Thursday, October 31, 2013

Business to Consumer) case study: Amazon.com

IT B2C (Business to Consumer) case study: Amazon.com
The B2C e-Business application that will be considered in this paper is Amazon.com. Amazon was founded in 1994 by Bezos Jeff and was initially named Cadabra. The site went online in 1995 and changed its name to Amazon. The firm started as an online bookstore where the customers could be able to access the books that they required. However, the firm has undergone massive diversification in the last couple of years to include the provision of a number of products for instance the jewelry, furniture, electronics, foods, toys, music and videos. The firm has undergone massive expansion to be able to offer its services to a number of countries of the world for instance The United Kingdom (UK), Germany, India, Italy, Brazil, Spain, Japan, China, France and Canada as well as international shipping to some countries for the different products that are offered by the firm (O'Shaughnessy, 1995).
The e-Business model of the firm makes use of online payment methods to allow the consumers to be able to access the products that are offered by the firm. The consumers are allowed to access the products and make payments through their credit cards then the products are delivered to the appointed location which they have stated. The B2C e-business site or portal of the firm requires the customers to be able to sign up or register before they can be able to access the site for the diverse reasons i.e. to make the purchases of the products that they want. Amazon.com also makes use of e-payment processors that ensures that the consumers have enough funds in their accounts to be able to successfully undertake the operations.
The position of Amazon.com in the electronic retail industry will be considered. The application that is used by Amazon is a market leader in the segment of the retail industry.
Krause (2013) argued that the market share of the firm in the domestic operations has significantly increased in the past. The market share of amazon.com was 16 per cent in 2010 but has since increased to stand at 26 per cent in 2012 out of the total e-retail market value of $226 billion. The application is faced with significant competition in the US thus would lead to the reduction in the market share or the market position in the market. The rise of the other e-retailers for instance e-bay and others is a pointer to the fact that the position that the application currently occupies will probably change in the next couple of the years. However, in the global retail industry, the application of the B2C e-business at Amazon.com will increase to make it a market leader. The above will be due to the increased or continued market expansion.

Based on the estimates of a business analyst from Morgan Stanley, the market share of the application of the Amazon.com B2C e-business will hit a market share of 23.5 per cent by 2016 (Kucera, 2013). The position that is held by the firm in the market is as a result of the core competencies and the capabilities that are held for instance the online search capabilities. The above allow the firm to be able to search for a wide variety of the products that are offered by the firm (Grimm, 2006). Secondly, the firm has a very reliable online ordering system that allows it to be able to minimize or reduce the errors that may be committed by the customers in the process of the order making.

The other capability of the firm is the customer service as it has significantly ensured that the customer service levels of the firm are very high. The products are also delivered in a timely and reliable manner (Hill, and Jones, 2012). There is a consideration that the firm ensures customer loyalty due to the perceived value that is created as the right products that are ordered by the customers are always delivered to them. The domination of the market by Amazon.com has also been due to the competitive advantage that the firm has for instance the huge variety of the products that are offered, the partnership that the firm has entered into with the other forms that are found in the industry as well as the economies of scale that allows for the significant reduction in the costs that are incurred by the firm. Amazon.com makes use of a cost leadership strategy so that it can be able to shatter the competition that it faces from the other firms that are found in the retail industry.

The focus of the firm is on the enhancement of the efficiency of the operations that are being undertaken by the firm (Kossowski, 2007). It is important to note that the forecasts for the reduction in the market share can be averted by the use of the cost leadership strategy (West, 2009). Amazon.com is also involved in massive differentiation. Differentiation makes the products that are offered by the firm to be different from those offered by the competitors (Eldring, 2009).

The e-commerce application of the Amazon.com has been selected based on the criteria shown below. First, there are the essential elements of the B2C e-commerce that is contained in the application that makes it an important choice for the study of the B2C e-business case study. The application that is used by Amazon.com has a global audience thus allowing it to be able to reach diverse countries of the world. Amazon.com has the presence in nearly all the countries of the world and the only requirements that are needed is the credit card access and the access to the internet.

The globalization and the rise in the use of information technology has made the products that are offered through Amazon.com to be accessible to all the groups of the customers who are found in the market. Secondly, the products that are offered are unlimited thus the customers can be able to make a range of purchases from music and movies to books, food, electronics and clothes amongst the many others.

The e-business application that is used at Amazon.com is tailored towards the consumers thus the marketing ensures that the products that are required by the diverse consumers. Amazon is focused on the individualized offering for all the customers who are found in the market. The point that needs to be highlighted at this point is the fact that rather than just focus on the provision of the variety of the products, the focus is on the ways through which the firm will be able to offer massive customization based on the needs of the individual customers who are found in the market. The B2C e-business application that is used at Amazon.com also has a portal site that is used to refer the customers to the site where they will be able to make the actual purchases of the different products that they may want to buy. Apart from such characteristic of the B2C e-business that are found in the application, the other element that is considered in the making of the choice is the consideration of the processes. The processes that are found in the e-business application that is used in the firm include the electronic presentation of the goods as well as the services, the use of online bill presentation and order taking, the automation of the customer service for instance the customer enquiries as well as the transaction handling and the online payments.

