Analyzing the Amazon success strategies

Full text

(JPMNT) Journal of Process Management – New Technologies, International
Vol. 6, No 4, 2018.
65
www.japmnt.com
ANALYZING THE AMAZON SUCCESS STRATEGIES
Zana Majed Sadq1, Hawre Nuraddin Sabir2, Dr. Vian Sulaiman Hama Saeed3
1Department of Administration and Accounting, Faculty of Humanities and Social Science,
Koya University, Iraq, and Visiting Lecturer at Lebanese French University.
2Department of Law, College of Law and International Relations, Lebanese French
University.
3Department of Administration and Accounting, Faculty of Humanities and Social Science,
Koya University, Iraq, and Visiting Lecturer at Knowledge University.
zana.sadq@koyauniversity.org, hawre.sabir@lfu.edu.krd, vian.alsalihy@koyauniversity.org
Professional Paper
doi:10.5937/jouproman6-19264
Abstract: This paper aims to present the Amazon
success strategies. Since the objective of the
Company is to become the best place to buy, find
and discover any product or service available
online. Amazon.com will continue to enhance and
broaden its brand, customer base and electronic
commerce expertise with the goal of creating
customers' preferred online shopping destination, in
the United States and around the world.
Keywords: companies, strategies, Amazon success
strategies
Literature Review
The Amazon success story started
in July 1995 by Jeff Bezos a computer
science and electrical engineering graduate
from Princeton University. After his
resignation from an investment Bank, he
settled in Seattle and found what is now
known as Amazon. Bezos did not know
much about the Internet. However, "he
came across a statistic that the Internet was
growing at 2300%; this convinced him that
this was a large growth opportunity".
Amazon’s choice of the location in Settle
was obvious for its rich technological
talent and the close proximity of the book
wholesalers in Rosenberg.
Amazon came into being in July
1995 and was up to the public in 1997It is
claimed that Bezos was one of the few
individuals who understood the real power
of E-commerce and the entire internet
retail business. Under Amazon vision,
Bezos injected two comprehensive ideas to
the E-commerce and these are building the
customer-centric company world over, and
also creating an environment where
customers could easily buy almost
anything they wanted to buy. Indeed, his
vision has been hugely achieved since
1995 (Hof, 2001).
Amazon.com’s Objectives& Strategy
In its business model, Amazon.com has
identified the following as key success
factors. First of all, a strong brand name
location. Then providing clients with
marvelous value and a superior shopping
knowledge. After that, considerable sales
capacity. Finally, Realizing economies of
scope and scale (Modi et all, 2000).
Amazon.com's marketing strategy is
designed to strengthen the Amazon brand
name, increase customer traffic to the
Amazon.com Web sites, build customer
loyalty, encourage repeat purchases and
develop incremental product and service
revenue opportunities.

(JPMNT) Journal of Process Management – New Technologies, International
Vol. 6, No 4, 2018.
66 www.japmnt.com
Customer- centric
Customer-centric involved asking
customers what they wanted, and sorting
out how their needs would be delivered to
them, and in the end, delivering it to them.
According to Bezos, that is the traditional
term of customer-centric. And Amazon
focused on this traditional view with
success evidenced over the years.
The other meaning for customer-
centric is innovation on behalf of the
customers. According to Amazon,
innovation simply means searching for
what the customers don’t know they want
and delivering it to them. The third
meaning is the personalization nature of
the internet. In order to suite this third
meaning of customer-centric, Amazon
redesigned their store to suite each
customer, by launching a ‘your store
service’. This translated this vision into
reality. Amazon valued to deliver
convenient, selected, services at a broadest
price (Timothy et all, 2000).
Although critics thought that customer-
centricism of any given company is the
same with any other company, Amazon’s
customers has continued to rise over the
years. And despite that Amazon began as a
global bookstore, the company also
intended to be a place where customers
could buy anything online. Amazon moved
its attention to very new category of
products, which includes kitchen ware,
tools, and Auctions (Wiggins, 2001).
Books as a means of customer-
centricism & Innovation
Having started as a bookseller,
Amazon remains a leader in selling all
sorts of books in spite of having drifted
into other products. Bezos indicates that
books have huge items in the book market
compared to other items in any given
products. And as huge titles of books do
emerge, they can be sorted, searched and
organized by computers. He further
stresses that the customer proposition is
only done online. The internet has a huge
category of books, in contrast to the
physical world (Hof, 2002).
In addition, Amazon claims that books are:
 Easy for Amazon to ship
 Provide basic information enabling
them to sale on online storefronts
with the information which may be
in the form of
 Chapters
 Table of contents
 Editorial
 Customer reviews (Krishnamurthy,
2002).
On the other hand, Amazon added
maximum value to the inefficient
arrangement of the publishing industry in
America. In the 1990s, the industry had;
 Concentrated on supply-publishers,
printers and wholesalers.
 There was no key player on the retail
position. Even the Barnes & Noble
had as little as 11% of the American
market.
 Publishers had guaranteed the sales of
books, yet retailers could return a book
not sold within the defined time frame.
 The business was unpredictable
especially with the lack of stability on
the sales.
 The retailers had a fixed cost for
displaying the product in a brick and
mortar environment. (Krishnamurthy,
2002).
The major competitor to Amazon in
the book market was from Brick-and-clicks
stores. These included BN.com and Barnes
& Noble. Before Amazon came into being,
BN.com had a number of competitive
advantages ranging from, superior
recognition of the Barnes & Noble brand
name, to cross-marketing, co-promotion
and customer acquisition programmers'
both in the US and Europe. But come July
1995, Amazon trashed all these market
advantages by enabling customers to
browse over 4.5 million titles from their
computers. This was a fantastic wave of
success in E-commerce (Modi et all,
2000).

