Executive Summary
Amazon has experienced immense growth over the years due to technological advancements and its consistent dedication to providing quality services and commodities for its clients. However, there are certain issues that the majority of its clients are concerned about, including data safety, quality of goods, and accessibility of goods from physical stores. Amazon is highly ranked globally for its ability to maintain a large customer base despite the increasingly emerging consumer demands; however, to maintain that positive brand perception by its customers, it is crucial for Amazon to address the concerns of the public. Therefore, the company ought to ensure that their client’s data is at all times protected as per their policies to the customers; they should also put in place strict quality measures protocols to minimize sales of fake goods by third-party sellers and consider reopening and opening of Amazon physical stores to attract more clients.
Background
Amazon is an internet service firm and an e-commerce retailer established by Jeff Bezos in 1994 in Washington, USA (Mac Cathmhaoil et al. 218). Under the division of Internet service provision, it operates as Amazon Web Services (AWS), specializing in cloud computing (Stone 9). As an e-commerce shop, Amazon is a retail shop that also provides external sellers with online platforms to sell their products (Stone 8). Although the company just started as an online bookstore, over the years, it has expanded its operations into web service provision and immensely grown its online presence by diversifying its products and services. In sustaining the retail online business, Amazon has established multiple fulfillment offices and storage warehouses to ensure that their products get to the buyers from the sellers within the expected timelines. Therefore, the company has fulfillment centers on several continents, among them the Americas, Europe, and Asia.
Operations Strategy
Amazon has multiple core operational competencies that help it navigate the competitive retail world against other businesses such as eBay and Walmart. Amazon has suitable market differentiation strategies, among them localization, which enables the organization to reconfigure its promotional approaches in accordance with the demands and interests of its prospective clients (Aaron). Secondly, the standardization approach allows Amazon to maintain comparable basic business procedures and positioning across all operational geographical areas. The competitive advantage Amazon holds is its ability to maintain uniformity in its operational techniques (Mac Cathmhaoil et al. 224). Therefore, the business is now able to provide its services uniformly in every market. Consequently, the firm has had the opportunity to hold a prominent position in a number of foreign markets and capitalize on its robust, internationally recognized image. Amazon’s improving its global supply chain operations and management will significantly assist the company in its growth process.
Organization and Structure
What Management issues are there? What Operational Management issues are there? What language, diversity, or cultural issues impact the organization?
The interesting aspect of Amazon’s organizational layout is that it allows for a great deal of top-down management of international e-commerce activities, considering that the organization operates in multiple domains of business(“Driving Change from the Top Down: Wielding Organizational Power”). Amazon needs to keep performing as a top online company in order to sustain its wide and quickly growing customer base. Amazon offers an array of job opportunities to the public; therefore, the expertise is dependent on the type of job one is applying for in the company (“Meet the Amazon Business Team”). Jobs vary from customer service provisions that require efficient communication skills to logistics that need excellent planning abilities to cloud computing, which requires top-notch database management skills. The company has offices majorly in Asia, Europe, and the Americas. Therefore, the company does not discriminate against its employees despite their physical abilities and racial and cultural diversities. However, there have been complaints over the years from employees regarding the lack of consideration for the employees by the management. Amazon employees have cited strict working hours and poor working conditions due to negligence on the management’s part.
Location
Amazon chooses its operating locations in consideration of the factors discussed below. The first is their consumers’ needs, which then allows them to deliver products on the same day they are ordered, and when late, they deliver the following day. For instance, a majority of its warehouses are located around populated towns and cities in the United States of America to ensure easier and quicker delivery of products to clients where there is a higher demand for products (Abdelbaki 19). In this case, California, Texas, and Illinois are the major cities home to Amazon’s largest warehouses in the U.S., while in Europe, it is Luxembourg (Abdelbaki 19). The second factor Amazon considers when choosing its locations is its proximity to major transport terminals, considering its operations overseas, where deliveries may not be done as frequently as they would locally (Johnson). Amazon deals with third parties as outside sellers; therefore, they transport and store a wide variety of goods, necessitating large storage facilities that would conveniently accommodate all their operations and goods. Therefore, Amazon considers the size of properties and spaces around the properties when choosing their locations.