Amazon.com has a dynamic database that allows it to be able to have and maintain an online catalog of the diversity of the products that are offered by the firm to the customers. Also, the online ordering operation of the firm is securely integrated with the front end presentation as well as the system of the order entry to ensure the significant success of the operations. In addition to the above, rather than have a static billing statement data, the e-business application of Amazon.com makes use of a web based server that contains the presentments for the data on the billing statements. There is also the ability of the application to be able to accept the electronic payments for instance the EFTs (Electronic Funds Transfers) and credit cards for the bill payment or the full shopping transactions.

The choice and the uniqueness of the Amazon.com’s B2C application have also been used as the criteria for the selection of the use of the application in the case study. There are some tools that are used in the e-business operations of Amazon.com and they have been used by some other e-business retail firms. First, when Amazon.com went online in 1995, it had developed an electronic commerce server that is web software that allows for the running of the diverse functions of the firm for instance the functions of the online store front. The online store front functions that are undertaken include the management of the inventories of the firm, the online ordering of the products, the display of the diverse products that are found in the market amongst the many other products that are offered.

The above software works in conjunction with the other online systems to be able to process the different payments. Initially, Amazon.com made use of the IBM commerce servers but it has moved to the use of the servers that are made by Microsoft. The firm makes use of the Microsoft Site Server Commerce Edition that is significantly suited to the B2C applications. This is because it has the massive connections that allows for the proper undertaking of the functions that are found in the firm. There is the Microsoft Internet Information Server which makes use of greatly dynamic web pages through the CGI and ASP to be able to connect to the database back end through the Microsoft SQL server and the Open Database Connectivity. There are also the electronic commerce payment systems thus allowing the customers to be able to use digital cash and credit cards to be able to make the purchases that are found in the market (Lawfer, 2004).

The electronic commerce payment processors of the firm help in the validation, verification and encryption security for the cards that are used thus ensuring that the purchases that are made are effective and there are no frauds that the firm is faced with. Finally, there is the consideration of the standards. The standard that is used is the Secure Electronic Transaction (SET) that ensures that the integrity and the privacy of the consumer data is maintained while ensuring that the payments are processed effectively.

There are different types of e-business that are found in the market. There is the business to business electronic commerce (B2B) which entails the use of private networks on the internet to be able to automate the business transactions that are taking place between the different firms. The B2B makes use of the electronic data interchange (EDI) to be able to structure the data that represent the diverse transactions that are undertaken. The B2B makes use of VAN (Value Added Networks) that allow the companies to be able to undertake the online business after they have obtained the membership to the given VAN where they want to be involved in the business operation. Web technologies have been implemented for instance the use of web EDI thus allowing the small firms to be able to join in the transactions that are being undertaken. Secondly, there is the business to consumer electronic business (B2C) that is greatly targeted at the retail business models through the use of the internet. The application of the Amazon.com belongs to the B2C model due to the number of considerations. The application is used for the retail operations and it makes use of the internet (Amazon.com, 2009). There is an unlimited selection of the products and there is also a global audience for the products that are offered.

The application will also be classified in terms of the objects that are traded in the application. There are a number of the objects that are manipulated through the use of the application that is used by the firm. There are the services that are manipulated for instance the customer service as well as the provision of the interface through which the diverse customers of the firm can be able to undertake the varied operations. There are also the financial services that are undertaken in the application (Amazon.com, 2009). The e-business application of Amazon.com makes use of a web based server that contains the presentments for the data on the billing statements. The application is able to accept the electronic payments for instance the EFTs (Electronic Funds Transfers) and credit cards for the bill payment or the full shopping transactions. Online ordering operation of the firm is securely integrated with the front end presentation as well as the system of the order entry to ensure the significant success of the operations. Also, there is the consideration of the times scopes that are related to the duration of the collaboration between the parties that are involved in the activities of the e-business. There are two main parties that are involved in the B2C electronic business.

They include the business that offers the diverse products and then there is the customer who interacts with the business as well as makes the purchases of the products that are found in the market. Rather than make use of static collaboration, Amazon.com’s application makes use of a dynamic collaboration where there is a back and forth relationship between the firm and the different customers who are found in the market (Chesbrough, 2009). The e-business undertakings in the firm entail the collaborations that are determined for each and every individual e-business order that is being executed in the firm.

