Amazon.com a Strategic Assessment of Amazons' E-Strategies Essay

Amazon.com

A Strategic Assessment of Amazons' e-Strategies

Amazon's remarkable ascent as one of the top online global retailers can be attributed to the foresight they had in creating a comprehensive distributed order management, Enterprise Resource Planning (ERP), Supply Chain Management (SCM) and e-commerce series of systems. The many other e-commerce sites that rose quickly with massive infusions of venture capital just as quick exited the market, flaming out due to a lack of system and process scalability, lack of understanding of customer dynamics, and a complete loss of focus on scalable business models. All of these factors are what caused competitors to Amazon to exit the e-commerce market either through acquisition, merger or complete exist from the market.

When starting Amazon, Jeff Bezos invested heavily in the distributed order management, ERP, SCM and e-commerce integration points to book distributors initially, and then expanded into a broader product mix. This allowed the enterprise to quickly scale as volumes increased during the first five years of the company's existence. Having creating this reliable, scalable and secure platform, Mr. Bezos and the Amazon founders concentrated on creating an analytics layer throughout their architecture that could quantify customer, distributor, dealer and even competitor activity on the site (Amazon Investor Relations, 2012). This reliance on analytics also gave Amazon executives and technical staff the insight they needed to launch quickly into entirely new product categories, get the complex and often confusing task of localization right, and also create a highly popular and profitable Amazon Web Services (AWS) cloud computing platform and hosting platform for Software-as-a-Service (SaaS) applications (Mitchell, 2012).

From a technology standpoint the performance of Amazon today can be directly attributed to the insightful decisions made in 1994 and 1995 when the company founders prioritized the development of enterprise-wide platforms and a strong focus on analytics over spending all their time on the front-end website and its facade (Lindic, Bavdaz, Kovacic, 2012). As Jeff Bezos would later remark in interviews, by investing to create a truly world-class enterprise back-end system first, his company was freed up to fast track the actual user interface of the e-commerce sites globally at a pace that left comp[editors far behind in terms of functionality and product breadth (Amazon Investor Relations, 2012). Mr. Bezos chose in 2007 to also institute a culture of metrics that also capitalized on the nearly two decades of investment in their infrastructure (Amazon Investor Relations, 2012). Combining the global e-commerce, enterprise-tested infrastructure and the most robust set of analytics that any e-commerce provider had, Amazon was ready to begin expanding their product strategies, start offering greater options in their Amazon Web Services initiative which today is expected to be a $1B by 2015, even by conservative forecasts (Amazon Investor Relations, 2012) and also invest heavily in their state-of-the-art recommendation engine technology that seeks out products and services customers may be interested in and present them during shop[ping sessions in real-time (Sun, 2012). It's important to appreciate just how vast of an e-commerce infrastructure Amazon has in completing this analysis of their e-strategy. They have greater agility, flexibility and capability to execute than any other online retailer globally today. How they choose to use these technologies to attract new customers and keep existing ones loyal, a point the case study makes in greater detail, is predicated on the ability to get the most value from this infrastructure while still staying focused on delivering a world-class customer experience in each transaction. Based on the analysis undertaken for this case analysis, it is abundantly clear that Jeff Bezos and the executive management team are passionate about keeping the company as customer-focused as possible, including the continual selective use of technology to accentuate and strengthen the user experience online and off (Murphy, Narkiewicz, 2010). With these foundational aspects of Amazon defined, the seven areas of focus in this analysis are next presented.

The overarching objective of this analysis is to understand the value of e-strategies in organizations, with Amazon being the organization of interest in the analysis. Specifically concentrating on the benefits of having an e-strategy at Amazon, defining how e-strategies contribute to Amazon's broader accomplishments, and an analysis of how Amazon aligns their e-strategy to the overarching organizational strategy as well., The analysis continues with an analysis of the key business factors that are the catalysts of the e-strategy at Amazon, followed by a suggested strategic plan for ensuring e-strategy initiatives at the company continue to lead to profitable growth.The final section of this analysis provides an assessment of the technical infrastructure needed to accomplish the proposed strategic plan.

