Service marketing management of amazon

SERVICE MARKETING MANAGEMENT
Presented by: JEAN F. BAYLON. BSBA4
Mktg 29 Instructor: Mr. A. Quiwa
August 2013

OUTLINE:
I.

II.

III.
IV.
V.
VI.
VII.

Overview
o Amazon founder Jeff Bezos
o Acquisitions
o Merchant partnerships
o Locations
o Fulfillment and warehousing
Products and Services
o Retail goods
o Consumer electronics
o Computing services
Service Management System
SWOT Analysis
Recommendations
Conclusions
References

I.

Overview

Amazon.com, Inc. (NASDAQ: AMZN) is a
US-based multinational electronic commerce
company. Headquartered in Seattle, Washington,
it is America's largest online retailer, with nearly
three times the Internet sales revenue of the
runner up, Staples, Inc., as of January 2010.
Jeff Bezos founded Amazon.com, Inc. in 1994 and
launched it online in 1995. The company was
originally named Cadabra, Inc., but the name was
changed when it was discovered that people
sometimes heard the name as "Cadaver." The
name Amazon.com was chosen because the
Amazon River is the largest river in the world, and
so the name suggests large size, and also in part
because it starts with 'A' and therefore would
show up near the beginning of alphabetical lists.
Amazon.com started as an online bookstore, but
soon diversified, selling DVDs, CDs, MP3 downloads, computer software, video games,
electronics, apparel, furniture, food, and toys. Amazon has established separate websites in
Canada, the United Kingdom, Germany, France, Italy, Japan, and China. It also provides
international shipping to certain countries for some of its products. A 2009 survey found that
Amazon was the UK's favorite music and video retailer, and third overall retailer.
Amazon founder Jeff Bezos
The company was founded in 1995, spurred by what Bezos called his "regret
minimization framework", which described his efforts to fend off any regrets for not
participating sooner in the Internet business boom during that time. In 1994, Bezos left his
employment as vice-president of D.E. Shaw, a Wall Street firm, and moved to Seattle. He began
to work on a business plan for what would eventually become Amazon.com. After reading a
report about the future of the Internet which projected annual Web commerce growth at
2,300%, Bezos created a list of 20 products which could be marketed online. He narrowed the
list to what he felt were the five most promising products which included: compact discs,
computer hardware, computer software, videos, and books. Bezos finally decided that his new
business would sell books online, due to the large world-wide demand for literature, the low

price points for books, along with the huge number of titles available in print. Amazonwas
originally founded in Bezos' garage in Bellevue, Washington.
The company began as an online bookstore. In the first two months of business, Amazon
sold to all 50 states and over 45 countries. Within two months, Amazon's sales were up to
$20,000/week. While the largest brick and mortar bookstores and mail order catalogs might
offer 200,000 titles, an online bookstore could "carry" several times more, since they had an
almost unlimited virtual (not actual) warehouse: those of the actual product makers/suppliers.
Bezos wanted a name for his company that began with "A" so that it would appear early in
alphabetic order. He began looking through the dictionary and settled on "Amazon" because it
was a place that was "exotic and different" just as he planned for his store to be, and he
believed it was the biggest river in the world, and he planned to make his store the biggest in
the world. Since 2000, Amazon's logotype has been an arrow leading from A to Z, representing
that they carry every product from A to Z.
Amazon was incorporated in 1994, in the state of Washington. In July 1995, the
company began service and sold its first book on Amazon.com: Douglas Hofstadter's Fluid
Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of
Thought. In October 1995, the company announced itself to the public. In 1996, it was
reincorporated in Delaware. Amazon issued its initial public offering of stock on May 15, 1997,
trading under the NASDAQ stock exchange symbol AMZN, at a price of US$18.00 per share
($1.50 after three stock splits in the late 1990s).
Amazon's initial business plan was unusual; it did not expect to make a profit for four to
five years. This "slow" growth caused stockholders to complain about the company not
reaching profitability fast enough to justify investing in, or to even survive in the long-term.
When the dot-com bubble burst at the start of the 21st Century, destroying many e-companies
in the process, Amazon survived, and grew on past the bubble burst to become a huge player in
online sales. It finally turned its first profit in the fourth quarter of 2001: $5 million (i.e., 1¢ per
share), on revenues of more than $1 billion. This profit margin, though extremely modest,
proved to skeptics that Bezos' unconventional business model could succeed. In 1999, Time
magazine named Bezos the Person of the Year, recognizing the company's success in
popularizing online shopping.

