Amazon case report. Executive Summary & Business Model. MGMT Essay

Baipeng HuangAmazon’s CaseAD 715
Contents TOC \o "1-3" \h \z \u Executive Summary PAGEREF _Toc20935636 \h 1Amazon's Business Model PAGEREF _Toc20935637 \h 1Amazon's core competencies PAGEREF _Toc20935638 \h 3Alibaba has the most significant potential threats for Amazon PAGEREF _Toc20935639 \h 5Where to Next PAGEREF _Toc20935640 \h 7Final Conclusions and Recommendations PAGEREF _Toc20935641 \h 7
Executive Summary
This paper looks into details of the Amazon business model, by explaining how the company operates in its business environment. It also explains how the company manages to maintain its better performance in the market through better service provision to its customers. It also contains the core competencies that largely explain the company's pillars and values. In the core values, the company’s operation has also been well explained to create a better understanding of the company. The paper also identifies Alibaba as the major competitor for the Amazon Company. Lastly, the paper looks into the future of Alibaba Company.
Amazon's Business Model
An extraordinary business model can enable a company to gain significant revenue and survive from fierce competition with its competitors in the long-term. Amazon has a mixed business model that involves online bricks – and - mortar store, Amazon website service (AWS), prime membership program, warehouse storage, and advertising service. The online store, AWS and Prime membership program are the most common familiar and profitable projects which bring billions of dollars annually to the Amazon in the past decades. The first pillar of Amazon is the online store, the largest e-commerce market all over the world, and people can purchase or sell their goods through this platform. Amazon will collect service fees to make some margins. Amazon's online store changes people's purchasing behavior in some way. It provides more options for potential customers at a lower price comparing to the physical store.
The Amazon business platform provides for direct sales. Direct sales is a less common feature among most of the online shopping platforms, which enables the buyer to obtain goods and services at cheaper services. The large inventory stores owned by the Amazon company enable it to have enough supply so that at any time the customer can obtain such goods directly from its stores. This limits the high costs that are tied with brokers who may be involved in the process. In addition to these direct services, the company allows other sellers to obtain goods from them and later sell. This is important since enables those customers who stay in far areas to be able to easily access such goods.
Moreover, Amazon's online store eliminates the distance barrier to let customers can shopping through their smart devices. This online store can help Amazon to build a data model that shows the changing trend of people's behavior and interests in different fields which will increase the sales revenue. The second pillar of Amazon is the Prime membership program which costs $99 annually. The prime membership program gives the members free two-day shipping on any prime products. And the access of Amazon's video services which include more than eighteen thousand (18,000) movies and 2,00...