Question

INSTRUCTIONS

Read the following case study about Amazon, and then submit a posting with answers to the 5 questions below. Your answers will be graded primarily on content, but grammar, spelling, syntax, etc will also count. Please make sure that your answers are labeled to match the Question numbers so that I can easily read (and grade) your submissions

CASE STUDY: THE AMAZON OF INNOVATION

On December 2, 2013, Amazon.com customers ordered 36.8 million items worldwide, an average of 426 items per second, with more than half of the orders from mobile devices. At the peak of sales for the Xbox One and the Playstation 4, Amazon customers purchased more than 1,000 of those units per minute. The last local express delivery was ordered by a customer in Everett, Washington at 12:26pm and was delivered at 3:56pm that same day.

You may think of Amazon as simply an online retailer, and that is indeed where the company achieved most of its success. To do this, Amazon had to build enormous supporting infrastructure – just imagine the information systems and fulfillment facilities needed to ship 36.8 million items on a single day. That infrastructure, however, is needed only during the busy holiday season. Most of the year, Amazon is left with excess infrastructure capacity. Starting in 2000, Amazon began to lease some of that capacity to other companies. In the process, it played a key role in the creation of what are termed “cloud services,” which you will learn about shortly. For now, just think of cloud services as computer resources somewhere out in the Internet that are leased on flexible terms.

Today, Amazon’s business lines can be grouped into three major categories:

• Online Retailing
• Order fulfillment
• Cloud services

Consider Each.

ONLINE RETAILING

Amazon created the business model for online retailing. It began as an online bookstore, but every year since 1998 it has added new product categories. The company is involved in all aspects of online retailing. It sells its own inventory. It incentivizes you, via the Associates program, to sell its inventory as well. Or it will help you sell your inventory within its product pages or via one of its consignment venues. Online auctions are the major aspect of online sales in which Amazon does not participate. It tried auctions in 1999, but it could never make inroads against eBay.

Today it’s hard to remember how much of what we take for granted was pioneered by Amazon. “Customers who bought this, also bought that;” online customer reviews; customer ranking of customer reviews; books lists; Look Inside the Book; automatic free shipping for certain orders or frequent customers; and Kindle books and devices were all novel concepts when Amazon introduced them.

Amazon’s retailing business operates on very thin margins, meaning it makes very little money off of any one item. Products are usually sold at a discount from the stated retail price, and 2-day shipping is free for Amazon members (who pay an annual fee of $99) How does it do it? For one, Amazon drives its employees incredibly hard. Former employees claim the hours are long, the pressure is severe, and the workload is heavy. But what else? It comes down to Moore’s Law and the innovative use of nearly free data processing, storage, and communication.

ORDER FULFILLMENT

In addition to online retailing, Amazon also sells order fulfillment services. You can ship your inventory to an Amazon warehouse and access Amazon’s information systems just as if they were yours. Using technology known as Web services your order processing information systems can directly integrate, over the Web, with Amazon’s inventory, fulfillment, and shipping applications. Your customers need not know that Amazon played any role at all. You Can also sell that same inventory using Amazon’s retail sales applications.

CLOUD SERVICES

Amazon Web Services (AWS) allow organizations to lease time on computer equipment in very flexible ways. Amazon’s Elastic Cloud 2 (EC2) enables organizations to expand and contract the computer resources they need within minutes. Amazon has a variety of payment plans, and it is possible to buy computer time for less than a penny an hour. Key to this capability is the ability for the leasing organization’s computer programs to interface with Amazon’s to automatically scale up and scale down the resources leased. For example, if a news site publishes a story that causes a rapid ramp-up of traffic, that news site can, programmatically, request, configure, and use more computing resources for an hour, a day, a month, or whatever it needs.

With its Kindle devices, Amazon has become both a vendor of tablets and, even more importantly in the long term, a vendor of online music and video. And to induce customers to buy Kindle apps, in 2013 Amazon introduced its own currency, Amazon Coins. And, recently Amazon opened a 3D printing store from which customers can customize their own toys, jewelry, dog bones, and dozens of other products. Amazon is also beginning its foray into drone delivery.

QUESTIONS

1. Based on the facts presented, what do you think is Amazon.com’s competitive strategy?
2. Jeff Bezos, CEO of Amazon.com has stated that the best customer support is none. What does that mean?
3. Suppose you work for Amazon. What do you suppose is the likely reaction to an employee who says to his or her boss, “But, I don’t know how to do that”?
4. Using your own words and your own experience, what skills and abilities do you think you need to have to thrive at an organization like Amazon?
5. What should UPS and FedEx be doing in response to Amazon’s interest in drone delivery?

Answer 1

Part 1 Amazon's Competitve Strategy

Amazon's success lies in its ability to utilise technological aspects to the maximum in order to drive more traffic , thereby boosting sales and customer experience . Amazon has got 'True Customer Obsession ' and their relentless focus on providing the customers low cost top quality services, convenience and wide area of merchandise make them stand out.

The features like fast shipping, free returns, low prices, discounts, ease of access and the services like Prime sums up as a tough competition to other retailers.

The business strategy could be described as Cost leadership and Customer centricity at its peak.

The key factors that contribute towards their success comprises of

* their continuous entry into new segments.

*Widening the organisation's eco system spanning across multiple industries

* Uncompromised focus towards customer service.

* Getting maximum inputs from Human Resources and their focus on values.

Part 2

It is as simple as a system which runs so smooth that it hardly faces any issues and thereby hardly requiring any external support as well.

Similarly Amazon deals with providing excellent self service Information system for the customers which barely requires any human assistance externally.

So as it is rightly quoted , the best customer care is none which is 100% true in case of amazon.

Part 3 and 4

As far an organisation like Amazon is concerned , it continuously expands into new niches and thereby making the learning process endless to its employees. There shouldn't be a point where the employee is stuck. If there is , they should be able to adapt and update their skill set on a regular basis.

Tha management would be providing regular trainings / certifications as per the updated business processes making the transition better and easier for its employees.

So the management is most likely not to tolerate anyone who isn't willing to learn ,explore and be flexible.

Always the willingness to do things that you haven't done, taking up challenges thereby exploring more ,is valued any day rather than being stagnant on whatever knowledge you have within.

Part 5

The UPS and Fedex had already started their experiments on drone delivery back in 2013.

It would be so good if they team up with Amazon for good and hence provide something productive and innovative in future.

Or if they can, they should really try coming up with advance features surpassing Amazon.