Over the years, the advent of the internet and information technology has completely changed the way of doing businesses. The advancement of technology and the growing use of internet services has been playing an important role in the immense growth of electronic commerce (e-commerce) during the last two decades (Khan, 2016). Amazon is one of the largest e-commerce and technology company in the world. At present, the Amazon is among the big four technology organisations in the world along with Google, Facebook and Apple. Amazon is also considered as one of the most innovative companies in the world.
By focusing on the importance of technological innovation and internet transformations, the essay aims to profile and critically analyse the revolutionary impact of the Amazon on the business environment. In the first section, the essay will provide an overview of Amazon and its businesses. In the second section, the essay will present a brief description of the historical development of the Amazon and its businesses. In the third section of the essay, the innovative business model of Amazon will be analysed. In the fourth section, the essay will discuss in brief about the social ecology of the company along with an ecosystem map. Lastly, the essay will discuss the internet transformations and technological innovations that Amazon has achieved.
Overview of Amazon
In today’s’ technological business world, Amazon is one of the most valuable organisations in the world. By considering revenue, this Seattle, Washington based e-commerce giant is the second-largest technology company in the world. The company started its business as an online bookstore but with the passage of time, the company expanded its business to the online selling of toys, electronic products, food products, jewellery items, clothing, software, apparel, video games and fashion products (Noe & Weber, 2019). Amazon serves its potential customers with the help of its website and mobile application by focusing on the customer’s selection, price range and convenience. The company allows the users to shop online by using their laptops, computer and mobiles with the help electronic transaction. The company also allows the sellers to sell their products on the retail website of the company (Amazon, 2019). Over the years, Amazon has successfully made a sense of belief and trust among its customers. The company works effectively and efficiently to become the most customer-centric company in the world. Through its innovative ideas and strategies, Amazon has created a significant impact on the communities, economy, employees, businesses, and customers. Thus, Amazon is one of the most valuable companies in the world.
Figure 2: Logo of Amazon; Picture Source: (ABC7 News, 2019)
History of Amazon’s development
At present, Amazon is one of the biggest e-commerce and technology company in the world. This Seattle based e-commerce giant was founded by Jeff Bezos in the year 1994. Initially, the company started its business as an online bookstore which was operated from the garage of Jeff Bezos’s house (Noe & Weber, 2019). By understanding that the internet is the future of the business, Jeff Bezos launched its website on July 16, 1995. The company was founded with a vision to become the most customer-centric company in the world. After almost two months of its beginning, the sales of Amazon reached $20,000 per week (BBC News, 2019). In the year 1997, Amazon goes public by issuing its IPO of stock at $18 per share which helped the company to raise increase its market capitalisation (Fundable, 2014). In the year 1998, Amazon extended its business and started selling music and videos through CDs and DVDs and later started selling electronics, video games, toys, software and home improvement items in the same year (Noe & Weber, 2019). In 1998, the company also began its international expansion by acquiring online sellers in the UK and Germany.
Video on Amazon Success over the years
During the beginning of the 21st century, the dot-com bubble burst became the reason for the failure of many e-companies but Amazon survived and became the leader of online shopping. In the fourth quarter of 2001, the company earned its first profit from the business. In the year 2002, Amazon started online selling of clothes by forming partnerships with 400 major clothing brands (Kandemirli, 2018). The company introduced its Prime membership program in the year 2005 with a subscription of $79 per year which offered 2-day free shipping on all orders (Noe & Weber, 2019). Amazon launched its Kindle in the year 2007 which is an electronic device that allows users to download magazines, books and newspapers of their choices. By the end of the year 2011, the company had more than 30,000 full-time employees (BBC News, 2019). In the year 2014, Amazon launched its first virtual personal assistant. In 2019, Amazon has completed 25 successful years in its business and the net revenue of the company in 2018 was around $232.89 billion, up from $8.49 billion which shows a tremendous growth of the company (Statista, 2019).
