Amazon - Inside and Out

An Analysis of ’s Internal and External Environment

Written by Nour Yamanita

Introduction

In 1994, left Wall Street to begin funneling his efforts into the company that will later be called Amazon (Pederson, 2017). What started as a small book company run out of

Bezos’ garage later blossomed into the internet giant we know today (DePillis & Sherman,

2019). Although Amazon may seem larger than life to many, the company faces the same kinds of decisions as small businesses. Amazon has its own strengths, weaknesses, opportunities and threats. Management faces decisions on business and corporate strategies that are to be utilized in the company. The company’s decisions are reflected upon the segmentation, differentiation, cost strategies, integration, and acquisitions they end up pursuing. Also relevant to their internal environment are the controls and structure Amazon utilizes. Productivity, third party retailers, organizational culture, and organizational structure are all things that help make Amazon the company it is. Their external environment can be analyzed through the use of Porter’s Five

Forces and the environment they are competing in based on their life cycle stage. Amazon’s environment can show what is helping the retailer giant reach success.

Section I: History

Although Amazon is taking the online world by storm, the company came from small beginnings in the garage of Jeff Bezos. With desks made of doors, Bezos started Amazon as an online bookstore with just $10,000 and a few employees (DePillis & Sherman, 2019). In

July 1995, Amazon launched and quickly took off. The online bookstore had fulfilled orders from every state and in forty-five countries world wide. By the end of 1995, Amazon had been recognized by Yahoo!, Point Communications, & Netscape, and featured over one million titles.

At this time, Amazon only carried 2,000 titles in their warehouse and went through wholesalers and publishers to help deliver their items. (Pederson, 2017). In May 1997, Amazon went public and began trading stock. At the end of their first day, the closing price was $1.96 per share for the company. Although they were valued at 300 million dollars, Amazon warned investors of loss due to intense competition with Barnes & Noble (DePillis & Sherman, 2019). The same year, Amazon opened a distribution center in Delaware and expanded its Seattle center by 70%.

Amazon would go on to become the first internet retailer with one million customers, located in every state in the U.S. and in 160 countries (Pederson, 2017). It is no surprise that Amazon’s rapidly growing success ended up leading the company to expand into other areas of merchandise.

In 1998, Amazon began to offer music and DVDs to their store. Users were able to preview tracks before purchasing and were even offered recommendations for the 125,000 titles in their inventory (DePillis & Sherman, 2019). Their customers doubled up to two million that year. Starting in 1999, Amazon began furthering expansion of merchandise outside of books and music. The company began to offer toys, electronics, lawn & patio furniture, and kitchenwares.

They also launched Amazon Auctions (Pederson, 2017). What is now known as their

Marketplace, was introduced under the name zShops. It allowed third party sellers to sell products on the site which ended up boosting transactions (DePillis & Sherman, 2019). Although

Amazon seemed to be booming, they continued reporting net losses. Once the “dot com” boom came to an end, Amazon ended up laying off 1,300 employees in 2001. However, Amazon struck deals with corporations like Target, and offered products from Toys “R” Us and more.

This, along with a price reduction business strategy, led Amazon to see their first ever profit in the last quarter of that year of $5 million (Pederson, 2017). After their previous high of $106.69 per share on the stock market, Amazon’s share price dropped down to $19.12 by the time they began to offer clothing in 2002 (DePillis & Sherman, 2019). However, Amazon saw its second profit of $3 million at the end of that year, in its fourth quarter (Pederson, 2017). This began to mark the start of what Amazon is today.

2003 proved to be a big year for Amazon. Despite not earning a profit for most of the company’s existence prior, 2003 saw the company make its first annual profit of over $35 million. Their revenues had even jumped up 34% that year as well, leading to their monetary success (Pederson, 2017). Amazon also introduced , or AWS the same year. This allowed Amazon to cloud host other websites, such as Borders and Target. A year later, Amazon decided to expand into foreign territory by purchasing the Chinese book seller,

