“Our vision is to be earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.”
(Amazon.com, 2016)
Background
Amazon, the online video and retail company, is the largest e-commerce business in the United States. It is a driver of digital media and online retail trends, using strategic business decisions to become successful. Amazon is a Fortune 500 company based in Seattle, Washington (Amazon.com, 2015). The company was founded by current Chief Executive, Jeff Bezos, in 1995 and has since grown into an online platform that provides a multitude of products ranging from books and electronics, to clothing and food, as well as interactive services, such as Amazon Video and Music for digital content streaming (Amazon.com, 2015). Bezos created Amazon with the intention of providing and selling a selection of books larger than any existing brick or mortar store offered at the time. He named it Amazon after the world’s largest river, complementing his vision for it to become the world’s biggest bookstore (Alpe, 2015). As the company grew, the platform began to allow second-hand products and other businesses to sell their merchandise on the website, which facilitated its move from a basic book selling market to one that currently offers a tremendous variety of goods and services.
Amazon CEO & Founder Jeff Bezos
According to Amazon.com, Amazon has over 180,000 employees; they work across a multitude of sectors, which include customer service, sales, engineering and design, facilities and fulfillment centers, operations management, and software development, among many others. These employees are often divided into teams of as many as 150 associates and are managed by team leaders and an executive staff (Streitfeld, 2015). However, the corporate culture and management style of Amazon has been widely debated over the course of the past year.
According to a New York Times article, employees working for Amazon have felt that they have been mistreated and evaluated unfairly because they “work in a backstabbing environment that supports the constant criticism of each other’s performance and character” (Streitfeld, 2015). Because the company’s main prerogative is to keep growing and provide constant service to the customer, many employees have complained that management has led them to compete and bash each other’s ideas for new product development and innovation. This is problematic because it creates a hostile working environment, where people are discouraged to explore new project ideas. According to Streitfeld, the hard-hitting management style and unrelenting fast pace of the company that led Amazon to build a retail powerhouse with a market capitalization of $250 billion, has ultimately destroyed the morale and happiness of employees (2015). These issues have brought negative media attention to the company and as a result, Bezos has plans to improve corporate culture and prevent callous management practices in the future.
Business Model, Revenue Model, & Assets
Amazon is not a traditional retailer. Therefore, its business model is very unique, having lines of business that range from product sales, service sales, and publishing, to digital content subscriptions, fulfillment, and advertising. Most recently, Amazon has entered the world of online streaming. In the past, its main competitors have included traditional brick and mortar stores and online retail sites such as Barnes and Noble and Ebay; however, it has since been competing with other online video suppliers and content distribution sites, such as Netflix, Hulu, Apple iTunes, and the Google Play Store (Investopedia, 2014).
Amazon’s overarching business objective is to lower the cost structure of the products that it sells, in order to lower prices to enhance the customer’s experience. The company hopes that doing so will generate website traffic and attract more suppliers who want to do business with Amazon. This increases the online selection that Amazon offers its consumers, which ultimately creates growth and sustainability for its business operations (Thompson, 2015).
Amazon’s Basic Business Model
Amazon partners with a variety of companies and business, which become suppliers and vendors for the website. The products and services that are marketed and distributed through the website are available to the general public and any consumer with access to the internet. To generate revenue, Amazon slightly marks up the products that it sells directly and also keeps a commission of the products it sells through its partner retailers. Furthermore, Amazon has a subscription based model within its service, in which customers pay an annual fee of $99 for free two-day shipping and subscriptions to Amazon Video and Music, its online streaming services (Investopedia, 2015).
Amazon has many providers that allow the company to use their digital content, including media such as television episodes, movies, sporting events, and news events (Amazon.com, 2016). It has a specific content streaming agreement with each content provider, which transcend into the usage agreements that Amazon has for the customers who actually use the service. These usage agreements typically specify rental and purchase options, as well as streaming and downloading choices.
Lastly, the company also generates revenue through its small electronic products line, selling the Kindle, its original e-reader, which corresponds to its original mission of becoming the largest online bookstore. The aforementioned services, products, and brands are all assets that Amazon owns and controls.
