Amazon Australia (AU)
Institution of Affiliation
Amazon Australia (AU) is one of the largest international online retailers and enjoys both local and international markets. Jeff Bezoz, the founder of the company started the business in America in 1995 with the aim of selling eBooks, articles, and journals online to the public. Over the last two decades, Amazon has strongly managed to compete and defeats its competitors in the global market. According to the company’s founder, Jeff Bezoz, the Amazon objectives expanded to selling of products such as computer software, CDs, DVDs, furniture, and toys after getting strong demands from its potential customers across the world (Castillo, 2014). However, at the beginning of the online business, the company went through financial crisis which made it somehow hard to effectively compete with other companies that provide online services. But later, the company’s management managed to curb the situation leaving it as the most promising company followed by Apple.
The competition trends in any online business are dynamic and Amazon Australia cannot depend mainly on its competitive advantages. As claimed by Castillo (2014), the level of competition in this kind of business is strong and Amazon needs to come up with some strategies to position itself safe and secure from any external threats. Although there is strong competition in this online business, Amazon continues to provide many different products including eBooks, toys, CDs, electronics, computer hardware, and home based products to its potential customers across the world. Statistically, the company has customers in more than 170 countries around the world which makes it enjoy global market. According to the founder, the company plans to accomplish its vision of being the world most customer-based company and also creates a place for discovering new products online. In addition, the company believes that investing in technology will contribute a lot to its growth as it will attract more potential customers from all corners of the world. This report will discuss different ways in which the Amazon Australia company is using to offer quality online services to its customers, the value chain of management, existing problematic human activity system within the Amazon Australia and how to improve them, and proposed information system to effectively support the company’s operations. It will also provide necessary recommendations on what the company should focus on in order to improve its customer’s service globally (Castillo, 2014).
Background of the Amazon Australia
The Amazon Australia is an electronic company that provides different products to the public and also offers free shipping service for the products ordered by the customers. The company was established as an online company offering books, but later incorporated different types of goods and services including electronic items, books, and apparel. Internet use has enabled many people to effectively complete different transactions within the shortest time possible. However, the Amazon Company continues to enjoy global online economy as there are no many companies to compete with it. The only company which somehow tried but did not manage to sustain pressure from the Amazon is Apple when it launched the use of iPads in converting eBook. Currently, the Amazon Australia offers Amazon Prime to help the existing customers to access many different products on the Amazon.com, for example, in the United State of America, Amazon Prime provides 24 hours delivery depending on the geographical location of the end user.
In terms of revenue contribution, the Amazon Australia charges around $6.99 per month and $59 for prime users. In case one plans to join the company before 31st January, 2019, he or she will have to pay at least a monthly charge of $4.99. The company, in its last year report, states that it is planning to have adequate capacity to deliver products and services to the customers within two days upon request. Collectively, Amazon Australia contributes significantly to the economic growth of the country. The company keeps its price minimum attracting more global customers to join it. Additionally, the company does not charge any product that has been rejected by the customers.
Amazon Selling Strategy
Amazon has different ways of promoting its online products to the people across the world. It divisions its markets basing on the geographical location of the customers, however, for psychographics, the company focuses on the individuality of each customers and also examines its needs converting one-time visitors to potential customers. To further, the company analyses its customers’ buying behaviors as well as their shopping preferences electronically. Also, apart from using publication method to market its products, the company can use this information to target certain customers, demographics, and geographies and this has succeeded in many cases. All of its targeted ads, for instance, social media ads, well-published sales, and Google ads continue to play a significant role of promoting the company’s image in the world.
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However, in order to maintain the existing customers for long time, the company has good delivery strategy that ensures that customers get their requested orders as faster as possible. Statistically, the company has more than fifty five fulfilment centers to provide best delivery services. In fact, the company is praised by many people for its reliability and convenient services. Moreover, the company marketing services prove to be a powerful marketing platform for retailers.