Joyo (DePillis & Sherman, 2019). In 2005, Amazon introduced their famous prime program. For a $79 annual membership fee, customers were able to receive two-day shipping for all of their in stock products. Going back to their roots, Amazon debuted an ebook read in November 2007, called the Kindle. Retailing for $399, the Kindle sold out in six hours after its release. It’s no surprise that the company later went on to release a Kindle 2, and the Kindle Fire. The Fire, debuting at half the price of the original at $199, went on to claim 22% of the tablet market share less than a year after its launch in 2011 (Pederson, 2017). Amazon itself was also growing alongside the Kindle’s popularity. Amazon acquired , , and Kiva Systems between 2008 and 2012. They also began Sunday package delivery in 2013 (DePillis & Sherman, 2019). 2013 also saw a growth in prime membership. Compared to 9.7 million members in 2012, 2013 saw 7 million new prime members join for a total of 16.7 million. In

2015, Amazon began to offer free same day shipping to prime members. Despite starting online,

Amazon went on to open a physical brick-and-mortar store, (Pederson, 2017).

While Amazon’s growth has expanded far beyond just the books it started with, the company would not be where it is today without strong controls and structure to help put the pieces into place.

Section II: Controls and Structure

Amazon’s internal environment starts with the structure of their company.

Unsurprisingly, Jeff Bezos sits as the CEO of Amazon, with and Jeff Wilke sitting as

CEOs of Amazon Web Services and worldwide consumer, respectively. Among these three are other important executives including Jeff Blackburn, SVP of Business Development; David

Limp, SVP of Amazon Devices and Digital Management; and Jay Carney; SVP of Global

Corporate Affairs (Kim, 2019). These decision makers are working under a functional structure.

A functional structure “focuses on business functions as bases for determining the interactions among components of the organization” (Meyer, 2019). Amazon features three main structures, such as global function based groups, global hierarchy, and geographic divisions. These major function based groups are as follows: 1. Office of the CEO, 2. Business Development, 3.

Amazon Web Services, 4. Finance, 5. International Consumer Business, 6. Accounting 7.

Consumer Business 8. Legal and Secretariat (Meyer, 2019). It’s important to note that several of the most important members to decision making in Amazon are heads or higher ups in these groups. While Wilke, Jassy, Blackburn, Limp, and Carney all directly report to Bezos, Jassy serves as the CEO in AWS, along with his own line of direct reports like the others. Bezos also has CFO, Brian Olsavsky, reporting directly to him (Kim, 2019). This line of direct reports helps emphasize Amazon’s global hierarchy. Amazon’s utilization of vertical command lines from senior executives allows for control of the entire company, even down to the actual retailing of the items. (Meyer, 2019). As noticed with the head executives of Amazon, they are split into geographic divisions. Amazon’s geographic divisions include North America and International

(Meyer, 2019). After the structure is determined for the company, Amazon must decide what their values will be and how they will be represented, and create an organizational culture from that.

In general, any company has a set idea of what they want to accomplish, Amazon is no different. Their mission is “to be Earth’s most customer-centric company… striving to delight our customers, and make their lives easier, one innovative product, service, and idea at a time”

("Come Build," n.d.). This mission is the center around Amazon’s organizational culture.

Amazon follows what they call leadership principles in order to help achieve their mission. The first of these fourteen principles is “customer obsession,” followed by “insist on the highest standards,” and “deliver results” ("Leadership Principles," n.d.). These three principles are some that highlight the value that Amazon places on customer service and satisfaction. Part of their mission statement talks about bringing customers innovative products and services ("Come

Build," n.d.). This is especially highlighted with Amazon referring to themselves as a company of “pioneers.” They emphasize customer centricity, boldness, and peculiarity as part of the organizational culture (Meyer, 2017). Already mentioned is Amazon’s emphasis on customer centricity by their leadership principles. Amazon’s boldness can be seen through their use of data to make decisions, such as which items to sell online. They also encourage employees to take risks. Lastly, Amazon encourages peculiarity, or challenging conventions, in order to create maximum potential (Meyer, 2017). This is shown in their leadership principles as well, specifically in the points “invent and simplify,” “think big,” and “have a backbone; disagree and commit” ("Leadership Principles," n.d.). Amazon also has several controls and additional structural choices that help the company run as smoothly as they do.