Barnes & Noble sued Amazon on May 12, 1997, alleging that Amazon's claim to be "the
world's largest bookstore" was false. Barnes and Noble asserted, "[It] isn't a bookstore at all. It's
a book broker." The suit was later settled out of court, and Amazon continued to make the
same claim."Walmart sued Amazon on October 16, 1998, alleging that Amazon had stolen their
trade secrets by hiring former Walmart executives. Although this suit was also settled out of
court, it caused Amazon to implement internal restrictions and the re-assignment of the former
Walmart executives.

“Amazon.com strives to be the Earth’s most customer-centric company where people can find
and discover virtually anything they want to buy online.”
Acquisitions
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1998: PlanetAll, a reminder service based in Cambridge, Massachusetts; Junglee, an
XML-based data mining startup based in Sunnyvale; Bookpages.co.uk,a UK online book
retailer, which became Amazon UK on October 15, 1998.
1999: Internet Movie Database (IMDb); Alexa Internet, Accept.com, and Exchange.com
2003: Online music retailer CDNow.By 2011, the web site cdnow.com was defunct and
in use by a different company.
2004: Joyo.com, a Chinese e-commerce website.
2005: BookSurge, a print on demand company, and Mobipocket.com, an eBook
software company.[35][36] CreateSpace.com (formerly CustomFlix), a distributor of ondemand DVDs, based in Scotts Valley, California. CreateSpace has since expanded to
include on-demand books, CDs, and video.

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2006: Shopbop, a retailer of designer clothing and accessories for women, based in
Madison, Wisconsin.
2007: dpreview.com, a digital photography review website based in London; Brilliance
Audio, the largest independent publisher of audiobooks in the United States.
2008: Audible.com; Fabric.com; Box Office Mojo; AbeBooks; Shelfari; (including a 40%
stake in LibraryThing and whole ownership of BookFinder.com, Gojaba.com, and FillZ);
Reflexive Entertainment, a casual video game development company.
2009: Zappos, an online shoe and apparel retailer Lexcycle, SnapTell, an image matching
startup.
2010: Touchco.,Woot, Quidsi, BuyVIP, Amie Street.
2011: LoveFilm, The Book Depository, Pushbutton Yap
2012: Kiva Systems, TeachstreetEvi
2013: IVONA Software, GoodReads

Investment
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2008: Engine Yard, a Ruby-on-Rails platform as a service (PaaS) company
2010: LivingSocial, a local deal site.

Subsidiaries
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2004: A9.com, a company focused on researching and building innovative technology.
2004: Lab126, developers of integrated consumer electronics such as the Kindle.
2007: Endless.com, an e-commerce brand focusing on shoes.
2007: Brilliance Audio, the largest independent audio book producer in the U.S.

Merchant partnerships
Until June 30, 2006, typing ToysRUs.com into a browser would bring up Amazon.com's "Toys &
Games" tab; however, this relationship was terminated due to a lawsuit. Amazon also hosted
and managed the website for Borders bookstores but this ceased in 2008. From 2001 until
August 2011, Amazon hosted the retail website for Target. Benefit Cosmetics, another
merchant partner of Amazon, has also launched a major E-Commerce platform of their own
based on Hybris and arvato systems NA, in the US, EU and China.
Amazon.com operates retail websites for Sears Canada, bebe Stores, Marks & Spencer,
Mothercare, and Lacoste. For a growing number of enterprise clients, currently including the
UK merchants Marks & Spencer, Benefit Cosmetics' UK entity, edeals.com, and Mothercare,
Amazon provides a unified multichannel platform where a customer can interact with some
people they call the retail website, standalone in-store terminals, or phone-based customer
service agents. Amazon Web Services also powers AOL's Shop@AOL.
On October 18, 2011, Amazon.com announced a partnership with DC Comics for the exclusive
digital rights to many popular comics, including Superman, Batman, Green Lantern, The

Sandman, and Watchmen. The partnership has caused well-known bookstores like Barnes &
Noble to remove these titles from their shelves. These titles will be available for purchas e
exclusively through Amazon's new Kindle Fire tablet.
Locations
Amazon has offices, fulfillment centers, warehouses, customer service centers and software
development centers across North America, Latin America, Europe, Africa, and Asia.



