E-Business System Report for Amazon Inc.

Introduction

Amazon Inc. is a company located in Seattle, Washington and sells the bests of heterogeneous products. The company serves all the 50 states of the U.S.A alongside other 160 nations around the globe. Some of the products Amazon offers include electronic book readers, computer hardware and software, electronics, CD’s, DVD’s, housewares and among others that can be viewed by the customers on their online portal and other international websites. The company is guided by the vision of being a customer-centered and has built a forum where its customers can find and discover items they are interested in buying online (Amazon.com, 2018). The company’s Web services involve renting data storage and computing services through online cloud computing. Besides, the firm makes market-dominant Kindle e-book readers. The promotion of such devices has led to a drastic growth in its e-book publishing and has enabled Amazon to revolutionize the book-publishing sector.

Amazon brand stands at the 83rd position on Forbes’ Global 2017 list measured in terms of its revenue, profits, assets, and market value (Gensler, 2017). The company believes in innovation as a force that brings global change; therefore, it embraces innovative ideas for customer attractions, promote its merchandise and stimulate the developers regarding its infrastructure for businesses and in turn boost the creativity among the developers. Through such innovations, the company has created an enabling environment for online shoppers compared to the traditional shopping systems. Being the first company to initiate online procedures, Amazon continues to offer value through wide selection, high-quality contents, top-notch customer service, personalized services, competitive pricing and innovative application of technology. Besides offering products, some other services have helped the company to generate healthy revenues. For example, the firm is reaping from its competitive edge and is creating value through customer-relationship management models, captivating customers and promoting its brand image alongside the financial well-being.

Information Resources

Amazon employees are the key stakeholders in the adoption and utilization of its information systems. The firm maximizes the potentials of its employees to develop customer loyalty and maintain its brand image. Amazon applies the available software and hardware for optimization of its information system. The firm uses updated software and hardware to generate data used in making decisions concerning its global presence. For instance, Amazon uses the software to link all its international stores, suppliers and customers and creates a standardized management system across these online stores. The data generated by its information system are often used in making adjustments in the company’s operations. Therefore, such information assists in creating competitive edge among the Amazon-affiliated stores. A strong network is applied in coordinating the operations across the stores, share the best practices and effective data management. Also, the company applies such network systems effectively in conducting international research to assess the trends in consumption behaviors among its existing and potential customers.

E-Business System Report 

The main reason for using computers alongside information system by Amazon is to reduce operating costs and gain a competitive advantage in the retail market. The company’s information system is developed to collect data, process it and deliver in time, relevant and useful information that can be applied in decision-making processes. Previously, Amazon applied a different information system to position itself as a leader in pricing strategies. Such currently applied information systems include point of sale and ISD systems. In line with reaping from the applied information technology, Amazon has established an information system department, which is linked to over 2000 associates. The introduction and application of information system has and will continue to help the company improve in its efficiency and ability to address economic trends associated with different countries of operations such as Asia, North America, and Europe. In addition, it will enable the online store to manage the increasing number of the online clients and create global practices that will boost its efficiency in service delivery.

Amazon is competing against a number of rivals such as smaller online retail stores and larger ones such as Walmart and Ali Baba. The global dimension of the e-commerce business also exposes the company to different forms of external forces. Therefore, Amazon must ensure that it maintains its resilience despite the changes in the retail market. Using Porter’s Five Forces Analysis, the following are some of the external factors that affect the company.

Competitive rivalry: Amazon has many competitors in the online retail sector. Some of the external factors responsible for high-level competition in the online retail sector are strong aggression by the firms, presence of many substitutes and low switching costs. Generally, online retail companies are always aggressive and put a strong competitive pressure against their rivals. Some of the competitors such as Walmart and Ali Baba have elaborated and expanded e-commerce websites (Dobbs, 2014). There is also a strong force of substitutes in the industry. For example, Walmart’s brick-and-mortar stores are close substitutes to Amazon’s online retail services. Furthermore, there are some brick-and-mortar e-book stores that directly compete against Amazon. Besides, low switching costs insert a strong force on the firm. Low switching costs are linked to low barriers for consumers to move from one retailer to another substitute provider. Regarding eternal factors, competition should be a strategic priority in ensuring Amazon’s long-term competence.

