Case Study: Situation Analysis

Jeffrey Bezos started in 1994, after recognizing that Internet usage was growing at a rate of 2,300 percent a year. Operating from a 400-square foot office in Seattle, Jeffrey launched on the Internet in July 1995. mission is to use the Internet to transform book buying into the fastest, easiest, and most enjoyable shopping experience possible. By the end of 1996, his firm was one of the most successful Web retailers, with revenues reaching $15.6 million. Almost overnight quickly became the world’s largest e-tail bookstore in the world. Amazon has continued to expand its customer base, and sales revenues have increased every year. The firm’s revenues increased from $15.7 million in 1996 to $2.76 billion in 2000 . Today, is the place to find and discover anything you want to buy online. Amazon offers the Earth’s Biggest Selection of products to 29 million people in more than 160 countries across the world making them the leading online shopping site accessed via the World Wide Web.

amazon logo

Over past several years has grown and developed very rapidly. The key core processes that have lead to Amazon’s success are convenience, selection, service, and price. Convenience can best be described when Bill Gates stated that, “I buy all my books at because I’m busy and it’s convenient. They have a big selection, and they’ve been reliable.” With over 106 million adults purchasing books every quarter, Amazon has capitalized on the convenience of on-line ordering. The next key process for Amazon is selection. Amazon is able to offer the world’s largest selection because they are an e-tailer with virtual directories. Amazon only keeps recent publications in stock for quick order fill, but directly orders any other requested books from the publisher. This business practice allows Amazon to have low warehouse cost, and offer the largest selection of books at the same time. The third key process for Amazon is service. Amazon offers customers everything from email notifications when their orders are filled, to chat rooms so customers can discuss and recommend books. Amazon also allows customers to search for books with similar titles or subject matters. Currently about 63% of Amazon’s business comes from repeat customers. The last key process for Amazon is price. At, almost all books are discounted. Bestsellers are sold at 30-40% discount and all other books are at a 10% discount. Amazon is able to offer such discounts because they have a lower cost structure than physical stores, and they turn their inventory over 150 times a year. All four key core processes have lead to the success that Amazon has experienced in its young six years of operation.

People would visit whenever they wanted to buy a book because it would be the most likely store, (physical or online) to have a particular title. After becoming satisfied customers, people would return to to buy more books and would eventually stop looking elsewhere. In 1998, began selling music CD’s and videotapes. The websites software can track a customers purchases and recommend similar book, CD, or video titles. In fact, the site can recommend related products in a variety of product categories now sold on these product categories include consumer electronics, computers, toys, clothing, art, tools, hardware software, house wares, furniture, and car parts. now generates significant revenue by supplying other sellers of consumer goods with the technology to sell those goods online.

Problem Definition

Although has experienced tremendous growth and increase in revenues over the past six years, many challenges face Amazon in the fast paced environment of the Internet. Amazon faces the challenge of providing excellent customer service, while trying to grow and expand their business. Amazon also faces the challenge of finding innovative ways to stay ahead of their competitors.

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