Amazon is a company that has overcome lots of difficulties during its history. These difficulties are sometimes born in the market, these are the market forces. “Market forces shape and constrain a firm’s behaviour and interact with the firm’s decisions to determine profitability.”[1]
Demand is a really important market force that Amazon has to take always into consideration because is the very first way of making money. Sometimes some potential customers in society really put companies under pressure (bargaining power of customers). This time, some customers said they needed physical stores. They complaint about the lack of shops to buy. This thought change may be dangerous to a company like Amazon or any other “online” company. If these companies do not change themselves to fulfill this desire in society, they may lose potential customers. In this case, we can see that Amazon opened in Seattle a store. Is this a way of it telling the society: “calm down, we know what you want”?
Related also to demand is how the complete path of Amazon has changed. As customers buy products, they want more products and Amazon has always satisfied these desires. This is probably how it has become one of the most important companies in society, thanks to the wide range of products it sells. Diversification is the key in Amazon. This company started selling books and now you just have to check that almost anything is being sold here. The threat of substitutes has been more or less overcome with this strategy. If you offer substitutes of your products and your market share is big enough, you will exponentially grow in sells due to these two opposite products.
Amazon is a company that has lots of strengths and it has used them during its development. Supply can be its very best resource. This company not only sells a wide range of products, but it also sells them on the Internet. Current society is willing to save time for other activities rather than spend this valuable time buying products that do not need a huge amount of decision time. Moreover, if this “easy” product can be right in your house tomorrow, why would you go to a supermarket or a close shop instead of using this time to watch a movie or going to the gym? This is basically the main resource of Amazon and it is the one that engage its buyers.
Within this huge tool, there are also different capabilities in Amazon. Differentiation is one of them. Amazon sells lots of different products, but it offers personalization. It sells the buyer the product, but many companies have their own online sites to sell. The difference between them can be the will to give you not what you need, but what you really want. There are some options in Amazon as “related with your purchase”, “because you have searched this product” or “recommended for you”. It is easier to find what you want if cookies and different tools choose these products for you. Moreover, Amazon offers you the possibility to be a premium user and enjoy films, series and movies in Amazon Prime. Why paying other streaming platforms that only offer you this or why paying other online seller webs that only offer you this other thing if you can have both within one price? The same can be said related to the Kindle e-reader and what the company offered to India.
Also, it goes without saying that technology has been key during the whole development of the company. The more money the company earns, the more and better technology the company can afford and with this, again the more money the company earns. It goes round and round in circles.
Also, it goes without saying that technology has been key during the whole development of the company. The more money the company earns, the more and better technology the company can afford and with this, again the more money the company earns. It goes round and round in circles.
As we see, Amazon is not offering just products, but it is offering accessibility and ease. Amazon has used its competitive advantages correctly and in the best time because there were almost none competitors and now that some of them could “copy” Amazon’s idea it is too late for them because how big Amazon is. It is creating almost a monopoly because it supplies to your house in one day almost anything you can imagine with just a click.
[1] Besanko, D., Dranove, D., Shanley, M., and Schaefer, S. (2013): Economics of Strategy, 6th Edition. John Wiley & Sons Inc.
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