Strategic Innovation Case Study of Amazon

4048 words (16 pages) Business Assignment

23rd Sep 2020 Business Assignment Reference this

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ABSTRACT

Amazon is one of the global online retailer and a customer centric company. The expansion of Amazon in the last 25 years, continues its offer and new implementations which made the company’s uninterrupted service, and it offers products at a reasonable price. Amazon strategy is to - build customer trust by providing the products at a minimized value with a large range of materials.

INTRODUCTION

The Era of online shopping, has played a significant role all over the world. As internet usage is a part of day-to-day life, people were fond of doing everything via internet. Many business are attempting to build an international sales through internet and by creating a web portal as a value addition to their retail sales and many organisations start and run online stores.  Online  shopping  web portals brings good impact to the Information Technology field, in order to maintain the web portals needs a lots of programmers, such as analysis programmer, database administrator, security programmer, web designer…etc… and it creates a more job opportunity. 

Amazon.com Inc. is an American based multinational corporate based on  Seattle, Washington that acts as a hub for e-commerce business globally and it is well known for its new innovation in large scale and it was founded by Jeff Bezos, in July 5th 1994.The logo was designed to convey the message that it sells everything from A to Z (the arrow which connects the two letter in the logo) which express the smile that consumer should experience while shopping in Amazon.com.

In day-to-day’s life as we have seen a lot of technological advancements that seek to reduce the load of overruling on human labour. Amazon is one of the powerful examples of this enrichment. Initially Amazon started an online market place for books, but later they expand the services to sell software, electronics, video games, apparel, furniture, food, toys and jewellery. Amazon is currently operating in 13 worldwide market place and launches free shipping to 27 countries. Its mission statement is to focuses on competent and high quality service to the customers.

Amazon vision statement is “To be Earth’s most customer-centric company where customers can find and discover anything they might want to buy online”. The following segments are indicate in Amazon’s vision statement: Global reach, Customer prioritization & widest selection of products. (Amazon, n.d.)

Amazon mission statement is “We strive to offer our customers the lowest possible prices, the best available selection, and the utmost convenience” This mission statement promises an attractive e-commerce service to satisfy customers’ needs. The following components are identifiable in Amazon’s mission statement: Lowest prices, Best selection & Utmost convenience. (Amazon, n.d.).

The outline of the paper is to describe about the importance of technology and how it simplifies the customer efforts and grabs the attention towards online shopping experience and to generate income out of it.

The scope is to brief the innovation done by Amazon, which organize the individual dimension of the web expertise according to the stage of the customer journey. The conceptual model reveals about the online customer journey and the experience undergone various segments.

In the Amazon the report structure describes about the innovation which is implemented and the business canvas model used to make this customized innovation in the online market industry. The Business model canvas which covers the Osterwalder format and covers under different categories like Value propositions, customer segments, channels, customer relationships, key activities, key resources, key partners, revenue streams and the cost structure.

STRATEGIC INNOVATION THEORY

Definition of Innovation

Innovation is significant positive change. It’s a result. It’s an outcome. It’s something you work towards achieving on a project. If you are successful at solving important problems, peers you respect will call your work innovative and you an innovator. Let them choose the word. (Berkun, 2013)

Definition of Strategic Innovation

Strategic innovation is an organization's process of reinventing or redesigning its corporate strategy to drive business growth, generate value for the company and its customers, and create competitive advantage. This type of innovation is essential for organizations to adapt to the speed of technology change. (Rouse, n.d.)

AMAZON SUCCESSFUL FRAMEWORK

The factors that drive to purchase through Amazon is as follows, they are cost efficient, prime benefits, convenience, fast shipping, selection of wide range of products, reliability, customer reviews and easy returns or exchange of products. Here is a simplified view below of how a products travels from manufacturer to the consumer through various process of the fulfilment network. Depending on the products and the consumer’s location, and there is a different delivery options through the system.

 

Delivery and fulfilment network

(Innovation Tactics, 2018) 

 

AMAZON BUSINESS MODEL CANVAS

The business model canvas is a unique tool which helps to understand the business model in a structured way. This allows you to visualize your business model, deduct the weakness and test whether it can work. It was developed by the Swiss economic theorist Alexander Osterwalder.