Bargaining power of Amazon’s buyers: The firm’s vision and mission statements demonstrate its customer-centered approach to the online retail business. With the emergence of internet services, consumers can easily access information concerning online retail services and products. Such a factor affects Amazon regarding its customers’ ability to find alternatives to its products and services. Regarding low switching costs, Amazon’s customers can easily move to its competitors such as Walmart. Besides, the availability of substitutes enables consumers to transfer from one retailer to another (Dobbs, 2014). For instance, American consumers can easily avoid purchasing from Amazon’s website and opt for Walmart’s online stores. Therefore, Amazon must emphasize the buyers’ strong bargaining power to address its challenges in the online retail market.

Suppliers’ bargaining power: Suppliers have full control of Amazon’s raw materials and supplies. The company feels a moderate intensity of its suppliers’ bargaining power due to a small number of suppliers, moderate forward integration and suppliers’ size. The small population enables the company’s suppliers to have a strong force on its online business. For instance, changes in prices of machinery from a small number of its large suppliers can directly affect its online retail costs of operations (Dobbs, 2014). Nonetheless, suppliers are limited regarding the moderate forward integration. Moderate forward integration is equated to moderate degree of control of suppliers concerning the sale of their products to online retail stores such as Amazon. Furthermore, the manufacturers of moderate size equipment have limited influence on Amazon. Therefore, Amazon’s external factors on the significance of moderate suppliers.

Threat of substitutes: Amazon is in competition with some substitutes in the online retail industry. Therefore, the company continues to address the strong substitution force which threatens its e-commerce performance. The low pricing costs indicate that the consumers can easily transfer to its competitors (Dobbs, 2014). Besides, the presence of substitutes coupled with the low prices of their products, especially among the small retail stores further influences the competition against the company.

Threat of new entry: The entry of new companies reduces Amazon’s market share in the online retail sector. However, the company experiences a weak force of the new entrants because of economies of scale and high costs of branding (Dobbs, 2014). For instance, new entrants would spend millions of dollars and many years to create a brand that could match Amazon. Besides, the strong e-commerce business makes Amazon benefit from large economies of scale. Therefore, new entrants have to achieve large economies of scale to favorably against the firm.

System Specification

Radio Frequency Identification (RFID)

Radio frequency identification (RFID) is a general term referring to information and communication technologies that are capable of identifying staff, the location of its products and individuals to a firm’s computing system without manual intervention. The system will be composed of a reader and a tag to be integrated within the other firm’s systems. Amazon will apply Motorola FX9500 fixed RFID reader (Kim, Park and Shin, 2014). Such a reader is sensitive to -105 bistatic and a power input of +10dBm. RFID will be connected to a personal computer (PC) that has an installed a flash memory of 128MB and DRAM of 128MB. The computer will be using Linux operating system (OS) with a management protocol of RM 1.0.1, connected to a network support of 10/100 Base T Ethernet. Since most of the systems are prone to workmanship defects and materials, FX9500 will have a 1-year warrant dated from the time of delivery due to specifications from a particular manufacturer. The cost of the application system will be $1,000 at each of its online stores, and this cost includes the reader and tag. Notably, this is the minimum quoted price compared to Apple’s EM4100 reader. Like Apple, Motorola is equally a reputable electronic manufacturer. The main advantage of this reader is its portability and compatibility with other simple computers. Furthermore, it does not need specific input and output devices.