North America
o USA
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Goodyear, AZ
Phoenix, AZ
Patterson, CA (opening
summer 2013)
San Bernardino, CA
Tracy, CA (opening 2014)
Middletown, DE
New Castle, DE
Jeffersonville, IN
Plainfield, IN
Whitestown, IN
Coffeyville, KS
Campbellsville, KY
Hebron, KY (near
Cincinnati, OH)
Lexington, KY
Louisville, KY
Robbinsville, NJ (opening
early 2014)

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Fernley, NV
North Las Vegas, NV
Nashua, NH
Breinigsville, PA
Carlisle, PA
Hazleton, PA
Lewisberry, PA
Lexington, SC
Spartanburg, SC;
Chattanooga, TN
Lebanon, TN
Murfreesboro, TN
[83]
Irving, TX (between
Dallas and Fort Worth)
Chester, VA
Dinwiddie, VA (near
Richmond, VA)
Sterling, VA
Bellevue, WA

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o

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DuPont, WA (opening
2013)
Sumner, WA.

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Canada
 Mississauga, Ontario
 Annacis Island a part of
Delta, British Columbia

Europe
o United Kingdom, as of 2013, 7 in
operation with 3 more planned.
 England
 Marston Gate
(near
Brogborough)
 Rugeley,
Staffordshire
 Peterborough
 Doncaster
 Hemel
Hempstead
 Scotland
 Gourock
(Inverclyde)
 Dunfermline
(Fife)
 Wales
 Crymlyn Burrows
[87][88]
 Swansea
(near Jersey
Marine)
o France
 Boigny-sur-Bionne (2000)
 Saran (2007)
 Montélimar (2010)
 Sevrey (Autumn 2012)
o Germany
 Bad Hersfeld (1996 and
2010) (Hessen)

o
o

o
o

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Leipzig (2006) (Saxony)
Werne (2010) (North
Rhine-Westphalia)
 Rheinberg (2011) (North
Rhine-Westphalia)
 Graben (2011) (Bavaria)
 Koblenz (2012)
(Rhineland-Palatinate)
 Pforzheim (2012) (BadenWürttemberg)
Netherlands
 Amsterdam
Italy
 Castel San Giovanni
(2011) (Emilia-Romagna)
Slovakia: Bratislava (2011)
Spain
 San Fernando de Henares
(Madrid)

Asia
o

o

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Japan
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China
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India
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Ichikawa
Yachiyo
Chiba
Sakai
Daito
Osaka
Kawagoe
Saitama
Guangzhou
Suzhou
Beijing
Chengdu
Mumbai

Fulfillment and warehousing
Fulfillment centers are located in the following cities, often near airports. These centers also
provide warehousing and order-fulfillment for third-party sellers:
Warehouses are large and each has hundreds of employees. Employees are responsible for four
basic tasks: unpacking and inspecting incoming goods; placing goods in storage and recording
their location; picking goods from their computer recorded locations to make up an individual
shipment; and shipping. A central computer which records the location of goods and maps out
routes for pickers plays a central role; employees carry hand-held computers which
communicate with the central computer and monitor their rate of progress. A picker with their

cart may walk 10 or more miles a day. In the United Kingdom initial staffing was provided by
Randstad Holding and other temporary employment agencies. Some workers are accepted as
Amazon employees and granted pension and shares of stock; others are dismissed. "When we
have permanent positions available, we look to the top performing temporary associates to fill
them." Development of a high level of automation is anticipated in the future following
Amazon's 2012 acquisition of Kiva Systems, a warehouse automation company.

II.

Products and Services

Retail goods
Amazon product lines include books, music CDs, videotapes and DVDs, software, consumer
electronics, kitchen items, tools, lawn and garden items, toys & games, baby products, apparel,
sporting goods, gourmet food, jewelry, watches, health and personal-care items, beauty
products, musical instruments, clothing, industrial & scientific supplies, and groceries.
The company launched amazon.com Auctions, a web auctions service, in March 1999. However,
it failed to chip away at the large market share of the industry pioneer, eBay. Later, the
company launched a fixed-price marketplace business, zShops, in September 1999, and the
now defunct partnership with Sotheby's, called Sothebys.amazon.com, in November. Auctions
and zShops evolved into Amazon Marketplace, a service launched in November 2000 that let
customers sell used books, CDs, DVDs, and other products alongside new items. Today, Amazon
Marketplace's main rival is eBay's Half.com service.
In August 2007, Amazon announced AmazonFresh, a grocery service offering perishable and
nonperishable foods. Customers can have orders delivered to their homes at dawn or during a

