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Analysis Pf Amazon

3964 words - 16 pages

Conclusion Amazon is a revolutionary e-marketplace that is both world-renowned and extremely efficient. Amazon has gone from a small company run out of a garage, to a Fortune 100 company run all over the world. Amazon fulfills their mission statement every day by being a customer-centric company that offers over 200 million products at the lowest prices possible. Amazon is a very
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innovative company that creates and manufactures many products. They are always expanding and trying to create new ways to make their company and the lives of their customers better. Amazon’s biggest competition as an e-marketplace is eBay. Amazon currently leads this market by having a ...view middle of the document...

Indeed, books, electronic, apparel and toy stores are highly fragmented and have many “mom-and-pop” participants, indicating that entry is relatively easy. However, there have been recent trends toward consolidation. Internet retail sites serves a “defragmenter” in several industries, and are an online version of these boutiques. Consequently, the internet model of one-stop shopping is a conundrum for the traditional defragmenter. Typically, a company that consolidates, or defragments, an industry does so at the expense of personalized service. However, the internet can actually offer more personalized service than some small independent retailers because of the sophistication of its software. Consequently, new entrants can easily offer the low-cost advantage of a large retailer combined with personalized service, and thus quickly compete with traditional brick and mortar shops.
Despite the low barriers to entry, the online ubiquity in the brand name gives Amazon.com a competitive advantage over potential entrants. Amazon’s ability to store and recall customer billing and shipping information creates a minor form of lock-in for customers who can easily make a purchase with Amazon’s “one-click” shopping. In addition, Amazon took advantage of the cheap financing opportunities of the late 1990’s to raise over $1 billion in debt, which it used to build a vast distribution network. With today’s capital markets being less friendly toward new internet start -ups, it would be difficult for a new company to effectively compete with Amazon’s warehouses. In addition, Amazon’s policy of offering free shipping on orders over $25 would be difficult for another company to imitate. Therefore, the threat of new entrants is relatively low.
Buyer Power.
Amazon’s business model includes two distinct groups of buyers, both of which have moderate power. The largest group of buyers is the traditional end consumer of Amazon merchandise. Serving end consumers, Amazon must compete with both ‘brick and mortar’ stores as well as other internet sites. While it would be very difficult for these buyers to collectively bargain with Amazon, it remains very easy to individually abandon the site and shop elsewhere. The second group of buyers include retailers such as Target and Borders, who hire Amazon to provide a web presence or distribution service. These “buyers” of Amazon’s services have little holding them to Amazon. Their ability to switch providers and distributors is varied, and they can therefore demand good terms from Amazon. However, the relationship must remain mutually beneficial, and Amazon must get fair terms from any deal.
Supplier Power .
Amazon has many suppliers representing brands across numerous product categories, and as a group they wield low bargaining power. Suppliers are eager to sell through Amazon and take advantage of its wide popularity with consumers. Currently, it is improbable that these suppliers could organize to bargain with Amazon on...

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