Electronic commerce

Amazon customers use Amazon Go App installed on their smart device which scans the 2D barcode to access the stores and enjoy their shopping. Items selected from the shelves are automatically added to the clients’ virtual cart. On leaving the stores, customers voluntarily walk out with their accounts electronically charged, and a receipt will be dispensed from the device. This kind of technology used by Amazon Go incorporates computer vision, machine learning, and Al and sensor fusion technologies. This system enables Amazon to reduce fraud because it does not allow cash for the items bought from its stores. Notably, Amazon abandoned RFID about 16 years ago because its cost is higher than barcodes printed on packages which have almost negligible costs (He, 2017). For many years, Amazon has managed to revolutionize its supply chain management through such system. The firm has decentralized its inventory control and procurement processes.

The application of deep learning by the Amazon Go systems enables it to be aware of the different items in its stores, which creates a big barrier to apply it by third-party firms. This is because the shelves in third-party stores are to be modified with sensors and cameras. Even though such technologies reduce labor costs, their initial costs of deployment are high. Besides, the rival companies need to have its own inventory on Amazon to train them for information. Furthermore, the new technology has been tried by Amazon employees only, and some issues are likely to affect different people in different regions. These barriers may limit its competitors from adopting the similar technology until they are addressed adequately and proved to be viable.

Emerging issues in the retail industry

Technology continues to play a critical role in the retail industry today. Interactive applications, chatbots, and robotics among others are some of the client-facing technologies in the retail sector. Even though many online retail outlets apply impressive and cutting-edge technology, it is critical for them to use the right technology that suits their business and customers. In a few years ago, a few online retail firms were affected by the rapid technological changes and retailers have been facing “evolve-or-die” ultimatum as technology creates platforms for the retailers to reach out to customers and enable clients to access information about products such as reviews and ratings. The introduction of personal devices such as smartphones and tablets is evolving both in-store and online shopping experiences. Retail stores can now access large-scale market and customer data which provides them with equal levels of opportunities and risks. Even though retailers try to manage the challenges and opportunities presented by these technologies, the majority are taking advantage of such technological advancement to enable them to survive in the technological environment.

By adopting next-gen models, retailers will manage the global expansion. This is possible with flexible deployments, creating seamless e-commerce and good channel experiences for their clients and improve inventory management (Pierce, 2012). In this time of empowered consumers, retailers should develop wonderful customer experiences through intelligent operations and steward businesses towards success today and in future.

 

References
Amazon.com. (2018). Amazon.com: Online Shopping for Electronics, Apparel, Computers, Books, DVDs & more. Retrieved from https://www.amazon.com/
Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry analysis templates. Competitiveness Review24(1), 32-45. doi: 10.1108/cr-06-2013-0059.
Gensler, L. (2017). The World's Largest Retailers 2017: Amazon & Alibaba Are Closing In On Wal-Mart. Forbes. Retrieved from https://www.forbes.com/sites/laurengensler/2017/05/24/the-worlds-largest-retailers-2017-walmart-cvs-amazon/#6049d62920b5.
He, X. (2017). Will Amazon Go win the war between computer vision and RFID in retail? Read more at: https://www.idtechex.com/research/articles/will-amazon-go-win-the-war-between-computer-vision-and-rfid-in-retail-00010463.asp. Idtechex. Retrieved from https://www.idtechex.com/research/articles/will-amazon-go-win-the-war-between-computer-vision-and-rfid-in-retail-00010463.asp.
Kim, J., Park, J., & Shin, Y. (2014). RFID-Based Automatic Inspection System Design and Implementation for Manufacturing and Retail Industry. The Journal of Korean Institute of Communications and Information Sciences39C (1), 97-105. doi: 10.7840/kics.2014.39c.1.97.
Pierce, K. (2012). Shopper Intimacy: A Practical Guide to Leveraging Marketing Intelligence to Drive Retail Success20121Rick DeHerder and Dick Blatt. Shopper Intimacy: A Practical Guide to Leveraging Marketing Intelligence to Drive Retail Success. Upper Saddle River, NJ: Pearson Education, Publishing as FT Press 2011. 232 pp. plus index, ISBN: ‐10: 0‐13‐707543‐X, ISBN: Also lists ‐13: 978‐0‐13‐707543‐0. Journal of Product & Brand Management21(4), 301-301. doi: 10.1108/10610421211246720.