Discuss About The Online Commerce Company Amazon Could.
Amazon is the largest e-commerce company in the word which was founded in the year 1994 by Jeff Bezos at the back of his Garage. The company which was founded as an online bookstore for the internet consumers in Seattle grew at a rapid pace and added millions of products in its product offering. Jeff Bezos had a futuristic vision for Amazon; he wanted to enlist anything to everything on the world largest e-commerce platform (Beauchamp & Bowi, 2014).He wanted that any person who gets on to Amazon should get a product of his choice. It was this vision of his that got translated to huge stack of inventory in Consumer electronic, consumer durables, home décor, lifestyle products, and home appliances and so on. Presently amazon is present in more than 16 countries and has a shipping presence in over 188 countries. Thus, Amazon is truly a global organization which is rolling up its sleeves to improve the customer online experience by consistently adding business innovation its business policies and procedures (Bhatt et. al., 2015).
The world is changing rapidly; the direct implication of this is on the business dynamics. In such as changing business dynamics it becomes essential for global businesses to adapt to the change in the business environment and ensure that they are least affected by the change. Drawing on the above mentioned preamble certain key issues will be identified which are affecting Amazon in the global business environment; a set of recommendation will be suggested to Amazon in order to take proactive measures to deal with such issues in the future.
Here, certain issues will be identified which are affecting the organization due to the rapid change in the global business environment. These issues have a long term impact on the sustainability of the organization, thus have to be evaluated carefully and work on reducing such impacts.
Amazon employees more than 300,000 employees in sixteen location, working in different department such as marketing, sales, seller, finance, customer success managers, fulfilment centre employees and many more. The organization which is customer centric in nature has to definitely learn a lesson or two from the issues faced by its human resources. There are no two doubts that Amazon as an e-commerce organization is presently leading the bandwagon, but its employees are not very happy with the things at the company’s office (Davies, 2018).
There have been consistent flak leading to the bad culture at the company; Managers are pushing the employees beyond their working hours to work in the direction of sustainability and growth in the organization. This is seriously disrupting the life of the employees and they are failing miserably to achieve Work –Life harmony. Amazon is presently catering to over a billon customer; this no doubt requires strong commitment from the employees working in the organization. Due to the changing global environment, e-commerce is rapidly spreading its wings, thus, employees have additional responsibilities towards the organization and its customers (Smith, Rupp & Offodile, 2017).
The company is facing a large employee turnover due to these excessive pressures and the managers are unable to control it. The high workforce diversity is struggling to adapt to the changes of the global business environment, and this is a major issue at hand of Amazon.
E-commerce over the last decade has become a part of every day’s life, people use e-commerce to search for products, compare the product and then buy the product. Millions of customer everyday buy volumes of product from Amazon .This has lead the company to work towards its competitive strength and its opening plethora of fulfilment centres to catch up the rising demand of the people (Domingues, 2018).
The wave of disruption Amazon has crated is giving rise to numerous new entrants in the market who are eying for a pie in the market share. The models are varying from offering everything to specialized products in certain category and so on, but globally the competition is rising by leaps and bounds. Geographically the business is facing different challenges, Alibaba, another e-commerce company having a strong presence in China is making it difficult for Amazon to sustain or build its market in the most populous country. Amazon holds a meagre 2-3% of the market share in China, which is extremely poor looking at the capabilities of Amazon. In the similar manner, Walmart is growing its presence in the click model; in a recent development the company has acquired one of the largest e-commerce companies in Asia, Flipkart. Walmart in order to gain dominance over the second largest market, in terms of population and growth took over the company in over US $ 23 Billion to give a tough competition to Amazon. This has made Amazon to redo its strategic thinking to gain a competitive advantage in the Asian market (Srujan et. al., 2018).
This clearly reflects that the dynamics in the global business environment is creating problems for the company to achieve the goal of sustainability in the longer run.
There is no doubt that Jeff Bezos did a terrific job in building a company out of nowhere from scratch and turn it into one of the largest e-commerce companies in the world, with high focus on customer centricity. The company has made Jeff Bezos Time Person of the year and put him in the list of top earners, globally. The company earned whooping revenue of over US $ 39 Billion in the year 2016, which is fantastic. However, all this is not enough when it comes to factors which can impact sustainability of the organization in the longer run (Chauhan, 2017).
Post the Paris treaty on climate change, almost 190 countries have pledged to ensure their efforts in reducing the carbon emission and work towards the sustainability of the environment. Amazon has low or significantly no contribution towards the environment in none of the country in which it is operation. In one of the studies conducted recently by Climate counts, Amazon was ranked at 127/145 in the list of companies which are working towards carbon emission and to reduce the emission of greenhouse gases. This number looks tragic in comparison to the strong financial numbers posted by the company. Its rivals such as Walmart, Google, Alibaba, and Yahoo have been contributing a significant share of their earning to preserve the environment, and their customers are recognizing their efforts. It is just a matter of time that Amazon customers will put a strong pressure on the company to do well for the environment, but at present it is one of the major global business issues clouding the e-commerce behemoth (Kaur & Wadera, 2018).