While it may be up for debate the morality of such controls, one way Amazon manages their productivity is with productivity standards. Employees working in Amazon’s warehouses are given scan guns that track the time it takes to do a task and monitor them. Employees are only allocated 18 minutes of “time off task” per shift (Guedenelsberger, 2019). Inside those same warehouses are robots who are also used to help productivity. These robots by Kiva Systems carry empty shelves across the warehouse so that workers can stock them with products. They are then sent back later on to these workers so they can pick the products they need off these shelves, saving them up to twenty miles of walking per day and taking one third of the time (Del

Ray, 2019). Both the scan guns and robots allow Amazon to have higher productivity and track the progress being made. They can then better accurately schedule employees based on number averages and keep wasted time to a minimum. Employees and robots alike would not have nearly as many products to stock, if any, without third party sellers contributing to their warehouses and sales. One of the most notable things about Amazon is that they feature third party sellers, as well as their own line of products. Third party sellers serve as a source of revenue for the company and provide more products to help satisfy their customers' wants and needs. Sellers are able to list their products for a monthly fee of $39.99, or $0.99 an item, plus the per-item referral fee. Amazon also offers Fulfillment by Amazon, which allows sellers to store their products in

Amazon warehouses and have the company deal with packing, shipping and customer service for that product ("Learn," n.d.). In 2018, third party sellers had grown to include 58% of physical gross merchandise sales (Bezos, 2019). Third party sellers are a vital part of Amazon’s current success and sales and also serve as an important factor to include when talking about the company’s structure and control.

Section III: Business Strategies

When you think of Amazon’s customers, you may think of anybody. This is because

Amazon purses a segmentation strategy and looks to serve most or all the segments of a market

(Hill et al., 2017, p. 156). The company offers a huge selection of products, including 12 million of their own products and 350 million when including third party sellers in the Amazon

Marketplace (Dayton, n.d.). Unsurprisingly, they also offer a large variety of categories. Their top selling category is “Electronics, Computers & Office,” but they also offer selections in food, beauty, apparel and accessories, home, pet supplies, toys and more. Millennials in particular are taking advantage of Amazon’s pantry, while Gen Z shoppers prefer to spend their money on electronics, health, and beauty (CP Strategy & Elite Sem, n.d.). Amazon’s strategy to serve pretty much anyone seems to be working out pretty well for them. With over 103 million prime members, it’s easy to say that Amazon has won over many different people with their vast number of products offered in various categories (Chang, n.d.). Catering to the masses isn’t

Amazon’s only key to success; many people are driven to Amazon and stay loyal customers because of their customer centricity.

Many retailers have good customer service, however not everyone is as customer obsessed as Amazon in. Amazon clearly lays out its plan “to be Earth’s most customer-centric company” in its mission statement and their plan is working ("Come Build," n.d.). Amazon is so customer focused that it serves as a point of differentiation for them. The company routinely takes part in a call session training each year, to ensure that call center employees are listening to ​ ​ their customers, and not just hearing (Baldacci, 2013). Listening is a crucial part of knowing what your customer wants in order to be able to fulfill them. Amazon takes this seriously and even released the Kindle as a response to customer desires (Baldacci, 2013). Amazon offers 24/7 support, a FAQ page, a community forum, and a help center in order for customers to get the help they need ("8 Customer," n.d.). Additionally, Amazon offers Amazon Assist, which gives users of the extension access to price trackers, order updates, product comparisons, current deals and more ("Amazon Assistant," n.d.). Besides customer services, Amazon is customer focused in other ways. Their offering of one day shipping and same day pickup as additional fast shipping options shows that they want to satisfy customer needs now. 41% of Amazon customers are influenced heavily by their low prices, which can only be made lower on certain items using their “Subscribe & Save” program (CP Strategy & Elite Sem, n.d.). Amazon’s customer centricity has made them offer new products, faster shipping, lower prices, and great customer service. Through all of this, Amazon is still managing to pursue a cost leadership strategy in order to keep their prices low and their quality of services high.

One of Amazon’s keys to success is to offer low prices, meaning the company needs to have low costs. Even from the very beginning, Amazon was able to offer low costs to customers.

