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Running head:
Identification and Evaluation of Strategic Activities Effective for Amazon’s Competitive Advantage
IDENTIFICATION AND EVALUATION OF STRATEGIC
ACTIVITIES EFFECTIVE FOR AMAZON’S COMPETITIVE
ADVANTAGE
Identification and Evaluation of Strategic Activities Effective for Amazon’s Competitive Advantage
2
Abstract
Introduction:
This chapter has focused on the strategic activities of Amazon, which focused on product packaging's role in competitive advantage and sustainability. Amazon has adopted multiple approaches for its product packaging since 2015. This research has identified the problem that caters to the gap between product packaging strategy and consumer preferences. The main focus of this research is to address the possible strategies that Amazon can adopt for its product packaging strategy.
Literature review:
Strategic actions are carried out by a company to achieve its long-term goals and objectives. Adequate packaging is entailed for the growth of e-
commerce as it not only safeguards products but also plays a vital role in branding, differentiation, customer satisfaction, and environmental sustainability. This literature review has examined strategies such as adopting sustainable raw materials for packaging, eliminating packaging weight and transportation costs by using renewable energy, and others that can help companies like Amazon to mitigate the challenges. Amazon has faced the challenges of using plastic for packaging a diverse range of products to gain competitive advantages. Organizations can match their brand with the values of customers and promoter preferences and loyalty by utilizing materials
that have a loose effect on the environment or by utilizing minimal techniques of packaging.
2
Identification and Evaluation of Strategic Activities Effective for Amazon’s Competitive Advantage
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Table of Contents
Chapter 1: Introduction
................................................................................................................
6
1.1 Research Background
........................................................................................................
6
1.2 Research Rationale
............................................................................................................
8
1.3 Research aim, purpose objectives, and questions
...........................................................
10
1.3.1 research Aims
............................................................................................................
10
1.3.2 Research Purpose
.....................................................................................................
10
1.3.3 Research Objective
...................................................................................................
11
1.3.4 Research Question
....................................................................................................
11
1.4 Problem Statement
...........................................................................................................
12
1.5 Significance of the Research
............................................................................................
14
1.6 Scope of the Research
.....................................................................................................
14
1.7 Outline of the Dissertation
................................................................................................
15
1.8 Overview of Methodology
.................................................................................................
16
1.9 Summary
..........................................................................................................................
17
Chapter 2: Literature Review
.....................................................................................................
18
2.1 Introduction
......................................................................................................................
18
2.2 Concept of Strategic Activities in Organisation
.................................................................
19
2.3 Concept of Competitive Advantage
..................................................................................
19
2.3 Theoretical Interpretation
.....................................................................................................
21
2.3.1 Classical Conditioning Theory
...................................................................................
21
2.3.2 Market-based View Theory
........................................................................................
22
2.3.3 Resource-Based View (RBV)
.....................................................................................
23
2.4 Identifying the importance of product packaging strategies for the e-commerce industry.24
2.5 Evaluating the positive impact of product packing strategy
..............................................
27
2.6 Importance of environmental sustainability to ensure business advantage
......................
31
2.7 Challenges in product packaging by Amazon compared to the competitors
.....................
34
2.8 Possible Mitigations Strategies to Overcome the Product packaging-related Challenges in a Sustainable Way
.................................................................................................................
37
2.9 Literature Gap
..................................................................................................................
39
2.10 Conceptual Framework
..................................................................................................
39
2.11 Summary
........................................................................................................................
39
3
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Identification and Evaluation of Strategic Activities Effective for Amazon’s Competitive Advantage
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References
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41
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Identification and Evaluation of Strategic Activities Effective for Amazon’s Competitive Advantage
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List of Figures
Figure 1.1: Amazon's Sustainable Packaging
...................................................................
7
Figure 1.2: Consumers’ opinion on sustainable packaging
...............................................
9
Figure 1.3: Consumer Attitude Towards Eco-friendly Approaches
.................................
13
Figure 1.4: Dissertation Structure
....................................................................................
15
Figure 2.1: Global value of e-commerce packaging market
............................................
26
Figure 2.2: Importance of packaging strategy
.................................................................
28
Figure 2.3: Sustainable strategy of amazon
....................................................................
30
Figure 2.4: Evaluation of Product Packaging
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33
Figure 2.5: Conceptual Framework
.................................................................................