(JPMNT) Journal of Process Management – New Technologies, International
Vol. 6, No 4, 2018.
67
www.japmnt.com
Table (1)
"SALES GROWTH (OR LOSS) SINCE 2004"
Company-s% All
rounded
2011
2010
2009
2008
2007
2006
2005
2004
Barnes & Noble
bookstores
N/A
-5%
-3%
+2%
+2%
+2%
+7%
Amazon Media(Books,
Music, DVDs)
North America
+16%
+15%
+11%
+16%
+29%
+17%
+18%
+14%
Borders/ Waldenbooks
Books
N/A
-16%
-15%
-9%
-0%
-1%
+2%
+2%
BN.com
N/A
+24%
-2%
+9%
-1%
+5%
-2%
http://www.fonerbooks.com/booksale.htmSource:
Amazon’s complete dominance in
the book business online came very clearly
by the capitulation of Boarders. Amazon
went on to create an alliance with the rival
Borders. And borders battled in vain to
match a web site competitive with
Amazon. And eventually, borders had to
release its employees and Amazon front-
ended its online book market to this day
(Hof, 1998).
Music
In June 1998, Amazon ventured
into the music selling followed by DVDs
and Videos in the same year. The very
beginning in the music business, Amazon
enjoyed a $14.4 million profits. One of the
reasons for Amazon’s shift in its products
especially into music may have been that
the company had already established
closeness with the customers with books.
And leading them into another product like
music was easy (Hansell, 2001). The other
argument for the huge shift is that directing
its attention into a variety of products
would enable the company to be a
dominant retailer. Besides, it did become a
very dominant retailer (Krishnamurthy,
2001). Amazon has amassed 132% profit
in books, Music, and DVD sales between
2004 and 2011 (16% in 2011 alone).
Growth Abroad
Amazon now serves well over 152
countries worldwide. However,
Amazon.com is the only bookseller in the
world’s top 500 websites. According to
one market analyst report, "Amazon.com is
estimated to have over 80% of the online
bookstore market" (Modi et al, 2000: XI).
As early as 1995 Amazon customers
ranged from 45 different countries. With a
global market at heart, Amazon launched
one of the earliest sites in Germany and the
UK. All the individual market’s focus has
been books, Music and videos. In England
alone, Amazon UK has call centers in
Brogborough, Bedfordshire, Peterborough,
Don Caster, and Hemel Hempstead.

(JPMNT) Journal of Process Management – New Technologies, International
Vol. 6, No 4, 2018.
68 www.japmnt.com
Governmental regulation and Legal
uncertainties.
Currently, Amazon.com faces
common business laws and regulations or
regulations regarding access to online
commerce in addition to taxation laws. For
instance, expanding company's services
distribution center network might result in
additional sales and other tax obligations.
Regulatory authorities may implement
particular regulations and laws governing
the online commerce or Internet. These
regulations may cover pricing, copyrights,
taxation, user privacy, content, distribution
and features as well as quality of services
and products. Changes in buyer protection
laws furthermore may enforce additional
burdens on enterprises conducting business
online. These regulations or laws might
impede the growing of the Internet or other
online services. This could, in turn, reduce
the request for Amazon's services and
products in addition to increase Amazon's
cost of doing business. Additionally, it is
not clear how existing laws governing
issues for instance sales and other taxes,
property ownership, libel and personal
privacy apply to the Internet and online
commerce. Disapproving resolution of
these issues may harm Amazon's business.
SWOT Analysis
Typically a SWOT Analysis will
analyze the organization's strengths
weaknesses and available opportunities
and threats to its existence.
Applying SWOT Analysis to Amazon
Possible strengths:
o Amazon remains the greatest leader
in E-commerce since 1995 through
knowledge of its customers and
providing the best possible E-retail
world over.
o The company has raked a total of
132% of profits since 2004 well
above the rest of the competitors on
the book and music market.
Possible Weaknesses:
 With the unpredictable future e-
retail and the growth of competitors
with similar market approach,
Amazon’s future may be at a threat.
 Although Barnes & Noble seems to
be behind Amazon in terms of sales
and profits, time will tell how long
they will remain behind.
Available opportunities:
 Amazon may continue to raise
more markets in other countries
worldwide to remain positioned on
the E-commerce market that the
company has enjoyed so much.
Threats:
E-commerce predictably changes every
given time. There is a predictable threat a
competitor to equal to Amazon will
emerge crushing every bit Amazon has
built over the years.
PESTAL analysis:
Technically, PESTAL analysis helps to
understand the real effects of the
company's external factors. These includes:
Economical, Environmental, Political,
Social, and Technological.
A- Economic: with the current
financial crises that has been
ravaging the global finance since
2008 up until now, can rose a real
danger to Amazon's market.
B- Technology: Amazon should
relentlessly continue to revamp its
technology to the need of the
modern revolution to survive.
Porter's Five Forces analysis:
Porter's five forces of Competition can
be a helpful tool in analyzing a business.
Those factors are: buyer power, supplier
power, competition from substitutes,
entrants, and rivals.
 Power of Buyer: clients that buy
books in amazon.com tend to
become standard customers due to
the low prices that amazon.com can
offer.

