Amazon.com Inc Case Study – Retailing Giant to High-Tech Player?

 

 

Year 2008 2009 2010 2011
Current Asset (in Millions $) 6157 9797 13747 17490
Current Liabilities (in Millions $) 4746 7364 10372 14896
Current Ratio = Current Asset/Current Liabilities 1.3 1.33 1.33 1.17
NP after Taxes (in Millions $)
Total Assets (in Millions $) 8314 13813 18797 25278
Shareholder’s Equity (in Millions $) 2672 5257 6864 7757
ROI (%)
ROE (%)
Net Income (in Millions $) 645 902 1152 631
Revenue (in Millions $) 19166 24509 34204 48077
Net Profit Margin (%) 3.37 3.68 3.37 1.31

 

  1. Amazon has widened its horizons and became a very high-tech organization for multiple reasons. Amazon is high technology geared company. Also, they have changed their focus on becoming more innovative and releasing new products such as Amazon Prime option and Amazon cloud reader. Lately, besides kindle e-reader product, Amazon released the Echo, which is a new technology that works as a voice activated tool to accomplish variety of tasks that are related to the internet. This is a great progress for Amazon Inc because their direction of development for Amazon is leading to build a strong competitive advantage over other competitors. There are various types of e-commerce in the market such as ebay, paypal, groupon…etc. While, they all compose a  virtual market that offer goods and services, Amazon has excelled and set itself as a unique company among them through their popular quick and convenient delivery as well as offering returns, high quality of product listings, and legitimate verified sellers. Beyond that, Amazon offers a strong buyer protection as well as protection for the sellers.

However, for the long term marketing strategy, Amazon needs to keep including high-tech and innovative products to keep customers loyal and interested in the site as well as the company’s offerings. Otherwise, Amazon will not be indifferent from the other competitors. The reason of importance of technology is that without it, Amazon had not been universally recognized. Since the entire business model is based on an online website, it is not unusual to see Amazon as a leader in the technology market. Amazon was created from technology revolution era and it needs to keep up with that fast paced high-tech competitions.

  1. In the long term goals of Amazon, analysts argued that Amazon is trying to benefit from selling the contents online such as books, media and games. Therefore, Amazon can absorb the marginal costs of selling below costs in the beginning and make up for this by selling digital contents, which cost nothing as far as shipping and handling costs. This is a logical strategy because without the kindle device, customers do not have the option to read online books, or it will be much more complicated. They will be restricted to access the digital contents from Amazon through only computer devices. Currently, mobile devices became a central part of our life, so it is essential for Amazon to find another way to be competitive in pricing to encourage customers to buy from their phones. The ultimate goal should be making Kindle contents to be integrated parts of customers’ daily life. This could be done by selling the Kindle versions below its cost.
  2. In terms of sales tax, Amazon should not collect it, because collecting taxes signifies paying taxes to state government. There are not many laws on the procedure of collecting taxes of online products and services. This is actually one of the major motivations of be a part of the e-commerce market. As a result, Amazon was able to save millions of dollars. Similarly, also Amazon customers saved a lot of money by using Amazon to purchase their products instead of buying it at a local store and pay extra taxes on it.  Certainly, both customers and Amazon are likely to participate in e-commerce for the same benefit of avoiding tax payments. Consequently, if Amazon starts collecting taxes, they must be able to handle the costs and losses of millions of customers because they will not be happy with the results. Consequently, They would search for other markets to buy online products without taxes, which can change the profits and customers base of millions to none overnight.
  3. Investing in the same day delivery method is a huge commitment which Amazon cannot do so far unless they change their means of transportation delivery. They are attempting to find a cheaper and alternative mode of delivery than trucks. However, Amazon cannot control gas prices for instance, which is a big burden for same day delivery costs and operations. Recently Amazon has tried using drones to deliver packages. This is a possible new way of delivery but it is also very controversial because the air traffic is just as busy and complex as the ground traffic (Gross, 2013). So, none of the previous strategies provide ultimate solution so far.
  4. Amazon should expand the streaming content to include the pre orders of new movies, music songs, and book releases. The digital version is supposed to be the fastest to provide customers with instant satisfaction, which is a unique product type for busy clients. In this range, the main competitor of Amazon in this streaming content segment is Netflix for streaming videos. Mobile devices makers such as Apple or Google have their own digital stores for streaming contents as well. Besides that, broadcasting companies also offer free and paid online streaming of their contents. Thus, in order to keep their high-tech devices competitive and the website to be current and relevant, Amazon has to keep up with the digital streaming content such as their 1 click buying feature.
  5. Amazon can certainly compete with Sony, Apple and Samsung because they have good warehouse system, new delivery method and cheap devices. Customers are attracted to buy from Amazon because of the low competitive price and the convenience of online buying, shipping, and handling.
    Products of Apple are usually sold out when there are new releases because they are very successful in the high-tech innovation and marketing. However, Amazon’s customers are not this type of customers. They are the constant loyal flow that looks for competitive prices and convenient delivery methods. Therefore, Amazon’s target customers care more about differential pricing, the quick delivery, digital products as well as buyer’s protection.

Usually, when a buyer chooses Amazon and Amazon’s products, his incentive is that the price is cheaper than other devices and that they can get it shipped to their house in quickly manner. Furthermore, buyers are able to buy Apple, Sony and Samsung products on Amazon.com too. This is the other advantage of business that Amazon can use to compete. Since Amazon is a high tech company, as well as a retailer for other products in addition to digital content seller and an e-commerce platform for everyone to buy or sell, including  even the competitors, Amazon still has advantage and strong position in the e-market.

References

Gross, Doug. Amazon’s drone delivery: How would it work?. CNN. December 2, 2013. Retrieved from http://www.cnn.com/2013/12/02/tech/innovation/amazon-drones-questions/.

Internet. Amazon’s Echo. http://www.amazon.com/oc/echo/ref_=ods_dp_ae