“The EUrASEANs: journal on global socio-economic dynamics”

Volume 1 (8); January – February, Year 2018;

ISSN 2539 – 5645 (Print)
Copyright © 2018, [The EUrASEANs]
on-line access: https://www.euraseans.com/1(8)

STRATEGIC ANALYSIS OF GLOBAL E-COMMERCE

AND DIVERSIFICATION TECHNOLOGY:
THE CASE OF AMAZON.COM INC.

Irina V. Onyusheva

Tanatthon Seenalasataporn

Stamford International University, Bangkok, Thailand

This paper considers the strategical issues of the Amazon.com development, presenting in
detail the strategic analysis of external and internal business environment of this company in
its current situation, suggesting also the alternative strategy for the future.

Keywords: E-commerce, technology, diversification, strategy, globalization, Amazon.com

Introduction

Strategy is significant execution plan for business through the individual level which
brings up or down depending on the environment and analysis of the related factors. The
catalyst would come from internal and external environments, both having direct and indirect
impact on businesses. That is why strategy is supposed to combine critical thinking with
exploratory analysis and detailed investigation.
Amazon is a global corporation which is ranked 12th in the Fortune full list with the
latest data on revenues being $135,987 Million (Fortune 500, 2016). Amazon was established

Irina V. Onyusheva

PhD in Economics, Dr.h.c. of IANH, Associate Professor, Corresponding Member of Academy of Pedagogical
Sciences of Kazakhstan, Academician of International Informatization Academy, member of the Editorial Board of
the 'Polish Journal of Management Studies' (Scopus, SJR, WoS).
Research Field And Scientific Interests: formation, ensuring and increasing economic competitiveness on both
micro- and macro- levels; human capital development; HR management; knowledge economy; project
management.
She is the author of more than 70 research publications, author of an individual scientific monograph named
“Human capital in context of national economic competitiveness: formation factors and development prospects»
(2015) awarded as "Best educational edition in economic field" in the framework of the XXVI international book
fair of educational publications (Sochi, Russia, October 8-11, 2015), and Gold medal “European Quality” (ESIC,
Germany, Russia, April 4, 2016).
E-mail: irina.onyusheva@stamford.edu

Tanatthon Seenalasataporn

Stamford International University, International MBA Program

Interests – Strategic Management, Project Management, E-Commerce, Diversification Technology

E-mail: 316331005@students.stamford.edu
 The EUrASEANs: journal on global socio-economic dynamics, № 1 (8), 2018

back in 1994 from Amazon.com book by Jeff Bezos with the investment of only $10,000.
The Bezos’s message was then described as "Amazon.com strives to be the e-commerce
destination where consumers can find and discover anything they want to buy online"
(Kotelnikov, 2008). Currently, Amazon has the market capital of 427 bln USD (Fortune 500,
2017).
This work aims to illustrate and analyze Amazon in its various dimensions of business
operations and its market segmentation by focusing on its current business model and
strategy.

Company’s Current Strategy

Overview of Amazon.Com With its Current Business Units

Amazon.com is a corporation which was essentially global in nature, from the initial
stage of its development and until now. Moreover, Amazon diversifies greatly its business
strategy, thus providing a lot of meaningful information for potential research.

Current Vision, Mission and Goals

CEO Jeff Bezos released the latest annual letter to shareholders, explaining the
business drivers of Amazon.com Inc. Those were described under 3 themes of high velocity
decisions. Firstly, any decision can be undone, as it is argued by Amazon’s CEO that “If you
walk through and don’t like what you see on the other side, you can’t get back to where you
were before. We can call these Type 1 decisions. But most decisions aren’t like that – they
are changeable, reversible – they’re two-way doors” (Gupta, 2017).

Table 1. Amazon.com's vision & mission statement

Visions statement To be the Earth’s most customer-centric company, where customer can
find and discover anything they might want to buy online
Mission To strive to offer our customers the lowest possible price, the best
statement available selection and the utmost convenience
Goals To move quickly to solidify and extend our current position while we
begin to pursue the online commerce opportunities in other areas. We
see substantial opportunity in the large markets we are targeting. This
strategy is not without risk: it requires serious investment and crisp
execution against established franchise leaders.