39
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Identification and Evaluation of Strategic Activities Effective for Amazon’s Competitive Advantage
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Chapter 1: Introduction
1.1 Research background
This research has focused on the identification of strategic activities that are obtained by Amazon to gain competitive advantages. In the dynamic evolving landscape of e-commerce, strategic activities have played a pivotal role in determining the competitive advantage of the company. This research has specifically focused on Amazon, and this research has also delved into the realm of the packaging strategy of Amazon products, which recognizes their significance in shaping the perception of the consumer that fosters competencies. As per the information of Escursell, Llorach-
Massana& Roncero (2021), consumers across the world are starting to prioritize sustainable practices, and online retail companies like Amazon plan and execute their packaging stages. The background has laid the foundation for exploring the multifaceted dynamics of strategic activities in Amazon, which offers an interlinked relationship between packaging strategies, sustainability, and competitive advantage in the e-commerce industry (Clemons & Clemons, 2019). 6
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Figure 1.1: Amazon’s sustainable packaging
(Source: Amazon, 2022)
In 2022, amazon demonstrated a 0.4% reduction in absolute carbon emission despite a 9% increase in net sales; the company has achieved this by enhancing overall
efficiency and investing in renewable energy, which expanded its capability by 8 gigawatts and secured its position as the largest corporate purchaser of renewable enlarging in the whole world for the third consecutive year (Amazon, 2022). The intensity of carbons has decreased by 7% from 2021 to 2022 and 24% since 2019, showcasing consistent decoupling of emissions, constituting one-fifth of the total, which grew by 11%. This has helped Amazon with business expansion and improved emission calculation methods. The company has also emphasized its packaging 7
Identification and Evaluation of Strategic Activities Effective for Amazon’s Competitive Advantage
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efficiency, which achieved a 41% reaction in outbound packaging since 2015, which prevented more than 2 million tons of material use (Amazon, 2022). Notably, Amazon has launched electricity-wavy goods vehicles, deployed hydrogen-powered forklifts, and
committed to green hydrogen to fuel 40000 forklifts annually by the end of 2025 (Amazon, 2022). Challenges persist in decarbonizing air freight and cargo shipping due to nascent net-zero technologies and infrastructure, yet Amazon remains committed to progress and is participating in a coalition sector-wide. 1.2 Research Rationale
E-commerce giant Amazon operates in an intensely competitive environment where strategic decisions are transformative. As stated by Caraway (2020), the role of product packaging strategy is one of the essential elements that has a direct impact on the experience of the consumer and their perceptions. The rationale for the research lies in the imperative to comprehend the strategic activities undertaken by Amazon to sustain and enhance its competitive advantage. For instance, Amazon's intricate logistic
network is essential for global prodigy delivery, which utilizes different tactics for its packaging in order to reduce transportation-related emissions (Amazon, 2022). Amazon
has aimed to eliminate distance traveled by packages that introduce sustainability through measures like lightweight packaging and algorithms optimizing packaging solutions for reduced emissions per shipped unit. As satiated by Magiriri (2020), consumer preferences and behaviors are pivotal in shaping the dynamics of the e-
commerce sector, and consumer preference helps companies like Amazon gain competitive advantages.
8
Identification and Evaluation of Strategic Activities Effective for Amazon’s Competitive Advantage
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Figure 1.2: Consumers’ opinion on sustainable packaging
(Source: Yltävä, 2023)
It is also stated that consumers demand sustainable packaging as they are also facing multiple sustainability challenges like pollution and increased levels of carbon footprint. Consumers become conscious of their environment and their health as well. According to Yltävä (2023), sustainability significantly impacts consumer choices, as evidenced by an 80% preference for Eco-friendly packaging materials among UK consumers in 2022. The survey further reveals that the same number of shoppers expressed the belief that online shipments commonly included excessive and 9
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unnecessary packaging (Yltävä, 2023). Moreover, understanding the intricate interplay among consumer attitudes, sustainability expectations, and packaging practices is crucial for online retailers like Amazon. As stated by Quaye & Mensah (2019), the main focus of this research is to unravel the nuanced nature of the consumer preference shift to sustainable packaging that affects consumer choices, which helps companies to adopt effective strategic decisions like product packaging. The research intends to offer useful insights for businesses like Amazon to match their strategies with growing consumer attitudes that support both competitive advantage and environmental responsibility. 1.3 Research aim, purpose objectives, and questions
1.3.1 Research Aims
This research has focused on the evaluation of the effective strategies adopted by Amazon for its competitive advantage. The main aim of this research is to understand the effectiveness of the product packaging strategy of Amazon for competitive advantage as this research has focused on product packaging strategy. 1.3.2 Research Purpose
The purpose of this research is to uncover the dissonance between the expectations of customers towards eco-friendly packaging and the current practices of the e-commerce operation of Amazon by analyzing the different faces of eco-friendly approaches for product packaging that influence consumer satisfaction (Sellitto, Camfield& Buzuku, 2020). Proposing strategic initiatives is the main purpose of this 10
Identification and Evaluation of Strategic Activities Effective for Amazon’s Competitive Advantage
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research. This research has focused on guiding the alignment of Amazon and its packaging practices with evolving environmental expectations, ensuring competitiveness and sustainability. 1.3.3 Research Objective
●
To find out the importance of product packaging strategy to gain a competitive advantage in the e-commerce sector. ●
To evaluate the impact of product packaging strategy planning by online organizations to ensure sustainability in the light of Amazon ●
To determine the importance of environmental sustainability to ensure business advantage. ●
To identify the challenges in product packaging by Amazon compared to the competitors. ●
To recommend possible mitigations to overcome the product packaging-related challenges in a sustainable way. 1.3.4 Research question
●
How is product packaging in the e-commerce sector important for companies to gain competitive advantages? ●
How does the product packaging strategy of online retail ensure sustainability for Amazon? ●
What is the importance of environmental sustainability for ensuring business advantages? 11
Identification and Evaluation of Strategic Activities Effective for Amazon’s Competitive Advantage
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●
What are the challenges in product packaging by Amazon in comparison to other
competitors?