Consumer data is the most important asset to e-commerce companies and to most of the companies working in the tech space all over the world. It is the duty and responsibility of the organization to ensure the safety of the data from increasing cybercrime activities. Everything was going fine, and the tech companies were sure of the data security, until news of Ransom ware erupted in market and data of large global organization was heavily compromised. Companies like WPP group, Wipro and other big tech companies were impacted by this cyber theft.
To add, fuel to the fire, the news emerged of Facebook’s data was leaked by Cambridge analytica, a data analytics firm; the company took consumers data and sold it to marketers across the globe. This was the last nail in the coffin, and Mark Zuckerberg himself had to face the US Congress and explain the company’s stance in the situation. There is definitely a lesson to be learnt from here for Amazon. The company which stores Peta bytes of data of its consumers on cloud has to make sure of its safety. Consumers trust Amazon with their financial and personal data, the data holds value for them. Amazon has to realize this value and work towards the safety of the data. Tim Cook of Apple says that the company realizes the importance of consumer’s data, and in its entire journey they have never ever compromised with the security of the data. Thus, Amazon has to understand the challenges faced by data security and create measures to ensure the safety of its consumer’s data (Anderson, 2018).
As mentioned in the earlier section that Amazon has its offices in almost 16 countries and ships products in over 180 countries, now these numbers are huge thinking of the journey of Amazon. However, Amazon has been doing a great job in understanding the markets and focussing its business expansion strategy based on the study. However, if numbers are to be believed, its profitable or high revenue generating markets are US, Mexico, Canada, Japan, Germany and the UK, the revenue from these countries account for over 95% of the business revenues(Crane & Matten, 2016).
The company failed miserably in China, but in India the company is doing good, and India is it highest growing market, however it’s too soon to predict the future of the company in the country. The company’s revenues have been shrinking significantly and all the revenue it is earning is being pushed back into the business which is being utilized for its growth and expansion strategy. At the same point in time, leaving apart 5 or 6 countries , the rest other countries are giving negative returns to the company owing to high infrastructure, marketing costs, labour issues and growing legal consideration. Thus, Amazon has to identify, what it has to do, should it invest in more such markets or stick to the countries which are its major profit centres?
Amazon has been doing exceptionally well in taking care of its customers, and it is the largest customer- centric company on the face of planet earth. However, in order to do so, the company has been making certain mistakes which have to be dealt with in utmost seriousness to ensure the sustainability of the business in the longer run and get away from Marketing Myopia. Amazon has to consistently work in the direction of innovation which will not only help its customers, but would also help the company to create a culture of innovation in the business environment. In one of the studies conducted by S&P , it was founded that the age of the business model have come down significantly over the last 50 years, the age came down from 60 years to straight 20. Thus, if steps are not taken right away, the company might fade away in the future. Some of the desired outcomes can be:
Amazon has to has to ensure that it takes good care of the employees in this highly competing business environment, else, not only will it lose its grip on the business, but would also lose out on its key employees. It is the responsibility of Amazon to create a culture which values work-life harmony and ensures that its employees are highly motivated to achieve its business goals and objectives. Walmart and Alibaba are the biggest rivals of Amazon, the company has to work on its organization culture and provide a job satisfaction environment for its employees to make them contribute positively towards the organization (Vulimiri et. al., 2015).
As pointed out earlier that contribution of Amazon towards the environmental sustainability is less than nothing, the company is focused on its growth strategy, while missing out on the most important component of the business environment, The Environment. It is high time that Amazon should start behaving like a good citizen and contribute towards the wellbeing of the country in which it is operating.
