The Role of Logistics in Amazon Company

In the year 1994, an American Philanthropist known has Jeff Bezos launched his business idea that incorporated e-commerce and customer oriented strategies (Amazon, 2018). Today, Amazon is known to be purely business to customer based i.e. it sells its products and services such as kindle e-book, CDs, sporting goods, and software among others. This is through an e-commerce platform where the company uploads its products and service design online for the customers to choose. Once the customer familiarizes his/her self with the product that he/she wants to buy, they then do an online order from which the Amazon Company will be alerted. Even though many start-up companies failed to stand the wave of dissolvent due to minimum output and income they were receiving from online business, Amazon Company decided to keep on trading a midst low customer base and low sales revenue (Amazon, 2018). By late 2007, Amazon Company decided to invent kindle e-book leading to a positive change in its total earnings. The sales revenue increased by 35% (approximately $ 2.89 billion) and the net profit per share increased by 19% (Rupp & Clinton, 2017).

To gain access into the interior and exterior markets, Amazon Company has evaluated its SWOT and found it prudent to outsource logistics (Smith, Rupp & Offodile, 2017). Logistic companies who are responsible for the delivery of products once clients make orders and confirm payments. They have to use their freights to bridge the time gap so that the products reach the customers within the agreeable time. This study will, therefore, add value to the Amazon Company and the field of e-commerce. It seeks to examine how logistics has contributed to an increase in customer base for the growth of Amazon Company. The study will want to look at how e-commerce and logistics can attribute to growth and success of Amazon Company. The company has been able to develop its own logistic department that currently delivers its products to the customers at agreed destinations (Rupp & Clinton, 2017). It will also look onto factors that have prompted Amazon Company to introduce its own logistic freights.

Business Opportunity for Amazon Company

Many online market platform such as Magento, Yokart, and VTEX among others are coming up strongly but are unable compete with the Amazon Company because of the customer base, trust and loyalty that the company has developed with its clients over the years (Smith, Rupp & Offodile, 2017). Amazon took an initial lead in extending the multi-sided platforms since most customers could find it prudent still to interact, make an order, decline an order, or re-order for the new product. Online platforms’ success depends on its ability to bring both consumer and sellers on board and many of the e-commerce companies have found it easy to use these platforms including the Amazon Company (Berge & Lune, 2004).

Since 2005, Amazon has been delivering products to its customers through its own logistic service. However, it compliments the already established logistic providers such as FedEx. The services are mostly available to provide shoppers with an alternative same-day delivery shipping option. Delivery drivers are treated like third party service providers who are contacted through Amazon Company. Given that the services rely on third-party providers, the level of service offered varies from one provider to another. It is, therefore, important to understand how buyers’ reaction to these services in relation to e-commerce influences the continuity of the Amazon Company and its relationship with the clients.

Amazon has gained customers’ trust through quick and safe delivery of their products, but this has been positively attributed to the fact that logistics delivery services have been efficient, thus, easing e-commerce business. Like any other company, Amazon has to take the issues of customer relations very serious. Therefore, any delays in product or delivery due to inefficiency in the logistics must be addressed in advance. Outsourcing is a critical issue since logistic segment is the backbone of any e-commerce company like Amazon. According to Kauremaa & Tanskanen (2016), there exist a correlation between a company’s efficiency in the area of logistics and their success in e-commerce. Firms which are deeply rooted in e-commerce such as Amazon consider efficiency in operations especially delivery of products to different parts of the globe very crucial. This is because every day’s development of information technology is a very critical invention in the e-commerce and if logistic segment of how and when a customer should be sure to receive a product is not looked onto, then the usefulness of e-commerce companies such as Amazon will not be felt with time.

Literature Review

E-commerce is where two or more groups of people use internet and website to order for a given product between and within business partners who have formally come to terms and regulations. Business to Customer (B2C) is the generated name for the online companies selling its products and services to and Amazon Company is one of those online companies that sell consumer products directly (Smith, Rupp & Offodile, 2017).