How BMC works

It is suitable for both for analysing of existing business model and the design for a new idea. It covers a different areas like client segments, value proposition, key partners, key activities, customer relationship, cost structure, cost structure and revenue streams.

The advantages of BMC is as follows below.

      Look at the essentials

      Testing alternative models for your business model and find new combination of possibilities

      Brings your business idea in a structured form and in a different angle – Structured presentation

      Detailed business plan to carry out the business well.

AREAS COVERS IN THE BMC

Client Segments: As Amazon is the leader of the online market industry and targets to satisfy the consumers globally, accessibility of wide range of physical and digital products. Amazon always have to something to offer most consumers.

Value Proposition: The idea of Value Proposition is to be precise and easy to understand, defining the things to be done, how the product resolves the delicate point of your potential customer, giving the strong first impression to the prospective customers. The value propositions of the Amazon is based on the steps like cost effective, selection of wide range of products, shipping speed, dedicated customer service, other prime services like prime, kindle.., launch of new products like amazon echo, these are the advantages are driven by the couple of areas of amazon business model and its market place.

Channels: Customer relationships are very closely interlinked with channels, each and every business has their own business model to run and to establish the company. Channels are typically by direct or indirect method which has 5 different phases, awareness, purchase, and delivery and after sales.

Client Relationships: The prime success of Amazon is handling the customer very efficiently, the company has made an art of finding better ways to improve customer experience like customer focus by offering fast and hassle free ordering and delivery, helping the customers to get the best deal. It allows the customer to give a feedback, comments, reviews and to share the thoughts, which helps to boost up the development of organisation and by giving negative suggestions areas are the factors which helps to implement new products and make the customer satisfy, the customer reviews are viewed by the manufactures about the quality, and the plus and minus of the product. Customer reviews plays a vital role for developing the products and services and to measure the customer satisfaction and to helps in shaping the business reputation.

Customer Loyalty:  Amazon regularly interacts with the customers by satisfaction surveys, which is an effective tool for building the sales volume and turning customers into loyal enthusiasts. Self-Evaluating is the critical tool for company’s success and to understand the consumer experience, in simple ways it is called as customer-loyalty.

Key Activities: Promotes physical and advanced merchandise, is clearly a key activity but in the last few years, Amazon has invested substantially in production of computerized content through Amazon Studio and the customer gadgets under the Kindle mark.

Key Resources: Key resources is like building blocks, which describes the most important asset needed to make a business model work. Every business has their own business model, it helps to analyses the value propositions and revenues to generate. They can be categorized as Physical, Intellectual, human and financial. Physical asset such as buildings, vehicle, machines, point-of-sales system and distribution network. Intellectual covers the brands, patents, copy rights, partnerships and customer database. All organisations are in need of human resources, for instance, a pharmaceutical company is heavily relied on human resources like skilled scientists and aggressive sales force. Finally some business model is highly depend on the financial resources, like cash, credit or stock option pool.

Amazon owns a many physical resources such as warehouses and film studios, but Amazon’s technological innovation is considered as a key resource, owning numerous digital content streaming platforms they are likewise the world’s biggest supplier of cloud framework administrations via their subsidiary, Amazon Web Services. Amazon operates for some of the largest databases in the world, which they are used to among other things, keeping the record of the customer’s consumption habits in order to engage in more efficient merchandising. In the era of “Big data”, this is not an asset to be underestimated.

Cost Structure: The Cost Structure describes the cost incurred to make the business model work. While implementing the business model, cost are minimized, therefore it is helpful to distinguish between two broad classes of business models: cost-driven and value driven.

Revenue Streams: As Amazon is the world’s largest online revenue generating organisation, it stocks huge range of physical products, the online offer of which recorded as a huge part of their revenue. Other sources of generating income is taking a commission from the third-party retailers, who use to Amazon platform to sell the products. E-books and streaming digital content is the growing source of revenue for Amazon over the last decade. Other smaller profitable areas are Amazon Prime subscriber’s fee and Amazon Kindle scope of hardware.

