Amazon.com as one of the largest online retail stores of the world - Case Study Example

Case Study Amazon.com, one of the largest online retail stores of the world was established in the year of 1995. Amazon started its business as theonline book retailer and within two months of their business, they were able to sell their products to over 45 countries. By, 1996, Amazon became the World’s largest web retailer, earning about $15.6 revenues. After that, they established themselves as renowned online music retailers in the world. Answer 1 Though Amazon.com gets a huge success as world’s most preferred and trusted online book and music retailers, they are facing immense internal as well as external problems from different dimension like huge competition they are facing from the competitors (Dringoli 22).

With the growing number of online book retailers and publishers, the competition has become immense among the competitors of online book stores like Amazon. The major competitors of Amazon.com are Barnes & Noble, Random House Inc publisher, etc. Barnes & Noble is considered as the largest competitor of Amazon.com as they have focused on differentiated products. Amazon.com has always believed on customer oriented approach not on the competitor oriented approach. Music stores opening were one of their expansion strategies.

The company always tried to satisfy the customer’s demand by offering them differentiated product. The decision of Amazon.com to go for a retail store depends on the feasibility and market situation analysis. Amazon.com is capable enough to introduce the physical retail store as they have huge scale of operation, strong human resource management (Angerer 27). The Amazon.com should go for the retail store concept with the true differentiated product. Amazon has always served the customers with differentiated products as they don’t believe on me-too type of products.

Amazon can focus on selling the Kindle fire tablets, accessories, collection of popular book titles. The competitor like Books-A-Million and Barnes & Noble have already decided not to sale Amazon’s books from their store, in this situation it would be profitable for Amazon to sell their books from their own stores and it can be cost effective for them also. Amazon.com can offer a tight competition to its competitors by introducing the book stores in different locations of the world. Another reason, why Amazon should go for the retail stores is, by placing the physical retail stores, Amazon gets the potentiality to earn huge profit margin as they can use their economies of scale and can keep the price low in the market.

The opening of retail store will not only increase the customer base and market share of Amazon.com but also it would increase the brand recognition and brand image of Amazon. Answer 2 The biggest takeover took place in 2009 through the acquisition of Zappos.com by Amazon.com. It paid &775 to purchase the Kiva system of the Zappos.com. Kiva system is an internal infrastructure system used in warehouse management. Kiva formulates a bright self-propelled robot which moves around the warehouses to get back and bear whole shelf-units of packages to the particular shipping point.

This major decision comes from Amazon because they were not benefitting from the scale. The fulfillment of their scale requirement is very expensive process if it is done manually. Amazon was facing huge pressure to improve its shipping capacity; Kiva would help Amazon.com to enhance the shipping efficiency. A Forbes reporter said “When you tap “Place your order” on your iPad’s touch-screen you are literally reaching through the Cloud to become one with Kiva to grab a box in the warehouse” (Mills).

Amazon could take the advantage of using the smart robots to increase the productivity and efficiency of the warehouses. Though the acquisition is very expensive but, it would not more than the value if Amazon will set up few more warehouses that would be required for their probable entry in the retail market. Through using robots, very easily Amazon can cut the costs and reduce the errors of warehouse operations. But, it would adversely affect the employment of Amazon.com. Only the lucky human beings will be remained who will tackle the analysis and robot handling activities.

The path Amazon has shown to other competitors to reduce their workforce and cost by engaging robots in their production and warehouse would affect the huge job market globally. Tough Amazon is claiming that, they will not eliminate their more than 56,000 employees but still it would be a burden to Amazon to carry such a number of employees in future. Competitive force will bound the other competitors like K-Mart, Wal-Mart, Circuit City, Barnes and Noble to implement the familiar strategy and that can lead to major unemployment crisis.

Retailers generally buy the products from the wholesalers or distributors; depend on the distribution network of a particular company. The “e-tailers” the online retailers primarily buy the product from manufacture and resell it to the customers. Retailers do not resale the product but “e-tailers do so. The price in which retailers buy products is fixed by manufacturer but in case of “e-tailing” price is fixed by “e-tailers” (Myers 23). Works Cited Angerer, Alfred. The Impact of Automatic Store Replenishment on Retail: Technologies and Concepts for the Out-of-Stocks Problem.

New York: Springer, 2007. Print. Myers, Kelvin. Buy It, Fix It, Sell It.PROFIT. USA: Kaplan Publishing, 2003. Print. Dringoli, Angelo. New Perspectives on the Modern Corporation: Corporate Strategy and Firm. Cheltenham: Edward Elgar Publishing Limited, 2012. Print. Mills, Mark. Amazon's Kiva Robot Acquisition is Bullish for Both Amazon and American Jobs. 23 March, 2007. Web. 3 September, 2013. .