Products and Services to Sell on the Amazon
At the beginning, the Amazon Australia found it hard to accommodate different forms of products; however, as time went by, it adapted advanced technology which allows customers to sell all varieties of products and services including eBooks, CDs, DVDs, and electronic gadgets. In most cases, customers can enjoy posting two kinds of product on the company’s website (Amazon.com) and they include;
Products made by you: These are original products discovered by customers selling them. The products will fall under Amazon special with no competitors and most of them are very lucrative.
Second hand products also known as used goods: They include second hand eBooks, CDs, and electronic gadgets. According to the current studies, many people especially dealers earns their living through selling this kind of products.
Moreover, customers need to use their natural abilities and objectives to find out the best kind of the posted products that could fit them. It is therefore important not to use a lot of your energy, time, and money looking for these kinds of items, just go for Amazon Australia.
Amazon Australia Structure
According to Hitt (2017), organizational Culture reflects the inner functions of the company. This kind of culture represents the hierarchical system of the company as it deals with company’s authority, duties, communications, rights, and obligations. In general, organizational structures show how powers and rules are managed with different levels of management in an organization. The company’s structure relies highly on its objectives, strategy, and goals. However, as claimed by Hitt,(2017), the best organizational structure is determined generally on the four elements. These elements include work specialization, departmentalization, chain of command, span and control. To further, the structure created accommodates about 560000 worldwide individuals.
With its expensive size not similar to many other online business companies, Amazon Australia company remains to be the only online retailer that can adjust to any changes in the global market. According to the founder, Jeff Bezoz the company has immensely advanced in providing web-based service and this is facilitated by the organizational structure as it provides clear guideline for running the company to fulfill its vision and objective of being the best online retail in the world.
Amazon Australia Value Chain Analysis
Usually, the value chain analysis of any company concentrates on the principles on which the company was established. For Amazon Australia, in this case, the value chain analysis will base on how the company values its customers (Cegielski ; Prince, 2015). To effectively reduce the delivery time, the company came up with its own warehouses. Since the establishment of these warehouses, customers have been enjoying Amazon delivery services. Most of the online requested orders take 24 hours to reach the customers, though this could sometime take two days. Moreover, the company continues to add value in its sales as it sees this as one of its core competency in this industry. However, just like other online companies, investing in modern facilities such as advanced technology to monitor all its operations costs the management; as a result, Amazon Australia has closed almost all of its facilities where there is under-utilization of the capacity. Recently, the company has adopted a flexible method and market place for the sellers who sell other goods even at lower price. With great experience of analyzing these markets, Amazon continues to build new distribution markets to increase its global market economy.
Amazon Australia is full accountable for all the management, return of the products, as well as the administration of the customers. For instance, once the client has placed an order on certain product, the company arranges for shipping that particular product to the client. The vendors have optional decision to use FBA, thus making results of external manufactures to qualify for Amazon Prime. Amazon Prime users enjoy free 48 hours delivery, dispatching among other things.
Marketing and Selling Strategy
For many years, the advertising costs of the Amazon Australia have been expanding making the company to come up with different strategies of promoting its online services to the global customers. The estimated amount Amazon Australia uses every year is $10 billion and this comprises the costs of time, marketing, and advertising. For instance, the company spends approximately 2 billion on marketing its new services to the customers in last year (Norris, 2010).
Porter’s Five Analysis
With the current development of internet, Amazon Company experiences fewer barriers in this online industry. Initially, it was very difficult to access certain books as they were printed and passed to the distributors who sold them to physical shops in the country. People had to spend time looking for shops that sell books. It is this that Amazon decided to come up with online store to present customers with its storefront (Norris, 2010).
Furthermore, the company enjoys global market because of its ability to handle the competitors like Apple. To effectively do this, Amazon Australia relies heavily on modern technology. Its kindle technology comprises hardware and software in which customers can access all kinds of books. However, in order to use internet effectively the company integrated itself into its overall operations and strategy as well. The use of the new technology helps the company to complement its existing modus. Although many organizations think that their back-end forms are the only significant agents in the organization that satisfy the selling channels of the clients.