With only 2,000 books in stock in Seattle, Amazon was able to keep costs low in the very beginning by getting rid of storage costs of products by shipping out items they got from wholesalers and publishers (Pederson, 2017). Now, Amazon has achieved economies of scale by being able to produce their products in large quantities since they handle their own manufacturing of Amazon branded lines (Johnson, 2020). Products from third party sellers are also allowing them to keep costs low by simply foregoing the manufacturing cost of those products. Third party sellers are able to offer their products on Amazon for a monthly or per item fee, which is almost all profit on Amazon’s end. Sellers then have a choice between shipping out the items themselves or sending it to Amazon for fulfillment by them ("Learn," n.d.). If a seller decides to fulfill their orders through Amazon, they are faced with additional fees suchs as storage, long term storage, fulfillment, unplanned services, removal, and return fees

("Fulfillment" n.d.). The lack of production along with the addition of fees for third party sellers allows Amazon to host their products for profit for no cost. Amazon is able to pursue this cost leadership strategy by realizing economies of scale and benefiting from hosting third party sellers.

Section IV: Corporate Strategies

Everything a company does usually originates somewhere, and that’s at the top. Amazon pursues different corporate strategies in order to keep growing as a company. Vertical integration is an important part of helping keeping costs low and delivering their word on their two day shipping pitch. Amazon’s manufacturing, warehousing, technology and delivery are all part of

Amazon’s supply chain. The company manufactures Amazon brand products for lower cost than third parties (Johnson, 2020). Some of Amazon’s brands are easily identifiable, such as Amazon

Happy Belly, Amazon Essentials, and AmazonBasics, but others stay under the radar like Mama

Bear, North Eleven, and Prinzon (Johnson, 2017). Amazon ensures that their products are readily available and accessible to consumers, with strategically placed warehouses both big and small.

Each warehouse has five unique storage areas and robots to help ensure the efficiency of processing orders (Johnson, 2020). These robots pick and stow products in storage. They have enabled Amazon to store up to 40% more in their warehouses and help productivity by saving time, since employees don’t have to walk across large floors to store or pick items (Del Ray,

2019). Robots aren’t the only technology being used by Amazon. Amazon is working on implementing Air, which will utilize drones to deliver products within 15 miles of a drone enabled warehouse and have a delivery time of just thirty minutes (Johnson, 2020).

These drones are the latest in Amazon’s delivery system, but their famous two day shipping is still ongoing. The company even offers , which will allow products to be delivered within two hours. They utilize Amazon branded trucks and vans, as well as outsourcing help from FedEx and UPS (Johnson, 2020). Amazon also shows a good use of corporate strategy through the number of acquisitions they have made over the years. Amazon made their first acquisition ten years after their formation. In 2004, the company purchased the Chinese book company Joyo. This marked Amazon’s entry into China, and was just one of the many acquisitions to come. The company later acquired Audible, Zappos, Kiva

Systems, and between 2008 and 2014. Their latest acquisition of Whole Foods in 2017 is their next game changer though (DePillis & Sherman, 2019). The acquisition of Whole Foods put Amazon into the grocery game, both online and in stores. Prime members are able to get delivery for groceries in two hours in 60 cities. Prime members also get to benefit from curbside pickup at certain locations, 5% cash back when using an Amazon Visa card, and discounts.

Amazon was able to make $25.4 billion in grocery sales in stores and online as well as getting

30% of online grocery sales in 2018. Even though the company only captured 3.7% of the market share in grocery sales, Amazon is still a force to be reckoned with (Berthene, 2019).

Amazon’s acquisitions throughout the years have helped them enter into new markets and territories, improve productivity, and increase revenue.

Section V: SWOT

The e-commerce giant, Amazon, has numerous strengths including their strong brand loyalty, huge merchandise selection, technology, and Amazon Web Services. Amazon Prime had

103 million members in 2019. Out of those members, 95% of them said they were likely to renew their membership. (Chang, n.d.). Amazon customers also trust Amazon, with 52.2% willing to try unheard of brands on the site, with the average prime member spending around

$1300 a year on Amazon (CP Strategy & Elite Sem, n.d.). It's no surprise that people are willing to come back to Amazon. They offer 350 million products between their third party sellers and their Amazon brand lines (Dayton, n.d.). They also offer products in a wide range of categories, such as electronics, toys, and apparel (CP Strategy & Elite Sem, n.d.). In order to fulfill orders being placed, Amazon has utilized robots and technology to help improve productivity and efficiency. Robots are used to pick and stock items in order to save a worker’s time from walking across the warehouse floors to retrieve products (Del Ray, 2019). Amazon is also using drones for delivery. While it is limited to 15 miles, these deliveries would take 30 minutes under

Amazon Prime Air (Johnson, 2020). Lastly, Amazon is able to make a profit by its use of

Amazon Web Services, or AWS. AWS provides tools for businesses to use and include a variety of noteworthy customers, such as Netflix. They offer 175 products and services in 24 categories, ranging from offerings in analytics, cost management, storage, and more (Brandon, 2020).