●
What are the recommended possible solutions for Amazon to overcome the product packaging challenges in a sustainable way? 1.4 Problem Statement
Amazon is the leading e-commerce company across the whole world, and the company has increased its sustainable approaches to its packaging. The discussion about packaging, customer expectations, and sustainability has reached a peach, which
is evidenced by the outcomes of a survey conducted in June 2020. 12
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Figure 1.3: Consumer Attitude Towards Eco-friendly Approaches
(Source: Coppola, 2022)
The above image demonstrates that with more than 90% of the respondents indicating a desire for higher plastic recycling rates, the survey clearly highlights the strong demand among Amazon customers across the US, UK, and Canada (Coppola, 2022). Moreover, more than 87% of the participants have shared their opinion that prominent e-commerce companies like Amazon have an obligation to tackle the problem of plastic waste. Composing the subscriber group of Amazon Prime is extensive in numbers; 76% of them have said that they can recommend Amazon to look
into alternatives to plastic packaging (Coppola, 2022). The strong attitude of customers indicates that expectations from consumers and
present packaging practices, especially the usage of plastic, are in rhythm. One of the biggest names in e-commerce, amazon faces a significant difficulty in bridging the gap between customer demands for eco-friendly packaging and the actual environmental effect of their packaging tactics (Amazon, 2023). This research determines to analyze the complex complexities that Amazon is facing for sustainable packaging options into practice and the strategic steps needed to bring the packaging processes of Amazon into line with the changing demands of the concerned consumer base. As stated by Boz, Korhonen & Koelsch Sand (2020), it is very important for Amazon to understand the customer's expectations and maintain a strong and stable competitive status so that the company can maintain a stable position in the ecologically sensitive e-commerce sector. 13
Identification and Evaluation of Strategic Activities Effective for Amazon’s Competitive Advantage
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1.5 Significance of the Research
This research of identifying and evaluating the effective strategies of Amazon for
competitive advances has held paramount significance as it identifies the critical notion between consumer expectations, sustainable packaging, and the strategic positioning of
a major e-commerce player like Amazon (Tu & Wu, 2021). Comprehensive and overcoming the disparities between the preferences of consumers for environmentally conscious practices and the ecological consequences of packing tactics is essential for Amazon and the larger e-commerce sector (Aureli et al., 2020). These strategies help this research provide useful information for companies so that they can understand how
they can improve their strategic direction toward a competitive edge. Moreover, it can be stated that this research is significant for the entire retail sector. Other companies like Amazon, such as Walmart, Asda, and others, can adopt these sustainable packaging strategies to satisfy consumers and also benefit the environment at the same time (Pei et al., 2020). Through this research, consumers can have a perception of the importance of eco-friendly packaging for the environment so that consumers can be more conscious about the environment and sustainability. 1.6 Scope of the research
This research scope is focused on the multifaceted landscape of the e-commerce
sector and its sustainable product packaging by shedding light on Amazon's strategic direction. This research encompasses an in-depth analysis of consumer preferences, strategies for product packaging, and the environmental impact; this research has also delved into the difficulties and challenges faced by Amazon in order to meet the 14
Introduction Literature review
Methodology Findings and analysis
Conclusion and recommendations Identification and Evaluation of Strategic Activities Effective for Amazon’s Competitive Advantage
15
expectations of the consumers, along with analyzing comparative assessment of competitors of the sector (Choudhary et al., 2019). While taking into account consumer sentiment worldwide, this research has focused on Amazon. It also looks at the competitive edge of Amazon and its influence on the norms of the sector. The scope encompasses a detailed analysis of the product packaging strategies of Amazon and its
carbon footprint and sustainable development, including its sustainable approaches, in order to promote a full comprehension of the sustainability model in the enormous corporation of e-commerce. 1.7 Outline of the Dissertation
Figure 1.4: Dissertation Structure
(Source: Self-Created)
15
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The first chapter of this dissertation is Introduction, which has created aims, research objectives, and research questions for the entire research by defining research
problems and justification of the research. The second chapter is a literature review
that discusses past research and the existing research aligned with the objective of the current research topic. A theoretical application has been provided that also helps to identify the gaps in the research. The third chapter is research methodology, which has identified the suitable methods and techniques for collecting data from appropriate sources and identifies techniques for analyzing the research outcomes. Findings and Analysis is the fourth chapter that analyzes the deleted information in order to meet the research objectives. Conclusion and recommendation is the fifth and last chapter that provides the entire conclusion of the research and provides recommendations in order to mitigate the
research problems. 1.8 Overview of Methodology
This research has adopted an interpretivist research philosophy for exploring the product packaging strategies of Amazon, which acknowledges the subjective nature of the context. Employing an inductive approach draws general conclusions from diverse responses, which maintains authenticity and impartiality (Mukherjee, 2019). Secondary qualitative data have been obtained in this research from relevant sources. This methodology has ensured compatibility and a nuanced understanding of the 16
Identification and Evaluation of Strategic Activities Effective for Amazon’s Competitive Advantage
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multifaceted elements surrounding the packaging practices of Amazon (Newman & Gough, 2020). The data collection method chose a thematic approach that collected information from non-human beings and made themes based on the collected information, which met the research objectives. 1.9 Summary
Based on the above discussion, this chapter has focused on the strategic activities of Amazon, especially in product packaging; this chapter has established the importance of understanding the interpretation between packaging, sustainability, and competitive advantage in the ecommerce sector. It has outlined the rationale of the research, objectives, and problem statement of the research. This research has identified problem statements related to customer expectations and packaging practices
of Amazon. The significance of the research lies in reducing the gap between consumer
preferences and actual packaging practices. The scope encompasses a comprehensive
analysis of Amazon's strategies along with Amazon's challenges and a comparative assessment of Amazon's competitors. 17
Identification and Evaluation of Strategic Activities Effective for Amazon’s Competitive Advantage
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Chapter 2: Literature Review
2.1 Introduction A literature review is a comprehensive evaluation and summary of existing published research on the topic of study. This chapter will find the strategies that have allowed the companies to grow and dominate the online retail industry. Consumers are more aware of sustainable practices like packing in the e-commerce industry (James & Kurian, 2021). Developing this type of practice can give a competitive advantage in this sector. The primary approach involves continuously developing and incorporating novel methodologies and advancements like deep machine learning to enhance customer satisfaction and streamline processes. This chapter consists of several themes, which are based on the objectives of the study. This will also discuss the gap of previous studies of the researchers.