Operating Procedures
Amazon, as a retail shop, carries out multiple operations, including hosting third parties as online sellers in their online platforms through the help of cloud computing services. The company is also responsible for selling products under their name by coordinating with manufacturers of certain products and delivering the products to their buyers online. Amazon picks up goods from the production premises, distributes them throughout international boundaries by ensuring that they take care of ground transit and regulatory clearances at the borders, stores stock in large quantities in their warehouses, oversees restocking across Amazon as well as additional channels of distribution, and then ship it straight to clients (Rodrigue 4). The operations procedures are dependent on the types of commodities being handled. The goods may be categorized depending on their perishability, their regions of delivery, the urgency of the order, and the sellers (Rodrigue 2). Amazon has enough human resources and unique resources in its storage facilities and fulfillment centers to facilitate easier, efficient operation procedures and quick delivery of packages. For instance, they have robots that help move packages out of conveyor belts, delivery trucks, Amazon air cargo fleets, and drones to facilitate quick delivery of Amazon packages within 24 hours (Stone 14, Mac Cathmhaoil et al 226).
Workflow/planning/scheduling
Amazon offers internal career development possibilities, such as collaborative training, departmental transfers, and managerial job promotions, to help employees enhance their current abilities or acquire new ones. The company takes pride in enhancing employees’ skills, even those who have yet to gain prior background knowledge in a certain field of operation (“How Amazon is Working to Close the Skills Gap and Train Employees for Jobs of the Future”). The company’s workflow could be handled by some employees working from home. However, in 2023, the company insisted on employees returning to the office to work at least three days a week in the office (“Swipe Your Badge or Get Fired? Employers and Workers Face a Reckoning over Returning to the Office”). It aimed to foster collaboration and cooperation among employees by working within the office. Amazon offers its employees employment contracts best suited to their schedules. Therefore, they have full-time employees, part-time employees who may choose to work on night or day-time schedules, and also contract employees who may choose to work for a specific number of hours within a given period (“Amazon Boosts Employee Flexibility with the Launch of New Term-time Contracts” ). Amazon inspires employees to put in much effort and aim high. Opportunities for career development, a pleasant work setting, and learning initiatives.
Technology and Automation
One of the earliest retailers in the world, Amazon uses machine learning, an element of artificial intelligence, to recommend commodities to prospective clients, and this provides them with a competitive advantage. The corporation uses a special A.I. model known as the flywheel approach to make sure that discoveries and conclusions based on A.I. and ML are disseminated throughout the enterprise rather than limited to one division (“The Amazon Flywheel Explained”). The company is also known to utilize robotics systems in its warehouses to facilitate quicker movement of products during the assortment process. For instance, Amazon acquires and distributes goods as needed using robot arms such as Palletizers, which are tiny robots that take goods off conveyance belts and arrange them on boxes. Also, a heavier robot called Robo-Stow contains a six-ton automated arm that can move bundles of products 7.3 meters across different floors in a building (Bogue 182). Systems Applications and Products is the ERP system that Amazon continues to employ for its business functions. This ERP system is in charge of gathering all pertinent information about the store from the Amazon platform. Lastly, Amazon also uses a certain shipping software known as Veeqo, which proactively recommends shipping choices depending on the preferred transporter, the lowest prices, and amenities that can fulfill the shipping commitment to the consumer (“Multi-channel Shipping Software for Amazon | Veeqo USA”).
Quality
Amazon is dedicated to ensuring that it provides quality experiences for its customers, both sellers and buyers. Therefore, it has a formal program known as the Supplier Quality Assurance Program. The process of evaluating, accepting, and monitoring suppliers guarantees that Amazon selects and keeps the best suppliers for a fruitful and long-lasting collaboration. These evaluations concentrate on the expertise of suppliers, such as technical skills, quality control, and business support capabilities (Supplier Connect). Amazon utilizes the Six Sigma program to improve client fulfillment and decrease mishaps. For example, prior to undertaking changes, Amazon assesses client contentment levels, pinpoints regions of discontent, and investigates the underlying reasons. The business then maintains control over the enhanced procedures to guarantee continued excellence. The rules and regulations guide Amazon’s quality standards provided by individual nations and their organizational standards established under the Fulfillment by Amazon (FBA) quality checks (Bhuiyan). The firm monitors the quality of the goods through simple observation and thorough document reviews, among other processes, when they are dispatched to Amazon’s fulfillment centers. Amazon, being an online retail shop, is heavily reliant on customer feedback and suggestions for certain products, and this allows them to solicit ideas from customers around the globe. Amazon uses its customer service providers to deal with customer complaints, and they take the necessary action against accused third parties depending on the case at hand and the violations breached.
