Amazon.com, Inc. happens to be widely known corporation based in the U.S. It is a cloud computing and electronic commerce company which was founded in 1994. The headquarters of the company is in Seattle, Washington. Currently, it boasts of being the largest retailer that is Internet-based with regards to its market capitalization and total sales. At the time of its inception, Amazon.com was an online bookstore. However, with time, it diversified into selling Blu-rays, DVDs, video streaming and downloads, CDs, MP3 streaming and downloads, software, audiobook streaming and downloads, electronics, video games, furniture, apparel, toys, jewelry, and food. Amazon.com also began producing electronics for consumers including Fire tablets, Kindle e-readers, Echo, and Fire TV. It then grew to become the biggest cloud infrastructure services, provider. Currently, the company sells low-end products including USB cables within its in-house brand.
Amazon.com is one of the E-commerce giants who use psychographic and demographic segmentation to partition its markets. Amazon’s partitioning happens to be based on specific purchase behavior. In this perspective, it is not about what clients might be interested in, but rather, what they buy in the store. The micro-level partition targets clients at individual levels which enable the company to change visitors into clients who are long-term and of high-value (Amazon.com Inc 2017).
This partition is involved with the creation of personas that would buy products in a given pattern. Also, Amazon.com targets both middle and upper-class individuals identified to be having hands on experience regarding basic technology yet don’t have the time or rather prefer shopping online to physical outlets. The company is therefore recognized as a Go global Act local (Glocal) giant in e-commerce. In such a case, one can buy anything after which the company delivers the item to any particular remote location (Amazon.com Inc 2017).
Revenue Drivers: –
Currently, it is Amazon.com that dominates the landscape of the online retail business. By the year 2012, the company’s sales of products were at $51.7 billion; a figure that does not include the service sales. This figure had already approximately equaled its closest competitors including Barnes & Noble and eBay combined. However, between 2007 and 2012, the revenue of Amazon.com Inc, soared by 33%. As shown in the figure named Exhibit 1 in the appendix, The Company happened to have realized an overall growth of revenue between 2007 and 2012. The revenue is sourced from three major sectors including electronics, media, and general merchandise is known as EGM. Other sources of revenue include fulfillment operations, credit card co-branding, and Amazon Web Services. It should, however, be noted that the company’s revenue increase happened to be driven mostly by the sector of EGM that registered a growth of 49%, the media sector came second with a 46% growth rate (Khoja 2017).
The figure named Exhibit 2 (in the appendix) however shows the manner in which the growth of revenue manifested in every sector with regards to how media and EGM sectors drove revenue change for Amazon.com Inc. It is as well worth noting that the company operates in two business partitions. These segments are geographically based. They include international and North American business segments. In the same period between 2007 and 2012, North America’s revenue grew by 34% while the International segment grew by 31%. The rates suggest that the company, between 2007 and 2012, was able to maintain a balance reasonable with regards to international and domestic growth. With that particular balance, Amazon.com Inc has been positioned to be able to survive North America’s economic downturn through compensations provided by the international markets’ economic upturn (Khoja 2017).
The figure named Exhibit 3(in the appendix) portrays the manner in which the EGM sector dominance happens to be a providing a good balance for the soaring customer base, competitive pricing, expanding product offering, and customer service that are superior. It is therefore evident that there are methods by which Amazon.com had been increasing its product offering via acquisitions. The company acquired about twenty-two companies after which it launched thirty-one customer offerings from 1998 to the second fiscal quarter of 2013. One such instance was in 2009 when Amaon.com, Inc took over Zappos.com. From such an acquisition, Amazon was able to take over the sales of apparel after which made part of the company’s largest category of online shopping of apparels. By 2010, Amazon also bought BuyVIP.com which happens to be an online buying center for lifestyle and fashion apparels and of which has approximately six million members from several countries. Through several such kinds of acquisitions, Amazon was able to position itself in the retail sales of fashion apparel (Khoja 2017).
Competitive Advantage
For Amazon to have itself differentiated from others, it bought other e-commerce and IT start-ups including audible.com, pets.com, IMBD.com, Junglee.com, Woot, and Zappos.com, among others. By so doing, the company was able to offer the customers high value when they use the technology brought about by the acquired partners at costs that are lower. The company has also been able to achieve the economies of scale via offering an extensive product such as toys, electronics, games, DIY, and apparels, among other products.