Secondly, disagree and commit with yourself, this is described as “If you have
conviction on a particular direction even though there’s no consensus, it’s helpful to say,
“Look, I know we disagree on this but will you gamble with me on it? Disagree and
commit?” (Gupta, 2017).
Thirdly, act with 70% information (Gupta, 2017). Businesses should take action even
having only 70% of information, thus choosing to start faster rather than wait for the
information to be complete. This indirectly shows how much more competitive Amazon.com
is at today’s market.

49
 STRATEGIC ANALYSIS OF GLOBAL E-COMMERCE

Basically, Amazon.com is mainly looking for the customer-centric value proposition

with more agility so that to drive the value to its maximum thus matching this value with the
demands of today’s highly competitive market (Amazon.com Inc., 2016).

Amazon.Com Products & Services

Amazon.com products and services may be simply identified with 2 main groups as
retails and non-retails. The retail part includes: Book, Music & Movies, Consumer
Electronics, Computer & Office, Tools & Automotive, Food & Household, Home
improvement, Toys & Video Games, Sports & Fitness, Clothing and Jewelry, Kids and Baby.
While the non-retail part covers: Referrals / Commission base selling, Amazon Web Services
(AWS), Fulfillment by Amazon. 24 brands positioning below illustrates the interrelated
products & services of Amazon.

Figure 1. Amazon.Com Products & Services

The figure above shows the Amazon.com business model canvas with its specific focus
on the retail sector, Internet services, e-book ecosystem and platform business (Digital
Business Models, 2016). This figure illustrates the keys partners, activities, value
proposition, customer segmentation. From it, it is obvious that Amazon focuses on online
retail. This has started from Amazon’s detaching from traditional retailers to become a low-
cost retailer. Next were the Internet services, Amazon Prime provides free two-day shipping
on retails purchases, on-demands video streaming and also free access library for Kindle
which is operating as a subscription business model. Moreover, Amazon Web services
(AWS) include space leasing to other companies and individuals, with the core strategy being
self-managing servers and other Internet services. Lastly, Amazon is expanding into the
market of Kindle tablets manufacturing, providing tablet media services such as e-books
online etc. (Digital Business Models, 2016).

50
 The EUrASEANs: journal on global socio-economic dynamics, № 1 (8), 2018

Figure 2. Business Model Canvas of Amazon.com

Diversification and Acquisitions Of Amazon.Com

Amazon.com has performed various diversifications, with both related and non-related
business. The company has reinforced its retail business through non-related businesses,
including the delivery system, groceries etc. Consequently, today Amazon.com is able to
survive in many market areas at the same time.

Internal Analysis

Value Chain Analysis: Porter’s Generic Value Chain

Porter’s Generic value chain analysis is the methodology used to identify professional
activity that can generate value along with a competitive advantage until value proposition is
valid at a particular market.

51
 STRATEGIC ANALYSIS OF GLOBAL E-COMMERCE

Table 2.Value Chain of Amazon.Com

(analyzed by the coauthors)

Value Factors Consideration criteria

Inbound Logistics Amazon does not have long-term agreement with any
merchandise, any special payment conditions or extension of a
credit limit. Amazon has however its own inbound logistics for
owned retails business which sellers can use for their inventory in
Amazon fulfilment centers. Amazon bear all responsibility for
logistics and all related services if a customer orders FBA and
Amazon own inventory goods (Schreiber, 2016)
Operations In North America Amazon’s sales increased by 23% back in 2014
(Amazon.com, 2015) and then by 25% in 2016 (Amazon.com, 2016)
International market sales respectively increased by 12% back in
2014 (Amazon.com, 2015) and then by another 24% in 2016
(Amazon.com, 2017).
AWS market growth was 49% in 2014 (Amazon.com, 2015) and
55% in 2016 (Amazon.com Inc., 2017). Web-services offer cloud
resources and computing services, while the current major
customers include Pinterest, Dropbox and Airbnb. Moreover,
building application platforms are provided to GE, Major League
Baseball, Tata Motors and Qantas. AWS offers more than 526
features and services for more than 1 million customers altogether
(Amazon.com Inc., 2016)
Outbound Logistic Amazon operates 109 centers around the world which are using
robotic technologies to manage receipt, stowing, picking and further
shipment.
Generally, Amazon entrusts its business deliveries to UPS, FedEx
and TNT but has also started to lease part of deliveries directly to
Boeing and Freighter (Forbes, 2015).
Marketing & Sales Annual global marketing expenses of the company in question have
been consistently increasing, going over 7.2 billion USD back in 2016.
The marketing mix includes: printed ads, media advertising,
promotion, events and experience through various PR campaigns and
direct marketing.
Services Amazon manages all of its services entirely online through customer
account, while support is partially provided via calls (Expert CRM
Software, n.d.).