Amazon Web Services brought in an impressive $25.66 billion in revenue for the company in

2018 (Chang, n.d.). However, the company also has its own weaknesses.

Amazon has had some bad publicity, and has been under scrutiny for the treatment of their employees. Employees have complained of being treated like robots. Workers only get 18 minutes of “time off task” per shift, including any bathroom breaks or even just walking slower than you are supposed to (Guedenelsberger, 2019). Due to these high demands, workers feel forced to urinate in bottles because bathrooms are too far away, and they do not want to be penalized for time off. 74% of employees reported not using the bathroom due to fulfillment pressure and 55% say their mental health has suffered since working at Amazon (Laio, 2018).

The company also reports low profit margins despite $51 billion in sales. Amazon’s operating profit margin is a mere 3.8%. The company often reinvests the money into itself, such as building up e-commerce in other international markets. Met with a 43% increase of revenues was a 50% increase of operating costs (Bloomberg, 2018). Much like Amazon’s profit margins, there are other areas that propose potential opportunities to grow for the company.

Although Amazon has breached into international markets, the company still is predominantly in the US. 81.57% of Amazon’s traffic comes from the United States, with

Canada following at 1.72% and China at 1.44% ("Amazon.com" n.d.). While the company holds

49.1% of the United States e-commerce market, it only has 13.7% worldwide and is present in

14 countries (Chang, n.d.). Amazon certainly has an opportunity to grow in these international markets. Some of the most lucrative markets for Amazon may be Turkey, Brazil, Australia,

Mexico, and India (Strauss, 2019). If Amazon keeps growing these markets, they could see a large reward. India alone could provide $18 billion, with a projected 35% of India’s online retail market shares in 2023. If projections are correct, Amazon could be seeing a total of $25 billion in revenue across the five countries (Strauss, 2019). Developing these global markets isn’t their only opportunity either, Amazon can keep expanding their brick and mortar locations.

Amazon currently only has brick and mortar locations in 11 states. The company’s stores are not one size fits all either, as they offer four different kinds of stores including Amazon

4-star, Amazon Books, , and Presented by Amazon kiosks (Kissell, 2019). While

Amazon is dominating e-commerce sales, most of retail sales are still in the physical space.

While 16% of sales were e-commerce in 2019, that means 84% of them weren’t (Young, 2020). ​ ​ The majority of the US retail market still lies in a physical presence, meaning there is lots of potential opportunity for Amazon to expand brick and mortar. However, Amazon is still facing one huge threat. The sheer size of Amazon is posing some to ask whether they may need to be stopped.

The company has come under question on whether or not they have violated antitrust laws. With low profit margins and low prices, Amazon has been undercutting competitors prices and has raised the question if they fall into predatory pricing. While predatory pricing is hard to prove,

Amazon has been hiding expenses with capital leases in order to purchase assets. When you take those leases into account, that sends Amazon’s profits into negatives, which would be possible if they were purposefully selling at loss or low margins. If Amazon is using predatory pricing, it is against antitrust laws (Dayen, 2019). Additionally, the company is being looked at due to their treatment of third party sellers. The Federal Trade Commision began to interview these sellers to compare how much they were making on Amazon compared to other sites like eBay and

Walmart. With these interviews lasting 90 minutes, this poses a serious inquiry and threat to

Amazon and their practices (Molina, 2019). A class action lawsuit has even been called against

Amazon for enforcing a “most favored nations” clause in regards to their pricing. Before selling on Amazon, sellers must agree to keep prices of their items listed on the site at the same or lower than what they are sold for on other sites (Leonard, 2020). Amazon limiting pricing creates unfair competition because it means that Amazon is now the place the item is sold for the least amount of money, or at minimum the same. With millions of prime members who get the benefits of free two day shipping, it gives them less of an incentive to go to third party sellers' individual sites, even though those sellers may be getting better profit margins on their own websites. Probing by the Federal Trade Commission is not a good sign for anyone and is one of

Amazon’s biggest threats.