specified daytime window. Delivery was initially restricted
to residents of Mercer Island, Washington, and was later
expanded to several ZIP codes in Seattle proper.
AmazonFresh also operated pick-up locations in the
suburbs of Bellevue and Kirkland from summer 2007
through early 2008.
In 2012, Amazon announced the launch of Vine.com for
buying green products, including groceries, household
items and apparel. It is part of Quidsi, the company that
Amazon bought in 2010 that also runs the sites
Diapers.com (baby), Wag.com (pets) and YoYo.com (toys).
Amazon also owns other e-commerce sites like
Zappos.com, Shopbop.com and Woot.
Amazon's Subscribe & Save program offers a discounted price on an item (usually sold in bulk),
free shipping on every Subscribe & Save shipment, and automatic shipment of the item every
one, two, three, or six months.
In 2013, Amazon launched its site in India, amazon.in. It has started with electronic goods.
However, it plans to expand into fashion apparel, beauty, home essentials and health care
categories by the end of 2013.
Consumer electronics
In November 2007, Amazon launched Amazon Kindle, an e-book reader which downloads
content over "Whispernet", via the Sprint NextelEV-DO wireless network. The screen uses E Ink
technology to reduce battery consumption and to provide a more legible display. As of March
2011, the stated library numbers over 850,000 titles.
In September 2011, Amazon announced its entry into the tablet computer market by
introducing the Kindle Fire, which runs a customized version of the operating system Android.
The exceedingly low pricing of Fire ($199 USD) was widely perceived as a strategy backed by
Amazon's revenue from its content sales, to be stimulated by sales of Fire.
Computing services
Amazon launched Amazon Web Services (AWS) in 2002, which provides programmatic access to
latent features on its website. Amazon Web Services (AWS) was first launched as a public beta
of Amazon Elastic Compute Cloud running Microsoft Windows Server and Microsoft SQL Server.
This was later expanded to several operating systems, including various flavors of Linux and
OpenSolaris.

In November 2005, amazon.com began
testing Amazon Mechanical Turk, an
application programming interface (API)
allowing programs to dispatch tasks to
human processors.
In March 2006, Amazon launched an
online storage service called Amazon
Simple Storage Service (Amazon S3). An
unlimited number of data objects, from
1 byte to 5 terabytes in size, can be stored
in S3 and distributed via HTTP or
BitTorrent. The service charges monthly
fees for data stored and transferred. In
2006, Amazon introduced Amazon Simple
Queue Service (Amazon SQS), a distributed
queue messaging service, and product wikis (later folded into Amapedia) and discussion forums
for certain products using guidelines that follow standard message board conventions. Also in
2006, Amazon introduced Amazon Elastic Compute Cloud (Amazon EC2), a virtual site farm,
allowing users to use the Amazon infrastructure to run applications ranging from running
simulations to web hosting. In 2008, Amazon improved the service by adding Elastic Block Store
(EBS), offering persistent storage for Amazon EC2 instances and Elastic IP addresses, and
offering static IP addresses designed for dynamic cloud computing. Amazon introduced
SimpleDB, a database system, allowing users of its other infrastructure to utilize a highreliability, high-performance database system.
Amazon continues to refine and add services to AWS, adding such services as Scalable DNS
service (Amazon Route 53), payment handling, and AWS specific APIs for their Mechanical Turk
service.
In August 2012, Amazon announced Amazon Glacier, a low-cost online file storageweb
service that provides reliable data archiving, storage, and backup.
In November 2012 at AWS' web developer conference in Las Vegas it announced it was
targeting large companies as cloud storage clients. It will further cut its S3 prices to customers
with long-term contracts in its "Redshift" storage service launching in 2013.
In March 2013 Amazon announced its Mobile Ads API for developers. The new Ads API can
be used on apps distributed on any Android platform as long as the app is also available on
Amazon’s Appstore

III.

