Introduction
Amazon’s business structure has revolutionized e-commerce, pioneering new formats of Internet shopping that combine online conveniences, social network attributes, and multiple-vendor opportunities. Finding out more about the firm’s strategies for success reveals the competitive business concepts that Amazon uses to remain a forerunner in the industry. The following is a brief overview of the company, which is necessary for laying the basis for discussing its success.
Amazon is both a platform for online retailing and an online retailer for virtual goods, services and physical goods. The company competes with other retailers that rely on physical stores. It is a formidable competitor in the global retail industry because of its elaborate shipment network, multiple online store locations, and its ability to sell both new and second-hand goods. The intention to be the world’s largest online store has allowed Amazon to own the delivery channel and the distribution rights, as well as the production capabilities of virtual goods and services, which makes Amazon’s business too complex for a single competitor to defeat.
A succinct interpretation of the firm’s success can be seen in its growth in revenue in the last decade. Today, Amazon’s revenue exceeds 100 billion dollars, partly contributed to by its cloud services, while they were just shy of 4 billion dollars in 2007 (Streitfeld, 2016; Flynn, 2007). Amazon has established itself as one of the most successful and well-known retailers currently online, setting the bar high for other e-commerce sites, pioneering new technologies and the effective acquisition and use of consumer data.
When Amazon was first launched in 1995 as an online bookstore, founder Jeff Bezos had “a vision for the company’s explosive growth and e-commerce domination… he wanted Amazon to be ‘an everything store’”(D’Onfro, 2014). Shortly after the public launch of Amazon in 1997, with the store gaining one million customers, Bezos expanded its product offerings, beginning with music and videos in 1998, and then on to toys, electronics and hardware in 1999 (“Amazon.com Inc. History”, 2016). The company then moved into its affiliate program, leveraging the willingness of other websites to advertise Amazon products for a small commission. The affiliate program, and allowing other businesses to run their stores from within Amazon, has not been without its problems however.
Companies selling products infringing upon existing designs saw Amazon get sued for patent infringement, such as was the case in recent times, where family owned company Milo and Gabby claimed that Amazon was selling pillows that copied the Milo and Gabby designs. The dispute was resolved in court in 2015, whereby it was found that Amazon was “not liable for patent infringement when other companies sold infringing goods on [it’s] website because it found that Amazon itself did not offer to sell infringing goods or engage in any other infringing acts” (Paul, Kasedon, & Sahlsten, 2015). Despite such roadblocks to the continuing expansion and success of the company, Amazon has continued to push forward as a pioneer in e-commerce.
Recent developments have seen the company moving into data management, web hosting, and cloud services. These services were introduced before its major competitors such as Microsoft, Google, and IBM (Clark, 2015), giving Amazon an advantage in a massive growth industry: the storage and management of data.