). It can be said that Amazon Dash Button worked for Amazon as no profit no loss investment. On the other hand, Amazon Fresh is continuously growing and most demanding service of Amazon. Net sales of the year 2017 went rise up to 31% to 177.9 billion, 136 billion in the last year. Amazon fresh was liked by the majority of customers. Subscriptions to Amazon Prime also increased after launching this service. Food and grocery were one of the main areas in which e-commerce facilities were not effective and customers did not like to shop grocery products online. In such situations, Amazon invested in cresting Amazon Fresh system with same day delivery service and got success in building customer’s confidence (Montag, 2017).
Amazon Fire TV is one of the most successful services provided by the Amazon. Customers use Amazon fire TV and Sticks with various modes like television, laptop, and mobile. In America, Amazon Fire TV is the fastest growing internet connect TV device. Amazon’s success in increasing digital video subscribers is driven by three main factors: the success of fire video streaming devices, existence and standalone video service and its major investment in original content. Amazon Fire TV is expected to be used by more than 25.8 million consumers by 2020. This is one of the major symbols of the grand success of Amazon’s business strategy along with its innovative ideas (Dudovskiy, 2017).
Other business strategy used by Amazon includes centralized leadership and effective control over its all departments. Amazon also uses types of robotics in its warehouse to make an ease in the management of working time. It has large size robots with large robotic arms which can easily move large pallets available in the stock. Similarly, it also has small size robots that help in completing other tasks according to their capacity. At the end of the year 2017, Amazon had more than 45000 robots in its stock to simplify the processes (Shead, 2017).
Amazon formulates its business strategies with consideration of following important factors:
Customer Satisfaction acts as a king:
According to the CEO of Amazon, to win and to get success in present demanding consumer based market, a company must provide customer focused and digital marketing experience. While other competitors firms are stressed to find out their digital marketing techniques, Amazon has found several models to emulate. It is a well-known aspect that business firms that provide extraordinary customer service and satisfaction tend to earn higher revenues, customer’s confidence and loyalty (Report, 2017). According to the strategy of Amazon, a company can only grow if it keeps its customer happy with its services.
Amazon has developed expertized techniques in tracking consumer’s behavioural trends at a rough level to understand different segments of its target audience. The products which are purchased by the shoppers as well as the products which are being picked up by the shoppers but not purchased, both can be examined to understand the consumer behaviour related to available products and services (Preston & Moaddeli, 2017).
According to the CEO of Amazon, while developing the business strategy of Amazon Fresh, one thing that was considered includes delivery time of grocery products. Because the customer can manage delay in delivery of other products but food and beverages are necessary to be delivered within a day or very next day. Amazon is a well-known service provider in terms of the delivery system. In terms of delivery time, other online delivery systems are far behind as compared to Amazon. Development of drone system is one of the most important examples to understand the investment made by Amazon in its delivery system (Mennem, 2010).
Amazon always aims at entering into new areas of the market. It frames all its business strategies in such a way so that a large area of the market can be covered with the help of product diversification. Amazon also reacts proactively when there is a need for market diversification. However, entering the new market is riskier than launching a new product but it is said greater risks always results in higher revenue. Product and market diversification both are main important aspects of Amazon business development strategy. From the time of commencement of the company, it has been entered into various new markets. Earlier Amazon was only working on providing online books to the consumer. As the time passes and needs of the consumer increased, Amazon entered into new markets and diversified its products. It also undertakes some decisions as experiments but most of its experiments have been proved beneficial to the company (Rainer & Cegielski, 2010).
It is clear from the above study that Amazon is an emerging company which is continuously earning higher revenue as compared to its competitors. Although all the strategic advancement adopted by the Amazon have resulted beneficial for the company. It should also be noted that the company has also introduced some services like Dash Buttons and use of robots in the warehouses are not appraising one. Dash button did not receive customer attraction for a long time and Amazon had to suffer a huge loss because of this dissatisfaction of consumers (Klaus, 2013). Therefore, it can be recommended that either direct launching of these type of services, Amazon should firstly launch these services on trial bases so that loss of revenue and customer faith, both can be eliminated. On the other hand, it is also needs to recommend that use of robots in the warehouses can be the reason for increasing unemployment in the countries in which Amazon has its warehouses. It also increases the cost of production and it directly affects the price of products. Management of Amazon should try to avid to use of robots in their functioning because it involves a huge amount of sum that can be invested in other important areas of business including research and development department, market development and delivery system (Izogo & Ozo, 2015).
Conclusion:
On the bases of above report, it can be concluded that the business strategies developed by Amazon are based on their customer preferences. These strategies are performed with the help of technological advancement. Use of extraordinary technologies helps the company to keep its customers connected to it. It can be found from the above discussion that company spends a lot in order to maintain its customer satisfaction. Amazon does not provide services only to the customer but it also analyses their shopping trend which helps it in maintaining the supply of products according to their demands. Amazon has introduced a number of customer service products that are not only related to the basic need of customers but also they are related to their entertainment and physiological needs. After analysing the increasing trend of profit of Amazon, it can be concluded that Amazon can become a leading service provider virtual company by the use of its innovative ideas and technology advancement.
It is also to be noted that Amazon has adopted a number of new technologies very first time which were not adopted by any of the organization. It concludes that management of Amazon does not follow the rat race prevails in the market. It is the company that provides fully new and innovative services to its customers. Amazon has developed a faith and trust among the consumers to the great extent and in order to maintain that trust, it will have to serve its customer in the best way. The study also concludes that increasing trend of online shopping also resulted in the attractive offers, discounts and customer satisfaction. Amazon is working as e leading virtual online shopping company at international level and it may continue its leadership by emphasizing customer orientation and technological advancements.
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