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Amazon's Competitive Analysis

1296 words - 5 pages

Competitive AnalysisCompetitors are the firms that compete to serve the same customers in the same marketplace. Competitors can compete directly or indirectly. Competition happens on two levels: Product or service competition.Due to the shift of focus for Amazon, it has become the "Earth's biggest anything store". Its competitors have expanded from just online book retailers Barnes and Nobles and Borders to top audio retailers CDNOW.com and online auction house e-bay.com. Amazon has an overall lead of 40% market share against the other online retail firms. Their international business has more than doubled over the past 2 yearsAmazon's primary value chain includes purchasing/sourcing, marketing, distribution and after-sales services, which includes returns and exchanges from unsatisfied customers. Their main focus is in the purchasing/sourcing and in the distribution of the products to the consumers. Their investments are therefore, geared towards warehouses in key points of high consumer demand areas and an efficient delivery and distributing system to service all its consumers. Thus, Amazon controls most of its distributing system that spans across borders.How does Amazon compete?Competes through Quality, service, and low price.How effective is each?Quality - they make sure that their product reach the customer with no damage and always serve their customer with the best product.Service - Amazon delivers the product within a week. Less lead timeLow price - reasonable pricing.How powerful?Amazon is power because they were the first to start an online business. They have more customers due to this. The customers are loyal to Amazon and will do their shopping only at Amazon. Amazon is very profitable and is doing well currently. How aggressive?Amazon.com has remained on top of the online retailing business despite the entrance of giants such as Barnes and Nobles and Borders. Their success is attributed to two factors; timing and continuing to invest heavily into the inventory and distribution systems. Amazon, by being the first of its kind, has a big lead over the nearest competitors due to their experience and its reputation as the first movers. Their thrust remains on improving efficient delivery systems across borders and to build name recognition as the number one retailing firm in the Internet. They have also ventured into different retail options to keep that lead. Marketing, Innovative inventory and distribution systems, and name recall have helped Amazon build a sustainable competitive advantage.Will diversification into new markets finally turn a profit for Amazon.com before the dotcom godfather burns through the last of its savings?In five years Amazon.com has built the world's biggest online store. However, despite generating expected $1bn (£0.67bn) sales from the Christmas retail season alone, profit has proved elusive. Despite its profligate sales, business-to-consumer e-commerce's pre-eminent player is not expected to enter the...

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