Amazon.com in recent years has become dominantly influential across the globe, in light of its constant development on the range and features of its service. Not only has the transformative influence the company impacted on its rivals in the online technology/ business industry, but also on its customers, partners and workers and thus, the whole society. This analysis will start with some introductory information regarding the historic development of Amazon.com, with a supplementary infographic to demonstrate the scope of this online company and its competitiveness over its competitors, in particular, its ‘cash cow’ product Amazon Web Service. It will then be followed by a comprehensive analysis of the transformative effect the company has to lead the internet, especially in fields such as cloud storage service, data-driven economy, and machine learning, and the impacts in the political, economic, social terms.
Started up as a Seattle-based online bookstore in 1994, Amazon.com is now the second-largest company in the U.S. and the most valuable brand on the planet. (Hanbury,2019) Led by the founder- Jeff Bezos, Amazon’s ambition is to be Earth’s most customer-centric company’ (Amazon, 2018, p.3) The company has divided their business into 3 segments which are North America, International and Amazon Web Service. (Amazon, 2018) Ranging from home electronics made in Japan to Books published in London, from clothing to now the Kindle- Amazon eBook reader, Alexa – AI home device invented by Amazon, consumers are able to purchase through the Amazon marketplace, and receive the goods next day with their prime service. (Amazon, 2019) The product inventory is partially supplied by external vendors such as local shops to branded companies (CNN, 2019)
According to Inc, Amazon’s bookselling business sales exceeded $20,000 a week in the first two months in 1995. (INC, 2009) Rapid growth and expansion have taken place across the U.S., and then the globe after its publicization in 1997.(Depillis & Sherman, 2018) The company started its acquisition of businesses, in order to expand its distribution channel across the globe and the product range since 1998( amazon.com.au wasn’t established until 2013). (Myers, 2019) Amazon has taken up the dominant market share in different product groups, house improvement tools, fashion, ebook, just to name a few.(Chaffey, 2018) The company takes further steps on developing AI devices and sensible technology, including cashierless convenient stores, kindle and Alexa.
AMAZON WEB SERVICE (AWS)
AWS is a cloud-computing service provided by Amazon since 2003.(Depillis & Sherman, 2018) The initial objective of AWS is to provide platform frameworks and space (that was not as utilized by Amazon business) to companies to launch their own online existence on the internet e.g. target.com. (CNN,2019) The service currently takes up at least 50% of the cloud-computing market share. (CNBC, 2019)
The general manager at Amazon Business explained,
“ ….(AWS) got their start when Amazon began building compute power and storage solutions that we required to serve our consumer customers. We then took that technology, leveraged it, and sold it as a service to Fortune 100 companies, federal agencies, state and local governments, and educational organizations in the public sector. I think that’s a pretty good indicator of how Amazon thinks about engaging with organizations. We’re not here to supplant and replace; we’re here to enable and empower. “ (Burker, 2017, p.36)
AWS currently provides 3 major categories of cloud-computing service, which is 1. Infrastructure As a Service(IaaS) – offering virtual servers and storage services I.e. EC2, 2. Platform as a Service(Paas) – offering digital transportation as a platform , and 3. Software as a Saas(Saas)- offering cloud software services I.e. S3. Its servers and data centers are located in 12 different global regions due to the security protection of data. (Investopedia, 2019 )
Spotify, Netflix, Dropbox, just to name a few, are also their clients, who handle their core operations to AWS’s Iaas. These online companies have disrupted the traditional market in their fields without ‘physical existence’ in the market, and their successful transformation triggered in their industries are hugely contributed by AWS, where they were able to build their business without hardware cost for their online operation. See more case studies on website.
