Consumer Reviews in E-Commerce Transactions

Question: Write a formal report from a management perspective that critically evaluates (a) selected Case Study/ies, analysing and discussing the management of information through the implementation of E-Business, e.g. the design/implementation, benefits and risks, models and strategies used and the impact E-Business had on the organisation.? Answer: Introduction This report analyses the E-business model of Amazon. com. Amazon.com is a well known e-commerce company operating globally in the internet based retailing domain. Information Management and Customer Relationship Managementupport the business strategy of this company. Initially, this company was in the Business to Customer and Business to Business relationships while later on it shifted to customer to customer model. The business model cannot be only termed as internet services; it is a mixture of retailing and the kindle eco system. Thorough research is made to study the implemented E-business strategies undertaken by Amazon and the benefits, risk involved and particular limitations are discussed. Benefits of this model are that many large e-commerce sites sales their own products through amazon.com. It can reach to a wide range of customers across various geographical locations, thus increasing the sales volume of the company and providing wide range of options to the customers. According to Chiu et al. (2014), the risk involved is that many retail companies are adapting e-commerce models due to which competition have become intense, for this reason Amazon spends a good amount of money in RD. Amazon is constantly explorating for new strategies to outperform the competitors and hold a large portion of the market. Amazon Marketplace is a third party selling platform offering goods and services at a discounted price through online shopping mall. Management can take the advantage of online sale 24/7 and reach to a wide geographical reach and easy buying and selling procedures helps to make a fast turnover. Amazon takes a charge derived from formula involving sale price, a variable closing fee, a referral fee and a fixed charge. Amazon web services includes a host of web services under various heads namely, computer related, Content delivery, Database, E-commerce, Storage, support. Impact of e-commerce model on Amazon is huge which helps in the value proposition of price and convenient product across all categories, allowing extending in new markets and deepening the customer relationships. E-Business Analysis and Evaluation Infrastructure: Amazon keeps the client of the data secret, unlike other companies. Consumer search directly on the Amazon website to buy goods directly and the core data of the consumers are not sold to the third parties unlike other businesses. On the other hand, Amazon innovatively uses this data to promote its own products. The entire delivery process is driven by the recipients, which supports both traditional as well as alternative delivery process. In the digital economy, this proposition helps to integrate the entire delivery process and makes it user friendly towards customers. Amazon also includes full support to online platform- from initial search for services and goods to recorded delivery and sales return. Additional customer services information and adverse search can also be initiated (Huang and Benyoucef 2013). Environment: Many retail companies are applying the same e-commerce model as that of Amazon, so Amazon has to work in a competitive environment. Companies like Amazon, maintaining large locations are facing a disruptive and dramatic change in their business model. Online business models like that of Amazon enables the users how the goods and services will be delivered to them. Interactive care services and integrated customer information based on supporting electronic identities and personal preference will quickly gain in importance (Shaikh and Gupta 2014). Strategy: Strategy Explanation Making lucrative offer to prospective clients Offers made by Amazon are well thought out and lucrative to lure in customers. Passing on only the useful information Redundant data are blotted out and only useful data are passed on to increase productivity. Keeping only small but highly efficient team Small team makes the work smooth and effective. Talking only when needed Being verbose is not all welcome in Amazon which helps to cut out wrong information. Getting adversial Adversity makes an employee build overall skill and they learn to maneuver difficult situations. Table 1 showing the strategy undertaken by Amazon (Source: Hannak et al.2014) E-procurement: The process of e-procurement done by Amazon that is spot buyer requirement is not done by conventional e-procurement shopping and search options. In the case of Amazon, user punches out to Amazon and then shops around in the consumer- oriented market before getting approvals in e-procurement application. In e-procurement process the bottom line is that the process where Amazon is financially intermediated into every transaction can be very efficient and also user friendly from a requisitioned point of view but is not very effective from a financial standpoint in the real world. This company has one of the most innovative and technologically advanced e-procurement processes in the online retailing space and the model is copied by many others online retailers. E-marketing: Marketing methods Description Onsite product reviews Inclusion of products review on site is helpful in selling of products fast. About 88% of the customers review the products review the products before purchasing. Cross selling related products Cross selling is an important method of increasing the overall average order value of Amazon. Amazon has added various sections like Same products , Customers who brought this, also brought. Creating tons of contents Amazon has nearly close to 2.5 billion on site pages on Goggle. The more pages a company has better are the chances of ranking Fast page speed Amazon has a reputation for a fast page speed, creating a large impact on user experience and sales. Personalizing the shopping experience Amazon has a personalized way of selling products. On viewing pages viewers can see sections like Related to items you have searched, Most viewed etc., thus having a personal touch to the overall experience. Reviews comments by users Reviews are a way of creating reliability in the minds of customers. Amazon has an onsite