Amazonis a global powerhouse that has its strengths and weaknesses just like everyother company. Many people did not think the company would even stay afloatafter failing to become profitable after the first 4 years. Bezos proved all ofthe doubters wrong and believed in his vision. I think Amazon could thrive foryears to come if it stays under the radar of any more public criticism.
Theyhave forever changed the e-commerce business forever, but will they be able tochange their old habits and end the recent bad publicity? Despite the criticism, I think the company is too large andconvenient to fail. Jeff Bezos stated that he would put his employees first when it came tobusiness matters when he founded Amazon in 1994. As the founder of the company,I wonder how he has let his company suffer so many PR nightmares.
From a microperspective, it is important to instill a sense of security and confidence inone’s employees. If employees are motivated and driven, they are more likely toproduce a superior product. Globally, Amazon does not want to be known as thecompany that misuses and mishandles its employees. They need to take a lookinto their human resources management and figure out a solution before anyoneelse gets unjustly fired. Amazon could potentially lose millions of dollars ifcustomers, potential partners, and potential employees refuse to touch them.Bezos needs to lead the company in a new direction and fix the internalproblems they are having before things get worse. Inaddition to the harsh working conditions, workers have strenuous and exhaustingjob duties.
For example, some workers traverse the building for almost 15 milesa day with a cart and a handheld scanner picking up orders off of shelvesbefore taking the orders to the packing department for shipping. Supervisors can even monitor their employees’ scanners to ensure thatthey are meeting Amazon’s excessive standards of production. A New York Times article from August 16, 2015, explainedthat the often unfair and intimidating working conditions of Amazon warehousesextend so far as to force employees to sign lengthy contracts guaranteeingtheir employment for a period of time. The article also stated that employeesfrequently sign contracts preventing them for working or purchasing productsfrom any other company that might take away business from Amazon. Such reportslead many people to believe that the list of unfair working conditions at thecompany is almost as long as their extensive product line. Although Amazon.
com has perfected the art of easyshopping, as well as fast shipping and exceptional customer service, there havebeen numerous complaints from current and former employees regarding thetreatment of warehouse employees. In 2011 it was reported that awarehouse in Breinigsville, Pennsylvania, had inside temperatures reaching 100degrees, which resulted in workers being dehydrated and fatigued. Managersat the warehouse refused to keep the loading bay doors open to allow aircirculation to flow from outside the building for fear of being vandalized.
Amazon’s solution to this problem was to hire an ambulance to patrol thewarehouse, which led to many people saying the company was insensitive for notdoing more for the hardworking employees.InSeptember 2017, Amazon revealed that they would open a new headquarters in amajor American city. Bids for the new headquarters were to be submitted by citycouncils from across the country by no later than October 19th, 2017. Themulti-billion-dollar building has been proposed to be anywhere from 500,00 toeight million square feet, and expects to employ about 50,000 employees. Inaddition to their global expansion, Amazon devotes a large portion of theirprofits to philanthropic efforts.
For example, in 2020 the company plans toopen a new building in Seattle to host the charity organization Mary’s Place.As Amazon’s widespread reach extends into other markets and different areasaround the world, it’s anyone’s guess what they will do next.Withmassive amounts of data from Whole Foods shoppers, Amazon will ultimately beable to tailor the grocery shopping experience to the individual; similar toonline data tracking. Amazon has already mastered the process of up sellingonline through offering additional items that go with the items the consumer islooking to buy. Now, with the purchase of groceries, Amazon will know when yourun out of cereal, or any other item, allowing them to present you with theoffer to buy more at exactly the right time. Amazon will also record data oncustomer buyer patterns, allowing them to offer or recommend specific items basedupon customer preferences identified through prior purchases. The customer data Amazon will have the ability toaccess will also allow them to build analytical models to be used to predictwhat consumers will want, how much they will want, and when they will want it.While Amazon’s purchase of Whole Foods provides them with a tremendous amountof data, they will need to use that data to better understand their customer’sneeds and predict shopping behaviors.
If they cannot do that, the data becomesuseless. If they can successfully do that, the data can be used to maximizeprofit margins and minimize expenses.WhenAmazon acquired Zappos ($1.2B), Twitch ($970M),and Kiva Systems ($775M), they were all critical to the success of Amazon’splan to expand their business into new and emerging markets. However, the pricepaid for these companies was insignificant in comparison to the massive $13.
