Operations Management Case No.5
E-Commerce at Amazon.Com
What are the advantages and disadvantages of selling books and goods over the Internet?
The rise of the internet has created a boom in the market place; not only for the marketers but also for the consumers. According to recent statistics, consumers in 2007 spent on average £4 billion per month online. Today, you can find almost anything on the internet. However, selling your products online holds its own share of advantages as well as disadvantages. Selling products over the internet saves costs that would have been incurred in the setup and operation of a distribution outlet or a physical store. Additionally, it also eliminates other expenditures such as rent, human resource etc. Another key advantage of online sales is that it does not restrict your sales to a local market. Having a web presence not only widens your potential consumer market but also gives you a chance to compete against foreign customers
On the contrary, selling online may also pose some serious disadvantages. For instance, it could increase the level of competition for you. Since the cost of setting up a website and selling your products are comparatively less thus anyone, belonging to any part of the world can easily stand up against you as your competitor. Additionally, your potential competitor can easily copy your business model and start selling the same books and goods for a comparatively lesser price thus threatening the existence of your company.
Q.2.If books can be downloaded online, how will Amazon's business change?
Amazon is one of the pioneers and a leading online retailer with approximately five million different book titles as well as hundreds of other products ranging from musical instruments, electronics as well as pet supplies (Fred, 2004). One of the key competitive strategies followed by Amazon right now is its claim to sell books at the most reasonable prices. However, if these books could be downloaded online, it would cause a colossal damage, not only to Amazon's sales but also to its current operating strategy. On one hand the sales of its prime product i.e. books would go down drastically while on the other hand Amazon would have to revamp its existing strategy and come up with a totally new unique selling point.
Q.3.What do traditional stores have to gain from setting up an e-commerce side to complement their retail stores?
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