Right after Thanksgiving this year, Amazon’s shares hit an all-time high in early trading Monday as analysts predicted this online retailer would gain more market share in nearly future. So why my favorite One-stop shopping site, Amazon.com, could hold a position firmly at the top of the online retail realm, and ranking as the number one of America’s largest online retailer, as well as the UK’s top retailer for PC and home entertainment? I believe Amazon’s biggest strength is its competitive advantages. I am pretty sure many of you have shopped at Amazon.com, or at least visited the website once. So you probably can find Amazon as a one-stop shopping site, which sells everything under your needs, such as: books, music, home, video games and computer software, consumer electronics, appliances, garden items, baby products, sporting goods, jewelry, watches, health and beauty products, musical instruments, clothing, and groceries, among other things. The range of products under these categories is equally as vast; if it exists, it is likely to be found on Amazon, either from the company’s own stock, from a third party retailer(partner e-commerce companies), or from an individual user(Amazon marketplace).
Bill Gates pointed it out in a magazine interview. He said: “I buy all my books at Amazon.com because I’m busy and it’s convenient. They have a big selection, and they’ve been reliable”. What Bill mentioned are some core value propositions that Amazon makes. I made purchases at Amazon because its convenience, huge selections, excellent service, but one more thing Bill left out － of course, he don’t care about it at all － the price. Not only Moms, but also all consumers, including me are concern more about pricing benefits Amazon offers to us. If you try to input a product name and clicking the price search icon on Nextag or Pricegrabber.com, the results most likely include Amazon’s products with competitively priced, and they are often significantly lower than the suggested retail list price. Another pricing completive advantage Amazon owns is that it does not charge sales tax, for example, in California, since here does not have its distribution center, making its bargains even greater for me and those lucky enough to live in one of the other states without an Amazon warehouse.
Amazon also assists customers in making an informed decision before making a purchase. One web technology made popular by Amazon is user reviews. Now you have experience with Amazon, and you know for each product, it provides a press review, features user reviews, and rated on a 5-star basis. Amazon allows users to submit reviews of products sold on Amazon, which are attached to the web pages of each product. If you roll down the web-page by mouse, users' typically comments will be displayed which are about their experiences using the product and whether or not the product met expectations. So when we are considering buying a product, we definitely would love to visit the site just like Amazon, to read the abundant user reviews regardless of where we intend to make final purchase. By acting this way, Amazon encourages consumers to consider the alternatives at Amazon.com. Also, I personally admire the CEO of Amazon, Jeff Bezos’s idea about promoting negative users’ review. He chose to take a radically different approach to reviews because as he said: "we want to make every book available – the good, the bad, and the ugly...not to let truth loose”. I’ll bet his purpose by allowing negative reviews on site is not just like what he said in front of us. But Amazon is able to create a community for its reviewers. Much like a social network, Amazon’s customers share their opinions amongst one another. So this community reinforces Amazon’s commitment to transparency and buyer empowerment while increasing customer loyalty.
If you just don’t like shop at Amazon.com, I know you must like to shop at those traditional retail stores. This preference is leading an obvious disadvantage for Amazon: Amazon.com’s main competitive disadvantage is that it is an online exclusive retailer. Because of this, impatient consumers, like my dad, can’t achieve the instant gratification of utilizing something the second they buy it. I am pretty sure that they really don’t want for orders to be processed and shipped. Likewise, without brick-and-mortar locations, how could a grandma buy stuff at amazon if they even don’t know how to use the internet? Poor credit people also need a card in order to make purchases, as Amazon has no way of accepting cash. Other complications I heard from traditional shoppers are associated with a lack of physical retail locations include the difficulty and inconveniences of returning or exchanging an item, the risk of damage during shipping, and the inability to inspect an item, verify that it is listed correctly, and try it on before purchasing it.
But in order to ensure its competitive advantages sustainable, Amazon is constantly seeking new business opportunities. After staying within the company's basic business model, “business to customer”, for decades, Amazon realized that there are more potential markets to gain advantages. Blogger Scott Macaulay argues that “Amazon Studios”, the new open-source studio from the online retail behemoth, is challenging other film production firms significantly in the market; moreover, I was a little bit surprised when I place an order on Target.com because its platform looks so familiar to me. By expanding its business model to include “business to business”, Amazon was able to sell its web services (platform) to other e-commerce companies, such as Target.com, that lacked competitive web technology and infrastructure, creating a new source of revenue for the company.
Now that Amazon sells its web services to other e-commerce companies, you probably have some doubt that Amazon will be able to maintain its position as the absolute leader in the highly competitive e-commerce industry, especially now that competitors have access to Amazon’s technology and infrastructure. However, think about this: Amazon’s core competitive advantage is not merely the company’s outstanding backend, but rather and more importantly, the strong customer loyalty that Amazon enjoys. Even though other e-commerce companies are using the same IT backend as Amazon, they lack the same strong relationship with Amazon that has been built upon years of trust and outstanding service. Because of this, Amazon made a very smart choice to diversify its corporate business, as its e-commerce model will inevitably be duplicated. Amazon will remain relevant and sustainable because its core competitive advantage transcends its innovations.
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