Figure 3: Amazon revenue growth from 2004 to 2018; Picture Source: (Statista, 2019)
Amazon’s revolutionary business model
A business model refers to an abstraction of a business that identifies the ways in which the inputs to a company can be transformed into a profitable and value-added output (Betz, 2002). The business model of Amazon is a diversified business model. The innovative strategy and business model designed by Jeff Bezos helped Amazon to become the leader of the online business. Through his innovative and risk-taking approach, Jeff Bezos transformed Amazon into a risk-taking organisation through the complete growth and development in the market (Ritala, et al., 2014). This risk-taking and innovative approach of Jeff Bezos helped him to create an innovative working environment which promotes the continuous experimentation and invention in order to bring something new in the market. The revenue of the company comes from different services of the company like physical stores, online stores, Amazon AWS, Third-party seller services, advertising services and subscription services. More than 60% of the total revenue comes from the online stores of the company (Heriot-Watt University, 2010).
Figure 4: Amazon Flywheel; Source: (Heriot-Watt University, 2010)
According to Jeff Bezos, the business model of the company is mainly focused on the four main principles including customer obsession, long-term planning, operational excellence and passion towards innovation (FourWeekMBA, 2018). The customer-centric strategies and business model proved to be a vital element behind the global success and growth of the Amazon over the years. Jeff Bezos stated in an interview that obsessive customer focus is the most important aspect for achieving long term growth and success in the market as compared competitor obsession, technology obsession and product obsession (Ritala, et al., 2014). Another significant aspect for the continuous growth and success of Amazon is its long-term planning which helps the company to plan effective strategies for the future. Being an innovative and creative organisation helped the company to cause some disruptions in well-established industries. The innovative and creative approach of the company makes the company unique from its competitors. The commitment of the company towards operational excellence fosters the idea of continuous improvement in the company which helps the company to deliver the best product and services to the customers (Heriot-Watt University, 2010).
Figure 5: Amazon Business Model; Picture Source: (Heriot-Watt University, 2010)
Ecosystem of Amazon
Internet ecosystem is one of emerging and new kind of ecosystem which became a significant part of the business world. The internet ecology refers to an ecosystem that consists of a social and business organised system of the internet technologies which supports the each other in the ecosystem to carry out their business operations (Smart, et al., 2017). The ecosystem of Amazon is so broad and diversified as it comprises of many partners, competitors, users, regulators, owners and suppliers. The e-commerce and technology industry is one of the most competitive industry in the world. Amazon is one of the leading technology and e-commerce company but the company faces immense competitions from some major competitors. The list of major competitors of the company includes Walmart, eBay, Alibaba Group, Microsoft, Apple, Flipkart, Netflix, Best Buy, Home Depot, Oracle and Salesforce. The business of the Amazon is too diversified due to which the company aims to target a wide audience. The potential customers and users of Amazon are online buyers ranging young to old age including students, employees, growing start-ups, established enterprises, government agencies, and professionals (Amazon web-services, 2019).
The core suppliers of Amazon are the companies who deliver materials and required items to the company. The key suppliers of the company are Applied Optoelectronics, GoPro, Nautilus, FitBit, and Lifetime Brands. As the company deals in different businesses, the company has different partners including third-party sellers, payment partners like Visa, OpenCart, Zuora and MasterCard, established brands like Adidas, Urban ladder, Inner Chef, Haptik, bookmyshow, Faasos, Coffee Café Day, Lavie and other established brands (Amazon.in, 2019). The municipal governments, city governments, state governments, central governments and governmental regulatory bodies have the role of regulating Amazon in different countries. For example, the Australian Competition and Consumer Commission is the regulatory body for the online and technology businesses like Amazon. The innovative approach and unique service offerings of the make the company different from its competitors due to which the company is successful to become one of the leading technology and e-commerce company in the world.
Figure 6: Amazon’s Ecosystem
Transformative innovations of Amazon
The business model and strategies of Amazon are considered as one of the most innovative models in the world. Over the years, the company has brought so many new innovative ideas and concepts in the business that completely transformed the business environment. One of the most significant changes or transformation that the company brought in the community is the transformation of shopping style by introducing the concept of online shopping and transaction (LaVecchia & Mitchell, 2016). The “one-click’ concept of Amazon has revolutionised the way the people used to shop. The advent of Amazon made shopping easier and faster. The door to door delivery service of Amazon has changed the approach of the customers and companies towards the businesses and through these innovative ideas and concepts, the company has successfully achieved the truth and belief of the customers (Andrejevic & Burdon, 2014). The innovative and risk-taking approach of the company has completely transformed the digital ecology as a result of which the dependency of the businesses on technology has been increased.