There are various reasons of global sourcing of logistics, which includes cost savings, largely due to fewer regulatory controls from developed economies to less developed economies. Many e-commerce platforms such as Amazon would prefer to coordinate with logistics firms that they outsource or use their logistic department since its cost effective though the great distance between the supplier and the consumer might a time lead to high transportation cost i.e. shipping prices (Rupp & Clinton, 2017).

Business to Consumer model explains implicitly how electronic means through internet and network can be used to transact a business. This model states that even though there might be a number of barriers in the uptake of e-commerce but when a producer has a direct contact with a consumer, it tends to minimize costs and spoilage of goods (Fan & Li, 2014).

Logistics on the other hand is defined as an intermediary between the producer and the customer where it carries the product as directed by the company who sourced it, keep it safe out of spoilage until the goods and service reach the agreed destination where it will be confirmed to have met the customer’s requirements (Fan & Li, 2014). According to Greener & Martelli (2015), administering goods and services which are on move or in storage with the goal of ensuring that the consistency in the flow of the same product are observed is what we can logistics.

Purpose of the Study

Main purpose of this study will be to implicitly determine the correlation between e-commerce and logistic segment at Amazon Company.

Aim

i. To explain the relationship between e-commerce and logistic segment at Amazon company

ii. To investigate factors that determines development of e-commerce at Amazon Company

iii. To determine how to strengthen logistics segment when developing e-commerce at Amazon Company

Research Questions

The study seeks to answer the following research questions;

Ø What is the relationship between e-commerce and logistics as a far as a firm’s success online B2C business is concerned?

Ø What factors determine the development of e-commerce at Amazon Company?

Ø What are some of the strategies that can be implemented by Amazon Company to strengthen their e-commerce?

The Anticipated Contributions of the Study

The delivery of the goods to the customers is a basic component of e-commerce. In order to ensure quick delivery of the goods to the buyers, Amazon relies on the logistic freight forwarding services, which help the customers to receive the purchased goods quickly and safely. The logistics companies in the freight forwarders network, not only deliver to the customers but also offer warehouse and storage solutions with all necessary storage conditions for different types of goods (Christopher, 2011). When it is necessary, the logistics company can deliver the purchased goods to the customer who have ordered and purchased the goods online to the country and end destination. In the age of technological development and increased business competition, firms are looking for ways to minimize their costs while improving on efficiency and revenue maximization. The study will offer essential insights to Amazon and other firms who are involved in e-commerce. Besides, companies will use the knowledge on the correlation between logistics and e-commerce to design their online businesses to not only reduce the cost but also meet customer demand. Amazon Company will use the findings to make informed decision on whether to outsource logistic services or develop their own logistics department.

Research Methodology

To perform a qualitative research, one need to understand the problems that he/she will encounter, try to analyze the subject matter (human behavior) and answer the questions available so that you get in-depth understanding of the research (Berge & Lune, 2004). When a research want to analyze the human behavior, experience, history and at a time when sensitive questions are asked, it is always prudent to use in-depth interview (Smith, Rupp & Offodile, 2017).

During this study, the data that shall be collected are not just simple human wordings but attitudes, feeling, behavioral change and facial expressions are all involved. The researcher will be prepared in advance with interview transcripts, recording audio, field notes, and research memoranda since the research needs to be vigorous to come up with unbiased result from the findings. In-depth interview involves collection of data, coding of data and then analysis of the same data. All these three methodologies are inter-correlated such that if collection of data is inaccurate, then analysis of the same data might be unbiased to the findings (Bryman, 2017).

In-depth interview is a major source of primary data since the researcher will use the questionnaire. Thus in our study, we will major on the in-depth interview for the senior employees and customers of the Amazon company so that the research can generate primary findings from the first source (Smith, Rupp & Offodile, 2017). For the primary information to be applied in this study it has to be purposely suitable and realistic on the problems that this paper shall look onto, hence this paper will solely depend on in-depth interview from the field.