The offerings provided by the company keep the product prices low. The benefits of such small process are therefore passed to the consumers (Bhasin 2017). However, it is the company’s approach of effective customer centric to analyze the client’s purchasing behavior (which is based on preferences) that has helped Amazon have the upper hand over its competitors. It should be realized that about fifty percent of the online purchasers are Amazon’s repeat buyers. On top of that, Amazon happens to be the longest player in the online retail enterprising sector, therefore, making it develop a solid base in the U.S. and other European countries. As a result, Amazon can expand its operations to other markets (Bhasin 2017).
Amazon understands very well that the most crucial thing that clients would want is to have their products delivered as fast as possible. It is as a result of such a thought that the company uses a delivery system that is extensive. Amazon possesses over fifty-five fulfillment centers of approximately forty- three million square feet in area. The system, however, does not include the company’s “under-the-tent” plan which is all about putting into use, the warehouse space for vendors to have goods that are consumer-packaged to serve clients rapidly. The company also has a strategy that is aggressive and of which involves the infiltration of warehouses as well as the improvement of distribution lines. Such policies have enhanced the company’s ability to reach other clients and new areas (Bhasin 2017). The company has also created a properly structured network to make the goods available in locations that are remote for free to a price up to a given limit. Amazon.com, Inc has also come up with a global distribution mechanism that is extensive and has realized growth at a frenzied rate.
The spending of the company has been on a steady rise with regards to carrying out promotions and advertisements to make the brand stronger and of more equity. By so doing, Amazon has been able grow from an e-book provider to one of the largest and most successful e-commerce company worldwide. In 2015, Amazon’s brand had already hit US$ 176 billion of worth. The company treats the brand like one’s reputation. Reputation is earned through the performance of difficult tasks. Regarding that the company has a repeat buyer’s rate that is more than 55%, it is visible to note how much the company is working hard to ensure that the brand sells (Khoja 2017).
As stated earlier on, the client base of Amazon is made up of the middle and upper-class strata that have an inclination towards the use of E-commerce portals. Such individuals also happen to be comfortable with the online shopping activity. Most of these people are either business men or professionals and are busy with their activities. In such cases, they find the online purchase process the most convenient method of purchasing since they save both money and time. In other instances, the customers might be the ones looking for deals (MAYER 2017).
Amazon acknowledges the fact that incorporating goals of top management to HRM policies and practices have the ability to reward behaviors that would lead to the achievement of organizational strategies. With effective HRM practices, Amazon has been able to enhance its competitive advantage through the creation of differentiation and cist leadership. The functions of the HRM focuses activities on helping the business organization achieve its corporate goals including growth via hiring workers, orienting them, and having them make their job assignments (MAYER 2017). HR management also happens to be contributing to the strategy of cost leadership which focuses on retaining and recruiting employees who can work as productive and efficient as possible. HR management also helps in the use of the strategy of differentiation by retaining and recruiting employees that have the capacity to perform work of high quality and are also able to provide customer service that is exemplary. HR management is Amazon’s source of competitive advantage because:
As mentioned earlier, the headquarters of the company is in Seattle, Washington. Amazon.com Inc happens to be the largest retailer that is Internet-based owing to its large market capitalization and total sales. When Amazon was begun, it was an online bookstore. However, as time elapsed, it diversified into selling Blu-rays, DVDs, video streaming and downloads, CDs, MP3 streaming and downloads, software, audiobook streaming and downloads, electronics, video games, furniture, apparel, toys, jewelry, and food. Later, the company then began producing electronics like Fire tablets, Kindle e-readers, Echo, and Fire TV. After several years of struggle, Amazon.com Inc, grew into the biggest cloud infrastructure services provider. Currently, the company sells low-end products including USB cables within its in-house brand (Open Innovation 2003).
The company also possesses several fulfillment centers which are approximately forty- three million square feet in area. The centers, however, do not include the company’s “under-the-tent” plan which puts into use, the warehouse space for vendors to have goods that are consumer-packaged to serve clients rapidly. Amazon.com, Inc also has a strategy that is aggressive and involves the infiltration of warehouses as well as the improvement of distribution lines. Such strategies have enhanced the company’s ability to reach other clients and new areas (Open Innovation 2003). The company has also created a properly structured network to make the goods available in locations that are remote for free to a price up to a given limit. Amazon.com, Inc has also come up with a global distribution mechanism that is extensive and has realized growth at a frenzied rate.
Strengths: –
Conclusion
This research activity has majorly discussed issues concerning strategic financial management aspects of Amazoon.com Inc, It is, however, important to note that Amazon.com, Inc. is based in the U.S. It is also a cloud computing and electronic commerce company which was founded in 1994. The headquarters of the company is in Seattle, Washington. Currently, it is the largest retailer that is Internet-based with regards to its market capitalization and total sales.
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