Amazon has to ensure co-creation by using the resources of the country, infuse it with its organizational capability and work on creating shared resources which can be used for the bigger good. The underlying rationale of the concept of co-creation is to create a belief in the consumers and the government authorities that the company is not in the country for their own good, but want to do good for the society. It will only then, the company could gain the support of billions of its customer and contribute towards well-being of the environment (Kaur & Kaur, 2015)
The recommendation will help Amazon to create not only a competitive advantage, but at the same time help it to tackle the issues posed by the changing global business environment
It has been seen that Amazon applies more or less the same strategy which it used in any existing successful market. This strategy in the current state of business environment is proven to be disastrous, looking at the example of China. Amazon completely failed to understand the dynamics of China market and failed to succeed. Thus, Amazon has to carefully study a market before creating its expansion study; it has to understand the dynamics of the market to create a sustainable business advantage. GLOCAL, Go global and think local is the strategy to be adopted by the company. This will ensure that the company is wary of the global environmental forces and has created proactive strategies to face them. The strategy is highly feasible and practical to apply in the present business situation (Tian, 2016)
As explained earlier, Amazon has a strong threat from Walmart and Alibaba, both the companies are increasing their presence and have been moving to the countries in which Amazon has been doing well. Amazon in order to work towards the increasing threat from the global business competition has to effectively use its machine learning algorithm to improve the ways in which customers buy things online. Data analytics and programmatic has opened strong avenues of focussed growth for the company, it has to use it to improve the way in which customer buys online and create customized deals for them. This will develop trust in the customers and help the company to stay ahead of its competition, thus mitigating the effect of the changing global business environment (Marsland, 2015)
Amazon literally has zero contribution towards corporate social responsibility when it comes to its rivals, who have been putting in billions of dollars towards its CSR. This is one of the major issues as seen by the industry experts, customers wants to deal with a company which is doing good not only for them, but being part of a reformation towards the environment. Global warming, climate change and increasing carbon emissions are the major challenges all over the world. Amazon has millions of customers who buy products from the website on a daily basis, it is more than easy to lose faith over a company which has no concern for the damage done to the environment. Amazon has to ensure that it keeps a fund especially allocated towards its CSR activity and start using its innovation practices to contribute to the environment. A practical and feasible scenario for the company, which would help to keep the faith of the customers in the company and give an impetus to the aspirations of the company (Charles, Schmidheiny & Watts, 2017).
In the present day, people are talking about the use of Artificial intelligence, Virtual reality and internet of things to push the envelope of services for the customers. Amazon has been really active at this front and has been doing multiple innovations to make a difference in the lives of its customers. The recently launched product of Amazon, Alexa is an invention in the similar line of work and it has been helping consumers in taking leverage of the growing technology (Raschka, 2017).
Based on the same model, Amazon has to quickly get over with the testing of its drone delivery and create an unfathomable advantage in front of its customers. Drones are the next generation of product which would drastically improve the delivery of its goods, reduce the cost of delivery and significantly lower the timing of its product delivery. Drone delivery would make it possible for Amazon to deliver the product within 45 minutes of its order time. This will help the company in selling fresh fruits and vegetable, the space where the company is failing to make an impact. Thus, drone delivery would help in solving many of the issues in the global environment effectively. An extension to the usage of technology is Amazon Go Store; it is in the nascent stage and has the potential to beat the competition from Walmart. The high tech, no check in check out store can be the store of the future and has the potential to disrupt the entire model of retail chain. Thus, it is highly recommended that Amazon invests higher in technology and create solution to not only impact the lives of customers in a positive manner, but also to stay ahead of the threat posed by the global environment (Chamber & Humble, 2017).
Conclusion
Global business environment is a function of plethora of independent factors such as tax regulations, competitors, consumer taste and preferences, market dynamics, industry attractiveness and other such forces. It becomes important for the business organization to stay atop of the issues of global business environment and create meaningful strategies to mitigate the growing risk and concerns. Amazon which is the largest e-commerce company in the world is faced with plethora of issues at hand on the likes of global expansion, organizational culture, growth of technology and many more. The right strategy for the company is to stay steadfast on its path of business sustainability by creating strategies to do away with the issues and reach the zenith of success.
References
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Beauchamp, T.L. and Bowie, N.E. eds., 2014. Ethical theory and business. Pearson.
Bhatt, A., Patel, A., Chheda, H. and Gawande, K., 2015. Amazon Review Classification and Sentiment Analysis. International Journal of Computer Science and Information Technologies, 6(6), pp.5107-5110.
Chambers, I. and Humble, J., 2017. Plan for the planet: a business plan for a sustainable world. Routledge.
Charles Jr, O.H., Schmidheiny, S. and Watts, P., 2017. Walking the talk: The business case for sustainable development. Routledge.
Chauhan, P., 2017. A Comparative study on consumer Preferences towards online retail marketers-with special reference to Flipkart, Jabong, Amazon, Snapdeal Myntra and fashion and you. IJAR, 1(10), pp.1021-1026.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.
Davies, J., 2018. Online commerce company Amazon could be setting its sights on the US pharmacy market. Training, 15, p.11.
Domingues, F., 2018. Four companies owning the future: The Four: the Hidden DNA of Amazon, Apple, Facebook and Google (Scott Galloway).
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Marsland, S., 2015. Machine learning: an algorithmic perspective. CRC press.
Smith, A.D., Rupp, W.T. and Offodile, O.F., 2017. Amazon. com, Inc.: Retailing Giant to High-Tech Player?(pp. 3-6).
Srujan, K.S., Nikhil, S.S., Rao, H.R., Karthik, K., Harish, B.S. and Kumar, H.K., 2018. Classification of Amazon Book Reviews Based on Sentiment Analysis. In Information Systems Design and Intelligent Applications (pp. 401-411). Springer, Singapore.
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Vulimiri, A., Curino, C., Godfrey, P.B., Jungblut, T., Padhye, J. and Varghese, G., 2015, May. Global Analytics in the Face of Bandwidth and Regulatory Constraints. In NSDI (Vol. 7, No. 7.2, pp. 7-8).
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