18
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2.2 Concept of Strategic Activities in Organisation Strategic activities in an organization refer to the intentional and planned actions taken by the company in alignment with its long-term goals and objectives (
Fuertes et al., 2020)
. These tasks aim to establish a distinct edge and propel the organization towards prosperity. This task involves examining current patterns in the market, recognizing potential advantages and obstacles, and devising tactics to effectively address them. As per Ziółkowska (
2021)
, some common tasks that fall under strategic activities include conducting market analysis, creating new products, establishing a brand and implementing marketing campaigns, and preparing financial plans. Implementing strategic action can allow businesses to address their area of vulnerability, utilize their areas of advantage, and enhance their overall effectiveness, leading to lasting expansion and success. Amazon's primary strategy is continually pushing unmet customer needs and adjusting products and services to meet those needs, resulting in a customer-centric business model. This involves allocating resources towards developing new and improved products, adopting advanced technologies to enhance the customer experience, and improving the efficiency and effectiveness of fulfillment processes to keep customers satisfied.
2.3 Concept of Competitive Advantage Competitive advantage is the unique set of attributes or capabilities that a company has that allows it to outperform its competitors in a particular market. This can comprise elements such as advanced technology, availability of resources, strong brand
image, or cost-effectiveness. Companies that have a competitive advantage are able to 19
Identification and Evaluation of Strategic Activities Effective for Amazon’s Competitive Advantage
20
differentiate themselves in the market and draw in a large customer base, resulting in higher revenues and profits(
Varadarajan,2020
). By constantly utilizing their strengths and assets, organizations can sustain their market position and remain ahead of their rivals. Developing and maintaining a strong competitive advantage is crucial for achieving ongoing success and expansion in any industry. However, this can be negatively affected by various factors like lack of innovation, high competition, and changing consumer preferences. These obstacles can undermine a company's distinguishing features and weaken its position of superiority in the industry, decreasing its ability to outperform its competitors.
In the e-commerce retail industry, competitive advantages are often achieved through the use of technology and innovation(
Chong & Ali,2022)
. Organizations that can adeptly
harness technology to elevate customer satisfaction and streamline operations are better positioned to outshine their competitors. In the e-commerce retail industry, competitive advantage can be achieved through efficient supply chain management, customer service excellence, innovative marketing tactics, or technological advancement (
Chen, Liu & Li, 2019
). These benefits can aid a business in drawing in a large customer base, boosting revenue, and sustaining a robust standing in this industry. Amazon's competitive advantage lies in its vast product selection, efficient fulfillment network, and customer-centric approach, which allow it to offer customers seamless and convenient shopping experiences while maintaining low prices. 20
Identification and Evaluation of Strategic Activities Effective for Amazon’s Competitive Advantage
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2.3 Theoretical interpretation
2.3.1 Classical Conditioning Theory Classical conditioning theory focuses on a learning process where neutral stimulation begins to elicit a response after being paired with a stimulus that already elicits that response (
Akpan
et al.
, 2020)
. This is a psychological theory, also known as Pavlovian conditioning. The concept of selective attention can be utilized to understand how consumers perceive packaging in the context of online shopping. Shoppers view packaging as a crucial element of their online shopping encounters. The packaging plays a vital role in the initial interaction between the purchaser and the item, making it a
key element in shaping consumer decision-making. As per classical condition theory, it can be said that consumers are believed to have gained knowledge and experience that
makes them associate certain packaging features with specific qualities and attributes, ultimately shaping their overall perception of the product. In "classical conditioning," an initially neutral stimulus is combined with an unconditioned stimulus to elicit a conditioned response (
Pavlov & Kotchoubey, 2019
). When considering sustainable packaging in the world of online shopping, the packaging itself is the stimulus. At the same time, the benefits it offers, such as being environment friendly and promoting ethical production, serve as unchangeable triggers for positive reactions. The e-
commerce sector can utilize the principle of classical condition to shape consumer attitudes towards sustainable packaging by repeatedly linking the natural element of packaging with the desirable consequences of opting for environmentally friendly packaging options (
Purcărea et al.,
2022
). Repeatedly introducing consumers to these favorable connections can result in the development of a learned reaction. Therefore, 21
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“classical conditioning” can effectively influence consumer preference and give a competitive advantage in the e-commerce sector.