Marketing & Promotions Strategy
The online video space that Amazon has entered is very crowded. Consequentially, the video streaming component of the company has adapted new marketing strategies to make it stand out against its competitors. Amazon’s marketing technique is very simple and specific; to place the customer’s needs above anything else. Ian McAllister, an Amazon project team leader, said, “We try to work backwards from the customer, rather than start with an idea for a product and trying to bolt customers onto it” (2012). Amazon’s marketing approach places the customer and his or her interests first. The website generates online advertisements and suggestions that are related to what the customer has recently searched or watched. These advertisements and customized suggestions create an eye-catching screen and generate a high level of brand engagement with the consumer (Amazon Advertising, 2015). Additionally, Amazon has created a customer review function for its website, which helps to market its products to customers who are concerned about product quality and efficiency. Amazon also effectively promotes its different services, including Amazon Video, at the forefront of its home page, which instantaneously attracts the attention of its 244 million active users. Furthermore, the format of the website, personalized shopping tabs, and the speed of the web pages, all contribute to its successful promotional tactics (Forbes, 2013). For example, its “Your Watchlist” and “Recommendations for You” tabs add value to its website and direct its services more effectively to the user. Simply, Amazon’s promotion and marketing strategies uses data collected from its users and their web-browsing activities, then manipulates that information to target each specific customer with his or her particular interests.
Amazon Video Selection
Summary
The business tactics and marketing strategies of Amazon have allowed it to grow into a versatile retail platform that continues to develop and change with the customers it serves. Because the company’s philosophy is customer oriented, the employees are constantly working to maximize the satisfaction of its user base through providing goods that are both highly demanded, such as cell phone cases, as well as goods that are more uncommon, such as chain link body armor. This strategy tailors to every type of internet user and consumer, which contributes to the success of the business. Ironically, a company determined to be the most customer centric and treat the public with the utmost respect, has failed to do so within its own walls and with its own employees. Changes will be made as Amazon restructures and grows with the industry trends of online and digital media. The company was founded with an intention for one market, and has since grown into one of the largest marketplaces of today.
References
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Amazon.com. (n.d.). Retrieved February 9, 2016, from http://www.amazon.com/
Alpe, L. (n.d.). The history of Amazon. Retrieved February 9, 2016, from http://www.telegraph.co.uk/ technology/amazon/11790823/The-history-of-Amazon.html
Amazon Advertising Platform. (n.d.). Retrieved February 10, 2016, from https://advertising.amazon.com/amazon-advertising-platform
Amazon’s Marketing Strategy Goes Against the Current. (n.d.). Retrieved February 9, 2016,from http://www.brittonmdg.com/the-britton-blog/amazon-marketing-strategy-unusual-but-successful
Kantor, J., & Streitfeld, D. (2015). Inside Amazon: Wrestling Big Ideas in a Bruising Workplace. Retrieved February 8, 2016 from http://www.nytimes.com/2015/08/16/technology/inside-amazon-wrestling-big-ideas-in-a-bruising-workplace.html
McAllister, I. (n.d.). Amazon (company): What is Amazon’s approach to product development and product management? Retrieved February 8, 2016, from https://www.quora.com/Amazon-company/What-is-Amazons-approach-to-product-development-and-product-management
Six Things Online Retailers Can Learn From Amazon. (n.d.). Retrieved February 10, 2016, from http://www.forbes.com/sites/groupthink/2013/09/24/6-things-online-retailers-can-learn-from-amazon/#2cb4c6453b85
Streitfeld, D., & Kantor, J. (2015). Jeff Bezos and Amazon Employees Join Debate Over Its Culture. Retrieved February 8, 2016, from http://www.nytimes.com/2015/08/18/ technology/amazon-bezos-workplace-management-practices.html
The Difference Between Amazon And Alibaba’s Business Models | Investopedia. (2015). Retrieved February 9, 2016, from http://www.investopedia.com/articles/investing/061215/difference-between-amazon-and-alibabas-business-models.asp
Thompson, B. (2015). The AWS IPO – Stratechery. Retrieved February 9, 2016, from https://stratechery.com/2015/the-aws-ipo/
Who are Amazon’s (AMZN) main competitors? | Investopedia. (2014). Retrieved February 9,2016, from http://www.investopedia.com/ask/answers/120314/who-are-amazons-amzn-main-competitors.asp