Amazon typifies successful competition in the new economy far more than many firms. Some would say that Amazon invented the internet retailing business model that all other dot-coms are struggling to copy. Amazon understands the strategy of developing and maintaining customer loyalty, which is the key to success in retail e-business, and implements it effectively (Blocher et al., 2019). Amazon has a loyal and growing customer base because of its reliable service and low cost. It has recently been cited as a major factor in the bankruptcies of other companies such as Circuit City (electronics retail company) and Borders (book and music retailer). Amazon also presents a competitive threat to Walmart, OfficeMax, and other retailers. The reason: Shoppers find the same product at lower prices and enjoy the convenience of online shopping. A recent study showed that, on average, a Walmart product is 19% more expensive than at Amazon. Amazon avoids the costs of maintaining retail facilities such as the Walmart stores. On the other hand, Amazon does require shipping costs on some orders. To be competitive, Walmart has been aggressively pushing online sales with very positive results. In response, Amazon is targeting the Walmart customer base, for example, by offering online grocery sales (including delivery) to food stamp recipients (Blocher et al., 2019). Regardless of Amazon’s growing market share, the company is facing challenges in the delivery of goods to its growing number of customers. It's no secret that the retail giant has been quickly building up its logistics division to deliver the goods on its marketplace and set itself up as a potential third-party logistics partner for other retailers. The buildup has resulted in Amazon delivering a much higher portion of its own packages. In 2019, the company ships almost 48% of its own packages, posing a significant increase from 15% just two (2) years ago, according to Rakuten Intelligence, cited by Axios. This delivery buildup causes late deliveries and unsatisfied customers. In 2017, from January to late June, an average of 4.6% of items were delivered late, compared with an average of 16.6% in 2019, according to Rakuten Intelligence data cited by Business Insider. If Amazon is unable to reverse this trend, it risks significant damages to its brand reputation, especially as it continues to push the envelope by giving consumers even faster delivery options (Aouad, 2019). Using a strategic decision-making approach, formulate two (2) alternative courses of action to help Amazon resolve its problem regarding late deliveries. Then, identify the advantages and disadvantages of each proposal. In the Interesting box, write down how the company can implement each course of action. In the My Decision box, provide a recommendation of the most effective alternative and a suggestion on the evaluation/review approach that must be adopted by Amazon.
Amazon typifies successful competition in the new economy far more than many firms. Some would say that Amazon invented the internet retailing business model that all other dot-coms are struggling to copy. Amazon understands the strategy of developing and maintaining customer loyalty, which is the key to success in retail
Amazon has a loyal and growing customer base because of its reliable service and low cost. It has recently been cited as a major factor in the bankruptcies of other companies such as Circuit City (electronics retail company) and Borders (book and music retailer). Amazon also presents a competitive threat to Walmart, OfficeMax, and other retailers. The reason: Shoppers find the same product at lower prices and enjoy the convenience of online shopping. A recent study showed that, on average, a Walmart product is 19% more expensive than at Amazon. Amazon avoids the costs of maintaining retail facilities such as the Walmart stores. On the other hand, Amazon does require shipping costs on some orders. To be competitive, Walmart has been aggressively pushing online sales with very positive results. In response, Amazon is targeting the Walmart customer base, for example, by offering online grocery sales (including delivery) to food stamp recipients (Blocher et al., 2019).
Regardless of Amazon’s growing market share, the company is facing challenges in the delivery of goods to its growing number of customers. It's no secret that the retail giant has been quickly building up its logistics division to deliver the goods on its marketplace and set itself up as a potential third-party logistics partner for other retailers. The buildup has resulted in Amazon delivering a much higher portion of its own packages. In 2019, the company ships almost 48% of its own packages, posing a significant increase from 15% just two (2) years ago, according to Rakuten Intelligence, cited by Axios. This delivery buildup causes late deliveries and unsatisfied customers. In 2017, from January to late June, an average of 4.6% of items were delivered late, compared with an average of 16.6% in 2019, according to Rakuten Intelligence data cited by Business Insider. If Amazon is unable to reverse this trend, it risks significant damages to its brand reputation, especially as it continues to push the envelope by giving consumers even faster delivery options (Aouad, 2019).
Using a strategic decision-making approach, formulate two (2) alternative courses of action to help Amazon resolve its problem regarding late deliveries. Then, identify the advantages and disadvantages of each proposal. In the Interesting box, write down how the company can implement each course of action. In the My Decision box, provide a recommendation of the most effective alternative and a suggestion on the evaluation/review approach that must be adopted by Amazon.
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