Business Model, SCM, and CRM

Amazon bears the hope of continuous advancement in the coming years. It is proving to change how its customers shop with one of the most energizing and progressive administrations. Investors can’t seem to get enough of Amazon. Even if it is the world’s fifth-largest company, it is still receiving millions of dollars in terms of investments yearly.  Within no time, the company is proving to become the world’s most valuable company in recent years to come if it continues to grow at the same speed. Therefore, as a good practice student, it is only sensible to study the business model, market share, customer base, revenue, competitors, supply chain management, and customer relationship management of this highly-innovative company.

Business Model

Value proposition. The value proposition for Amazon is based on simplicity. Shoppers on the website can easily find extensive merchandise on the platform with straightforward navigation. Customers recognize that Amazon is a one-stop-shop. Its warehouses are always full, making it very dependable. Americans are more accustomed to the extreme success of Amazon. The Amazon effect is most evident in The United States since it takes up the most space in the online retail industry (Garner, 2018). Therefore, they are convenient and cheap at the same time. It can have such low prices because it leverages technology. The business model allows the organization not to have any kind of stock, hence minimizing storage costs.

Key resources. Amazon owns several physical assets, including film studios and distribution centers. However, its crucial resource lies in its mechanical foundation, which is fundamental for the business’s seamless working.  For example, it is through this automated capability that the company can have a database. This database is one of the biggest globally. The company uses it to store information on the client’s utilization tendencies to improve its marketing effectiveness.  Furthermore, by being owners of various computerized content, it can supply the cloud framework administrations to numerous clients.

            Key activities.The promotion of physical and advanced merchandise is the main activity in Amazon. However, recently it is actively engaging in making digital content through Amazon Studios and customer gadgets under the Kindle marketplace.

            Key partners. Having a website alone could not make it possible for Amazon to conduct its operations successfully. Therefore, Amazon partners with manufacturers and distributors to complete the cycle. Manufacturers of goods sold on the website are the most conspicuous partners. However, not all products retailing on the website are in their distribution warehouses. Amazon also partners with outside vendors to utilize their online space to make sales at a fee.

Customer Relationships

For a long time now, Amazon concentrates most on making the online shopping experience of customers simple. They especially enjoy a cozy relationship with customers who pay a yearly membership of Amazon Prime. It also values high-level client insight, where customers have the option of surveying buys and adding remarks about each page. Also, the organization values client benefits. To tap customer loyalty, Amazon offers a 24-hour client benefit through web-visit, mail, or telephone. It also gives help discussions where clients may look for counsel from the online group of buyers.

Customer Segments

Amazon appeals to a mass market. It does not focus on particular socioeconomics. Its openness and simplicity mean that anyone with a web association is a potential client.  The only segmentation occurs within the website, where it has a section for returning clients. These customers ay a yearly membership of Amazon Prime, and enjoy complimentary express postages, among other advantages.

Channels

Amazon’s primary channel is its site, Amazon.com. However, it maintains fourteen other site suitable forms for clients in different nations worldwide, over five continents.  An extra channel is the outsider gadget stores that stock Amazon’s kindle.

Cost structure

The main cost driver for Amazon is notably warehousing and circulation. Such costs run due to the numerous distribution centers it runs globally.  Besides, running the various programming advancement projects and client benefits also adds to the price. According to the Department of Labor, wholesale distribution is the number one employer in the world (Hartung, 2017). Having a significant share in the wholesale business, Amazon has thousands of employees, whose salaries also contribute to the costs. The overall expenses it incurs in acquiring the merchandise they offer is also a critical cost driver.

Revenue Structure

Amazon’s revenue model is diverse. The primary source for its revenue is the commissions and fees it makes by connecting buyers with sellers.  It also acquires income through affiliate programs within site. Different affiliates can own stores within site at a more substantial fee than just being a seller. It also sells advertising space within the site since it prides itself as one of the world’s most visited websites.  The Kindle device by Amazon also generated revenue for the company. Its users read books in electronic format. Through the method, Amazon holds a 75% market share in the e-book market. Finally, the subscriptions paid for the Amazon Prime service are also notable income generators.

Market Share

            Amazon has a 21.1% market share in the e-commerce industry worldwide (D’Agostino, 2018).  This share is attributed to its low prices, ease of access, and low prices.  These features contribute to Amazon being the largest e-commerce in the world as of 2018.                                              

Competitors

           Some of Amazon’s significant competitors include, but not limited to, Apple inc., Wal- Mart, Target, and E-bay. However, their market share does not add up to 6% combined. Therefore, Amazon is way ahead in terms of the e-commerce business. However, it needs to retain its innovativeness to ensure a secure position in the industry. With the recent introduction of Amazon studios, customers can stream films directly to their devices.  This feature also faces competition from Netflix.

Supply Chain Management

            Amazon’s supply chain is strategic and incorporates a competitive strategy. It combines multi-tier inventory management, excellent logistics, multiple warehouses, and efficient use of technology to align the string with its competitive strategy (Juneja, 2015). The first tier in the multi-tier system is the aggregation in the distribution centers, which prevents Amazon from holding more than its demand. The next level comprises partner distribution centers, such that when an item runs out of stock in the warehouse, they can rely on the partners to deliver the goods to customers. The third tier comprises third-party sellers and manufacturers who use Amazon as the intermediary to link them up with customers

Customer Relationship Management

Customers always go back to shop at Amazon because they make it easy for them. Hence, they have great customer relationship strategies. Amazon has invested a fortune in ensuring the website tailored to their specific needs. Such needs include being user-friendly, great communications operations, and massive data storage. The one-click shopping makes it easy for customers to create and track orders without complications. Everything is so intuitive, leading to customer obsession, which makes it one of their biggest strengths.

References

D’Agostino, J. (2018). AMAZON, E-COMMERCE, AND THE NEW BRAND WORLD [Ebook]. Robert D. Clark Honors College. Retrieved 30 June 2020, from https://scholarsbank.uoregon.edu/xmlui/bitstream/handle/1794/23999/Final%20Thesis-DAgostino.pdf?sequence=1&isAllowed=y.

Garner, B. A. (2018). Amazon in the Global Market. Journal of Marketing & Management, 9(2).

Hartung, A. (2017). Why The ‘Amazon Effect’ Is So Huge In The USA, And Not In Other Countries. Forbes. Retrieved 30 June 2020, from https://www.forbes.com/sites/adamhartung/2017/05/31/why-the-amazon-effect-is-so-huge-in-the-usa-and-greater-than-in-other-countries/#781e5602aaef.

Juneja, P. (2015). Analysis of Amazon’s Supply Chain Management Practices. Retrieved 30 June 2020, from https://www.managementstudyguide.com/amazon-supply-chain-management-practices.htm