RESEARCH METHODS

Data collection and Analysis

Technological advances have simplified the human efforts, as well as they have some negative impacts. Technology can be good or bad, it is all depend on how we use it and there is no doubt that has dominated the world.The paper describes about the innovative technology, as the Amazon has implemented and using a unique technology which is different from competitors. Here are the some of the important technology that Amazon to be a pioneer in the e-commerce industry.

      1-Click Checkout

      Automated Warehouse

      No - Cashier Stores

      E-Ink Display

      On-Demand Cloud Computing

Let’s discuss the following

1-Click Checkout:

As the internet founded in 1991, Amazon launches in 1995,1-click checkout was first introduced and got patented in 1999,by enabling the 1-click checkout option, it automatically stores the personal details, which simplifies the human efforts and it will be used for future shopping benefits.

Automated Warehouse:

As quoted by Amazon, it could be fully automated warehouse in the next 10 years. Scott Anderson, the director of Amazon Robotics Fulfilment, led reporters on a tour of the company’s Baltimore warehouse during which he said it would be “at least 10 years” before Amazon could entirely automate the fulfilment process. (HOUSER, 2019)

No – Cashier Stores:

Amazon Go is a chain of retail stores in the United States of America which was founded on January 22nd, 2018, which is operated by online retailer Amazon.com with 13 locations around the USA. Amazon Go is a revolutionary kind of store, where no checkout is required. By downloading the Amazon Go an app, and entering the basic login details, just scan and enter the stores to grab the products as required. There is no special queue for billing as we grab the products from the shelf it automatically calculates the items purchased and the customer exits from the store. The checkout-free shopping practice is the same technology which is used for self-driving cars, that is computer vision, sensor fusion, and deep learning. The outline of this paper is to describe about the “Just Walk Out” technology.

E-Ink Display:

The Amazon Kindle is a series of e-readers produced and merchandise by Amazon. It was very popularised the idea of e-books over paper books, which helps the writers to self-publish the books through Amazon platform, as more and more books are available in the digital format, readers have an easy access of thousands of stories on a light weight device. Amazon didn’t invented the E-Ink technology and they wasn’t first to produce an E-Ink Device. The E-Ink didn’t take off until Amazon’s first Kindle in 2007, which sold out within six hours after the release.

On-Demand Cloud Computing

Cloud Computing is the delivery of computing services which includes serves, storage, databases, networking, software, analytics and intelligence over the internet to offer faster innovation, flexible resources and economies of scale. Many people don’t know that cloud computing has been around since the early 90’s, but Amazon was the one who popularized it for consumers. Amazon has launched Elastic Compute Cloud, which allows users to run application on Amazon’s virtual servers and by paying for the hour. Later this has been evolved to include the other services and they called it as Amazon Web Services.

AMAZON – INNOVATIVE COMPANY

Amazon is considered as one of the most innovative companies, and not without good reasons, it changed the way of people live and shop. But when it comes to innovation Amazon stands apart from other users because some unique cultural elements that make it a perfect place for cultivating innovation. The Echo, Amazon’s very impressive voice over command device, which can be used to play songs, research your favourite sports teams. This innovative technology was a huge investment for the e-commerce giant, which sold 22 million Echo units in 2017.

The dedication and commitment towards the customer service, Amazon developed a range of helpful tools, which help the employers to track packages and quickly return or exchange ordered items, and convenience of their online shopping experiences. Amazon customer service team has won many awards for the dedication and addressing the issues of the customer then and there. Social media is another powerful tool that Amazon employs to engage with merchandise and to build the quality of customer service.

Amazon execute the customer’s orders in a very systematic way, and it has excellent vendor relationships that allows them to offer customer at discounted pricing. Organising the way of work, with the technology help the employees to work efficiently and execute the work in correct time and place.