Service Management System

Amazon does not ‘deliver customer service’, they build powerful partnerships.
Amazon’s customer service has always been recognized and applauded as world-class.
This is remarkable, especially since it is a purely online retailer. Amazon has hardly any ‘human’
interactions – often considered crucial perception points for increasing customer satisfaction
and loyalty – in the value delivery chain. Customer satisfaction survey has rated Amazon as #1
among all online retailers.
Many companies try to emulate Amazon and cost-effectively provide higher levels of service
through leveraging technology. But Amazon does not only ‘deliver customer service’ – they
build powerful partnerships with their customers.
Every service cycle is a series of interconnected conversations: Explore, Agree, Del iver and
Assure.
1. EXPLORE: find out what is important
to the other person.
2. AGREE: make a promise to do
something on their behalf.
3. DELIVER: do what you promised.
4. ASSURE: check and make sure they
are satisfied.
5. EXPLORE to start a new cycle again
To build powerful partnerships with
ever growing levels of trust, a service
provider must become excellent in all
four stages. Most companies are
chronically weak in at least one, which
jeopardizes this accumulation of trust.
How does Amazon do it?
How does Amazon help you EXPLORE?


Search by any topic or title.
View related titles, other titles
by the same author, and titles
of books purchased by people
who also purchased this book.

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Amazon provides book reviews from other readers as well as the publisher and author.
If you are a member of a specific community, company or affinity group, Amazon tells
you what books people in that group are buying now.

How does Amazon AGREE?
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You can have products sent to multiple locations, request individual giftwrapping, pay
either by credit card, wire transfer or check.
You can choose standard, express or overnight delivery and see the costs of each before
deciding. If a product is not in stock, you can have each item sent as it becomes
available, or hold and ship all your items at once. If you choose the first option, Amazon
guarantees shipping costs will be no more than if you chose the second.

How does Amazon DELIVER?
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As soon as you place an order, you receive an e-mail confirming all the details. You can
change it if you reply right away.
When your order is filled, you get another confirmation by e-mail. Your credit card is
charged only when the order is actually shipped.
Products are packed in strong boxes with extra padding to ensure they reach you in
good condition.
You can track your orders in process and see your complete order history at any time.
Inside each box is a complete description of the order and an attractive bookmark,
useful information or gift.

How does Amazon ASSURE?
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Amazon is committed to your complete satisfaction. If you have a problem, they will
reply to you quickly by e-mail and take remedial actions right away.
If you have any suggestions to help improve the service, Amazon enthusiastically
welcomes your ideas.

By continuously Stepping UP! in all four stages, Amazon earns high levels of customer
satisfaction with every purchase, builds extraordinary levels of loyalty and converts ‘one-shot’
deals into powerful partnerships.

IV.

SWOT Analysis

STRENGTHS


Cost leadership strategy. The goal of cost leadership strategy is to produce products
and services with a lower cost than the competitors do. The key to achieve this strategy
are the economies of scale. For Amazon to succeed with the cost leadership strategy it
has to provide the widest range of products to achieve the economies of scale and
benefit from the low costs of displaying those products on its online marketplace. In a
result, the business became the largest online retailer in the world.



Superior quality services and products. Amazon delivers only the best quality services
and products. It is reliable, convenient, offers one of the lowest and fastest shipping, the
lowest price, many free additional features with its services and has the widest selection
of goods. Amazon has a brand reputation for great customer service. Shipping free and
time delivery service. When people purchase items which Amazon.com holds more than
$25, the shipping cost will be free. To receive items safely, people can order Guaranteed
Accelerated Delivery that buyers can choose delivery speed.



Strategic acquisitions. Amazon has been successfully acquiring new firms to bring the
new products, services, capabilities, assets and skills to the business. Due to these
strategic acquisitions Amazon is now capable of offering cloud services, has developed
its information management (IM) and customer relationship management (CRM) skills.

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Efficient logistics and distribution. Amazon has a number of fulfillment warehouses in
each market it operates. The warehouses are geographically spread in each country so
the goods could be dispatched faster and with lower cost. Amazon.com is recognized
worldwide as it has international sites; Canada, United Kingdom, Germany, Japan,
France, and China.

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Economies of scope. Economies of scope are the savings that come from producing two
or more goods (or providing services) at less cost than producing each individually using
the same resources and technology. Amazon experiences economies of scope by using
its superior IT skills to offer the largest range of products online (instead of offering
fewer products). It also uses excess server capacity (which originally were built to
support online marketplace) to provide cloud computing services.