Figure 7: Screenshot of Amazon Prime; Source: (Life Wire, 2019)
The introduction of its new technologies like Amazon Kindle, Amazon Echo, Amazon Alexa and many other technologies helped the company to make a mark in the technology industry and transform the digital ecosystem of the business world. The application of smart technologies like artificial intelligence, advanced robotics, cloud computing, RFID, and chatbots has completely changed the way organisations towards customer value creation processes (Forbes, 2017). The growth and development of Amazon as a technology and e-commerce company not only create new opportunities in the market but also introduced new industrial and cultural practices regarding shopping and reading (Fortune, 2018). As the technological innovations and experimentation brought so many changes in the business world, it is very difficult to ignore the social, cultural, economic and political impacts the company have on the society and business world.
Amazon is one of the biggest companies in the world and one of the leading technology and e-commerce company in the world. Over the years, Amazon has brought so many changes and revolutions in the business world through its innovative and creative business models and strategies. The Amazon has been playing an important role in transforming the online shopping industry, online reading, online streaming of movies and videos and online gaming. Over the years, the company has also been creating new opportunities for youngsters and working professionals to work together and contribute to the economy of their countries. In the last two decades, Amazon contributed a considerable part in the world economy.
ABC7 News 2019, How Amazon’s latest HQ2 job listings hint at Alexa’s future in Arlington, viewed 08 November 2019, https://wjla.com/news/local/new-job-listings-posted-for-amazon-hq2.
Amazon Web-Services 2019, AWS Customer Success, viewed 08 November 2019, https://aws.amazon.com/solutions/case-studies/?customer-references-cards.sort-by=item.additionalFields.publishedDate&customer-references-cards.sort-order=desc&awsf.customer-references-location=location%23apac&awsf.customer-references-segment=customer-segm.
Amazon.in 2019, Featured Partners, viewed 08 November 2019, https://www.amazon.in/b?ie=UTF8&node=13833757031.
Amazon 2019, About Amazon, Amzon Inc., Seattle.
Andrejevic, M & Burdon, M 2014, ‘Defining the Sensor Society’, Television and New Media, vol. 16, no. 1, pp. 19-36.
BBC News 2019, Amazon at 25: The story of a giant, viewed 08 November 2019, https://www.bbc.com/news/business-48884596.
Betz, F 2002, ‘Strategic Business Models’, Engineering Management Journal, vol. 14, no. 1, pp. 21-27.
Forbes 2017, How The ‘Amazon Effect’ Will Change Your Life And Investments, viewed 08 November 2019, https://www.forbes.com/sites/adamhartung/2017/02/28/how-the-amazon-effect-will-change-your-life-and-investments/#78ecaf505e76.
Fortune 2018, Americans Say Amazon Has the Best Impact on Society, Topping Google and Apple, viewed 08 November 2019, https://fortune.com/2018/04/23/amazon-positive-impact-survey/.
FourWeekMBA 2018, How Amazon Makes Money: Amazon Business Model, in a Nutshell, viewed 08 November 2019, https://fourweekmba.com/amazon-business-model/.
Fundable 2014, Amazon Startup Story, viewed 08 November 2019, https://www.fundable.com/learn/startup-stories/amazon
Heriot-Watt University 2010, Amazon.com, Heriot-Watt University, Edinburgh.
Kandemirli, B 2018, Amazon.com’s Digital Strategies: Amazon.com’s case study, The University of Manchester, Manchester.
Khan, AG 2016, ‘Electronic Commerce: A Study on Benefits and Challenges in an Emerging Economy’, Global Journal of Management and Business Research, vol. 16, no. 1, pp. 1-6.
LaVecchia, O & Mitchell, S 2016, Amazon’s Stranglehold, Institute for Local Self-Reliance, Washington DC.
Life Wire 2019, Amazon Prime Video: What to Know, viewed 08 November 2019, https://www.lifewire.com/amazon-prime-video-4176363.
Noe, C & Weber, J 2019, Amazon.com, Inc., MIT Sloan School of Management, Cambridge.
Ritala, P, Golnam, A & Wegmann, A 2014, ‘Coopetition-based business models: The case of Amazon.com’, Industrial Marketing Management, vol. 43, no. 1, pp. 236-249.
Smart, P, Heersmink, R & Clowes, RW 2017, The Cognitive Ecology of the Internet, Springer, Switzerland.
Statista 2019, Annual net revenue of Amazon from 2004 to 2018, viewed 08 November 2019, https://www.statista.com/statistics/266282/annual-net-revenue-of-amazoncom/.