As Amazon has continually evolved its position as a global force in online retailing, its command of supply chains globally has also evolved very quickly. In the latest rankings of the highest-performing supply chains completed by Gartner, a leading research consultancy, Amazon has ranking within the top twenty five for five years running (Amazon Investor Relations, 2012). What this signals is that Amazon has progressed from relying on enterprise-wide infrastructure to compete and is now on the growth trajectory of making supply chain processes their competitive advantage.

Table of Contents

Analysis of the Benefits of an e-Strategy at Amazon

Contributions of e-Strategies of the Attainment of Amazon's Objectives and Strategic Plans

Analysis of How Amazon's e-Strategy Aligns and Supports Organizational Strategies

Business Factors That Serve As Catalysts of Amazon's e-Strategies

Analysis and Assessment of e-Commerce Benefits to Amazon

Strategic Plan for Retaining and Growing Amazon's e-Strategy Competitive Advantages in the Global Marketplace

Definition of Technical Infrastructure to Support Strategic Plan

References

Analysis of the Benefits of an e-Strategy at Amazon

Amazon's founders are where they are today because they correctly interpreting and acted quickly on the market signals occurring in the emerging e-commerce markets of the early 1990s. It must have been tempting to jump right into designing a very flashy website in straight HTML at the time (ancient and static by today's Website programming standards) instead of concentrating on creating an enterprise-wide infrastructure. Yet that is exactly what Amazon did, creating what would eventually morph into the world's first distributed order management and ERP system that ran as a Web Service, orchestrating suppliers as diverse as Ingram Book Company to the thousands of resellers and individual booksellers (Lindic, Bavdaz, Kovacic, 2012). The strategic benefits of the heavy investment in infrastructure began to show strong Return on Investment (ROI) during the latter 1990s when Amazon was introducing new products and services at a pace that defied offline retailers (Amazon Investor Relations, 2012). Why this pace of new product introduction and launch of ancillary services as so achievable was the engraining of the expertise and core competencies, including a rapidly emerging dynamic of being able to quickly translate intelligence and information into shared knowledge, both tacit and explicit. Amazon was learning how to use its back-end infrastructure e-strategy and broader strategic supply chain and distributed order management strategies to become a learning organization capable of transforming analytics and business intelligence (BI) into organizational memory and expertise (both tacit and explicit) (Cross, Baird, 2000). Amazon was busy changing the entire playing field and its dynamics of e-commerce in the early and mid-2000 timeframe as its main competitors were still focusing only on the veneer or facade of their sites. Amazon, has been mentioned before, realized that the depth of customer experience they could offer would be more dependent on hwo deep and rich the functionality of their infrastructure was (Amazon Investor Relations, 2012). All of these factors together allowed Amazon to create a knowledge sharing ecosystem that gave the company the ability to quickly gain technology advances in personalization, pricing and recommendation optimization technologies, all areas of formidable competitive leadership for the company today (Birkinshaw, Sheehan, 2002) (Amazon Investor Relations, 2012).

When an e-commerce organization begins to base its competitive strategies on a process-centric approach to competing, they create one of the most powerful and potent set of differentiators there are (Murphy, Narkiewicz, 2010). Competitive differentiation moves beyond price and availability (the two factors that push online retailers back into a commodity-like selling role) (DiRusso, Mudambi, Schuff, 2011) and towards delivering an exceptional customer experience. Amazon concentrated on the core process areas of personalization, price optimization, fine-tuning and perfecting their recommendation optimization engine, and the pervasive use of analytics throughout the company including marketing to measure results of vs. strategic business objectives (Amazon Investor Relations, 2012). The net result of all these factors was the ability to align every system and process within the company at the priority of delivering an exceptionally efficient, economical and trusted experience for any customers, anywhere at any time (Murphy, Narkiewicz, 2010). All of these factors had to be combined to set the stage for the strategic objectives of delivering an exceptional experience. Further, this is what today has given Amazon the ability to successfully compete against IBM, Google and Microsoft in the cloud computing services market.....