Everybody can find virtually any item with lower prices especially, Books, DVDs, and
music. Amazon.com has expanded to provide music download called “amazonMP3,”
which is ￠10 cheaper than iTunes.



Amazon.com has produced wireless reading device called “Kindle.” Subsequently,
electronic books for the Kindle can be bought from only “amazonKindle,” hence as a

result of the monopoly, they make a lot more profit from selling the kindle and its
compatible electronic books


Amazon.com collects information on each customer’s likes and dislikes based on what
they view or purchase on the site, while constantly making suggestions through e-mail
on items the customer might like to view or purchase.



Amazon is the dominant online retailer. The Seattle-based company is synonymous with
online shopping. You can buy anything, from the useful to the questionable.



As it does business exclusively online, it doesn't have as much overhead as some of its
competitors, including Barnes & Noble(NYSE: BKS), Wal-Mart (NYSE: WMT) and
even Apple (NASDAQ: AAPL). Compare Wal-Mart's $85.27 billion SG&A last fiscal year
with Amazon's relatively paltry $9.93 bilion. Apple spent over $10 billion on SG&A last
year
as
well.
Those
cool
stores
aren't
cheap
to
maintain.

WEAKNESSES



Only online presence. Amazon lacks physical presence like retailers such as Wal-Mart
and Target. People can see and touch the purchases there and buy them instantly.
Amazon.com has sold daily goods such as cleaning cloths. Most of customers do not
purchase by online, and they get in offline retail stores because it is faster and to get.



Selling at zero margins. Many of the products the Amazon offers are sold at zero
margins to gain the market share and push the competition out of the market. In a short

term, it is a strong tactical move (due to Amazon’s cost leadership strategy) but in the
long run it only hurts firm’s profits. Competitors will adapt and can easily gain their
market share back by pursuing differentiation strategy.


Negative publicity. Amazon has recently attracted much negative publicity due to its tax
avoidance in the countries (UK and US) where it earns most of its revenues. Amazon is
also criticized for poor warehouse conditions for workers, anti-competitive actions,
price discrimination and etc.

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Amazon.com does a daily check and a constant maintenance of its server to ensure the
functioning of its systems. These are checks are costly and risky as a failure in any of its
systems could lead to a loss of customers.

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The company's cost structure can become a liability. The company posted a loss last
quarter of $27 million. A lot of its costs come from the cost of media. Those TV shows
and movies it's streaming on Prime cost money.



The online retail indsutry has a relatively low barrier to entry: Anyone can start an
online store. Just fill out the paperwork and sign a contract with FedEx or UPS. On the
other hand, it's hard for small businesses to compete with Amazon's economies of scale.
That would be like bringing a knife to a nuclear bomb fight. A better bet for them is to
specialize, like Zappos does for shoes ... and which Amazon happens to own.



As nice and technically solid as the Kindle Fire is, it will always be perceived as an iPad
knockoff. As Seth Myers put it on Saturday Night Live: "It's expected to sell well among
parents who always buy the wrong thing," even though Kindles existed before iPads did.
It's kind of like Oreos stealing the thunder of Hydrox cookies.



The company still gets flak for breakdowns in customer service. The company recently
froze a Danish woman's Kindle Fire before reinstating her after bad publicity broke out
over the Web. The incident recalls an earlier publicity black eye after Amazon remotely
sent copies of George Orwell's 1984 down the memory hole.

OPPORTUNITIES


Online payment system. Amazon could extend its current payments system and
introduce the service similar to PayPal. Amazon’s payment system would be of great use
for mobile buyers who usually by on the go and find it hard to provide bank details or
other personal information that is required when purchasing the product. In addition,
such service could be used by many other online retailers for a small fee.



Release more own brand products and services. With an access to such large market,
Amazon could benefit by releasing more of its own brand products.



Increase services and product portfolio through acquisitions. The company has already
acquired many companies to successfully extend its products and services offering.



Open more online stores in other countries. To sustain current growth levels, Amazon
could open its online marketplaces in other large and growing economies in Asia and
Europe.



Physical presence. The business could establish some physical presence in the markets
it operates. Smaller store-warehouse (like Argos’ stores) outlets could serve as
warehouses, distribution centers, the stores where customers could pick up their
purchases and physical contact points. Amazon’s brand presence would be significantly
improved.

THREATS
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Online security. Amazon stores its online shoppers’ personal information, such as bank
account details, which is a target for online thefts. The more online customers Amazon
has, the more attractive as a target it becomes.



