March 25th, 2014

AMAZON vs WALMART

Which Giant Will Dominate E-commerce? FIVE STARS GROUP
Le Thi Dao Do Thu Trang Tran Thi Tuyet Nhung Tran Hai Ha Le Anh Tuan

Project Description

1/ What concepts in the chapter are illustrated in this case?
2/ Analyze Amazon and Walmart.com using the value chain and competitive forces models 3/ The management, organization and technology factors that have contributed to the success of bothWal-Mart and Amazon? 4/ Compare Wal-Mart's and Amazon's e-commerce business models? 5/ Choosing Amazon or Walmart?

1. What concepts in the chapter are illustrated in this case?
  

E-commerce Ubiquity Global reach


 

Digital goods
B2B- B2C

Transaction broker

Ubiquity: Internet technology is available everywhere: at work, at home….
Transaction broker: sites that process transactions for consumers normally handed in person, by phone, or by mail Global reach: The technology reaches across national boundaries, around the Earth.

E-commerce: Use of Internet and Web to transact business

B2B- B2C: Business to Business – Business to Consumer

Digital goods: are goods that can be delivered over a digital network

2. Analyze Amazon and Walmart using the value chain and competitive forces models.

Methodology
Business Model Value Chain

•Views firm as series of activities that add value to products or services •Highlights activities where competitive strategies can best be applied •At each stage, determine how information systems can improve operational efficiency and improve customer and supplier intimacy •Utilize benchmarking, industry best practices

The value chain model:
Walmart: can lose money selling a hot product at extremely low margins and expect to make money on the strength of the large quantities of other items it sells.
 Wal-Mart’s efficiency, flexibility, and ability to fine-tune its inventory to carry exactly what customers want have been enduring sources of competitive advantage.  Wal-Mart also has a significant physical presence, with stores all across the United States and in many other countries, and its stores provide the instant gratification of shopping, buying an item, and taking it home immediately, as opposed to waiting when ordering from Amazon

Amazon: We bring the items to your doorstep. You don‟t have to fight through traffic or find a parking space.”

Methodology
Michael Porter’s competitive forces model

• Provides general view of firm, its competitors, and environment
• Five competitive forces shape fate of firm • Traditional competitors • New market entrants • Substitute products and services • Customers • Suppliers

Porter’s Competitive Forces Model

The competitive forces models
Traditional competitor: Amazon vs Wal-Mart competition in marketplace Low-cost leader: Amazon and Wal-Mart provide lowest price to customer and keep competing in lowest price New market entrants: both are the biggest company in E-commerce Substitute Products and Services: the competition in discount of two company is prominent

 

 


Customers: no mention
Suppliers: no mention

AMAZON.COM

Amazon developed a value chain

of

itself

to

internal

it

can

operationally best add value and maintain a competitive advantage.

They used the value chain model from Michael and Porter's book, "Competitive Creating Advantage: Sustaining

Superior Performance."

3. What are the management, organization, and technology factors that have contributed to the success of both Wal-Mart and Amazon?

The management, organization, and technology factors that have contributed to the success of Wal-Mart:
Strategy of managing cost Strategy of managing growth Strategy of managing people resources

Budgeting payroll cost

Location.

Motivating employee.

Saving on business travel cost

Acquisition

Internal promotion.

Investing in technology: energy system, new equipped stored. Eliminating unnecessary cost.

External recruitment.

The management, organization, and technology factors that have contributed to the success of Amazon:

Convenience and ease of use
• Large selection: publisher, relations, wholesale relations, unlimited virtual shelf space.

High performance service
• Website is fast, reliable, and easy to use. • Shipping is prompt. • Customer is kept informed. • Innovative technology.

Community
• Posting customer reviews with author reviews. • Customer gifts: bookmarks, notepads, cups, etc. • Promotion where customers collaborate with famous authors.

Large customer database
• Extensive customer profiles. • Search. • Ability to order before publication. • Out of print search.

Cost structure
• Low price. • Low overhead: less employee, less real estate, low inventory. • Fast, reliable, inexpensive shipping.

4. Compare Wal-Mart's and Amazon's e-commerce business models.

Which is
stronger?

e-commerce business models
AMAZON

WALMART

The greatest success story of ebusiness and B2B implementation that dominance the North American retail market. Using a “pull” model where customer demands drive the suppliers. But not always good for suppliers and customers EDI over the Internet (EDI-INT) uses a new standard called AS2, a communication protocol that attempts to make EDI communications over the Internet both secure and reliable

Amazon has expanded from a Business-to-Consumer (B2C) that functionly focuses on business buyers „1-Click Ordering‟, „Customer Viewing‟, „Recently Viewed Products‟, „Keyword Auto-fill‟ on the product search, „Your Personalized Store‟, and „Items to Consider‟. On the flip side, Amazon seems to not have kept up with the Web 2.0 and Web 3.0 user interface improvements and for most part still incorporates Web 1.0 technology

Compare Wal-Mart's and Amazon's e-commerce business models. Which is stronger?

* Wal-Mart is clearly the bigger and stronger of the two.
Consumers associate Wal-Mart with the lowest price, which WalMart has the flexibility to offer on any given item because of its size and ability to keep overhead costs to a minimum.

5. Where would you prefer to make your Internet purchases?
Rich shopping features Strong analytics for product recommendations High quality content

We choose to make my internet purchases in Amazon with considerations as:

Detailed product descriptions User generated reviews and usefulness ratings of reviews

Questions
& Discussion

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