Supply Chain
One problem is that it takes longer than expected for Amazon to enter all of the merchandise into its database. Consequently, there are interruptions in the packages’ readiness for delivery (Rodrigue 13). Delays of this kind directly impact customer contentment and, as such, comments and poor customer ratings. Such unforeseen delays have an impact on the capital of vendors and buyers’ opinions regarding certain sellers. Amazon has already been integrated into the future as they ceased engaging outside partners for significant packaging and transportation tasks but rather individually combined operations with companies further up or below the supply chain, including their suppliers and third-party customers (Rodrigue 12).
Inventory
Amazon has a vast range of items in its inventory: apparel, books, household items, shoes, etc. Therefore, the company engages a lot in the assortment process in their warehouses and fulfillment centers because they have to package and ensure that all items are at the right storage facilities and units. For efficient management of its inventory, Amazon uses a multi-channel multi-channel inventory management system commonly known as Veeqo (“Multi-channel Shipping Software for Amazon | Veeqo USA”). This is a free program offered by Amazon to merchants that operate multiple domains and platforms. It tracks and synchronizes inventory across FBA, locations, and channels. Veeqo ensures that the inventory levels are lowered across all of the platforms when one makes a sale on one of them, avoiding excessive sales.
Special Requirements and Contemporary Themes
Considering that Amazon is an online retail shop that requires its users to create accounts in order to engage in their shopping activities, then the company is required by law in its areas of operation to protect its customers’ personal information. In their declaration, Amazon endorses federal protection measures in the United States that forbid the selling of confidential data without consent and guarantee openness, possession of a person’s private data, and the opportunity to erase it (“Data Protection and Privacy | AWS”). In addition, Amazon is involved in selling multiple goods, and the Environment Protection Agency also requires them to adhere to strict environmental policies to ensure public safety. However, Amazon may not have been previously required to conform to strict EPA policies until recently, when they were required to stop selling environmentally friendly pesticides (“Stop Sale, Use, or Removal Orders Issued to Amazon.com Services LLC”).
Delivery and Customer Service
Fast and dependable delivery is a fundamental component of Amazon’s customer-focused strategy. With the use of logistics programs, the business may monitor deliveries instantaneously, give accurate shipment projections, and engage in personalized client service. By increasing confidence and commitment, this openness and accountability improve the entire client relationship. Amazon makes use of both direct and indirect avenues of distribution. When it sells things straight to buyers, it employs a direct distribution network(Rodrigue 13). When customers purchase goods from privately owned businesses through Amazon, and those businesses need to make shipments, then Amazon engages in an indirect distribution channel. On their website, Amazon provides after-sales support where customers have the opportunity to contact Amazon’s customer service, get their refunds, and return any defective goods.
Cost
Amazon deals with a multitude of independent sellers, commodities, and buyers; therefore, different costs apply differently. For instance, for sellers on Amazon. In the marketplace, there is a 15% charge on the standard selling fees, which then grants sellers access to a collection of products and services offered. Amazon increases value by ensuring that it maintains its customer base through consistently working towards providing quality services and goods. In addition, its vast inventory collection, efficient and consistent shipping, online amenities, and creativity focused on the needs of the consumer also allow Amazon to increase value for the same costs for their goods all around the globe through standardization. A majority of the tradeoffs between costs and other operational decision-making areas at Amazon are mostly commonly associated with the incentives given to buyers. For instance, Amazon may waive shipping fees or provide discounts on their products to customers in exchange for purchasing a certain number of commodities.
SWOT Analysis
Amazon, being a Cloud computing, online marketing, and e-commerce business, experienced several hiccups and threats in its operations that may have taken it a few steps back. Nonetheless, it has also had enormous opportunities in the past that have enabled it to succeed and gain a prestigious position. There will also continue to be multiple opportunities in the future that will assist the business in growing further. Here is a SWOT analysis of Amazon.
