Amazon: Report on 8 key Elements of Business Model / Report: B2C Strategy behind the Success of Amazon
E-commerce -- a subdivision of e-business -- denotes a wide range of activities involved in selling of products via electronic channels (such as the Internet). A novel emerging business model in the e-commerce domain is the web-based social shopping, which has gained immense popularity, of late. The e-commerce website, Amazon, allows customers to search for, and purchase, products online. As a business-to-consumer (B2C) website, Amazon leverages eight powerful major components of its business model for drawing buyers and maintaining an edge over competition (Amazon, 2015).
This study is aimed at analyzing the major components of Amazon's business model and coming up with suitable strategies, which may be utilized for improving future profit margins. Thus, value proposition, market, revenue model, competitive advantage, competitive environment, management team, organizational structure, and value chain will be critically analyzed, as will future strategies for building consumer trust in the company, for adequately grasping the context.
Contents
Introduction 5
Findings Analysis 5
Strategies Company should Use 9
Conclusion 10
References 12
Introduction
An online B2C retailer founded in the year 1994 and based in Washington's Seattle, Amazon.com has a North American as well as international market. The company operates via AWS (Amazon Web Services), International, and North American segments. It caters to online buyers by means of retail websites, (amazon.com, amazon.com.mx, and amazon.ca); these web-based marketplaces basically include content and goods bought from vendors for resale, in addition to third-party offered goods. Further, the company provides programs, which allow sellers to put up their stock for sale on Amazon websites, as well as personal branded websites. Via Amazon, app developers, authors, filmmakers, musicians, etc. can also put up their content for sale online. Additionally, Amazon caters to businesses and developers by means of AWS, which offers services in computation, storage, analytics, database, deployment, and applications for start-ups, educational institutions, corporations, and governmental agencies (Yahoo Finance, 2015).
Also, Amazon produces and markets Kindle e-readers, fire TVs, fire tabs, fire phones, echo and other electronic devices. It provides a web-based platform, Kindle Direct Publishing, to independent publishers and authors to self-publish their books on Kindle. Another company feature is its yearly membership program, Amazon Prime, which offers to members free merchandize shipping, access to Kindle books, access to instantaneous TV-episode and movie streaming, in addition to publishing, ad services, Amazon credit card, and subscriptions to digital content (Yahoo Finance, 2015).
Findings Analysis
A company's business model outlines how it captures, develops and provides value. The business model must be perceptive, taking into account all areas of interest; in other words, it must incorporate all conditions necessary and sufficient for organizational operations. Its concept needs to be all-inclusive, straightforward, and applicable, while taking care not to oversimplify the complexities underlying the actual functioning of businesses. Business models are very vital to ensuring proper establishment and smooth running of a business (Ranjan, 2013). The eight elements of Amazon's business model are:
Value Proposition
The company is famous for its superior customer service, interoperating ability, hardware, content ecosystem, and prices. Some aspects have been kept consistent. Irrespective of the service or product, Amazon's value proposition is always convenience and price; low prices are retained by ensuring self-service and near-total automation of its client relationships. The company is expected to continue venturing into novel territories, while retaining focus on its two major value proposition facets (which hold good in all product categories), enabling the company to enter new markets and strengthen bonds with customers (Baer, 2014).
Market or Audience
Amazon is a B2C company, targeted at everyone in the society. There are more than six billion global Internet users, making it evident why B2C and B2B Internet marketing enhances awareness of organizations and their offerings. This assists Amazon in reaching a large number of individuals, thereby increasing profit margins of the company (Ranjan, 2013).
Revenue Model & Cost Base
On Amazon, products are sold either directly, or by charging a commission. The company's fixed-price web-based market, Amazon Marketplace, enables sellers to put up their merchandize or sale alongside those offered by Amazon. Shoppers can purchase third-party second-hand and new articles directly via Amazon.com, through its Marketplace. This has been a very lucrative program and approach for the company. The company charges a transaction charge, variable closing charge, and selling-price-based commission rate. In the current year, Amazon's net sales rose to 25.4 billion dollars (i.e. a 23% rise) during the third quarter, as compared to 20.6 billion dollars in the...
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