Competitive Advantage: Porter’s Model

Amazon’s business canvas illustrates their strategy which mainly focuses on the
competitive advantages related simulatenously to low cost and differentiation as broad as the
mass market allows. Interestingly, their strategy fully complies with famous 4Ps by Philip
Kotler.
As it is also evident from the business canvas model above, the emphasis as applied to
the Porter’s advantage strategy is on Amazon minimizing its operation costs which is

52
 The EUrASEANs: journal on global socio-economic dynamics, № 1 (8), 2018

partially evident from its advance computing and network technology operations, both being
aimed at maximization of overall efficiency. The basis for e-commerce here is represented by
the automatic systems which are usual for the processes of purchasing, scheduling, and
operating, thus leading to minimization of operational costs at each of the stages (Simthson,
2017).

Financial Insight

Financial statement by Amazon clearly shows the company gained profitability at the
end of 2016, however, its business trend at a particular point of time reached somewhat lower
levels and then recovered back, mainly thanks to electronic devices’ sales. Latest sales by
Amazon evidence that a huge share of them belong to the group of Cell Phones &
Accessories, which together got 59.88 mln USD (Web Scraping Services, 2016).

Figure 3. Amazon Electronic Market Revenues’ Deepdive

(Source: https://www.scrapehero.com/how-many-products-are-sold-on-amazon-com-january-2017-
report/)

In the context of diversification by means of Mergers and Acquisitions (M&A), it

would be curious to compare Amazon with its closest competitors. This data reflects the key
results from the acquisitions carried out by Amazon.com, since the latter is now able to reach
the top level, quite comparable with Google. But the investment history overall also shows
that #1 in terms of M&A deals still belongs to Google while the Amazon’s trend goes
moderaly up and down.

53
 STRATEGIC ANALYSIS OF GLOBAL E-COMMERCE

Figure 4. Revenues’ Comparison in the context of Global Competition Viewed As

Profit Contribution
(Source: https://www.cbinsights.com/research/report/amazon-strategy-teardown/)

External Analysis

Pestle at International Markets

PESTLE is another tool to assess external environment which combines political,
economy, social, technological, environmental and legal aspects. It can be used for assessing
the existing environment or reverse-back use for analyzing the influence of businesses on the
external environment.

Political
Huge electronic retails like Amazon and e-bay can potentiall lead to many troubles
from the political point of view, especially when it comes to Asian countries. One of such
partially political, partially economic issues is taxation (Pratap, 2016). Amazon.com,
however, manages well its both political and governmental influences. The company always
gains benefits from the stability of political regimes since the latter usually creates an
additional opportunity for the firm to enlarge or spread its business, especially in highly
urbanized economies (Greenspan, 2017).

Economic
This is a significant factor influencing directly market conditions. E-retail rapidly grew
by 23% back in 2015, and this trend was characterized by broad market expansion. But this
factor also made most of the related markets highly competitive (Pratap, 2016). Somehow,
Amazon managed to maintain its positioning, taking into account the core trends of the
macroenvironment development. Relative economic stability in the most of developed
countries predetermined Amazon’s success because online retails’ business expansion and
disposable income availability led to boosting of the company’s financial performance. At

54
 The EUrASEANs: journal on global socio-economic dynamics, № 1 (8), 2018

the same time, recession in China is a threat because the new emerging competitor effects the
revenue volumes of Amazon (Greenspan, 2017).

Social
Behind the scene of e-retails businesses, social and cultural trends are effecting their
growth, though this is not always immediately obvious. Nowadays, the volume of mobile
users is rapidly increasing, and this factor directly promotes further growth of the businesses
like Amazon as they are expected to provide more convenience (Pratap, 2016).
At the same time, differences between the rich and the poor in so many countries
worldwide threaten Amazon’s success due to differences in the disposable income levels.
However, the increasing demand in developing countries bring up the potential market
development with its emphasis on more active online buying behavior. These are also
additional opportunities stemming from the social climate (Greenspan, 2017).

Technology
The 21st century is going to change IT technologies which already are the important
factors of business encouragement. Innovation as such is a significant success factor in the
modern era of better services’ delivery. On the another hand, artificial intelligence and
cognitive intelligence are gradually becoming the new competitive advantage, since both are
able to provide better customer service and thus – more customer loyalty (Pratap, 2016).

