Networking Economy
As the discussion regarding Amazon’s business in an attention economy environment has shown, there is more to the internal strategies of the firm that explain its successes. The external environment and its factors affecting Internet business also determine the appropriateness of the strategies that the firm should take. The networking economy operates on some different elements compared to the attention economy, and its currency appears to be networking rather than attention. Moreover, networking is also about the devices and systems facilitating the Internet business as much as it is about the people engaged in production and consumption on the Internet (Goncalves, Hosio, Rogstadius, Karapanos, & Kostakos, 2015). The Internet itself is a network of computing devices, but for the analysis of Amazon’s Internet business, this discussion focuses on the power of networking the users of the Internet to make them consumers and customers.
The Amazon Web Server subsidiary was launched in the early 2000s, offering Cloud and Web hosting services among other products (Clark, 2015), showing that Amazon is aware of the critical importance of data management and efficiency. By offering consumers and businesses a platform on which to host and store their data, Amazon is helping to advance the Network Economy, by becoming an integral part of data hosting and exchange online.
Amazon also acts as a central hub for buyers and sellers, creating a networked business model that is as reliant upon the connections made between third-party sellers as it is reliant on its own products and services. When the company was first launched as an online bookstore, Amazon had only around 2000 titles available to ship from its warehouse, with the rest of the available titles being sourced direct from wholesalers and publishers (“Amazon.com Inc. History”, 2016). It is important for Amazon to maintain a stable and fluid network of functionality, to ensure that the site and related external advertising algorithms offer consumers a solid foundation for which to buy and sell. Amazon uses a huge number of servers to maintain data stability, so the infrastructure that allows Amazon to function is as reliant on effective networking, as Amazon is reliant on the connections made between its site, its affiliates, and consumers.
The data hosting and Cloud services offered by Amazon have continued to expand in speed, stability, and complexity, with an announcement in 2015 that it had just launched an artificial intelligence service, known as Machine Learning, which is a ‘class of advanced statistical techniques that enables computers to automatically find patterns and areas of significance in data’ (Clark, 2016). With innovations such as this, users will be able to access demographic/geographic data, as well as site statistics, and buyer/seller habits – all essential data for increasing business and continuing growth for Amazon, its affiliates, and its customers.
Amazon appears to be effectively harnessing the power of networking in the way it arranges its value production strategies and product offerings. Some examples of actual products that exist because of their relevance to a networking economy are cloud computing services and crowdsourcing services for micro-tasking (Cushing, 2013). Actual examples of leveraging the power of networking include the previously discussed example of co-creation of the buying experience at Amazon, which is an example of crowdsourcing of buying options, quality reviews, and product assurances.
In fact, the success of one networking application is often due to the other applications that are also harnessing the power of the networking economy (Baer, 2014). Advancements in technology, especially the ubiquitous nature of smartphones, are also making it easy for connected consumers to enter the Amazon ecosystem as both buyers and co-creators of the buyers’ experience (Goncalves, Hosio, Rogstadius, Karapanos, & Kostakos, 2015). A salient factor witnessed in all the instances explained above is that people can easily share news of their purchases on Amazon and other networks, and doing so increases the brand recognition of Amazon, which then allows more people to reach the retailer.
When consumers witness satisfaction of other buyers, they take it as social proof of the quality of the buying experience at the given Internet firm. Casalo, Flavian and Guinaliu (2008) demonstrated that familiarity of usability ends up influencing consumer loyalty through consumer satisfaction. Amazon should end up as a platform where it needs not to own any merchandise, but relies on the participants such as sellers and buyers by connecting them and meeting its business goals (Morozov, 2015). Through its Mechanical Turk, micro-tasking platform, Amazon has succeeded in presenting a new form of competitiveness in the networking economy (Cushing, 2013). The approach would make the firm more adaptable to changes in the operating environment by being able to increase its labor production at minimal cost or reduce it when demand subsides. Doing this makes Amazon an example of a firm that is following the principles of the agile production process, while also doing what is necessary to be competitive in the networking economy.
The examples show the external environmental factors such as the options for networking workers and consumers as being fundamental to the success of Amazon’s Internet business. The discussion on how Amazon has conquered the networking economy also brings up aspects of the Internet business that have been relevant for yet another type of economy where sharing is the main value driver. The networking economy can be viewed as an infrastructure, and as value arises because of networking users, it also emerges from platforms allowing the users of the virtual network to share their experiences.