Section VI: Life Cycle & Porter’s Five Forces

With Amazon dominating the e-commerce gain with 49.1% market share, it may be surprising to think that the e-commerce industry is still in the growth stage of the industry life cycle (Chang, n.d.). There are five industry life cycle stages, including embryonic, growth, shakeout, maturity, and decline. The growth stage of an industry is defined as having new customers entering the market, companies and businesses starting to achieve economies of scale, customers becoming familiar with the product or industry, and the development of distribution channels (Hill et al., 2017, p. 61). Amazon falls into this category. The e-commerce market is still growing by billions of dollars per year. E-commerce raked in $461 billion in 2017, $524 billion in 2018 and $602 billion in 2019. Expenditure online has claimed 16% of total retail, up from the 6.4% in 2010 (Young, 2020). Growing 23% year by year, the e-commerce business is expected to account for 95% of all retail sales by 2040. There are currently an estimated 12-24 million e-commerce sites available now, with new websites opening up for business everyday

(Gennaro, 2020). Companies are able to keep prices low, or lower, because they are now able to achieve economies of scale. The availability of distribution channels is not a problem either.

Amazon uses drones, their own branded trucks and vans, as well as established delivery companies like FedEx and UPS (Johnson, 2020). The life cycle stage of an industry greatly impacts the companies competing in it. Porter’s Five Forces serve as a useful tool to analyze a company’s external environment.

Porter’s analysis tool looks at 1. Risk of entry by potential competitors 2. The intensity of rivalry 3. The bargaining power of suppliers 4. The bargaining power of buyers 5. Substitutes (Hill et al., 2017, p. 45). Since e-commerce is a growth industry there is still a high risk of entry.

New websites are created each day and enter the market, but less than a million sites sell more than $1000 a year (Gennaro, 2020). Amazon has an absolute cost advantage over new entrants, since they are unable to match Amazon’s low cost structure (Hill et al., 2017, p. 47). In fact, customers priced check products on Amazon from other websites nine out of ten times (Dayton, n.d.). Although there are many entrants in this market, there is low rivalry. Growth industries have low rivalry because new competitors are soaked up by the industry and make little to no impact on prices (Hill et al., 2017, p. 62). Amazon’s vertical integration means they also have their own manufacturing and create their own Amazon brand products. Besides the products they make, their other supplies come from third party sellers who choose to sell on the Amazon

Marketplace, with their orders being fulfilled by Amazon or the seller (Johnson, 2020). There is no bargaining power of suppliers because Amazon doesn’t have any suppliers besides themselves and people who choose to partake in offering their products on the website. Amazon even charges fees to be one of their suppliers, like their monthly rate of $39.99, or $0.99 per item ​ ​ sold, plus other fees ("Learn," n.d.). The bargaining power of buyers in the e-commerce market is particularly high since consumers have a variety of websites they can buy from for the same product. However, Amazon seems to be the kind of place people go to check other prices against them. Nine out of ten people price check other website prices with those Amazon offers due to

Amazon’s reputation for low prices (Dayton, n.d.). This still doesn’t stop the 72% of Amazon customers still price checking against other sites anyways (CP Strategy & Elite Sem, n.d.).

However, there is a high threat of substitutes for all e-commerce, the best example of this being price checking items on other websites. 24.9% of Amazon customers always price check on other websites before making a purchase on the site (CP Strategy & Elite Sem, n.d.). With such a large number of e-commerce sites, it’s not surprising to see many of them offering the same items or similar items for varying price points.