THE AMAZON BUSINESS MODEL
Jeff Bezos implemented a competitive, long-term, development-focused strategy in the company’s business model, working towards what he believes is customer-centric. (Amazon, 2019) The company adapts competitive pricing strategy on its products and services, along with constant and innovative services and features launches. The business also provides subscription-based Amazon Prime membership for their loyal customers, which members can enjoy next-day delivery service and other privileges. Meanwhile, The company also invest heavily in information technology for the rise of global internet on the sensor and automotive technology adoption, for instance, Cashierless convenient stores, drone delivery, prime air, Alexa etc. This is why ‘We’re going to be unprofitable for a long time. And that’s our strategy,’ Bezos told Inc. in 1997.(INC., 2009)
What attribute Amazon to the leading position in the cloud computing service industry even ahead online giant Google, were the wide range provision of services with high flexibility targeted at different customers. Not only end-users on the internet who seek for cloud storage for personal storage, but also smart-ups who needs hardware and cloud storage to support their connectivity and operations daily with certain stability and reliability. After the bankruptcy the company went through during the great recession, with the long term investment strategy that Bezos inclined, Amazon was not considered as profitable business with its business model and financial performance before the establishment of AWS, which reportedly take up more than 50% of the market share of cloud-computing service, and contribute $7.7billion sales to Amazon’s total sales in Q1, according to CNBC.(CNBC, 2019)
AMAZON’S ECOLOGY MAP
Stakeholders in the ‘Amazon ecology’ include owners, partners, suppliers, and customers. Due to the distinct business model and target between amazon’s retail business and AWS, details in each of the stakeholders are divided into two half, where the left side(red-coloured) represents stakeholders in amazon online shopping business, and right side(yellow-coloured) represents stakeholders in AWS.
Figure 1. The Amazon.com Ecology | Image source: Wikimedia commons, licensed under
HOW HAS IT COME TO HAVE SUCH A TRANSFORMATIVE EFFECTIVE?
Again, the ‘keeping customers in Amazon’s ecology’ strategy Bezos emphasized in his business model is the key tactic that maintains the business’s competitiveness, attract high rates of customer loyalty and turnover. Bezos incline to invest on technology innovation to adopt in his business and therefore risk-taking weighted their long term investment on their capital and infrastructure over their profit margin (which could have financially appeal to investors for higher share price) (Investopedia, 2019)
When the business managed to captivate its customers under the range of its business, the rise of market status also brings greater market influence on the internet business and maintain a certain degree of dependence of their users on its ecology.
A statistic research has revealed that Amazon Prime members has reached over 100millions people in late 2018. Such high customer loyalty in amazon as an online shopping platform, saved certain costs for amazon’s marketing expense and increase its competitiveness which attracts both customers to buy from them and third party suppliers to sell them products. At the same time, this could increase the bargaining power with their partners for a potentially larger profit margin. Loyal customers also tend to be willing to try out or adopt amazon’s transformation on experience, which (if successful) lead to a different extent or level of expectations on internet technology. When competitors(of amazon or amazon as the competitor) spot the success on rivals’ transformation and the need to improve customer experience in order to reach a similar level of expectations and competitiveness. This whole competition reinforces the business’s leading position and influence on consumers, internet users’ digital experience, and gradually to the culture and our understandings of the internet. (Wilken, 2015 )
On the other hand, the high level of customer loyalty implicates that certain customers who use amazon constantly provide and produce certainly an adequate amount of data for amazon to analyze and then provide access to its clients on AWS. This is another influence of Amazon which drive the data-driven economy to Dataveillance, which refers to the monitoring of consumers within their system- Alexa Ranking Analysis. (Clarke, 2003)
Moreover, as AWS becomes increasingly instrumental as it powers more and more traffic in the digital world, boosting the interactivity and connectivity between their customers and the internet users, it also reinforces the sharing ecology practices. Not only does this refer to data-driven economy or the eCommerce industry, but it also refers to the internet of things in political and social perspectives. Taking advantage of this low-cost and effective connectivity, like social media, digital activism and fundraising website also powered by AWS.
According to CNBC, Aws has more than 40 contracts signed with different federal government departments to provide website protection and data storage(rolls and election real-time result pages). (CNBC,2019)
However, facing those disruptive technologies, rapid digital transformation on our lives, and the increasing power of online technology private companies, there are issues comes that society fear when anticipating their future in political, economic and social perspectives.
Issues and complaints around the harsh working conditions of Amazon’s workplaces, including warehouse, delivery, their vendors, and employee mistreatment have frequently featured on headlines.
Amazon Employees Speak out about workplace conditions.
Jeff Bezos' D.C. mansion will have:
— 2 elevators
— 25 bathrooms
— 1,006 light fixtures
— A full movie theater
Amazon's Whole Foods cut health benefits for part-time workers less than 2 months ago.
Tax the rich.
— Robert Reich (@RBReich) November 4, 2019
According to CNBC, Amazon-owned supermarket Whole Food will be cutting health care benefits for 1900 part-time employees in 2020, criticism fuel by a tweet from Former U.S. Labor Secretary on the contrast between Bezos and his workers. Nevertheless, the potential of over-centralization of resources i.e. data, land and infrastructures, consumptions, and supplies i.e. inventory as well as workers, all-in-one provided by a private firm or a few, worried by the government the public.