Existing human Activity System within Amazon Australia
Human activity system plays a significant role in the development of the organization. These activities include communication (relay), accommodation (Food and Dash), deliverance of the products, and the alternative conveyance to the customers (Hitt, 2017). To begin with, relay concentrates on different ways of accelerating conveyance of goods to the warehouses. As seen in the company’s last year report, relay is very important tracking application that helps the company to monitor all activities within an organization and its main objective is to improve the efficiency of the company. The drivers, for example, can enter and load data of specific person before arriving. It functions in the manner that as it enters the data it is given certain code which is useful at the security entrance. With this process of pre-check, the company has ability to access information from the area of its conveyances.
Another human activity system in the Amazon Australia is product deliverance. From the report of 2005, Amazon Australia emerged as the first online companies to propel in prime administration (Hitt, 2017). The clients enjoy numerous services including paying little amount of yearly services and it takes two days for them to get the requested orders. The two-day conveyance is one of the aspects helping this company to enjoy distinct advantages over its competitors. Its early discovery of Amazon Prime Now service places it in a good position.
Conveyance option to consumers is another human activity system in the company. Amazon has many warehouses to accommodate different types of the products. Some of the fundamental conveyance choices one can find in the company include free super saver, 24 hours delivery, and top-notch delivery. The company still looks for the technology which will make it easy for a customer to get his/her order in less than 12 hours upon the request.
Moreover, last year report indicates that Amazon Australia came up with ways of selling many commodities under one roof. Although the project costed it $13 billion, the move placed the company in better position global (Hitt, 2017). By ensuring that the Whole Food Mark is controlled by the Amazon family, it gained a competitive advantage over its rivalries. Amazon Whole Foods is a marketing channel that depends on the greater part of the background logistics.
Pull/ Push Strategy for Supply Chain Success
When dealing with either traditional or modern management of supply chain strategies, the employed strategies are divided into two categories, namely; pull or push strategies. Whereas push strategy deals with production schedules that focus on long-term sales of the end product, a pull-based strategy concentrates in providing significant reduction in different levels of inventory. According to the study, a pull stem depends on the market prediction. Amazon Australia mostly uses a pull-based strategy to effectively run its operations as the company concentrates on providing quality service to its global customers at an affordable rate. However, most organizations find it hard to rational pull system as it is not strategically meant to react to the information as well as taking advantages of economic scales in the production too. Finally, both methods have their own advantages and disadvantages, therefore careful determination of system to use is very important in the management of each company in the world.
Five Forces of the Amazon Australia
The world of business has witnessed rapid growth of online businesses in the last ten years. Many people engage in this kind of business as they believe that these businesses are safe, convenient, faster, and one does not need to invest a lot in them. Amazon Australia being one of them has come out as the best and trusted online company amongst the people. The company provides free shipping services to more than 200 countries and 2017 was extremely glorious to it. In addition, the company continues to grow rapidly across the world because of the quality service it provides to the customers.
Bargaining power of the suppliers
Amazon Australia has low bargaining power. Supplies have no opportunity to bargain with the customers; instead they have to place products with their set selling standard. It can take long time for one to order the products of high price if there are many similar products listed. Also, suppliers are required to coordinate when providing their services as set in the Amazon suppliers’ rules.
Bargaining power of the customers
According to Norris (2010), customers have high power of bargaining as the company’s objectives revolve about providing quality products to the customers at cheap price thus having great customer loyalty. Though there are many competitors in the business, Amazon Australia continue providing free shipping service. Customers have the choice to purchase goods that are listed with low prices anytime, anywhere.
Risks associated with complementary products
Statistically, the company incurs high risks associated with selling alternative products to the customers (Amazon, ; Amazon.com, 2009). While the Amazon Australia has allowed many brands, some people are still buying from physical shops. They do not understand that buying through Amazon Australia has advantages as they can benefits from free service delivery and still can reject the requested product if it does not meet the set standard. The main issue the company faces is returning money to some customers.
