Amazon Background Information:
At the beginning of the 90s, the popularity of the Internet increased worldwide among people. Therefore, companies and entrepreneurs started to seek opportunities to start internet businesses. In Seattle, WA (1994). Jeff Bezos founded Amazon.com and began selling books online in 1995. In just 30 days, he sold books across the U.S. and 45 worldwide. In the beginning, Jeff’s goal was to sell books online. Later he decided to improve the business and start selling different kinds of products such as electronics, furniture, clothes, toys, food, and other products.
Q1: Who is Jeff Bezos? And what makes him a successful CEO?
In 1964, in Albuquerque, New Mexico, one of the most prominent entrepreneurs was born – Jeff Bezos. Bezos, from his early days, showed a passion for computers and electronics. Later he decided to study computer science and electrical engineering at Princeton University. After that, he had a successful work experience on Wall Street. In 1990, he became a senior vice president at the investment firm D.E. Shaw. Like other successful entrepreneurs, Bezos had to make a risky decision to achieve his dream, so he decided to quit his profitable job after four years to create his empire – Amazon.com.
Jeff Bezos is an intelligent businessman, and there are many factors in how he managed his business that made him a successful CEO:
Stubborn and Flexible: according to Bezos, “If you’re not stubborn, you’ll give up on experiments too soon. And if you’re not flexible, you’ll pound your head against the wall, and you won’t see a different solution to a problem you’re trying to solve.” That means that Amazon’s strategy focuses on experimenting and is highly flexible, which made the company successful.
Focus on Customers: from the start of the company, Bezos knew that the key to success is to make your customer happy. According to Bezos, “We’re not competitor obsessed; we’re customer obsessed. We start with the customer, and we work backwards.” Amazon focuses on gaining customers’ loyalty by offering excellent features, such as customers’ reviews about the products, Amazon Prime subscription, and an easy-to-use interface.
Make Their Own Rules: Bezos has a unique strategy for managing his company. First, he does not use PowerPoint presentations during the meeting. He prefers to write the idea in 6 pages document to put all the ideas to read and discuss instead of illustrating the ideas in a slide show. Second, the two-pizza rule he uses means that the team should be a small group of between 5 to 6 people to work more productively.
Think for the Long Term: according to Bezos, “If we think long term, we can accomplish things that we couldn’t otherwise accomplish.” He means that the way to succeed is to have patience and not focus on short-term earnings and achieve success by focusing on innovation and expanding the business to achieve higher income in the future.
Risk Taker: From the beginning, Bezos took a significant risk that made him one of the greatest CEO in the world. Therefore, he ensures that Amazon nowadays operates by focusing on the idea that the risk is worth the reward. Bezos invented a “Just Do It” award to encourage employees to share their ideas and focus on innovation, and don’t let fear stop them from achieving their goals. Jeff Bezos doesn’t stop experimenting, developing, innovating, and learning new things to succeed in the future. Bezos is always looking for new opportunities to improve
Amazon, and that is what helped him to change the core idea of the website from selling books to selling all kinds of products.
Q2: What are Amazon’s business model and mission?
Amazon.com, from the beginning, focused on the customers’ experience. According to Patrick Hull, Amazon.com’s mission is “Our vision is to be earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online.” Amazon.com is one of the biggest players in the online retail industry, and the key to its success is its business model. Convenience is What makes their business model attractive. Customers can buy easily from their website and find a large selection of products at low prices.
Amazon.com’s business model depends on three factors:
Online retailer: Amazon.com took advantage of the regular brick-and-mortar store because they have an enormous selection of products, as they say, “Earth’s Biggest Selection.” Amazon.com has become popular because of its variety of products and its low prices. Amazon.com is also considered a third-party seller, and they take their share from every transaction, which can help the company to lower its costs. Also, Amazon sells used products to compete with other companies like eBay.
Internet services: Amazon.com’s idea is based on the Internet, and from the beginning, they started selling products through their website. Amazon provides a lot of online services besides being an online retailer. Amazon’s line of business includes Amazon instant videos, which provides on-demand video streaming, Amazon Fresh, which offers online grocery; and Kindle library, which contains a wide selection of books. Customers can get all these services through an annual subscription called Amazon Prime, which provides free two-day shipping on retail purchases.
Kindle ecosystem: Amazon introduced a new line of business by improving the idea of selling books for Kindle tablet computers. Amazon manufactures and distributes Kindle table computers to other retailers as well as sells them on its website. In the beginning, the tablet was presented as a book reader, but some time later, they made it an entirely functional tablet like iPad.
Amazon created a successful business model that helped them be popular among the people, increasing their subscriber numbers. Their business model focuses on providing value to their subscribers in terms of convenience, low prices, and a large selection of products.