Data Collection and Data Analysis

This research shall use both primary and secondary data from Amazon Company. Secondary data such as quarterly reports and financial statements will be obtained from company website and databases. Previously studies and case studies on the same topic will be utilized in this report. Primary data will be collected from the field through interviewing of the Amazon employees and the customers. Customers will be appropriate for primary data since have used Amazon e-commerce when they ordered products online and received the same product through an outsourced logistic company or Amazon logistic freights.

Some of the factors to be considered before coming up with the appropriate sample size include the following;

i. Cost factors i.e. if there’s a limited finance then the research will exploit small sample size

ii. Population size i.e. a larger population will allow for a larger sample to be used

iii. Population composition i.e. since those who will be interviewed are of different segments (heterogeneous), then the research will go for large sample.

Generally, this research paper will employ Snowball Sampling. The participants will be majorly Amazon customers and few selected senior employees who might be willing to refer the researcher to other participants who might be having important information. The choice of Snowball sampling is because it is like a web i.e. it is able to bring many participants together to help in getting the full information. It also reduces the burden of lack of significant information since the researcher will be able to get access to those participants who hold sensitive needed answers to the interview.

Interview and the Target Group

Interviews are conducted in two different ways, which includes; face-to-face interview and telephone interview. According to Bryman (2017), face-to-face interview is mostly conducted by the researcher in home places, at work places and is mostly used to get confidential answers from the general. On the other hand, telephone interviews is where the research might decide to minimize travelling and cut cost but still make a phone call direct to the person he/she wants to interview.

The study subject, Amazon Company e-commerce, and logistic correlation will be determined within United States of America. Telephone interviews will be conducted on senior employees of Amazon Company and face-to-face interview for the Amazon Company customers. Using telephone interviews for a given segment of population whom distance or some economic factors might hinder to reach will be employed for those whom the research will consider important for the finalization of the findings onto the correlation between e-commerce and logistics at Amazon Company. Face-to-face interviews will be explored to interview customers who have interacted with the services offered by the Amazon Company. The interview part of it that will be explored when interviewing Amazon Company customers will major depend on whether in any way logistic freights in anyway have ever inconvenience their time when receiving the goods and services from Amazon Company at any time they order them online. In addition, since the target group is the senior employees of Amazon Company and its existing customers, the interview will be conducted within or outside the offices (if interviewing Amazon Company employees) and or within the field for customers of the Amazon Company.

Ethical Implications of the Research Study

Research ethics are the fundamental principles that guide the research when interacting with the people he/she is studying before and after the finalization of the study. These principles include; professional relationship and team work among researchers, fabrication of the data, patent rights, and plagiarism.

Fundamental Research Ethics Principle

According to Bryman (2017), the following three fundamental research principles are necessary for any researcher who wishes to carry out any research and this study will diverge into these major three research ethical principles when carrying out our research. These include;

i. Respect of person requires uttermost good faith for respect of humanity thus this research will ensure that the dignity of every employee and customers of Amazon Company are respected at all cost. Abiding to this principle is to emphasize that those who will be interviewed during the research project are not in any way viewed by a research as a vessel to achieve research objectives but are also valued for their time and inputs (Department of Health, 2014).

ii. Since there will be beneficence, there need a sincere commitment by the researcher to minimize risk associated with the research such as psychological and social risks. During this research study, all information that every interviewee will give to the researcher will be of greater benefit to the findings of this research paper hence it will be prudent to articulate specific ways this will be achieved when interviewing senior employees of Amazon Company .

iii. Justice i.e. those who benefits from the research knowledge should be those who took the burden of the research showing that the gain from the research will be for those who are asked to participate in the research.