2.3.2 Market-based View Theory
The “Market-Based View” (MBV) is an approach to understanding the performance of a business or firm based on its external market environment (
Tarihoran
et al., 2023)
. This concept proposes that a company’s achievements are affected by multiple elements in teh business environment, including market fluctuations, consumer choices, and rival companies. This theory is a widely used approach in strategic management reserch that focuses on understanding a firm’s competitive advantage through the lens of external market conditions. This concept suggests that a company’s prosperity and ability to stand out among competitors is determined by how well it can recognize and exploit advantageous market conditions and meet consumer demands. The MBV theory suggests that Amazon’s competitive advantage results from its adeptness in recognizing and adapting to evolving market dynamics. This entails comprehending the wants and tastes of consumers, recognizing evolving patterns and industries, and efficiently demanding by offering inventive products and services. The MBV theory emphasizes gaining a competitive edge(
Novianti, 2019
). Amazon stands out in the fiercely competitive e-commerce market for its extensive resources, including a worldwide distribution network, cutting-edge technology, and sophisticated customer data analysis, allowing it to gain a significant edge over its competitors. The MBV theory
highlights the significance of having a strong market position and being customer-
centric to succeed in the market.
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E-commerce companies embrace sustainability, like eco-friendly packaging, and
take calculated risks, coupled with a focus on using data to inform decisions that solidify
their edge over competitors (
Wei, Zhou & Cheng, 2023
). This theory supports the adaptation of environmentally sustainable product packaging practices as a means of creating value for customers. As consumer demand for environmentally friendly packaging increases, Amazon has responded by implementing sustainable packaging initiatives to enhance customer satisfaction and maintain a competitive advantage. This proactive approach to sustainability not only benefits the environment but also adds value to the company’s bottom line through increasing customer satisfaction and loyalty.
2.3.3 Resource-Based View (RBV) The “Resource-Based View” is a management theory that suggests a firm's competitive advantage is primarily determined by its unique resources and capabilities rather than by the industry in which it operates (
Davis& DeWitt, 2021)
. This perspective regards a company's resources as the primary factor determining its achievement, encompassing tangible elements like materials and monetary assets as well as intangible components such as employee expertise, brand recognition, and intellectual capital. By identifying resources, e-commerce firms can develop innovative strategies that differentiate them from their competitors and meet the changing needs and demands of the market. One of Amazon's essential resources is its vast global network of warehouses and distribution centers. The company is able to effectively supply goods
to consumers, giving them an advantage in terms of timely and easy access by implementing this strategy.
23
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On the other hand, Amazon's strong brand reputation, large customer base, and extensive distribution network are the key resources that give the company a competitive advantage over its competitors(
Cuthbertson & Furseth, 2022
). E-commerce sectors have capitalized on available resources to make progress in implementing sustainable packaging practices. For example, Amazon's "Frustration-Free packaging" effort aimed at decreasing excessive packaging and promoting environmentally friendly practices has been met with customer approval and improved brand loyalty (
Annadur & Jain, 2023)
. Additionally, this company's use of data analytics and technology has allowed it to improve packaging procedures and decrease the amount of waste production. Amazon can predict demand and effectively use packaging materials to prevent overpackaging and underpackaging through advanced technology. Therefore, RBV emphasizes how a firm's resources and capabilities can result in a competitive edge and consistent long-term success. Amazon has effectively incorporated sustainability into its packaging practice, resulting in cost savings and improving brand image by utilizing its assets and competencies.
2.4 Identifying the importance of product packaging strategies for the e-
commerce industry In today's highly competitive e-commerce industry, product packaging strategies play a significant role in a company's success. In the era of e-commerce, packaging has
emerged as the primary means of physical interaction between the customer and a brand, making it a critical element in shaping a company's image, enhancing teh customer experience, and communicating the quality of its product. However, packaging
24
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causes waste generation and environmental pollution. As per Ketelsen, Janssen & Hamm (2020
), the packaging of a product is essentially the first impression that a brand makes on its customers, and it has the ability to greatly impact their perception. Packaging in e-commerce has the potential to serve as a platform for companies to communicate their brand identity and values through the inclusion of their logo, messaging, and visual design on the packaging. Additionally, packaging offers a unique chance for businesses to stand out and establish an edge over their rivals(
Dörnyei, 2020
). Well-designed and innovative packaging can create a strong impression that fosters brand recognition and encourages customer loyalty and continued patronage. To stand out from the competing label brands, e-commerce companies should prioritize packaging that sets their product apart and enhances their visual apparel for consumers. One example of an
e-commerce retailer company with unique packaging is Glossier (
Montgomery,2022)
. The brand uses simple and charming pink and white packaging, adorable stickers, and personalized mote to create a delightful unboxing experience for their customer. The worldwide market for e-commerce packaging recorded a valuation of $27.15 billion in the year 2020 (Statista, 2023). The global packaging market is anticipated to surpass 62
billion US dollars in value by 2026, growing at a CAGR of 15.4 from 2021 to 2026, as shown in Figure 2.1.
