AMAZON’S BUSINESS MODEL AND ITS EVALUATION
Business organizations need to follow a business model that will be kept in front as a constant reminder of the objectives to be achieved and the methods to be followed for the attainment. A business without a business model is just like a missing backbone where the entire functioning of the business operations lay unstructured and relates an unorganized venture whose success is yet to be found. For understanding the importance of business models, the case study of Amazon can be taken into consideration that shows the fundamental reason for its overwhelming success. Amazon uses their business model as a tool for inspiration and innovation. The company has always focused on innovating and adding hoards of new categories for constantly changing the way of customers’ shopping by giving them the utmost range to select form.
The company follows a long-term growth policy as opposed to short-term profit margins as they believe in providing first and then receiving. In June 1994, Bezos founded Amazon as an online bookstore with limited editions available and finally launched it on 1995 with the motto of “sell all, carr few”. Gradually, with business strategies Bezos was able to expand his online e-commerce venture were it made a net sales profit of about US $15.7 million with a net loss of US $5.7 million (“Amazon.com's Business Model and its Evolution|Business Strategy|Case Study|Case Studies”, 2018). And the journey still continues till date emerging as one of the leading online e-commerce giants disrupting many potential business mediums.
Problems in the company
Amazon’s business model has been based on four pillars- low prices, wide selection, convenience and customer service (“Amazon.com's Business Model and its Evolution|Business Strategy|Case Study|Case Studies”, 2018). The aim of the company was quite fixed from the time of its initiation process. Amazon emphasised on attracting customers through offering low prices and a prompt delivery service. In addition to this, the company kept on increasing its product category to provide a wide range of products and services for the customers and offer exemplary customer service. Catering the customers well and in a proper manner has always been Amazon’s prime concern. However, in this urge, the company takes the increasing market competition much lightly as they consider customer convenience to be their ultimate objective and based on that they are continuously expanding the Amazon retail (Teece, 2010).
Jeff Bezos himself has constantly maintained his point of customer obsession above of competitor obsession (“Amazon.com's Business Model and its Evolution|Business Strategy|Case Study|Case Studies”, 2018). In this process, Amazon is overlooking the importance of modifying their business model as per the latest needs of the business market. Moreover, disruptive innovation is a current necessity for both retail and e-commerce spaces that should be considered by Amazon. The changing business environment and the ever growing competition in the market necessitate the reinvention of the traditional business model to cope up with the present situation and avoid intentional losses (Jetter, Satzger & Neus, 2009). Customer-centric business model has definitely benefitted the company, but the approaches need to be changed for maximizing the net profit. Also, the wide scale growth of the company can bring challenges if not checked in time and deftly handle the impending position of being at stake.
Impact on business
Amazon is in close competition with another of the big players, Walmart and many of the online retail industries. The company has gradually transformed itself from a start-up e-commerce venture to a powerful platform of digital media that extensively aimed at growth and innovation (“Amazon.com's Business Model and its Evolution|Business Strategy|Case Study|Case Studies”, 2018). Amazon has constantly tried to bring new developments in its business model by combining its online retail expertise with their ability to fulfill the preferences of the customers.
The company along with its executive staffs participated in Amazon’s growth wheel pledging by the motto of growing the prospects at the present and thinking about the profits later on. This is where the problems start.
The attempt of Amazon to expand its reach on the consumer base across the world started following an unstoppable demeanor that caused concern among the market analysts regarding the over ambitious growth rate of Amazon.
Their net loss percent is lower in most of the times than their net sales profit, but there is always an existence of a business strategy to backfire at point time that will bring down the rates to a marginal level or even lower than that.
So far the journey of Amazon is concerned the company is doing great on the foundation of their business model with the customer satisfaction and convenience at the center. It has even opened retail outlets as physical evidence to its customers.
However, the competitiveness of the market around is extremely capable of reaching heights set by others, thus, Amazon needs to pay attention of their strategic business model one more time.
Amazon may be to close rival for an additional of the enormous players, Walmart and A large number of the internet retail commercial enterprises.
The organization need bit by bit converted itself starting with a start-up e-commerce dare on a capable stage from claiming advanced networking that extensively pointed in development What's more improvement (“Amazon. Com's business model What's more its Evolution|Business Strategy|Case Study|Case Studies”, 2018).
Amazon need continually attempted on bring new developments clinched alongside its business model Eventually Tom's perusing joining its web retail adroitness with their capability to satisfy those inclination of the clients.
The organization alongside its official staffs took an interest over Amazon’s development wheel pledging toward the witticism from claiming developing those prospects during the exhibit Furthermore considering something like those benefits later on.
This will be the place the issues begin. Those endeavor for Amazon to extend its arrive at on the customer base over the reality began Emulating an unstoppable air that created worry Around the business sector investigators viewing those again yearning development rate from claiming amazon.
Their net reduction percent will be easier clinched alongside the vast majority of the times over their net deals profit, Be that there will be dependably an presence from securing a benefits of the business technique to reverse discharge at perspective occasion when that will cut down those rates on a minor level alternately Actually easier over that (“Amazon. Com's business model What's more its Evolution|Business Strategy|Case Study|Case Studies”, 2018).