Technologies’ quick obsolescence forces companies continuously develop new

technology assets, and this is a heavy load in terms of investments but also an opportunity in
terms of differentiation and competitive advantage. For instance, newer technology can
maximize productivity for e-commerce but it can also boost cybercrime at the same time,
thus, any technology is always an opportunity to guarantee long-term survival, but for all
parties involved (Greenspan, 2017).

ENVIRONMENT

Environment sustainability is a critical factor in the world development, and e-retail

business is no exception in this regard. This business needs better packaging, with wastes’
reduction, smarter energy consumption and other elements of business sustainability. This is
directly linked to the investment in Corporate Social Responsibility (CSR) and strong
dependency of many businesses on non-renewable energy (Pratap, 2016).
CSR activities, inter alia, contribute to satisfaction with a company and its marketing
activity, while business sustainability contributes indirectly to standardization and stronger
brand awareness and popularity of corporate image (Greenspan, 2017).

LEGAL

Compliance is important for global businesses, including Amazon. Any type of

distribution concerns certain legal issues and challenges, including labor-related ones and
many essential elements of legal compliance. It still a huge challenge for Amazon
international business operations (Pratap, 2016). Interestingly, these challenges also tend to
increase new opportunities.

55
 STRATEGIC ANALYSIS OF GLOBAL E-COMMERCE

Strengthening product regulation is creating new opportunities for Amazon in terms of

intensifying and encouraging its battle to reduce counterfeit in the online retail sector. Also,
the company has more chances to grow from easing import and export regulation. Moreover,
the company has an opportunity to shape better brand image through its CSR activities so
that to ensure long-term development of its e-commerce under full regulatory compliance
(Greenspan, 2017).

CURRENT SITUATION OF AMAZON.COM

SWOT Analysis
The most known framework for assessment in the cases of both corporations or
individuals is surely SWOT-analysis. We have decided to divide business situation and
development area into two tables, see below.

Table 3. Strengths vs. Weaknesses

(offered by the coauthors)

Strengths (S) Weaknesses (W)

Reasonable price as compared to Slower growth of net margin as
the price and convenience compared to the closest competitors
Technology orientation and value
preposition Business diversification is not
Various business dimensions that directly beneficial for Amazon itself
encourage their own mutual
development

Amazon’s strengths start from value proposition as compared to the price, efforts and
convenience. But in behind this strength, net profit margin of Amazon is always fluctuating,
mostly due to frequent mergers and acquisitions and instability of business overall.
Amazon’s opportunities correspond mostly with its own strengths of exploiting
business shifts from technology development and unique product development such as
Kindle. Broad differentiation is an additional encouragement factor in this regard. However,
technologies are changing and developing very quickly. Thus, the cost of differentiation
might decline in relation to pricing. At emerging markets cloud businesses become more and
more widely spread, thus competition becomes quite severe. Therefore, any host country
might come, at any time, with its new restrictions and rules which would kill all Amazon’s
expenditure into this particular country.

56
 The EUrASEANs: journal on global socio-economic dynamics, № 1 (8), 2018

Table 4. Opportunites vs. Threats

(offered by the coauthors)

Opportunities (O) Threats (T)

Exploiting the business shift to Consumer hardware is supposed
cloud storage and diversification of to improve while prices are only
all related services declining –this means that e-
Kindle e-book conquered books will get more expensive.
only a small part of the Cloud business is getting more
publishing industry and the and more competitors, and there
audiobooks’ sector are a lot of newcomers at this
Cloud services have the market.
leading position today but Internet payment services would
they also have a chance for have to compete with local
further business providers across the world
diversification

Porter’s Five Forces Analysis

Porter’s Five Force is a generic principle for assessing the current position at a particlar
market.

