PROJECT ON

Amazon.com
(E-BUSINESS)

SUBMITTED BY

ADITI BHARDWAJ (10PGDM005)

DONA BANERJEE (10PGDM036)

SEC-A
 INTRODUCTION

Amazon was founded in 1995. It is a US-based multinational electronic

commerce company. It has it’s headquarter in Seattle, Washington. It is the
largest online retailer in the United States.

Amazon.com started as an online bookstore, but soon diversified

selling DVDs, CDs, MP3 downloads, computer software, video
games, electronics, apparel, furniture, food, and toys. Amazon has
established separate websites in Canada, the United Kingdom, Germany,
France, Italy, Japan, and China. It also provides international shipping to
certain countries for some of its products. Amazon provides a unified
multichannel platform where a customer can seamlessly interact with some
people that they call the retail website, standalone in-store terminals, or
phone-based customer service agents. Amazon is just like a store - except
that it's online and the "sellers" can be any Amazon user.

So it's purpose is to put all these sellers and buyers into one handy little
place so they don't have to search for items they want on Google - they can
just go on Amazon, choose the cheapest price for the item they want, and
order it. It's definitely got 99.9% of all retail items listed - which include
Books, Movies, Music, Games, Computer stuff, Electronics, Toys, Clothing,
Jewelry, and a billion other different things.

In other words it's just "online shopping". However, Amazon.com was not
placed in the same category as other businesses trialing online servicing.
What distinguished Amazon.com from these other online businesses and
what now allows Amazon.com to claim that it changed the world, includes
its business model and the ways in which it turned the rules of finance
upside down. An initial reason for the choice of books as the first product
for sale on Amazon.com was that selling books online provides consumers
with a virtually limitless selection of books available for their online perusal
or purchase.
BUSINESS MODEL

A business model (also called a business design) is the mechanism by

which a business intends to specify a value proposition or a value cluster
for targeted customers, a financial model and a market offering. It is a
summary of how a company plans to serve its customers and identifies its
product offering. It involves both strategy and implementation.

As Amazon.com was being established, the delivery of information, goods,

or services to end customers employed one strong business model This
business model takes title to the newly manufactured products that they
sell and often rely on third party providers  

When Amazon.com was first launched, Amazon.com was heralded for its
feel-friendly culture that drew talented young people to apply for work there
and insisted on hiring the brightest, most intelligent and versatile people
who could find, even for the packing room. It tried to establish a sense of
community due to sharing both hard work and fun with his employees.
Although the company was paying his employees less than market
salaries, it gave employees ownership in the company and because of
which its employees were happy.

There are three operational strategies that have helped Amazon.com to

enhance its competitive advantage.

1. The first strategy, cost-leadership is pursued by Amazon.com by

differentiating itself primarily on the basis of price. Due to this
strategy, Amazon.com always makes sure that it offers the same
quality products as other companies for a considerably less price.

2. Their second strategy is customer differentiation. Amazon.com

provided current and prospective customers with differentiation
 though design, quality or convenience and Amazon.com always
selects a differentiator that is different among the competitor. So,
Amazon.com consumers can recognize and differentiate its product
from competitors

3. The last strategy that it uses is a focus strategy. This strategy takes
one of the two earlier strategies and applies it to a niche within the
market. Amazon.com focuses on outstanding customer service as a
niche but not the whole market because each niche has its own
demand and requirement. 
REVENUE MODEL
Revenue model is a description of how the organization will earn revenue,
produce profits, and produce a superior return on invested capital. The
major revenue models are:

Sales revenue model: A company gets the revenue by selling goods,

information or services.

Transaction fee revenue model: A company receives a commission

for enabling or executing a transaction. It is based on the volume of
transactions made.

Advertising revenue model: A company provides a forum for

advertisements and receives fees from the companies that advertise their
products.

Subscription revenue model: A company charges a subscription fee

for the users that access to the content and services offered.

Affiliate revenue model: A company receives commissions for

referring customers to others web sites.

