AMAZON

Amazon

Amazon

Introduction

Amazon is a very progressive online retailer, which continues to develop and extend its product offering, as was exemplified by its entry into grocery retail in 2010.

Amazon continues to be one of the leading online retailers in the world. In a recent survey of the US's top 40 online retailers which reviewed customer satisfaction levels, Amazon came top of the list. It seems that online specialists continue to perform better than their multichannel rivals, and US companies outshine their British counterparts (May, 2009, pp.22-34).

Company Background

Amazon was founded in 1994 by Jeff Bezos, initially operating purely as an online book retailer. It was novel in its approach, in that it allowed consumers to read and write reviews on books before they decided to purchase. The retailer gained an impressive following in the US on this basis. As the company grew, its product range also branched out to include toys, video games, software, electronics, music, videos and home improvement products, after just a year of full trading (Kliesen, 2006, pp. 23-28).

Following a difficult period of trading in the 1990s, Amazon underwent some extensive cost-cutting in 2001, and refocused on becoming a portal, acting as the middleman between buyers and sellers. The company also launched Amazon auctions in order to compete with eBay. Amazon currently has websites operating in Austria, France, Canada, China, Japan, Germany, the UK, the US and Spain (Jacob, 2002, pp. 44-48).

In 2007, Amazon launched Kindle in the US. This is an eBook reader with a difference, in that it allows readers to download books to their e-reader on-the-go by connecting to wireless mobile networks. This is a feature which is not offered by any of its competitors. Amazon has a history of growth through acquisition. In July 2009, Amazon purchased Zappos.com, a US-based online clothing and footwear retailer, for a reported US$847 million. In October 2008, Amazon also began selling clothing in the UK, stocking well-known brands such as Timberland, Versace and Nike (Haug, 2007, pp. 101-107).

Private Label

Amazon entered private label in the US with the launch of Strathwood in 2004, a range of home and garden products. This was joined more recently by its Pinzon private label range, comprising home furnishings and furniture. Amazon is yet to offer these private label ranges in the UK.

It thus appears that private label is not of great concern or interest to Amazon in the UK. Despite the growing popularity of private-label goods in the UK following the economic downturn, it appears that Amazon is not choosing to focus its attention on producing its own products at low-price points. Instead, it appears for the time being that Amazon remains committed to developing more high-end, innovative products, such as the Kindle e-reader, which continues to be a big income generator for the company (Weber, 1999, pp. 2).

Current Business Practices and Service Operation Concept

In order to open up new markets, Amazon is in very close attention to the relationship with the publishers. Traditional publishers have to bear all risk of ...