Section VII: Recommendations

Amazon is still able to generate revenues by expanding into other markets and expanding what they already have. A possible, profitable expansion would be getting into the virtual reality and augmented reality industry. The VR industry was worth $11.5 billion in 2017 and that number is only expected to grow. By 2025, it is expected to be at $571.42 billion (Valuates

Reports, 2020). Amazon currently has Prime Video and Amazon Prime Music, which offers streaming for movies and music, respectively. The company even offers free video games when you link your Twitch account (Broida, 2019). Amazon also has hosted two Amazon Prime Day

Concerts, with the 2019 concert featuring Taylor Swift as the headliner (Spruch, 2019). VR and

AR have been used in the entertainment, media, gaming, and retail industry, all of which

Amazon has some hand in (Broida, 2019). With the virtual reality industry expected to grow by billions over the next several years, Amazon would be able to profit by hosting virtual concerts like Amazon Prime Day Concert. With electronics being their number one selling category,

Amazon could even start to manufacture VR headsets (CP Strategy & Elite Sem, n.d.). The industry proves to be extremely lucrative and will be in the future. It also provides potential for

Amazon to release exclusive content for VR, whether it’s exclusive to prime members or not. Besides their brick-and-mortar stores, Amazon may be able to further expand into retail in other ways.

Amazon may be able to create partnerships with gas stations, convenience stores, and even discount stores in order for them to feature their products. Amazon Go stores features snacks and ready-to-eat meals that customers can consume after purchasing (Kissell, 2019). The company would be able to create partnerships to have these and other products featured in their stores. Food and gas station partnerships have already popped up, with Mirabito partnering with both Tim Hortons and Subway (Retail & Best Food Practices Editors, 2013). Food is not the only thing Amazon could be selling. When going to a gas station you expect to find some of the same items at each one; some gas station essentials include phone accessories and car products (PDI

CStore Essentials Team, 2019). Amazon’s AmazonBasics line offers a variety of electronics, including USB cords you may need for phone charging. They also have a trademarked brand not in use yet named GT Prime that will be offering car products. Amazon’s food lines include

Amazon Happy Belly and Wickedly Prime, offering snacks such as nuts, chips, cookies and popcorn (Johnson, 2017). These partnerships could prove to be lucrative for both Amazon and gas stations. Amazon has such good brand loyalty that consumers who may not want to risk purchasing a phone charger at a gas station would do so if it’s Amazon’s. The 70% of Amazon shoppers who may be concerned about counterfeit products on the website would have no worries while purchasing a charger in one of these gas stations (CP Strategy & Elite Sem, n.d.).

With Amazon’s good reputation, wide product offering, and brand loyalty, both the company and gas stations would benefit from such a partnership. Amazon can also further extend their global markets into South Korea. South Korea is one of the top e-commerce markets and is worth $37 billion. The country comes on top for a variety of categories including beauty & personal care, fashion, non-food groceries, packaged grocery food and fresh groceries (Osman, 2020). Amazon would be able to expand into this market and get a portion of that $37 billion. Amazon already has a selection of clothing brands for both men and women, including Amazon Essentials, North Eleven, Ella

Moon, Buttoned Down and more. They also have beauty brands such as Beauty Bar, and food brands like Amazon Happy Belly (Johnson, 2017). Expanding into the South Korean market could prove to be profitable for the company, as they are already selling products that could be of interest for South Koreans. The US is also expected to decline in market share of the ecommerce market. Holding 22.2% of the market in 2015, the US is expected to drop down to 16.9% in 2020

(Osman, 2020). The US market share will most likely keep declining as new entrants enter the market and countries gain more access to the internet. Amazon’s further expansion into foreign territory seems to be the best option for the company if they want to keep growing.

Conclusion

Amazon’s internal environment has ensured that they are able to thrive. Although the company started just selling books, the e-commerce store has turned into one-stop-shopping for many customers of many different market segments. Their focus on customer centricity has allowed them to give customers what they are asking for - high quality at low prices. Amazon’s extensive FAQ page, coupled with 24/7 customer service allows customers to be helped at any time of day without waiting for offices to open again like other companies. Their acquisitions have proved profitable, with the Kiva System robots paving the way for robots in their factories and Whole Foods allowing them to enter the grocery industry. The company’s reinvestment into itself has led them to generate even higher revenues than before and take up nearly half of the e-commerce market share. Every move Amazon makes is done so to serve the customer. From the Kindle introduction to faster shipping times, Amazon has strived for perfection every step of the way. With constant improvement and growth, Amazon has created loyal customers who love the company as much as the company loves them.

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