Amazon.com is an online bookstore in the early stage but soon it diversified

into different product line like VHS, DVD, music CDs and mp3, computer,
software, toys and so on. Therefore, the Amazon.com generates its
revenue by sales of goods, merchandise information and service provided
in the website. It allows user to submit reviews to the web page of each
product. They also have to rate the product on a rating scale from one to
five stars. Moreover, the users are allows to comment on reviews.
Amazon.com provides an optional badging option for reviewers to indicate
that the reviewer is one of the top reviewers. Amazon is pioneer affiliate
partnership marketing. An Amazon partner website can display Amazon
books directly on their website, and sends customers to the Amazon’s
website when the visitor is ready to buy it. In turn, Amazon pays a
commission for the sale to the site owner.

Amazon Marketplace is a fixed price online market place that allows sellers
to offer their goods alongside Amazon’s offerings. Buyers can purchase
new and used items which sold directly by a third party via Amazon.com by
using Amazon Marketplace. Amazon charges a commission rate based on
the sale price, a transaction fee and a variable closing fee which is a very
profitable sales strategy.
Furthermore, Amazon.com was one of the first online businesses to set up
an affiliate marketing program. AStore is an Amazon.com affiliate product
which website browsers can use to create an online store on their sites.
Website owners are not allowed to sell their own products directly; they
have to pick products from the store and earn referral fees on the products
purchased by their readers. The fee structure is range from 4% to 10% of
the product price.
CURRENT SCOPE & FUTURE
SCOPE OF Amazon.com

An initial reason for the choice of books as the first product for sale on
Amazon.com was that selling books online provides consumers with a
virtually limitless selection of books available for their online perusal or
purchase. Amazon.com now has 4.5 million books on offer to customers
around the world. Additionally, the internet retrieval and interface
technology enables the consumers to search the entire database for books
in print. Books require little need for hands-on product trial. Everybody
understands what a book is, therefore there is no need for product
explanation and would be the same as that purchased in a bricks and
mortar bookstore and this was one of the fundamental reasons for the
choice of an online bookstore.

Amazon.com sales have been growing gradually. The secret to its success
and profitability is customer retention - ensuring customer loyalty and
repeat customers. Amazon.com pioneered new technologies, such
as collaborative filtering, which suggests products that each individual
buyer might like by comparing them to other user's preferences. Also,
Amazon.com is continuing to work on further price reductions as well as
offering free all-year-round shipping. Therefore, nearly 70% of Amazon's
sales are from repeat customers.

Now, customers can buy many items from Amazon.com, however because
of the rapidly changing e-market, the quantity of products for sale on
Amzon.com is not enough. Most of the sales are coming from people that
already shopped online, that love the convenience of it, want to stay away
from the malls, took advantage of the free shipping promotions and spent
more of their total shopping dollars online. Therefore, customer retention is
so important for amazon.com future. Amazon.com will create strategies to
maintain its customers. Customers of the future will demand more
convenience and privacy. Interactivity will be the norm rather than a one
way pushing of information For example, Dell can customize computers in
response to customers' online requests. In the future this service will not
only be restricted to personal computers. A customized order may in the
future be placed at Amazon.com for a book comprised of six chapters on
Russian stamps from six different books, or a CD with 12 tracks that the
purchaser specifies, or a pair of pants cut to your measurements).
Amazon.com is not as developed in online delivery services. Someday a
customer might be able to order a book as a multimedia file to download to
a CD. It's happening with software and other print media such as
magazines so why cannot Amazon.com.

Also, Amazon.com needs to begin using the Net to enhance production

and distribution. Multichannel retailing will be the norm in the future.
Amazon.com will form partnerships with bricks-and-mortar retailer, the
number of companies that will take the bricks-and-clicks approach will
increase and online shopping will be viewed as one channel for gathering
information. Consumers shop at stores that they trust and like. The unique
brand position of Amazon.com will be its biggest strength. Amazon.com will
be attempting to occupy market shares from their off-line competitors. Price
reductions and year round and free shipping continues to aid Amzon.com
in sustaining its competitive advantage and maintaining market share.

In all, Amazon.com has clearly and admirably demonstrated how quickly a

business can develop and grow in the internet environment. Consequently,
through its actions and own experimentations, Amazon.com has
established a model for future online retailers to follow and experiment with
themselves.