References

Amazon. (2018). Background of Amazon Company http://www.amazon.com Access 28-03-2018

Berge, B.L., & Lune. H. (2004). Qualitative research methods for the social sciences (Vol. 5) Boston: Pearson.

Bryman, A. (2017). Quantitative and qualitative research: further reflections on their integration. In Mixing methods: Qualitative and quantitative research (pp. 57-78). Routledge.

Christopher, M. (2011), Logistics & Supply Chain Management (4th edition), Pearson Education Limited, London.

Fan, R., & Li, Y. (2014). The coordination of E-commerce and Logistics: A case study of Amazon. com.

Kauremaa, J., & Tanskanen, K. (2016). Designing interorganizational information systems for supply chain integration: a framework. The International Journal of Logistics Management, 27(1), 71-94.

Department of Health, E. (2014). The Belmont Report. Ethical principles and guidelines for the protection of human subjects of research. The Journal of the American College of Dentists, 81(3), 4.

Rupp, W. T., & Clinton, S. A. (2017). Book Retailers and the Ever-Changing SCM Landscape: Case Study of Barnes & Noble Company and Amazon (pp. 7-9).

Greener, S., & Martelli, J. (2015). An introduction to Business Research Methods.

Smith, A. D., Rupp, W. T., & Offodile, O. F. (2017). Amazon. com, Inc.: Retailing Giant to High-Tech Player?.

Appendix

Key In-depth Interview Guide

Research Objectives

i. To explain the relationship between e-commerce and logistic segment at Amazon company.

ii. To investigate factors that determines development of e-commerce at Amazon Company

iii. To determine how to strengthen logistics segment when developing e-commerce at Amazon Company.

Flow of Discussion

Section 1: Warm Up/Introduction (5 minutes).

Section 2: Getting to know Amazon Company and how it interacts with its customers (10 minutes).

Section 3: Relationship between e-commerce and logistic segment at Amazon Company.

(10minutes).

Section 4: Factors that determines development of e-commerce at Amazon Company (10 minutes)

Section 5: How to strengthen logistics segment when developing e-commerce at Amazon Company. (10 minutes).

Section 6: Wrap Up (5 minutes).

Section 1: Introduction

To make respondent feel comfortable before starting interview

(5 minutes)

 Moderator self-introduction

o Thank respondents for agreeing to take part in the research

o Inform audio recording

o Reassure confidentiality

o Inform for third party evaluation, anonymity and confidentiality

o No right or wrong answers.

 Introduction for purpose of interview – to understand the outcomes, strengths and weakness the research that leads to better and more effective research findings

 Get to know respondent’s name, title and roles etc.

Section 2:

Getting to know Amazon Company and how it interact with its customers (10 minutes)

1. What are the major products of Amazon Company?

2. What are some major inventions on Business to customer at Amazon Company?

3. Do customers complain about speculates accident of third-part-logistic in case of a product return?

Section 3:

Relationship between e-commerce and logistic segment at Amazon Company (10 minutes)

1. Do you think logistic is important for Amazon Company’s running?

2. What’s your opinion about outsourced logistics in the e-commerce operation?

3. Do you believe that Amazon Company’s development is helped by developing logistic

Section 4:

Factors that determines development of e-commerce at Amazon Company (10 minutes)

1. What are some logistic factors that hinder the development of e-commerce at Amazon Company?

2. Should customers be allowed to choose the mode of logistic to transport their products once bought online at Amazon?

3. How does Amazon Company overcome its competitors threats in the e-market operations?

Section 5:

How to strengthen logistics segment when developing e-commerce at Amazon Company. (10 minutes)

1. What should Amazon Company do to strengthen its logistic department when enhancing the e-commerce?

2. Does Amazon Company use outsourcing logistic?

3. If yes, comment on the efficiency of outsourcing logistic and by using the company’s own logistic.

Section 6:

Wrap Up (5 minutes)

1. What can the project do to increase the profile and visibility of the project?

2. What recommendations for consideration would you give to the project?