Strengths
Robust brand appreciation
Amazon has a good global reputation in the online retail realm.
Client-oriented
Amazon uses a wide range of resources to ensure that they engage clients individually.
Widest Variety of Commodities
Amazon boasts of 75 million purchases on their online retail platforms from their global customers, which is made possible by their ability to provide a wide range of commodities to customers.
A Significant Amount of Independent Vendors
A variety of independent sellers have joined Amazon’s platform to offer their products to the company’s websites. According to Fulfillment by Amazon (FBA) data, independent merchants offer over 2 billion items for sale.
Better Distribution and Logistics Networks
Amazon has extremely effective delivery and logistical networks that are prompt, safe, and dependable. The company even offers set prices for various delivery window durations. Weaknesses
Consumer Protection is decreasing.
Amazon needs help in adhering to some regulatory acts due to high demand and increasing independent sellers. Therefore, the company needs to be more able to inspect all its commodities as rewired, hence exposing its customers to hazardous situations. EPA recently requested Amazon to stop selling some pesticides.
Unjust Use of Information from Suppliers
Data protection is essential for the majority of I.T. companies, and recently, Amazon had issues with the E.U. for infringement offenses. Therefore, the company may need to pay a fine of up to 10% ($28 billion) of its 2019 revenue ($280 billion) if it is deemed to have violated the law.
Workers’ Strike
In the U.S., Amazon employees boycotted relocation demands by the company, and German Amazon employees boycotted work, alleging hazardous workplace circumstances, eventually leading to shut down of six fulfillment centers.
Profit Losses in Select Regions
Its attempt to provide incentives to its customers, such as free shipping over certain durations, may have led Amazon to suffer some losses, as what happened in India.
Opportunities
Ventures into untapped markets
Amazon could grow and increase revenues by venturing into untapped markets where there is less competition.
Reducing the number of Independent sellers
Amazon can minimize the number of sellers in their platform for better management of their brand, especially with certain products, to avoid compromising on their reputation.
Increasing the number of outlets
Amazon could be locking out potential customers who prefer shopping at their physical stores. Therefore, they can actualize their idea to expand on a number of physical outlets globally, such as what they had tied doing with their idea on Amazon Go stores.
Threats
Cybercrime
Amazon is required to stay vigilant due to the Growing cybercrime issues that could jeopardize the company’s network safety protocol.
Competition
Other retail giants such as Walmart and Target, among other companies in the U.S., and Alibaba in China, are Amazon’s greatest competitors. Therefore, Amazon has to consistently maintain a competitive advantage to avoid losing customers to competitors.
Counterfeit Commodities
Amazon has to invest more in quality control systems to ensure that it minimizes the sales of counterfeit goods by rogue independent sellers.
Fake reviews
Product reviews are a crucial sign of product reliability and legitimacy, and shoppers depend extensively on comments to guide their decisions. However, Amazon has an excessive number of falsified feedback,
Recommendations
The company has been a consistently high-ranking online retail shop through its continued investment in the timely delivery of commodities to customers. However, it would also increase its revenues by expanding its operations through the establishment of more e-commerce businesses, particularly in developing countries where there is less competition from global online retail giants. However, in order to maintain its market position, Amazon must also think about developing fresh initiatives in light of the dangers and vulnerabilities. In order to mitigate industry-specific pitfalls, it would be essential for Amazon to maintain its current level of company diversification in order to cope with the external and internal issues identified.
However, the company should invest in better quality control systems that help the organization counter-check some products whose components cannot be identified easily, such as products containing chemicals. This would allow the company to maintain its good standing with the Environmental Protection Act, where it would guarantee selling environmentally friendly products. Alternatively, for delicate products such as those, the company may also eliminate third parties and directly ensure the distribution of products themselves. Another suggestion would be to create additional alliances to broaden the company’s consumer base and support its global operations against rivalry and associated strategic obstacles in both online and offline markets. Consequently, Amazon should establish more physical stores to avoid alienating some customers who may otherwise prefer physical shopping at Amazon stores.
Works Cited
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