Amazon. com, Inc. (Amazon) is an internet-based company. Jeff Bezos is the founder of the company as well as its president, CEO, and chairman. Amazon has evolved from an online bookstore in its beginnings to now one of the largest corporation shopping sites on the Internet. Amazon has its business divided into three large categories, Online Retail, Marketplace, and Third-Party Sellers. The Online Retail segment consists of books, movies, music, greeting cards, toys, games, electronics, kitchen appliances, tools, cell phones, and much more at a customer’s disposal with a click of the mouse.
The Marketplace segment enhances the selection of products on Amazon’s principal website by offering new and old products via an auction format for person-to-person purchasing. The last segment is Third-Party Sellers which caters other companies and vendors in allowing outside companies to sell their own products through Amazon’s website. This Third-Party selling allows other companies to take advantage of the high online traffic that Amazon has built to help boost up sales.
In late 2000, Amazon launched a co-branded video and toy store with Toysrus. com, has strategic partnerships with others which all of the businesses are operate in cyberspace, and acquired business to produce e-commerce software and to establish a database to track customer demographic information and online buying habits. Amazon’s 2000 net income was negative on revenues. The case emphasizes on the external and internal assessment, strategies formulation and strategies selection.
Problems and Strategic Issues The major problem faced by the company is the people only visiting and browsing, and not buying. They used web sites to gather information about products, which is then used to purchase the product at offline locations or other web sites. The main reason is they fear of the loss of private financial information. Secondly, the increase of competitors as potential profits increases. More and more businesses want to come online.
Amazon’s major competitors are Barnes ; Noble, Wal-Mart, and e-Bay. Each is offering products and services through the Internet user, which Amazon and e-Bay are completely online business while Barnes ; Noble and Wal-Mart are the combination of ‘brick and mortar’ and virtual. The inability to realize a steady profit is one of the major problems. Amazon has an accumulated deficit and anticipates further losses resulting in significant gratitude.
The reason is that the company continues to expand its service offerings and looking a growth in its core business that is barely growing, and Amazon purchase some items from distributors rather than manufacturers, which there is no positive contribution margin. Lastly is the event of September 11. The uncertainty of the market reflected the uncertainty felt by the United States and the entire world. It has a significant impact on the consumer spending and confidence. In the war of terrorism, Amazon is affected.