Amazon started it off as an online bookstore, but it now offers soup to nuts. A simple search for nuts and soup will result up endless number of varieties. Amazon now carries products in music, electronics, health and beauty, automotive, grocery and clothing. Business owners can contract with Amazon’s network of pros to get IT support, furniture assembly and even A/V services. By expanding the networks, Amazon works getting much simplifier. By expanding into new markets and product categories, will attract new business opportunities and to grow with the organisation. For example, Amazon currently boasts an impressive 3.6 billion backlinks and 3.8 million referring domains. A highly diversified link portfolio plays a pivotal role to any successful SEO campaign. That’s why many e-commerce companies partner with us to optimize their link building strategies. (snap, 2018)

ANALYSIS AND DISCUSSION

The findings indicate that clients measure the online customer service expertise at AN overall level (OCSE), a dimensional level, constituting practicality and psychological factors, and a sub-dimensional level, encompassing of nine dimensions, specifically usability, product presence, communication, social presence, interactivity, context familiarity, trust, and price for cash. The study explores new dimensions constituting the client expertise in on-line environments, specifically social presence and merchandise presence. This supports the assertion that client expertise typically, and in on-line environments in specific, is a dynamic and evolving subject online customers price standing reports of their order’s progress transaction/delivery as a foundation for developing a relationship with the service supplier after, service suppliers ought to style processes guaranteeing that the customers’ perception of this half of the expertise is met. For example, customers notice it significantly helpful if confirmation emails embody a link to the logistical supplier with choice to receive automatic email updates once the shipping/delivery standing of their order changes. The social presence dimension indicates that the increase of social networks on the net will influence and form attitudes and beliefs towards on-line getting. This dimension is very important for marketers as a result of it indicates the sturdy influence of different on-line members in the customer’s call method. Whereas the service supplier cannot management the individual contribution of different members/customers/users, this study clearly indicates that further info and options area unit appreciated by customers and lead to their disposition to build a relationship with the service supplier. Thus service supplier ought to have interaction and manage these interactions by giving access and direct links to dedicated websites and social networks occupation to the requirements of their customers.

This appreciation of the feature throughout selection and analysis of choice stage was high no matter whether or not the comments were favourable or unfavourable for the purchase item in question. Therefore, online service suppliers are inspired to supply the peer-review-driven parts due to their long-run positive impact on the overall OCSE. These options and also the consistency of options drive a sense of convenience. If customers understand the looking surroundings as acquainted, they are not solely additional possible to decide on the acquainted on-line surroundings over others, however conjointly to pay additional time during this acquainted surroundings. Thus, consistency in all communications is very important, as an example customers notice it fascinating if the layout of service supplier email communication resembles the layout and options they're used to from the web site. Finally, though on-line customers aren't ready to physically bit merchandise, they still need options aiding them in assessing merchandise in virtual environments. This means that with the event of recent technologies, marketers ought to provide new, additional interactive ways in which to showcase their merchandise. Extra options, like videos demonstrating the actual use of merchandise, or “look inside” options, giving the client a sense of what the merchandise can seem like, or giving them a chance to read more than just the cover, as they will in an offline shop, are highly  appreciated.

Overall the organisation should consider online customer service experience as an important strategic objective. Based on the dimensions of OCSE that the findings are of particular relevance to other online and business-to-customer services.

CONCLUSION

The study proposes a new conceptualization of online customer service experience, and the study explores online shopping experience in a more holistic fashion and explores the holistic fashion, takes into an account for both browsing and goal-orientated behaviours, and explores the relative importance of the individual dimensions in relation to the stage of the customer experience, namely prior to, during and after purchase. The research expands and extends current online experience research and existing framework, and broadens our understanding of how customers perceive their OCSE and how it is driven by the consumer.

APPENDIX

 

AMAZON AND ITS GROUP COMPANIES

 

20 YEARS OF INTERNET GIANTS

References

  • (2018, December 14). Retrieved from Innovation Tactics: https://www.innovationtactics.com/amazon-business-model-ultimate-overview/
  • Amazon. (n.d.). Retrieved from Amazongo wordpress: https://amazongo581338975.wordpress.com/more/
  • Berkun, S. (2013, April 3). The Best Definition of Innovation. Retrieved from Scott berkun: https://scottberkun.com/2013/the-best-definition-of-innovation/
  • HOUSER, K. (2019, 05 02). Retrieved from Futurism: https://futurism.com/the-byte/amazon-automated-warehouses-10-years
  • Rouse, M. (n.d.). Strategic Innovation. Retrieved from searchcio: https://searchcio.techtarget.com/definition/strategic-innovation
  • snap, B. (2018, 06 12). Retrieved from snap: https://www.snapagency.com/7-reasons-why-amazon-is-so-successful/

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