review page, thus helping customers taking a fast decision regarding purchase of products. Recommending similar products Recommending similar products helps Amazon to sell more than one products including similar products. Table 2 showing the e-marketing strategy undertaken by Amazon (Source: Einav et al.2014) E-scm: Diagram 1 showing the E-scm strategy undertaken by Amazon (Source: Benlian et al. 2012). Amazon has a unique strategy of having a supply chain management model, by starting from customers and then moving backwards. Amazon is really innovative on their supply chain management process, by constantly bringing in new technology to improve the supply chain management process. E-crm: CRM is an activity by which most regular and loyal customers are retained by the company. Relationship Management, Database Marketing is ways of CRM. Amazon builds and maintains the list of client databases and takes onsite feedback from them. The personal touch the company brings in, in the form of product suggestions helps to build trust among the customers. Amazon has realized long back that customer relation is of utmost importance and is trying hard to retain loyal customers. Benefits of implemented strategy: Benefits Explanation E-Business change management Amazon does not stick to a single model for a long time. They are constantly finding new ways to innovate the business models and upgrade their model. Prime offerings Prime offerings include facilities like 2 day delivery and access to the streaming called Amazon Instant Video and will be able to borrow millions of books from Kindle website and premium customers will be able to get exclusive offers and discounts from Amazon. Customer offerings Amazon comes under the Top 100 brands globally, known for taking care of the customers. In a recent study it was found that highly satisfied customers are more likely to do business with the company and spread word of mouth publicity. Competitive Advantage Personalization includes providing search options of similar products and provides other options like Most searched, Also Searched options thus pushing customers to purchase more products. Reliability and Security Currently, Amazon boosted up the cloud computing services and the business of leasing out of server space in the large data centers. The infrastructure of Amazon is great and they are regularly updated. The problems of Server breakdown and hacking of websites are very less due to a strong infra structural set up. Kindle Universe Kindle is one kind of innovation changing the way readers used to read books. It started as a reading device but now operates in the tablet and mobile devices. Globalization Amazon operates on a global scale. The models that are applied by Amazon are put up on a global scale, which makes the model universally applicable. Costs and Risks Amazon being an innovative company spends a good amount of money on the Research and Development. The risk of the model decreases to a low level. Table 3 showing the Customer Retention Management undertaken by Amazon. (Source: Mikianset et al.2013) Limitations Competitive Advantage and Globalization: According to Zheng (2013), business model applied by Amazon is applied by other online retail organizations. Amazon does not have that edge over the competitors as it used to have in the earlier days. The same model when applied by many online retailers does not have that appeal. The strategy of Amazon is well known to other competitors, who either copy that strategy or presents a better strategy thus robbing the company of intellectual pursuits. With the advent of globalization e-commerce businesses are springing up here and there. They are coming up with new and advanced models giving a tough competition to Amazon. Costs and Risks: According to Chiu et al. (2014), Amazon highly focuses on innovation which has resulted in sophisticated forecasting, overall operational efficiency and fast inventory. On the contrary, this has resulted in negative cash flows, which means Amazon first pays to the suppliers then receives payment. The risk of nonpayment is huge and the cost involved is also high. Many experts are of the opinion that this model cannot continue for long. Accuracy: Amazon heavily relies on computer infra structure and they have the largest cloud computing systems in the world. If the computer system is hacked or any cable disruptions happen then product delivery, receipt of order will not happen and accuracy will take a backseat (Mikians et al. 2013). Reliability and Security: Amazon operates on a global scale, so they are exposed to foreign exchange rate fluctuations which can badly affect the stock price of the company. Relying totally on the cloud computing has its share of blues. Once, the site is hacked customer sensitive data will be available to the hackers, and those data can be misused to a great extent (Benlin et al .2012). E- Business change management: Change of any management will lead to initial protests from the employees as well as from customers. Buyers are acquainted with a particular setoff models. This may lead to loss of customers and frustration among the employees. Optimization: The existing process of Amazon is very good but the optimization process is not very good. Amazon is losing the competitive edge that it used to have to other competitors (Huang and Benyoucef 2013). Conclusion The management of Amazon is able to achieve partly the objectives of this company. The objective of the management is to insist on higher standards, think on a bigger scale and recruit the best. Amazon has a lot of potentialities which is still unexplored in the cloud computing space and expansion space. Management can improve the limitations by creating an alternative mode of system of taking orders and payment process to stop relying on the cloud computing process and avoid any sort of disruptions due to hacking or other problems. Cash flow system is also not at a very good position, so advance payment for products should be encouraged. Recommendation It is recommended that the E-business model followed by Amazon is appropriate, but it lacks some applicability in the model. The e-business model followed by Amazon is replicated by many online retail stores and local start-ups are coming up, offering customers more attractive offers. Amazon should give more focus on the Research and Development division, and be more innovative in the approaches. 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