Lawsuits. The business has already attracted much negative attention from UK and U.S.
authorities for tax avoidance and is subject for litigations and fines. Lawsuits are costly
and consume time.



Strategic alliances. Although Amazon is a massive online shopping mall and can’t be
easily surpassed by small competitors, it faces serious challenges from strategic
alliances. For example, the strategic alliance between Apple and e-books content
providers allowed the content providers to demand that Amazon would sell e-books for
higher price or that they will sell their e-books through Apple store only. Without the
strategic alliance, content providers were unable to compete against Amazon’s
bargaining power.



Legislation against tax avoidance. There are growing concerns over how huge
multinational companies, such as Amazon, avoid paying taxes for the countries they
operate in. Eventually, governments will pass a legislation requiring that all companies
would pay a fair share of taxes. In this case, Amazon’s profits would be significantly
affected.



Regional low cost online retailers. Regional low cost online retailers could outrival
Amazon on faster and cheaper shipping, localized product offering and better
knowledge about home market.



Amazon.com is difficult to compete with other online stores such as eBay beca use both
of them are selling similar products and having similar categories of products. Online
stores normally sales huge range of products that are produced by other companies. If
Amazon.com does price competition, it will damage about loss profit.



Competitors can always offer lower prices. Products on Amazon are often significantly
cheaper than the retail list price already.

As the result of SWOT analysis, Amazon.com has very high qualities as e-commerce, which
became No.1 in the Internet Retailer Top 500 Guide in the fourth quarter of 2007. Amazon’s
mission is providing a place to buy easier and faster, and enjoy doing shopping for everybody.
As internet marketing strategies, it is important for Amazon.com to consider customer value
and marketing relationship for loyalty. To keep being high e-business, Amazon.com needs to
improve on point of customer value.
So will Amazon keep its place as the king of the Internet retail mountain? We'll have to wait for
it to release its earnings to see, but with this analysis, it's obvious that the company has a
strong position.

V.











Recommendations
Sustain value
o Focus on core competencies and understand your business boundaries
o Maintain visionary leadership
o Brand image will help sustain value
o Exploit opportunities and build entry barriers
o First mover advantages
Increase collaboration with channel partners.
Enhanced integrated marketing
o Communicate to more clients in the global markets
Forward-integration
o Promote and manipulate where products and services are being sold
Continued focus on R&D
o Innovative strategies and devices to provide a competitive advantage in the
electronics marketplace
Positive cash flow
o Upward trends in sales
o Technology and restructuring costs might level off
o Estimated increase in revenue from hosting
o Conduct focus groups
o Collect customer data
Exponential growth
o Long-term positive forecasts for U.S. online retailing

o Focus on providing infrastructure services
o Promote more in online retailing
o Build alliances for hosting services for other product categories [kitchen/home
improvement, electronics, software]
VI.

Conclusions
Technological innovation drives the growth of Amazon.com to offer customers
more types of products, more conveniently and at lower prices. Since 1995, Amazon
has significantly expanded its product selection, international retail websites, and
worldwide network of fulfillment and customer service centers. Today, Amazon
retail websites offer everything from toys and video games to MP3 downloads and
collectible items.
Amazon’s evolution from Web site to e-commerce and publishing partner to
development platform is driven by the spirit of innovation that is part of the
company’s DNA. The world’s brightest technology minds come to Amazon to
research and develop new technologies that improve the lives of our customers:
shoppers, sellers, content creators, and developers around the world.
Because that's what being Earth's most customer-centric company is all about,
and it's still Day One at Amazon.

VII.

References
http://www.strategicmanagementinsight.com/swot-analyses/amazon-swot-analysis.html
http://www.slideshare.net/sfarooqui.5/amazoncom-swot-analysis
http://aws.amazon.com/fws/
http://aws.amazon.com/pricing/fws/
http://en.wikipedia.org/wiki/Amazon.com
http://www.amazon.com/CareersHomepage/b?ie=UTF8&node=239364011http://beta.fool.com/ddelony/2012/12/28/swotanalysis-amazon/18812/
http://www.managementparadise.com/forums/principles-management-p-o-m/208111swot-analysis-amazon-com.html
http://www.amazon.com/Careers-Homepage/b?ie=UTF8&node=239364011

Service marketing management of amazon

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