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Amazon.com Inc, popularly known as Amazon, was formed in 1996 as a bookstore. However, the company later diversified into sales of virtually all products including books, movies, music, household items, groceries, electronics and so forth. Amazon is an e-commerce company headquartered in Seattle, Washington and sells products through its website. It has gone further by customizing its website and allowing producers to sell their products through the website. The company has two markets as North America and International. The North American market majorly brings together U.S and Canada while the international Market is the rest of the world. The company maintains low prices for customers in terms of products and shipping. To achieve this, the company has integrated technology in virtually every aspect of its operations. This includes the use of robots. It also has more than 130, 000 employees (Reuters, 2014).
Amazon is engaged in E-commerce business. According to Shaw and Blanning (2000), E-commerce, also known as electronic commerce, is the exchange of goods and services through Internet or on the basis of an online service such as online payment. E-commerce has been promoted by increased uptake of the use of the Internet and movable Internet enable products such as mobile phones, tablets, lap tops and position technologies. Companies can develop their business electronically and sell directly to customers. However, there are companies engaged in retail sales through the Internet and additional include delivery service. Amazon includes both services. It also sells products to its customers through the World Wide Web or the Internet.
Amazon successfully manages market segmentation through its sales strategy. According to Roose (2014), Amazon strategically defines market segments through various ways. The company offers suitable service for consumers with a clear overview of the product they want. Amazon is often interested in consumer’s desires of purchase rather than their demography, profile or attitudes. Afterwards, it can recommend new products to customers that it delivers in two days. Within the market segments, the company maintains low prices for its consumers. Thus, if a consumer is interested in a book from a particular author, the customer is exposed to what other customers have about the author. Amazon is an e-market superstore, where virtually all products are available. A customer must thus have an idea of the product s/he wants before they engage in Amazon. Thus, market segment is not pegged on age, purchasing power, sex or consumption habit but ability to demand and order a known product.
What Do Consumers Want?
Amazon runs on a business policy of availing what the customers wants here and today rather than what was ordered yesterday or will be ordered tomorrow. The wants of the consumers are met by order and delivered afterwards. It is interesting since the consumer must be aware about their wants and choose a product or otherwise consider the purchase decisions of other consumers before making the final choice. It is also possible to view through the available products. However, since it is an online service, the customer is left with the obligation of making the final decision.
Amazon does not conduct marketing sessions to sensitize customers on avail products. The responsibility lies with manufacturers and customers. Producers must ensure that consumers are aware about their products. Thus, Amazon only avails the product within its warehouses and delivers to their customers. There is also the option of viewing products recently viewed by other customers and related recommendations from other customers. Equally, customers can look for their wants the shopping categories listed by Amazon. They can also search for the product meeting their needs directly. Precisely, at Amazon, there are no attendants to guide consumers on the most appropriate product for their needs. It offers a different model. It is unlike shopping stores like Wal-Mart, where an attendant can advise a customer on available products.
The operating strategy involves activities and practices that enable Amazon meet the wants of consumers. There are both front room and back room activities at Amazon. However, in both practices, the customer is not available. In the front room, Amazon interacts with the customer through virtual digital platforms such as i-pads, mobile phones, tablets, laptops and personal computers. Thus, with the front room where Amazon interacts with customers, an Internet enable devise is required. The customer then signs in or registers for an account with Amazon. Afterwards, the customer can search for the product they want or shop via the categories availed by Amazon. Eventually, the customer places the product in the cart and pays for it. The product is then delivered to the customer within two days.
The back room activities involve hiring personnel, management of finances, product and inventory management, warehousing and logistics. These are processes that ensure that Amazon is in possession of products demanded by customers. It helps them deliver on time once an order has been placed. Hiring or personnel and management of finances ensures that the company has the right people to their work and proper capital flows to enable the company meet its day to day obligations. The core of the Amazon’s operations lies in inventory and warehouse management. This is because Amazon has to link its ordering system and inventory system. It conducted in a way that once an order is placed, the item must be found in the warehouse immediately and is prepared for shipment. Thus, Amazon has to ensure that all products available on its website are stocked and their stock levels monitored efficiently to avoid delays. This requires an effective warehouse management system (MacLeod, 2006).
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In front and back room operations there are two vital operations. The first is the ability to choose the right product through ‘Find Merchandise’ in the front room operations. Secondly, there is the availability of the product and subsequent delivery through warehouse and logistics management. Finding the right product ensures that the customer is able to meet their wants. As a result, the customers expect some sense of satisfaction from the product ordered, hence Amazon’s business policy of customers ordering products they know or products they are sure will meet their needs. Consequently, through warehouse management and logistics, Amazon must ensure that it has the product ordered and deliver the product on time.
Developing Competitive Advantage
Amazon competes with same model with Google Express and Ali Baba. There are, however, other retail chains with stores and online platforms such as Wal-Mart. Despite this competition, Amazon still sells more online than its first 12 competitors that include Staples and Wal-Mart. Google through its Google shopping Express offers same day delivery services and rolled out the business in three states. Other companies include Postmates ad Instacart in the U.S. On the other hand, Wal-Mart offers Amazon competition on retail sales by offering product at a lower fee. Wal-Mart, through, its stores and online websites sell to their customers. Those stores are easily accessible with no waiting period. On international platform, Amazon competes with Ali Baba (Roose, 2014).
This cuts out the competition for Amazon. Since there are other market options, Amazon has to ensure that it avails all products required by customers. In this century with much of the available financial sensitization against impulse buying, Amazon provides consumption solutions to consumers who know what they want at relatively cheaper prices. Thus, consumer confidence that all products can be obtained from Amazon is a positive step. Secondly, the efficiency of logistic management is also critical. Amazon faces competition from companies doing same day delivery. Whereas, Amazon has waded competition, it remains critical that the delivery service has to be shortened from two days. Within its strong market brand and consumer confidence, the Amazon has the ability of increasing its sales by meeting wants urgently. Towards this practice, the company in 2014 automated its processes at the warehouse by introducing robots to help with logistics. Complete automation of process, will enable the company carry numerous orders at the least possible cost than its competitors.
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In conclusion, Amazon defies various market basics such as target marketing and consumer segmentation. The company does not base its market on what the consumer is likely to buy from demographic or psychographic characteristics but the consumer’s actual demand. The effect of group dynamics is also visible given that Amazon avails reviews of other users of a product to an expectant buyer. The company’s market strategy is more consumer-specific than segment-related. Amazon delivers products from virtually all producers and encourages all producers to sell their products through the website. It is thus, an efficient system that knows no boundaries except for a consumer with an Internet enabled device, a paid order and delivery of products. Further, Amazon assumes that its consumers are well aware of what product to demand. Thus, its business is anchored on availing and delivering products at cheaper prices.