25
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Figure 2.1: Global value of e-commerce packaging market
(Source: Statista, 2023)
On the contrary, e-commerce product packaging has a significant impact on sustainability, as it contributes to the generation of waste and carbon emissions (
Escursell, Llorach-Massana & Roncero, 2021
). E-commerce packaging commonly consists of safeguarding materials like bubble wrap and corrugated board, which are non-biodegradable. However, this sector can help contribute to creating a more environmentally friendly world by opting for eco-friendly materials and minimizing the size of their packaging. E-commerce businesses should prioritize packing in response to consumer expectations and ecological responsibilities. According to Moustafa et al. (
2019
), one potential solution to promote environmental sustainability in packaging is through the use of eco-friendly materials and designs. Adopting a sustainable packaging strategy can positively impact the environment and improve brand image among environmentally conscious customers. For example, Amazon has committed to 26
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using recyclable paper padded mailers and paper tape instead of plastic material to rescue waste and promote eco-friendly options for customers (
Yang,2022)
. On the other
hand, e-commerce items undergo an extensive process, from production to ultimately reaching the customer's residence for delivery.
As per Hoffmann
, Stahlbock & Voß (
2020
), the packaging should ensure the product is not harmed and stays protected throughout the process, safeguarding it from any potential harm or disruption during the shipping process. Therefore, effective packaging tactics involve using strong and sturdy material that considers the product's specific size and weight as well as concern for environmental pollution. Product packaging strategies are essential to success in the e-commerce industry as this involves branding, differentiation, customer experience, and sustainability beyond just protecting products.
2.5 Evaluating the positive impact of product packing strategy
In the evolving market of the e-commerce sector, product packaging has become
crucial for an organization's competitive advantage and sustainability initiatives. Packaging is a powerful tool for customer interaction and brand marketing to act as a protective barrier. According to Boz, Korhonen & Koelsch Sand (2020), innovative and aesthetically pleasing packaging not only draws customers but also creates favorable first impressions, which assist brands in standing out in a congested market. The competitive edge of an organization can be increased by strategically designing packaging that incorporates sustainable practices. As stated by Wandosell et al., 27
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(2021), products with environmentally friendly packaging speak to consumers who are becoming more conscious of environmental issues.
Figure 2.2: Importance of packaging strategy
(Source: Foschi & Bonoli, 2019)
According to Foschi & Bonoli (2019), it can be stated that when a company adopts sustainable packaging, the company has gained competitive advantages by attracting customers. Packaging is the first point of contact between the consumer and the product. A strategic packaging design can enhance brand recognition and create a positive perception of the products and the company. As stated by Maziriri (2020), 28
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sustainable and appealing packaging can also contribute to building a positive image of a brand. This has differentiated the company from its competitors. For example, a UK-
based e-commerce company has adopted a minimalist approach for packaging hooch, focusing on simplicity and eliminating excess materials. This continues a clean and modern aesthetic but also aligns with the sustainable goals. ASOS has offered customized packaging options occasionally, which allows customers to choose eco-
friendly packaging materials that showcase a commitment to environmentally conscious
choices (ASOS, 2019). Companies have adopted innovative packaging strategies that can also minimize expenditures throughout the supply chain of the companies. As stated by Fortunati, Mazzaglia & Balestra (2019), the efficiency of design has looped material consumption, expenses of transportation, and the need for storage. Packaging is not space efficient, and lightweight not only simplifies logistics but also eliminates the emission of carbon along with promoting environmental and economic sustainability. This research has shed light on Amazon so that it can be exemplified that Amazon has used a complex network of delivery and logistics partners that include trucks, motorcycles, ships, airplanes, and trains in order to ensure fast product delivery worldwide (Becerril, Nerín & Silva, 2020). In the sustainability report of Amazon, they prioritized decarbonizing transportation by expanding the use of low-carbon fuels, optimizing fleet efficiency, and scaling up the use of electric and alternative fuel cars. These have also emphasized effective packaging that promotes lighter, more flexible solutions and uses machine learning to identify ideal package types (Amazon, 2022). 29
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Amazon's aim is to increase the number of goods per order so that they can cut the cost
of packaging, which increases the efficiency of Amazon. Figure 2.3: Sustainable strategy of amazon
(Source: Amazon, 2022)
Amazon has focused on a sustainable future, aiming for net zero carbon emissions by 2040 through renewable energy and waste reduction. Prioritizing human rights and responsible resource use, they have advanced their products and social goals. Hence, the strategic product packaging approach elevates the competitive edge 30
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and sustainability of the company. Through unique and sustainable packaging, companies have gained a market differentiator (Morea, Fortunati & Martiniello, 2021). Cost-efficient, eco-friendly designs optimize resources and also enhance regulatory compliance and reputation. Supply chain efficiency, life cycle environmental impact consideration, and adaptability to market trends solidify the packaging strategy of the company. 2.6 Importance of environmental sustainability to ensure business
advantage
Environmental sustainability matters more to product packaging than the short-
term issues of waste minimization And legal compliance. It is essential to maintain competitiveness and the long-term advantage of the company. Environmental sustainability is very important for business as well as for the customer and environment. As stated by Taliento, Favino & Netti (2019), modern consumers are becoming environmentally conscious; they prefer to support businesses that are aligned
with their values, including sustainability. Through the adoption of eco-friendly packaging, businesses attract customers who are environmentally aware. These companies have also built loyalty by demonstrating a shared commitment to a sustainable future. Similarly, according to Vesal, Siahtiri & O'Cass (2021), sustainable packaging serves as a powerful tool for the differentiation of a brand
. Companies who
prioritize environmental responsibility distinguish themselves in the crowded market. A positive brand image associated with sustainable practices can set a business apart, attract positive attention and it also enhances the overall brand value of the company. 31