(JPMNT) Journal of Process Management – New Technologies, International
Vol. 6, No 4, 2018.
69
www.japmnt.com
 Power of Suppliers: As Amazon
continues to develop; its ability to
agreement with suppliers will
continue to rise.
 Rivalry: Amazon.com is one of the
first companies into the electronic
commerce field. This gives to
amazon.com a positive altitude of
tranquility into the marketplace.
 Entry barriers: With today’s principal
markets being less friendly toward
new internet start-ups, it would be
difficult for a new company to
effectively compete with Amazon.
 Threat of Substitution: Amazon.com
does not present threats of
substitution at least in the short
time (Carmany et al, 2003).
Conclusion
Amazon has become a house-hold
name in both books and music industries.
Its position among small competitors is
way ahead. The company’s ability cannot
be doubted in both books and music selling
for years to come. Amazon has
successfully expanded and hugely
profitable due to the provision of the best
E-commerce ever, the knowledge of its
customers and the longevity of the
relationships with its customers. And these
three aspects will undoubtedly keep
Amazon afloat and remain a dominant
retailer regardless of the threats from its
competitors.
For the smaller firms, the road may
be rough and unpleasant to keep up with
Amazon. To remain on the market, they
will have to re-invent themselves by
providing E-retail equal to the competitive
market. Without it, success for them
remains on the horizon. They will also
need to identify their customers and be
able to keep them as long as possible to
enable consistence.
References:
 Carmany, L., Guidry, B., Heinsohn, D.,
McPheeters, B. (2003) Can Amazon.com
be Profitable? [Online], Available at:
http://www.google.co.uk/#q=Porter%E2%
80%99s+five+forces+of+Amazon%2Bpdf
&hl=en&prmd=imvns&ei=47xtT4b4Ccmp
hAeplum2Bw&start=10&sa=N&bav=on.2
,or.r_gc.r_pw.r_qf.,cf.osb&fp=503a106c9e
01e775&biw=1366&bih=677
 Goldhaber, F.I. (2009)"The Politics of
Amazon", The Willamette Writer, p6-10.
[Online]. Available at:
http://www.peekyou.com/_huitom.
 Hansell, S. (2001) "Listen Up! It's Time
for a Profit; A Front-Row Seat as Amazon
Gets Serious", May20. [Online], Available
at:
http://www.nytimes.com/2001/05/20/busin
ess/listen-up-it-s-time-for-a-profit-a-front-
row-seat-as-amazon-gets-
serious.html?pagewanted=all&src=pm
 Hof, R.D. (2002) "How Amazon Cleared
the Profitability Hurdle", Information
Technology, February 4, Available at:
http://www.businessweek.com/magazine/c
ontent/02_05/b3768079.htm
 Hof, R.D. (2001) Q & A with Amazon's
Jeff Bezos, March26. Available at:
http://www.businessweek.com/magazine/c
ontent/01_13/b3725027.htm
 Hof, R.D. (1988) amazon.com: the wild
world of web commerce,
[Online]. Available at:
http://www.businessweek.com/1998/50/b3
608001.htm
 Hutchison, T. (2008) Web Marketing for
the Music Business, Oxford, Elsevier.
 Kotler, P., Wong, V., Saunders, J. and
Armstrong, G. (2008) Principles of
Marketing, 5th European Edn, Harlow,
Pearson.
 Krishnamurthy, S. (2002) Amazon.com- A
Business History1
To Appear in-“E-Commerce Management:
Text and Case”, Sep 27, [online].
Available at:
http://www.google.co.uk/url?sa=t&rct=j&
q=Krishnamurthy%2C+2001%2C+Amazo
n&source=web&cd=1&ved=0CDEQFjAA
&url=http%3A%2F%2Fwww.fe.up.pt%2F
ipc%2Fsuporte%2Fvarios%2Famazon_fin
al.pdf&ei=C_tsT7_cCoi5hAfmsOSNBw&
usg=AFQjCNGo_Y-
uzmVFczOholIhwyU3RW6a-
Q&sig2=WcsIWJquiBeI2oUkbjvhkA.
 Modi, T., Durkin, M. A., Kass, C., Ulin,
M. (2000) Strategic Audit: Barnes &
Noble, Strategic and International
Management, April 20 .

(JPMNT) Journal of Process Management – New Technologies, International
Vol. 6, No 4, 2018.
70 www.japmnt.com