As such the venture from claiming amazon will be worried the organization will be completing extraordinary on the establishment about their benefits of the business model for the client fulfillment What's more comfort at the focus.
It need Significantly opened retail outlets Concerning illustration physical proof should its clients. However, those intensity of the market around will be greatly fit from claiming arriving at statures set by others, thus, amazon necessities on pay consideration of their vital business model you quit offering on that one a greater amount duration of the time.
Planning for solving
The market growth of Amazon is extremely prompt as per latest information from the market statistics. The company has actively participated in improving on their business strategies and work out on more expansion plans keeping the customers on consideration. It tries every hand to provide their customers the best online shopping experience by fetching myriad of options for them. Amazon has increased its product category from a mere e-commerce provider of books to the latest range of Kindle, Amazon Prime, movies and other utilities (“Amazon.com's Business Model and its Evolution|Business Strategy|Case Study|Case Studies”, 2018).
This shows their determination in serving the customers on top of everything and at any cost. However, lack of concern on the competitive forces is a potent threat for the company in the coming times.
Thus, full-fledged strategic planning is required in order to meet the crisis moment that may come across their way in near future (Casadesus-Masanell & Heilbron, 2015).
The best way tackle the problems are to revise the business model plans, as that is what acts as the base for all business operations. Their customer centricism has really helped them to advance to their present position, but according to the changing times, the basic principles need to be altered and modified (Spencer & Ayoub, 2014).
The speedy expansion of Amazon and its ventures on other fields at the same time may not fetch the desired result. Therefore, it would be best if a new initiative is given some time for recording consumer response and its affectivity in competing with the market rivals before working on its expansion. Also, reinvention of policies is necessary after anticipation of the probable challenges and work in accordance with contemporary market trends (Gorevaya & Khayrullina, 2015).
Those showcases Growth of Amazon will be greatly prompt as for every most recent data from those business detail. The organization need actively took an interest on enhancing around their business methodologies What's more worth of effort out around All the more extension arrangements keeping the clients on thought. It tries each hand to give their clients those best on the web shopping knowledge by getting horde about alternatives to them.
Amazon need expanded its item class starting with an unimportant e-commerce supplier for books of the most recent extent from claiming Kindle, amazon Prime, motion pictures Also different utilities.
This indicates their determination on serving those clients on highest priority on All that What's more at any expense. However, absence of worry on the focused constrains is An intense danger for the organization in the advancing times.
Thus, full-fledged key arranging is required so as with meet the emergency minute that might go over their possibility to get to close to future (Casadesus-Masanell & Heilbron, 2015). The most ideal tackle those issues need aid will modify the benefits of the business model plans, Similarly as that is the thing that demonstrations Similarly as those base to the sum benefits of the business operations.
Their client centricism need by any means aided them should development to their available position, At as stated by the evolving times, those fundamental standards requirement with a chance to be modified What's more altered (Spencer & Ayoub, 2014).
The expedient development for amazon and its ventures looking into other fields at the same occasion when might not bring the wanted aftereffect. Therefore, it might a chance to be best though another activity may be provided for percentage duration of the time to recording purchaser reaction and its affectivity over contending with the business sector rivals in the recent past attempting around its extension.
Also, reinvention from claiming approaches is essential then afterward expectation of the possible tests and partake) energizes understanding with contemporary showcase patterns (Gorevaya & Khayrullina, 2015).
Outcome of the study
The case study on Amazon’s business model reinforces the significance of an effective business model that will act as the foundation for many other business prospects. The principles of a business models acts as the pillars of a concrete that reflects on each of the philosophies that have been kept in mind while designing the framework (Gorevaya & Khayrullina, 2012). The online world has taken the whole universe by storm of its convenient approaches that has eased the lifestyle of the majority of the population in this superfast world. Taking the advantage of the extremely powerful weapon of internet and social media Amazon successfully accomplished its heights in the world of business that is ruled by the leading business organizations at specific points of time. One such instance is of Amazon as well, which has successfully incorporated the customers, who are the major drivers of the e-commerce business, in the midst of their business model. Offering the customers an extensive range of product and at low rates were the initial strategies of the company’s CEO that is maintained even to this day. Giving importance to the customers is no wrong, as they really play a crucial role in creating demands in the market for various and services, as well as the company itself. The essential factors of growing a business has to be kept in the limelight, but the other concerns that are manifesting the business market in form of competition also needs to be paid due attention through constant monitoring and analyzing of market situation and restructuring the business models likewise (Kubzansky, 2012).
To conclude, once again the significance of a business model for an organization can be highlighted. It is essential for charting out a framework that will include the basic objectives of the company while dealing with their business operations and planning for further initiatives. Amazon’s success is no longer behind the screens. Everyone is aware of the products and services that are offered by the company and also their attitude towards their customers. Amazon’s ability to include the customers in all their ventures can be accounted as a major reason for their unlimited success. The company has very well understood the importance of the consumers for their business and has thus built their strategies on such measures that would provide convenience to the customers, which will automatically usher profits for Amazon. Backed by their customers’ support, Amazon is going forward to launch new digital products and services, power AWS and expand few more categories. Overall, with its strong and weak points it has managed a long way forward and keeps on with the belief of proceeding even further with constant support from its customers.
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