Amazon has grown over time to become a global market-leading online bookshop and e-commerce retailer. The firm represents millions of customers in about 150 countries. The company’s growth and success is linked to its competitive edge and ability to adapt to changing market trends. The advances in communication, technology, and transportation have helped Amazon’s businesses and commercial transactions to grow rapidly. Globalization has allowed the company’s international diversification and innovation. The internet enabled foreign networking enables business expansion into overseas countries causing market size and profits to grow.
The Evolution of Amazon
Evolution of through Geographical/Market Diversification
Amazon.com was founded in 1994 by Jeff Bezos in Washington (Hoffman, 2). Originally, the company began operations as an online bookstore but later expanded to be the largest online retailer in the world. It offers its products and services through agreements, partnerships and specified acquisitions. The main objective of Amazon was to achieve profitability and sustainable growth in long term. This was achieved by maintaining a lean culture that sought to increase revenue while balancing spending and working capital.
By 2008 amazon.com had diversified tremendously to be a global brand with its websites in around 150 countries around the world. In addition, by 2012, its main activities, primarily conducted in America, spread to Italy and Spain. Statistics by Alexa showed that in 2013, the percentage of visitors of the company from different countries were 66%, 2.6%, 2.2%, 2.1% and 1.4% from USA, India, United Kingdom, Canada and Japan respectively (Hoffman, 13). Evidently, the company has a wide geographical reach. Since its inception the company has more than 50,000 staff worldwide who work in their different offices from a single employee. These employees handle software development, customer service and finally order fulfillment to clients all over the world.
Evolution through Product Diversification
Amazon has been known as a retail giant (Hoffman, 3). However, the company has greatly diversified its products, and now considered as a tech giant. Initially, the company only offered books for sale but later diversified to other products and services. The core business of Amazon when it was formed was online book selling.to ride on the competitive advantage; the company diversified its product offering to retail product. The website began selling various items, including movies, music, electronics, and pharmaceuticals. Through third party vending strategy, the company realized the concept in order to increase product offerings and earned commissions. The company launched an e-book reader in 2007 which allowed their clients to read a large number of online books and newspapers. Amazon launched a handheld e-reader and a budget android tablet later. Android-based products from the Amazon have contributed to direct competition with the iPad from the Apple Group. The diversification was fueled by developments from its team and competition from other companies. By 2010, the company offered a variety of products and services such as books, music, magazine subscriptions and video games to their customers. They also offered a credited card which benefited the company, customer and the bank. The product diversification that today focuses more on tech products has led to more shipments. According to Hoffman (13) statistical records of frustration free packaging, excluding Amazon branded products, are 250,000, 1.3 million and 4 million for 2008, 2009 and 2010 respectively.
Evolution Through E-Supply Chain Management Improvements
The evolution of Amazon has been fueled by the growth of internet. Amazon’s diversification transformation can be attributed to globalisation, and internet expansion. “As people became more comfortable shopping online, Amazon built its website to take advantage of increased internet traffic and more efficiently serve customers,” says Hoffman (2). Amazon’s multiproduct approach has been achieved through its growing website. While software solutions play an important role in integrating and improving the efficiency of the supply chain, it is wrong to believe that an integrated e-supply chain management is as simple as installing a software tool (Chen, 10). The experiences of Amazon demonstrate that implementing an effective supply chain requires a heavy resource allocation, management and technical the amazon.com has undergone a lot of changes since its establishment with improvements being made regularly.
The Amazon Company pursues related diversification strategy. This strategy takes place where related businesses rely on the similar core competences for success and competitive. Amazon adopts this strategy to move beyond its current product offerings and existing markets, but within its industry. Specifically, Amazon adopts the related diversification multiproduct strategy. The related constrained multiproduct strategy suits the company’s businesses since the products and systems are related to each other.
Amazon’s market and organizational activities reveal those features in order to realize the associated restricted multiproduct strategies. The company’s operations are largely carried out in one platform. The main resource owned by the company is the e-commerce website, the Amazon.com. The restricted multi-product approaches are defined by the use of one important business tool. The company’s website is the main resources used for competitive advantage. For an effective constrained multiproduct strategy to be achieved for economies of scale there must be successful sharing of primary tangible resource. The resources may entail plant and equipment or unique product delivery system. The website allows for operational relatedness. The website has ordering system, e-payment platform, and order tracking process.
The amazon e-commerce platform has helped achieve the constrained multiproduct strategy through shared information and resources as well as risks that are likely to face the company. To manage its inventory more efficiently, Amazon has a robust inventory delivery process. The company is able to regulate the inventory process in a manner that reflects the changes in market demand. Conversely, inventory management is always improved by gathering enough inventory-related information, such as logistics and production capacity.
The compressed multi-product approach is applied by tightly controlled resources and business convergence to cut costs and make savings. Amazon’s focus is on focussing on its core competencies in the various companies. The corporate structure of Amazon Company is characterized by a centralization of strategic planning, managing human resources, and marketing. The strategy seeks to promote departmental collaboration. The amazon company’s website is used for ecommerce, payment and billing and computing and web traffic databases. These websites provided technological infrastructure required by the company and the clients. This created reliability, for instance, ecommerce enabled the merchants to direct inventory when goods were purchased in the company’s fulfillment centers. By 2012, Amazon was a leading player in the ecommerce business all over the world. Further, the company has greatly invested in technological infrastructure to respond to this huge growth.
- Chen, Te. Implementing new business models in for-profit and non-profit organizations: technologies and applications. Shanghai: Idea Group Inc. 2010. Print.
- Hoffman, Alan N. Amazon.com, Inc.: Retailing Giant to High Tech Player? Rotterdam School of Management. 2013. Print.