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Amazon's sustainable competitive advantage

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American electronic commerce and cloud computing company that was founded on July 5, 1994, by Jeff Bezos and is based in Seattle, Washington. ]] The e-commerce and clouding computing company Amazon has acquired a  competitive advantage  and international leadership   through  the deployment of  integrated strategies on  their business model by technological innovation, diversification of their products ,effective distribution channels and through selling strategies . The company presents a variety of  business activities[1]such as business to business (B2B) i.e. Amazon Web Service , business to customers (B2C) i.e. Amazon Prime and Amazon Locker and  consumers to consumers (C2C), i.e. Amazon Vine; different  models that provides a competitive advantage builded on customer’s trust.[2]Moreover, the company uses their vast computing resources to monitor and analyze the prices of many of items sold by their competitors .Therefore, their prices are considered affordable on the market . As a result Amazon’s  functional Competitive Advantage is reflected on the achievement of a superior profitability levels and profit growth[3] based on their business model.

Amazon’s Innovation Process

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According to Michael Porter's book “Competitive Advantage of Nations: Creating and Sustaining Superior Performance “ companies achieve competitive advantage through acts of innovation.[4] In addition, Philip  Kotler establishes that a competitive advantage is a company's ability to perform in one or more ways that competitors cannot or will not match.[5]

The company pulls more than $135 billion in revenue by the creation of amazon's stores, and turned a $749 million profit in the fourth quarter of 2016, up 55% year-over-year.[6]

In Amazon's case, the company has being part of a constant innovative process through their history in order to acquire a competitive advantage on its service. For instance, on 1996 Amazon Associates Program launched the first  online affiliate programs of its kind.[7] Amazon’s  strategy began by selling books online, offering a large selection of books and wide range of products thereby making itself distinct from its competitors. This strategy created a competitive advantage by the implementation of a new service that allows  customers to be part of E-commerce concept (make sure this link works!) of online shopping  and being on a daily contact with the service and its  products. For instance , in 2001 the company introduced virtual books with 6.2 million customers  in 220 countries.[8]

The brand expanded its horizons to international markets such as the  United Kingdom and Germany. Later on , in 2000 Amazon broadens its horizons, launching in France and Japan, becoming the pioneer at that time due to the  unprecedented technological revolution and providing   the company with a higher competitive advantage on the online  service.[9]Nowadays, the continuous improvement in online shopping  is visible on the diversification of markets and products, i.e. Amazon kindle in 2007 or the Fire phone in 2014.[10]Therefore, the company describes itself as a “customer-obsessed”  that considers crucial to listen to customers to be competitive on the market.

Porter established that  innovation can be manifested in a new product design, a new production process, a new marketing approach, or a new way of conducting training[11] . Amazon’s case, innovation is observed on the strategic alliances with retailers. In the year 2001 in order to maintain Amazon’s  superior competitive advantage on their products, the company started creating partnerships through joint ventures and strategic alliances with companies like Toy RU's, Border Books, Office Depot and other music and software companies. Amazon’s strategy allowed the company to reduce operating  costs, reinforce its customer service operations , maximize shareholder  value and increasing their share value in the international.market.[12]

Amazon Web Service

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By 2006, Amazon  launched Amazon Web Service  a technological platform concept through which developers can obtain direct access to the cloud services. Amazon adquiere an evident competitive advantage by adjusting their service to local systems diversified into regions, such as Eastern USA, Western USA (two locations), Brazil, Ireland, Singapore, Japan, and Australia.[13]

Amazon Vine

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Amazon competitive advantage on the customer service area is visible on Amazon Vine Program. This system allows customer’s  active participation through  judging their items  and ranking them in order to help their fellow customers to  make an informed purchase decisions.In this way, customers become actors of the selling process , this action can be considered as a digital marketing strategy.

Amazon Prime

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Amazon adquired a unique competitive advantage through their distribution channel. This system provides different packaging and delivery options. Therefore, this program succeed on the market by their distribution service on just 3 hours or a day.[14]

Amazon Smile

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As an added value of Amazon service and  social responsibility, AmazonSmile provides to their customers the possibility to contribute to more than 501 public charitable organization on every shop, at no cost. The company  will donate 0.5% of the purchase price to the customer’s charitable organization chosen.

Amazon Locker

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This system allows the company Amazon's customers on the U.S to reflect its competitive advantage through a personal distribution service , allowing  customers to receive their packages to a specific location. In this way, customers can pick up their packages on their  personal convenience. [15]

References

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  1. ↑ Porter, Michael E. (2011-05-31). Competitive Advantage of Nations: Creating and Sustaining Superior Performance. Simon and Schuster. I
  2. ↑ "Amazon.com Help: About Amazon Locker". www.amazon.com. Retrieved 2017-05-10.
  1. ^ Teece, David J. (2010-04-01). "Business Models, Business Strategy and Innovation". Long Range Planning. Business Models. 43 (2–3): 172–194. doi:10.1016/j.lrp.2009.07.003.
  2. ^ Brathwaite, Robert. "Amazon Com Case Study Analysis Marketing Essay". {{cite journal}}: Cite journal requires |journal= (help)
  3. ^ "Amazon - Investor Relations - Annual Reports, Proxies and Shareholder Letters". phx.corporate-ir.net. Retrieved 2017-05-13.
  4. ^ "The Competitive Advantage of Nations". Harvard Business Review. Retrieved 2017-05-13.
  5. ^ "Competitive advantage | Free essay | Management essays". UKEssays. Retrieved 2017-05-13.
  6. ^ Brathwaite, Robert. "Amazon Com Case Study Analysis Marketing Essay". {{cite journal}}: Cite journal requires |journal= (help)
  7. ^ "Amazon Operations & Customer Service Jobs - History". Retrieved 2017-05-13.
  8. ^ Brathwaite, Robert. "Amazon Com Case Study Analysis Marketing Essay". {{cite journal}}: Cite journal requires |journal= (help)
  9. ^ Brathwaite, Robert. "Amazon Com Case Study Analysis Marketing Essay". {{cite journal}}: Cite journal requires |journal= (help)
  10. ^ "Advantages and Disadvantages of Amazon Fire phone - Drawbacks of". Drawbacks of. 2014-06-19. Retrieved 2017-05-13.
  11. ^ Brathwaite, Robert. "Amazon Com Case Study Analysis Marketing Essay". {{cite journal}}: Cite journal requires |journal= (help)
  12. ^ The Oxford Encyclopedia of Economic History: Human capital - Mongolia. Vol. 3. Oxford University Press. 2003-01-01. ISBN 9780195105070.
  13. ^ "What is Amazon Web Services (AWS)? - Definition from WhatIs.com". WhatIs.com. Retrieved 2017-05-13.
  14. ^ "How Does an Amazon Prime Membership Work?". One Hundred Dollars a Month. Retrieved 2017-05-13.
  15. ^ "Amazon.com Help: About Amazon Locker". www.amazon.com. Retrieved 2017-05-13.
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