Case Study: The Amazon Of Innovation Case

The Amazon of Innovation Case

1. Based on the information provided in the case, Amazon’s competitive strategy can go either way – it is possible to justify Amazon’s strategy as a cost leader, simply because the case stresses, in more than on instance, in the fact that Amazon has razor thin margins, and places emphasis on discounted prices. However, I believe that Amazon’s competitive strategy is more oriented to differentiation. It’s clear from the timeline presented in this case that Amazon is not oriented to one product or service. Despite primarily being an online retailer, Amazon has diversified itself in many ways. For example, Amazon sells online cloud storage, physical storage (Fulfillment by Amazon), virtual currency and, as of 2014,
Selling via Amazon.com has its perks, but there are also drawbacks that come with it. In terms of advantages, the most obvious one is that by selling via Amazon, these retailers can gain access to Amazon huge global network, allowing them to reach clients they may have never been able to reach before. This can result in an increase in sales and ultimately profits. However, this is immediately met with an issue – pricing. Amazon prides itself on providing customers not just with convenient goods, but also with discounts and desirable pricing. As a retailer using Amazon, you would have to be prepared to lower your prices in order to capture Amazon’s wide range of clients. As well as Amazon’s massive customer base, your company will also get an element of credibility by selling through Amazon, as they have an excellent global reputation, and almost everyone has heard of their services in a positive atmosphere. Finally, selling through Amazon also allows you, as a retailer to build a reputation and network for yourself. Customers are able to comment and give instant reviews on your products, which can then be shared by almost every single social media
Already mentioned above, you have to be prepared to lower your prices as a retailer through Amazon, and this can be a deal breaker for many business owners. Furthermore, selling through Amazon is not cheap. Fees are associated with the price of your items, and you should be prepared for thin margins since for every sale you make, Amazon is going to end up charging a fee, and this may ultimately cost you more than it would have if you decided not to use Amazon. The final disadvantage I will discuss is the fact that whilst you have access to Amazon’s customer base, you are also synonymous with their reputation. If Amazon has some sort of a PR crisis, or is involved in reputation damaging events – you can expect your business despite not having any intense partnership with Amazon to suffer