Risk of new competitors
Usually new companies cause threat to the existing companies. However, the threats caused by these new companies depend mainly on their marketing and distribution strategies. For Amazon Australia, the threat caused by the upcoming companies is too low to shake its operations as the company invested highly on advanced technology. The investment of these new technologies has greatly helped the company to sell different products under one store, making it easy for the customers to access different varieties of product as faster as possible.
Since all business have competitors, there is need to have a healthy business competition. According to Norris (2010), a healthy competition is the competition in the business that results to the growth of the business. Competition levels vary from one business to another. In the online industry, competition is very high because of many upcoming and existing online companies. Therefore, Walmart and Costco are the only two main competitors of the electronic business.
New Information System
Always, introduction of new system of information causes impact whether positive or negative to the company. For positive growth of the Amazon Australia, the company needs to make use of advanced technology. As claimed by the CEO of the company, recent use of modern technology has greatly supported the company’s objective of being the best online company in the world. Customers now can get several products under one single store (Hitt, 2017). For example, the current software architecture can show some patterns which are inapplicable at the Amazon indicating that though the company uses high transaction system important information such as workflow, data analytics, and complex rendering is not being taken into consideration.
New technology as a primary source of Porter’s value model
Since application of advanced technologies in this company will contribute a lot to its economic growth, it is said to be a primary source of porter’s value model. Many organizations especially those handling online transactions require technology with high power of operation. Therefore, this element should be given the first priority because of its significant usage. Customers always go for the companies which they have trust in and understand that their services, goods, personal details are safe.
Efficiency of New System of Information
In terms of productivity, technology increases the productivity of the Amazon Australia. Development of technological features such as Amazon Elastic Compute Cloud, Amazon S3 Storage, and Amazon Cloud Front can be of benefit to the development of the Amazon Australia in this online shopping business. Scientifically, Amazon Elastic Compute Cloud offers a reasonable computer capacity to make the computing much easier for the developers while Amazon S3 Storage though simple, it is an interface that is used in keeping, storing, and retrieving any used and unused data. This interface provides developers with access to some highly reliable and faster inexpensive storage that the company can use to run its network globally. Also, it maximizes the benefits of the scale as it passes some benefits to the developers. To further, with Amazon Cloud Front, Amazon Australia delivers products to the customers in the shortest period.
As seen in the previous discussion, all online companies concentrate on customer empowerment as the key factor to their economic development. Due to strong competition in this online business, Amazon Australia needs to come up with good strategies of handling this market competition which can make the company face financial crisis. One strategy the company needs adopt is providing delivery service at discounted rate. In many cases, companies which provide free shipping cost to their customers for long time in a competitive markets end up facing financial problem. But with reasonable discounted shipping cost, Amazon with be able to compete favorable in this industry.
Second, although Amazon enjoys global market there are many undiscovered markets in the world especially in Africa and Asia in which the company should be providing its service. Most people in these regions find it hard to access Amazon products and if they get it take many days for them to get the requested orders. Therefore, setting up warehouses in these regions can greatly contribute to the growth of the company as it will gain more income.
To conclude, many companies such as Amazon, Apple, and Google enjoy online business when compared to new coming companies. For the last three years, Amazon Australia has created strong customer support with its unique approaches to all its online businesses. This allows the Amazon Australia to have a global market advantages over its rivalries and makes a cost leader in all its businesses as well. In addition, the feature helps the company to overpass all chains of supply to the customers through its innovative online strategy. By doing this, the company is able to control all its contribution channels as well as cutting down the prices of the products listed on its site (amazon.com). Finally, the company still needs to concentrate on the best ways of attracting and serving customers as this will not only help it maintain its public image but also makes it to be the best online company in the world.
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Norris, C. (2010). A quick start guide to online selling: Sell your product on eBay, Amazon and other online marketplace. London: Kogan Page.