3. What are the Amazon types of strategies that lead the company to its success?
Amazon’s strategies depend on many aspects that include their lines of business and made them the leading company in the e-commerce industry:
1-Amazon Prime: In 2005, Amazon launched a new service Amazon Prime. Amazon Prime is a service that offers two-day shipping delivery across the country for an unlimited number of orders. Every year the number of Amazon Prime subscribers is increasing due to the good deals and values that Primes offers. The subscribers’ number at the end of 2014 in the U.S. was 40 million, and the subscribers spent close to $1,500 each year on the e-commerce site. Nonmembers spend $625 each year, according to Consumer Intelligence Research Partners, LLC. The cost of subscribing to Amazon Prime, in the beginning, was 79$ annually to give the subscribers two-day shipping delivery for free to more than one million products in stock. Nowadays, the cost increased to 99$ annually for more than 20 million products in stock and includes services such as instant videos, music, and a Kindle library. According to Greg Greeley, the vice president for Amazon Prime, “We want to make Prime a destination to watch, read and listen, as well as shop,” Amazon took a smart move with Prime service in order to get customers’ loyalty by making their shopping at Amazon more convenient, and they don’t have to think about the shipping cost or long delivery time. Greg Greeley, the vice president for Amazon Prim, said, “We really wanted to make it easy for customers — the idea of, ‘make the decision once, and then for the year, you don’t have to think about it,.”
2-Amazon instant video and T.V. production: In 2011, Amazon introduced their instant video to their Prime subscribers so that they could stream movies and T.V. shows episodes and compete with Netflix in the streaming industry. The instant video service now has 40000 collections. They managed to get licenses from the biggest companies like Viacom, HBO, and other production companies to add their movies and shows to their service. Moreover, Amazon started producing movies and series to get a higher market share and improve the company. As a result, one of their series, “Transparent,” became a hit and won two golden globe awards in 2015, according to IMDB.
3-Kindle (e-readers- tablets- amazon T.V. fire- echo):
Being an innovative company, Amazon introduces a huge range of different technologies and services to a wide audience. Their Kindle e-readers and Kindle Fire tablets became popular very fast due to their low prices and great functionality. While other companies sold their products in the same price range as Apple, Amazon decided to sell Kindle at a lower price. Their strategy was focused on earning money from purchases of books, applications, and movies made by Amazon Kindle and Amazon Fire tablet users. Their idea was the same as like idea used by Apple. Amazon created its products to attach its users to the Amazon ecosystem. Another step, which is used to attract more people to Amazon services, is Amazon Fire T.V. This streaming and gaming device allows users to watch movies from different streaming services. Though it doesn’t support Google Market and iTunes, it still provides a lot of different streaming services, games, and applications. The idea behind this project is the same, to make high-quality services available at quite a low price.
4-Amazon fresh and amazon food delivery:
Amazon Fresh is another promising service launched in 2007. The idea of this service isn’t new; this service provides people with fast delivery of different grocery products. However, the strategy which Amazon uses for this service is slightly different from the strategy used for other services. Though Amazon is usually focused on providing people with services and products at low prices, Amazon Fresh provides services at higher or comparable prices to grocery stores. Moreover, it charges a $299 subscription for customers in L.A. and San Francisco. This subscription also provides access to Amazon Prime services. It seems that due to high competition, Amazon Fresh is not as effective as other projects created by the company. Since it was created, it has expanded only to some parts of L.A., New York City, San Francisco, and Philadelphia.
5-Amazon prime air delivery drones:‘
One of the most interesting projects introduced by Amazon is Amazon Prime Air. This project is focused on delivering products sold by Amazon with the help of drones. Amazon wants to create drones that would effectively deliver products weighing not more than 5 pounds. Bezos claims that products weighing less than 5 pounds make up about 86% of products sold by Amazon. The products will be delivered within 10 miles radius of Amazon warehouses. It is interesting that FAA has already allowed Amazon to test its drone in March 2015. Nowadays, Amazon is testing drone prototypes and improving the safety of this technology. Apparently, this service is very innovative and may help Amazon to maintain a competitive advantage in delivery services in the future.
6-Amazon International expansion:
Another Amazon goal is international expansion which would allow it to cover new countries and win a bigger audience. Analyst Gene Munster stated that the expansion of Amazon to new geographical markets is a top priority target. However, the statistics show that Amazon’s international growth declined to 13% in the third quarter of 2014, though it was 20% in the third quarter of 2014. Nowadays, Amazon’s Global Selling program covers ten countries, including the U.K., U.S., Canada, France, Italy, Spain, Germany, Japan, China, and India. Amazon provides services in the native language of all these countries, so it is easy for customers to contact support, order products, and make purchases in their local currency. Amazon is planning to expand of service in even more countries to attract as many international customers as possible.
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