Amazon.com has also a very strong brand name presence in the online-retail market which is primarily due to their successful exploitation of their "first-mover" advantage. It would be able to leverage this brand name as it realizes its plans for expansion in the future (Haddad, N & Sheth, J 2001).
In addition, the technological infrastructure of the company also gives its competitive advantage against the other rivals. It can pen a new store which has different products very easily because its core shopping technologies are easily re-usable (Haddad, N & Sheth, J 2001).
On one hand, its website is elegantly designed, easy to navigate and quick to load. It also has numerous proprietary inventions like the click shopping, personalized recommendations and user rating which make shopping more pleasurable (Haddad, N & Sheth, J 2001).
The four strategies such as outsourcing strategies, strategic partnership, compelling value, and active advertising (see Exhibit 1) implemented by the company have contributed to its success in sales growth and cost efficiency (Haddad, N & Sheth, J 2001).
However, transitioning the company culture is one of the problems and weaknesses may face by Amazon.com. A lot of changes have to be made in order for Amazon to adjust to different situations especially since the rules of business keep changing rapidly. Amazon was only a start-up few years ago but it grew rapidly and successfully in the online retailing business. Thus, Amazon is no longer can be considered a start-up but a company moving from one culture to another because of its expansion and time in the industry (Durkin, MA, Kass, C, Modi, T & Ulin, M 2000).
Another is the financial difficulties brought about by its international exposure. The fluctuation of exchange rates from different currencies into U.S. dollars may affect Amazon's money market. The success of Amazon's international expansion also depends on local economic and political conditions (Durkin, MA, Kass, C, Modi, T & Ulin, M 2000).
Conclusion
Amazon has grown admirably from its initial beginnings as a small online bookseller to a giant superstore company. During this process of rapid growth, it has incurred significant losses and it becomes more expose to a greater competition and threats. Cutting costs and achieving profitability remain Amazon's greatest challenges. However, there are key factors such as a strong brand, providing customers with outstanding value and a superior shopping experience, massive sales volume and realizing economies of scale which contribute a lot to the success of this company. These factors and the people around the company help Amazon.com to face the threats pose by other online bookstores. Essentially, the company should aim to maintain its gross margins in its existing business and in future product lines such as music CDs and videos. In order to do this, Amazon.com should develop strategic partnerships with all of its main suppliers.
Exhibit 1: Amazon.com Company Strategies
| Outsourcing Strategy | Amazon.com has purchased majority of its products from two major wholesalers, Ingram Inc., and B&T, which enabled Amazon.com to have less, inventories and reduce internal overhead such as operating expenses. |
| Strategic Partnership | Amazon.com has established long-term relationships with Internet companies to become a premier merchant on the Internet: America Online, Yahoo!, Excite, Netscape, GeoCities, AltaVista, @Home, and Prodigy. |
| Compelling Value | Through the innovative use of Internet technology, Amazon.com was dramatically able to lower the price and provide enhanced selection, high-quality content, a high level of Consumer service, and personalized service. |
| Active Advertising | Amazon.com has spent a large portion of its expenses to strengthen the brand name. For the years ended 1995, 1996, 1997, the company incurred advertising expense of $30,000, $3.4 million, $21.1 million, respectively. |
This online bookstore focus on University textbooks and college textbooks market. It does very well in students market. Prices are very good and all are Brand new textbooks there.