Analysis for Amazon

Amazon’s Psychographic and Demographic Segmentation

Amazon has grown to become one of the most valuable companies in the world, with far-reaching effect on the American business landscape. Psychographic segmentation in Amazon is based on the actual purchase behavior of its customers and not the interests that people might have expressed; as such, the company targets each client individually. As a result, Amazon successfully converts visitors into long-term clients. In terms of demographics, Amazon focuses on big cities using the Prime Now and Prime Fresh services. Essentially, there is denser population, which is easy to serve, thus, the availability of high-income consumers. Amazon focuses on cost-saving for customers evident in their low prices; also, speed up delivery and attention to quality services are given priority. The company should concentrate on becoming a one-stop shop than any other retailer to improve customers’ experience and satisfaction.

Amazon as an E-Commerce Giant

Company

Amazon, which has become an e-commerce giant, deals with products from industries ranging from electronics, grocery items to books. Being the world’s leading online retailer, Amazon is guided by the passion for invention, customer obsession, and commitment to excellence. Additionally, the wide variety of merchandise and its low-cost structure serves as the company’s strengths in the competitive markets. The huge number of third-party sellers and an efficient delivery network also play a significant role in enhancing the success of Amazon. However, the company has attracted negative publicity due to tax avoidance; in addition, Amazon has high debts as it is still struggling to make the business profitable in many developing nations. Amazon can consider opening physical stores outside U.S. as well as acquire e-commerce companies (Castelli, Manzoni, Vanneschi, & Popović, 2017). As a result, this company can increase its purchases and decrease the competition level from other businesses.

Factors Affecting Amazon’s Growth

Context

Although there has been rapid growth in online retailing competition, no other company has a higher market penetration than Amazon. However, the business is profoundly affected by political instability, law, and order, as well as rules and regulations in countries they are looking to do their business. In the same way, the purchasing power of people in areas where Amazon is seeking such as USA and EU to grow has declined due to the economic downturn. In essence, people are reluctant to buy various products due to economic uncertainty. In terms of technological factors, Amazon has to ensure that it is updated with technological advancements. For instance, most people use mobile phones; it is, therefore, essential for this company to provide applications for such customers. To have a minimum effect on the environment, Amazon should aim at promoting products that have little or no negative impact (Ratnasingham, 2006). Since Amazon is used to open markets, legal issues in some countries affect its growth as it’s hard to follow some rules.

Amazon’s Collaboration Strategy

Collaborators

Amazon utilizes three business models that enable them to establish productive cooperation with its competitors. Through this model, Amazon involves competitors in distributing the expenses incurred by business operations. Here, the Amazon competitors use the company’s market venue where Amazon is permitted to keep part of the sale proceeds if the competitor makes any sales. For instance, when selling books on its website, Amazon allows competitors to offer the same product on their platform. If a customer purchases the book from the competitor, Amazon gets to keep some of the money from that sale. Essentially, Amazon’s mindset is not competitor-centered; instead, the company’s strategy is to become a customer-centered business enterprise (Castelli et al., 2017). As such, there are no formal collaborators in Amazon.com; the company concentrates on cooperating with competing firms as their business model.

Amazon’s Competitors

Competitors

Amazon has numerous competitors ranging from online competitors, manufacturing companies, to retailers. Dividing the company’s operations into three segments, Amazon is considered to deal with electronics, media, and other merchandise. In the electronic and general merchandise sector, the company has several competitors who include Walmart, Staples, Family Dollar, and Systematics. In the online platform, the competitors include Overstock.com, Vipshop Holdings, and Alibaba Group among others. In the media segment, Amazon competes with Apple, Google, and eBay among others. In other operations, this company deals with some of the world’s largest companies such as PC Connection, Insight Enterprises, Google, Accenture, among other competitors. It is, however, important to recognize that despite the high competition, Amazon still leads in terms of sales and profits among its competitors (Ratnasingham, 2006). To achieve this, Amazon does not concentrate on the competition but rather customer’s experience and satisfaction.

Recommendations for Amazon

Recommendations

Amazon has the capability and necessary strength to maintain its dominance in e-commerce and the competitive advantage in the market world. However, there are some recommendations that the company should put into consideration. First, Amazon should increase its entry into developing countries since it still has a limited presence in their markets. This is a great opportunity as it will promote rapid economic development. Second, Amazon should consider adding stores to make sure that it addresses the issue of competition, especially with firms like Walmart. This will also serve as a way to increase brand popularity and market reach, aspects that will increase its productivity. Finally, Amazon should invest more in advanced technology and intensify information technology measures to suppress cyber-crimes and address counterfeiting efficiently. As a result, the consumers will enjoy Amazon’s product as they will purchase security and protection during purchases of the various products offered by the company.

References

Castelli, M., Manzoni, L., Vanneschi, L., & Popovič, A. (2017). An expert system for extracting knowledge from customers’ reviews: The case of Amazon.com, Inc. Expert Systems with Applications, 126, 117-126.

Ratnasingham, P. (2006). A SWOT analysis for B2C E-commerce: The case of Amazon.com. International Journal of Cases on Electronic Commerce, 2(1), 1-22.