Amazon since launch has been a frontier in developing and adopting information technology, and unprecedentedly disrupted not only the eCommerce field, but also technology industries especially with its cloud-computing service AWS, and most importantly, social and cultural influences such as transformation on shopping culture, job insecurity, public fear of over dataveillance privacy issues and over-centralisation of market power and resources on its stakeholders who keep the whole Amazon ecology running.
Amazon. (2019). Introducing Amazon Go and the world’s most advanced shopping technology [Video]. Retrieved from https://www.youtube.com/watch?v=NrmMk1Myrxc
Amazon.com. (2019). 2018 Annual Report. Seattle: Amazon.com. Retrieved from https://ir.aboutamazon.com/static-files/0f9e36b1-7e1e-4b52-be17-145dc9d8b5ec
Andrejevic, M., & Burdon, M. (2014). Defining the Sensor Society. Television & New Media, 16(1), 19-36. doi: 10.1177/1527476414541552
Burke, R. (2017, 04). THE CONTRACTING TOOLS OF THE FUTURE: A conversation between GOVERNMENT INDUSTRY. Contract Management, 57, 28-32,34-36,38-44. Retrieved from http://ezproxy.library.usyd.edu.au/login?url=https://search-proquest-com.ezproxy1.library.usyd.edu.au/docview/1898376244?accountid=14757
CNBC. (2019). How Amazon Paid $0 Federal Income Tax in 2018 [Video]. Retrieved from https://www.youtube.com/watch?v=qNg55JDMDHM
CNBC. (2019).How Amazon.com moved into the business of US elections. (2019). Retrieved 8 November 2019, from https://www.cnbc.com/2019/10/15/how-amazon-moved-into-the-business-of-us-elections.html
Columbus, L. (2018). Roundup Of Cloud Computing Forecasts And Market Estimates, 2018. Retrieved 8 November 2019, from https://www.forbes.com/sites/louiscolumbus/2018/09/23/roundup-of-cloud-computing-forecasts-and-market-estimates-2018/#5799c2c507b0
Depillis, L., & Shreman, I. (2018). Amazon’s extraordinary 25-year evolution. Retrieved 7 November 2019, from https://edition.cnn.com/interactive/2018/10/business/amazon-history-timeline/index.html
Hanbury, M. (2019). Amazon’s market share was dramatically downgraded, and it could be a weirdly good thing for Jeff Bezos. Retrieved 8 November 2019, from https://www.businessinsider.com.au/amazon-market-share-downgraded-could-be-good-jeff-bezos-2019-6?r=US&IR=T
Myers, A. (2019, Spring). AMAZON DOESN’T HAVE AN ANTITRUST PROBLEM: AN ANTITRUST ANALYSIS OF AMAZON’S BUSINESS PRACTICES. Houston Journal of International Law, 41(2), 387+. Retrieved from https://link-gale-com.ezproxy1.library.usyd.edu.au/apps/doc/A594180195/LT?u=usyd sid=LT xid=0f71c98b
Narula, S., Jain, A., & Prachi. (2015). Cloud Computing Security: Amazon Web Service. 2015 Fifth International Conference On Advanced Computing & Communication Technologies. doi: 10.1109/acct.2015.20
NBC News. (2018). Amazon Employees Speak Out About Workplace Conditions | NBC Nightly News [Video]. Retrieved from https://www.youtube.com/watch?v=tvdyxXhVNRE
Robert Reich. Twitter. Posted on 5th Nov 2019. https://twitter.com/RBReich/status/1191453134318518273?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1191453134318518273&ref_url=https%3A%2F%2Fwww.truthorfiction.com%2Fdid-jeff-bezos-cut-whole-foods-workers-benefits-as-he-bought-a-second-mansion
Spiro, J. (2009). The Great Leaders Series: Jeff Bezos, Founder of Amazon.com. Retrieved 7 November 2019, from https://www.inc.com/30years/articles/jeff-bezos.html
Page, V. (2019). What Is Amazon Web Services and Why Is It so Successful?. Retrieved 8 November 2019, from https://www.investopedia.com/articles/investing/011316/what-amazon-web-services-and-why-it-so-successful.asp
Wu, J. (2019). Whole Foods to cut health-care benefits for 1,900 part-time employees starting next year. Retrieved 5 November 2019, from https://www.cnbc.com/2019/09/12/whole-foods-to-cut-healthcare-for-1900-part-time-employees-in-2020.html
Image used in figure 1licensed under the Creative Commons Attribution-Share Alike 4.0 International license. From Wikimedia commons .