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On the other hand, Cai et al., (2020) have stated that governments globally are implementing stricter regulation of environments. Companies that adopt sustainable packaging practices proactively reduce the risk of non-compliance, legal issues
, and potential financial penalties. When the companies have evolving regulations, it helps companies to ensure the long-term viability of the business. Moreover, it can be stated that sustainable approaches include efficient and streamlined design, which leads to cost savings throughout the supply chain. According to the statement of Sarkar et al., (2019), this has included reduced material usage that optimized transportation and minimized requirements for storage
. These efficiencies have contributed to the cost-saving approaches of entire business operations. For example, in 2020, amazon India achieved a significant sustainability milestone by eliminating all single-use plastic in packaging across more than 50 fulfillment centers. According to Amazon (2020), the company replaced plastic packaging with eco-friendly alternatives like paper cushions and biodegradable tape. This accomplishment aligns with Amazon's commitment to creating a sustainable and eco-friendly supply chain. More than 40% of customers of Amazon orders in India are packaging-free or have significantly reduced packaging, further emphasizing their dedication to sustainable practices and environmental impact reduction (Amazon, 2020). 32
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Figure 2.4: Evaluation of Product Packaging
(Source: Amazon, 2022)
Later, in 2022, amazon committed to sustainability by minimizing packaging and increasing recyclability. According to Amazon (2022a), through innovation and investments, the company has reduced packaging weight by 38% since 2015. In 2021 alone, they cut plastic packaging weight per shipment by over 7%. Initiatives include right-sided packaging, utilizing algorithms, and optimizing packaging materials. Amazon is exploring alternative recyclable materials, increasing recycled content, and collaborating with industry initiatives (Amazon, 2022a). This approach has aligned with the broader sustainability goal of Amazon and demonstrates that businesses can prioritize environmental responsibility in order to benefit both the plant and the customers at the same time. 33
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Embracing sustainable packaging practices has offered me multifaceted benefits for business. Apart from the environmental impact, Klinger et al. (2022) have stated that
it enhances access to markets and attracts investments by aligning with ESG criteria ("Environmental, social, and governance" criteria). Sustainable packaging has fostered a resilient supply champion, enabling businesses to navigate disruptions and adapt to the evolving preferences of consumers. This commitment has helped to drive sustainability innovation and also ensure companies stay ahead in their industries (Sarkar, Rao & Singh, 2023). Moreover, it fosters employee engagement and attracts top talent that sells purpose-driven workplaces. Contributing to global sustainable goals secures long-term viability and also aligns with broader initiatives that address climate change. 2.7 Challenges in product packaging by Amazon compared to the
competitors
Amazon is a leader in e-commerce; it faces unique challenges in product packaging compared to Amazon's competitors. According to the point of view of Rodrigue (2020), a diverse range of products
is one of the challenges that a company
faces in its product packaging. Companies like Amazon have faced challenges with their huge range of products. Amazon has offered a huge array of products ranging from small electronics to large appliances. Packaging of a diverse range efficiently poses challenges to creating standardized packaging solutions (Moustafa et al., 2019). On the other side, Boots
, a UK health and beauty retailer, has dealt with a wide range of products from cosmetics to pharmaceuticals. Balancing the need for protective 34
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packaging and sustainable practices for such diverse items poses challenges (Boots, 2023). Boots has faced challenges in creating packaging that has preserved the integrity of delicate cosmetics while adhering to sustainability goals. On the contrary, ASOS, an online fashion retailer, encounters the challenge of aligning packaging with sustainability goals while maintaining a stylish presentation, this needs to address the goal of enhancing customer experience and the brand identifying whole meeting environmental standards. On the other side, it can be stated that companies like Amazon have faced environmental challenges for their plastic packaging. For Amazon, Amazon Aws was criticized for their environment and the impact of their product packaging using plastic materials. According to EDF (2021), it is important for a company to adopt protective packaging with sustainable practices and eliminate plastic packaging techniques for the concern of the environment and the customer's well-being. For example, Companies like IKEA and Etsy have committed to emissions shipping, and they prioritize electric vehicles and remove plastic from their packaging (EDF, 2021). On the other side, smaller competitors of Amazon have more flexibility and adaptability to adopt sustainable packaging practices without facing the summer challenges like Amazon. According to Oceana.org (2022), the significant plastic packaging impact of Amazon is estimated to be 709 million pounds in 2021. In spite of a 7% reduction claim, the transparency of Amazon falls short and excludes third-party sales. Shareholders demand action with a historic 49% vote for plastic reduction. Oceana urges a ⅓ reduction commitment by the end of 2030, full plastic footprint disclosure, and climate impact accountability for products and packaging. 35
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Apart from that, hurting the expectations of the customer is also an effective challenge that a company faces. Amazon has set high standards for its fast and reliable delivery. As stated by Zhao et al., (2021), in that situation, it is difficult for Amazon to meet customer expectations for quick shipping by not compromising on packaging and packaging sustainability. On the other side, competitors have more focus on the customer base with specific expectations that are easier to manage. The UK has seen a
rising interest in sustainable packaging amid the surge in online deliveries driven by increased awareness of environmental impact. According to Bagnboxman.co.uk (2022),
over half of UK adults (58%) are willing to pay additional for eco-friendly approaches, with 29% on to spend over 11% more. Oxford stands out as the city most willing to pay significantly more 18% and Welsh adults 58% are least likely to pay extra. Interest in " sustainable packaging" was at its peak in 2021, with a 59.4% increase in monthly searches from 2016 to 2021, which reflects growing consent for environmentally conscious practices for product packaging (Bagnboxman.co.uk, 2022). For example, John Lewis, a record UK department store, is also opening online stores. John Lewis has faced challenges in creating packaging that provides adequate protection for fragile products like glassware while minimizing environmental impact.