The four BOAT perspectives that have an effect on the business activities that are undertaken in the electronic business will also be considered. The BOAT Framework was developed by Paul Grefen, PhD (Grefen, 2010). The framework integrates several developmental stages into one spiral model. The main aim of the BOAT is to be able to develop new e-businesses that are characterized with a very strong technology drive as well as those that require various cycles so that they can be fully understood and be able to profit from the interaction between the technology and the business that is being undertaken in the firm. The BOAT framework consists of diverse aspects and stages. They include the business aspects, organization aspect, architecture aspect and the technology aspect. For the B2C e-business application by Amazon.com, the first element of the BOAT that will be considered is the Business aspect (Grefen, 2010). The business aspect entails the business goals of the e-business that is being used in the firm. In the Amazon’s application, both richness and reach are points of consideration. The reach is the ability of the business to be able to interact with the different customers who are found in the industry to be able to exchange the objects and be able to undertake the modal reach through the channels etc.

The richness on the other hand refers to the intensity of the communication between the parties that are involved in the e-business. The richness is determined by the like frequency, the band width, level of derail, the choice of the media, the level off interactivity as well as the levels of customization and detail amongst the many other considerations (Grefen, 2010). The reach is increased due to the fact that the accessibility of the customers is particularly increased by the firm. Through the reduction of the costs and efforts that the customers will take to be able to access the market, more customers will be willing to purchase the products that they need from the e-business site of Amazon. The Amazon application significantly stores the decision histories for the different customers thus significantly increasing the richness. The customers will also be able to have significant ease in the undertaking of the purchases from the websites and the portals that are maintained by amazon.

There is also the business direction where the Amazon has been taking strategic directions with regards to the new viewpoints that need to be explored in the organization. The elements that are currently considered include the online capability, the true on-time, the completely automated business and the enriched customer relationships. The other is the consideration of the business structures for instance the case of the dynamic partnering with the suppliers as well as the changes in the service levels that are found in the firm.

Apart from the business aspect of the BOAT Framework, there is also the organizational aspect. The organizational aspects are structured on the diverse ways through which the organizations are connected and structured to be able to achieve the business goals. It includes the business functions and the business processes that are found in the firm. The organizational aspect at Amazon.com makes use of diverse elements that make it stand out in the market especially considering the levels of the interaction between the customers and the firm (Grefen, 2010). Architecture aspect will entail a number of elements. The architecture aspect entails the conceptual structure of computerized information systems used to empower the organizational structures. It includes all the information system structures that are found between organizations as well as within organizations (Grefen, 2010).

The architecture aspect entail the use of Microsoft Internet Information Server which makes use of greatly dynamic web pages through the CGI and ASP to be able to connect to the database back end through the Microsoft SQL server and the Open Database Connectivity as well as the Secure Electronic Transaction (SET) that ensures that the integrity and the privacy of the consumer data is maintained while ensuring that the payments are processed effectively. Finally, the technology aspect will also be considered. It describes the technological comprehension of the systems of with architectural structures. The technology aspect describes software, languages, communication protocols as well as the hardware that are used in the application (Grefen, 2010). There are the servers that are located in the different parts of the globe. There are also the many programming languages that are used in the making of the application.

The Amazon.com’s particular application gives it a competitive advantage in the market where it operates in due to a number of reasons. The elements of the application that makes it stand out will be considered to be able to help in the clear understanding of the competitive advantage that the firm enjoys in the market (Shanker Ramamurthy and Petit, 2009). The reach is increased due to the fact that the accessibility of the customers is particularly increased by the firm. Through the reduction of the costs and efforts that the customers will take to be able to access the market, more customers will be willing to purchase the products that they need from the e-business site of Amazon. The Amazon application significantly stores the decision histories for the different customers thus significantly increasing the richness (Amit, and Zott, 2001). The customers will also be able to have significant ease in the undertaking of the purchases from the websites and the portals that are maintained by amazon. Rather than make use of static collaboration, Amazon.com’s application makes use of a dynamic collaboration where there is a back and forth relationship between the firm and the different customers who are found in the market (Osterwalder and Pigneur, 2009).

The e-business undertakings in the firm entail the collaborations that are determined for each and every individual e-business order that is being executed in the firm. The above ensure that the operations that are being undertaken by the firm are significantly supported and that the firm can be able to offer the customized service to all the customers who are found in the market. As at 2000, the firm stated that it wanted to be able to offer the customized service to all the 4.5 million customers that it had. This goal is still being achieved by the firm due to the excellent customer relationship management.

There are also the electronic commerce payment systems that allow the customers to be able to use digital cash and credit cards to be able to make the purchases that are found in the market. The electronic commerce payment processors of the firm help in the validation, verification and encryption security for the cards that are used thus ensuring that the purchases that are made are effective and there are no frauds that the firm is faced with (Fasnacht, 2009). Also, there is the consideration of the standards. The standard that is used is the Secure Electronic Transaction (SET) that ensures that the integrity and the privacy of the consumer data are maintained while ensuring that the payments are processed effectively. This ensures that the safety and the privacy of the transactions that are undertaken are significantly maintained by the firm.