7billion acquisition of Whole Foods Market, a high-end food market company with over 400 stores. Whole Foods exclusively features foodswithout artificial preservatives, colors, flavors, sweeteners, and hydrogenatedfats. The deal was completed on August 28, 2017 and seems tobe very profitable for Amazon because the market for natural food stores issoaring. This acquisition makes it clearthat Amazon’s real interest is in two things: the massive amount of consumerdata that will become available after the acquisition, and Whole Foods’ privatebrand product. Amazon’s goal to be a superior brand that touches everyaspect of daily life appears to be coming to fruition. Amazonhas also begun to employ drop shippers which has helped their companytremendously.
Drop shippers are partnered with Amazon to advertise their wareson the Amazon website even though the drop ship company did not purchase itsown inventory through Amazon. This allows Amazon to list products from millionsof companies, and in return, Amazon maintains a markup on all products listedthat hovers around 75%. As Amazon continues to grow in size through additionalsellers and markets drop shippers will become more common as more and morepeople will be looking to Amazon as a means of distributing their product to alarge number of consumers.Amazonbegan by focusing on two tiers: business-to-consumer relationships andbusiness-to-business relationships. They then moved to help providecustomer-to-customer relationships within the Amazon marketplace, acting as ago-between to facilitate transactions between third party companies andconsumers. The company allows anyone to sell anything using its platform. Someother large online distributors even use Amazon along with their own websitesto sell their merchandise. Additionally, Amazon rents out space for many oftheir third-party retailers.
Small businesses are able to sell their goods to alarger marketplace on a global scale through the use of Amazon. Amazon’s successful sales model was surprisinglysketched on the back of a napkin by founder and CEO Jeff Bezos in 2001. Hesuccessfully laid out the foundation for a winning marketplace strategy thatthey would base their entire sales’ approach on called the “Virtuous Cycle”.This mindset has driven the company’s strategy since the very beginning.
According to Amazon’s founder, the virtuous cycle begins with providing thecustomer with excellent service, which drives a large volume of online traffic. Happy and satisfied customers attract more happy and satisfied customers,and the cycle continues. This business model allows Amazon to make moneyby leveraging the power of its name, in addition to the efforts of a third-partyseller. As Amazon grew, it lowered its cost structure by leveraging purchase,and using fulfillment infrastructure and logistics infrastructure subsequentlylowered the cost per unit of products. The decrease in cost then allowed Amazonto lower its prices to shoppers, continuing to satisfy the need to have thebest prices around. This low price point, combined with an increased selection,was critical to improving and maintaining the customer experience that drivesthe virtuous cycle.
Amazonsurpassed Wal-Mart as the most valuable retailer in the world by market cap in2015. Currently it has a market cap of around five hundred and forty-sixbillion dollars. The company has made its fortune off e-commerce and is one oflargest sellers over the internet.
Amazon started out by selling books onlineand, as time went on, people’s needs evolved beyond just buying books. Theyhad to add some diversity to their company, so they chose to expand theirproduct line by selling videotapes, CDs, books, movies and differenttypes of electronics just to name a few items. Jeff Bezos’s globalizationstrategy allowed him to expand his business across the world, and it paid off.Amazon has a different retail website for each country that utilizes itsservices. The list of countries includes Ireland, Canada, France, Germany, theUnited States, Japan, and India, to name a few. Amazon is a fortune 500 company based out of Seattle, Washington.
Jeff Bezosfounded the company on July 5th, 1994, but it did not officiallylaunch until 1995. A report Bezos read claimed that the web commerce industrywould grow at two thousand three hundred percent, and this was his motivationfor starting the company. Not long after, a company was founded because ofBezos’ inspiration and his keen eye for emerging markets. He left his job asvice president of D.
E. Shaw and Co. and never looked back. The company name,Amazon, was chosen by Bezos after looking through the dictionary and falling inlove with the exotic nature of the word: Amazon. Amazon’s founder had hugegoals, which were finally starting to come to life.
Amazon had aroundthirty thousand full-time employees in the United States by 2011, and thenumber grew to one hundred and eighty thousand just five years later thecompany currently employs more than 380,000 people worldwide in full andpart-time jobs.