In contrast, return management at Amazon poses the challenge of creating packaging that is both protective and easily resealable, which is essential for their generous return policy. Competitors with more stringent return policies have encountered fewer challenges in designing packaging for returns in tents of counterfeiting concerns (Mahmoudi & Parvizi Omran, 2020). Amazon grapples with the need for security tamper-evident packaging to authenticate products. This challenge 36
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persists as the company challenges counterfeit issues. These challenges prevent Amazon from gaining a competitive advantage. Moreover, companies like Amazon can obtain strategies to gain competition. Some companies, facing less exposure to counterfeiting concerns, can find it easier to implement similar packaging solutions that ensure the authenticity and secrecy of the product. 2.8 Possible mitigation strategies to overcome the product packaging-
related challenges in a sustainable way
There are multiple challenges to adopting sustainable approaches for product packaging. Mitigating the challenges of product packaging in a sustainable way needs thoughtful strategies. These challenges can be barriers for e-commerce companies to achieve a competitive edge. According to Pellet al., (2021), utilization of innovative materials like eco-friendly materials like biodegradable plastics, compostable packaging,
or recycled materials is essential for companies like Amazon in R&D for exploring advanced sustainable packaging alternatives. By creating packaging using recyclables and encouraging consumers to participate in recycling programs, minimalist packaging design ms helps companies reduce material usage. As stated by Krauklis et al., (2021), prioritize lightweight and space-efficient packaging that meets protection requirements without excess waste that lowers environmental impact. For example, Ocado, a leading online home grocery retailer in the UK, has been working on sustainable packaging solutions specifically for fresh and perishable goods (OCADO, 2023). The company has
focused on minimizing packaging waste while maintaining the freshness and quality of good items during transit. 37
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Amazon has introduced "Frustration-Free packaging
," which focuses on reducing unnecessary packaging materials and making it easier for customers to open packages. This initiative aims to minimize waste and improve the overall customer experience (Amazon, 2018). "Amazon Second Chance" promotes the reuse and recycling of products and packaging materials. This program encourages customers to return and recycle their Amazon devices, packaging, and other products Amazon (2023). "
Amazon packaging feedback program” allows customers to provide feedback on the packaging of their orders. These product strategies have helped Amazon to obtain a competitive advantage in the era of competition in the global market. Companies like Amazon can use a variety of strategies for supporting environmentally friendly product packaging. As stated by Tang et al., (2020), companies
need to concentrate on educating their consumers that encourage appropriate disposal practices and putting in place closed-loop mechanisms that make reuse and recycling easier. This has helped Amazon to gain a competitive advantage in the competitive landscape. Frequent packaging audits assist in pinpointing areas that require improvement across the supply chain and product life cycle. Maintaining current environmental standards guarantees adherence, and open reporting has fostered confidence among stakeholders (Patti, Cicala & Acierno, 2020). The commitment of the companion helps in environmental stewardship is strengthened by offering incentives for sustainable practices to manufacturers, suppliers, and customers as well as by investing in advanced technology like intelligent packaging and sophisticated recycling. 38
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Combining these strategies in a sustainable way at the expectations and environmental goals of customers. 2.9 Literature Gap
The literature review has focused on environmental sustainability in the context of e-commerce product packaging and has made a significant notion that also focuses on the benefits and challenges faced by businesses like Amazon. However, a notable gap exists in understanding the nuances dynamic between strategies of product packaging, the behavior of custom forms, and the economic implications for business. Existing research has emphasized the importance of sustainable practices by not delving into the specific consumers' perceptions and behaviors that drive the demand for eco-friendly options. A more comprehensive analysis of economic trade-offs associated with adopting sustainable packaging practices is needed in the ecommerce sector. Bridging this gap in the literature is crucial for developing targeted strategies that
not only align with environmental goals but also resonate with consumer preferences while maintaining the economic viability of the business in the evolving landscape of e-
commerce. 2.10 Conceptual Framework
Figure 2.5: Conceptual Framework
(source: self-created)
39
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2.11 Summary
This literature review explores the strategies employed by companies with the main focus on Amazon, which helps to dominate the e-commerce sector, emphasizing the significance of sustainable product packaging. It has discussed concepts like strategic activities, competitive advantage, and theories like classical conditioning, market-based view, and resource-based view. The review underscores the significance of sustainable packaging for competitive advantage, consumer loyalty, and regulatory compliance. Amazon has faced challenges like diverse product ranges and plastic packaging issues, which can be mitigated by adopting sustainable approaches. The literature gap is also identified regarding the relationship between packaging strategies, consumer behavior, and the competitive advantage of the company. 40
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