Table 5 – Amazon’s Five Force Analysis

(compiled by the coauthors)

Threat of Online business as such is too valuable for Amazon. New market
new entrants entrants will have no problems since there is quite a variety of logistic
- High provider such as DHL, TNT, UPS and others. This factor has its
critical impact on Amazon business in the context of new entrants at
the market (Dudovaskiy, 2017)
Threat of From the standpoint of customers, there are many types of products
substitute and services Amazon is offering today. However, there is also an
products and alternative variety of physical stores as well as other websites that
services - High could easily replac or substitute Amazon (Dudovaskiy, 2017).
Bargaining power The bargaining power of buyers from varies sectors of customers is
of Amazon buyer - increasing because it easily changes from Amazon to any other
High substitute that is why price is a highly sensitive and significant factor
for the Amazon strategy (Dudovaskiy, 2017).
Bargaining power Amazon has small population of suppliers which has a relatively
of suppliers - strong force but moderation effect influences their integration size of
moderate supplier while the size reduce the force until it becomes moderate
(Greenspan, 2017).
Rivalry among Retail businesses are quite aggressive in relation to each other due to
the already rather strong competition at the market. The strongest competitor of
existing similar Amazon today is Walmart which has a very strong background in the
firms - High retail sector and is expanding into e-commerce quite intensively
(Greenspan, 2017).

57
 STRATEGIC ANALYSIS OF GLOBAL E-COMMERCE

The five-forces analysis of the Amazon business seems be a difficult task despite many
forces being the critical factors at the same time. Amazon still survives in the market but it
needs to develop technologies constantly and provide business diversification continuously.

BCG matrix

Yet another interesting analysis tool to determine a business position is BCG. The
illustration below shows the Amazon’s product position and description according to this
methodology.

Figure 5. BCG Matrix Of Amazon.Com

Cash cow, it is first quadrant shows that the low cash usage but high cash generate
were identified in relation to Kindle e-books and IMDB. Revenues from e-book selling were
observed to increase significantly over the years, while the number of Kindle’s users wa ts
expanding, thus making it a high-value product for Amazon (Miller & Bosman, 2011). Audio
books were roughly at the same level with the e-book markets, that is, also demonstrating
quite impressive sales. In addition, on-demand movie streaming has also generated high
revenues (Adamkasi, 2017).
Start, this is the secondary category of products and the assertion of Amazon’s
financial performance, has achieved higher sales as compared to brick & mortar retails such
as the Best buy (Griswold, 2016). This trend is further expected to increase due to increasing
number of users at the online shopping portals. In addition, the cloud computing segment has
shown positive growth prospects for the near future, hinting that this product may become a
cash cow in future once a relatively significant level of market share is established
(Adamkasi, 2017).
Question Marks – this quadrant shows the chance of growing into a profitable business.
The segment of video streaming demand has some problems with connectivity, and Zappos
has faced similar problems due to its low maturity and low rate of return after its acquisition
by Amazon (Stone, 2009). These businesses will need to solve these issues which so far have
resulted in low market share, thus, these units need to become more profitable (Adamkasi,
58
 The EUrASEANs: journal on global socio-economic dynamics, № 1 (8), 2018

2017). But already now, these businesses do not belong to the Start quadrant because video
on demand is starting to gain more market share as people’s behavior and buying habits are
changing when it comes to video these days.
Dogs, this quadrant of the matrix is usually for those products that are not able to
generate high revenues and thus have a notable market share. For Amazon music business
has not been able to provide solid financial leverage (Adamkasi, 2017) that is why MP3
business is in the Dogs part of the BCG matrix.
Due to space limitations this figure cannot illustrate all of Amazon’s products and
services. Only the major items are thus presented there.

VRIO framework

VRIO framework gives us a chance to describe the company in question in comparison

with its direct competitor, in this case – google. At first glance, it may seem that Google and
Amazon have a similar strategy but as the book postulates, “three aspects of Google’s search
products initially gave it an advantage over other search engines”. These three features are:
“(1) the way that it evaluates the quality of websites in response to a search request, (2) the
way that it interactes with firms seeking to advertise in conjunction with searches, and (3) its
price for consumers”. Moreover, Google imposes “aggressive yet incredibly creative
culture,” (DPTHRNBR, 2017), and this is actually quite similar to Amazon.
But Amazon has an extremely aggressive style and also an innovate approach to
accessing different market areas. Amazon established itself as the main player in the industry
that has a truly mass customer base. What is interesting here is that Amazon has the
capability to attract people with valuable products, rare things and also low-cost orientation
(DPTHRNBR, 2017)

Current Market Position

Today’s market position reveals the current Amazon’s strategy and positioning.
Amazon’s market development strategy is primarily concentrated to entering new
markets and growing on promising young markets. By now, Amazon has developed its
retails services to consumers at 10 markets/in 10 countries. This activity is following the
vision of global market outreach (Simthson, 2017).
Market Penetration is a secondary growth strategy for Amazon’s online retail business
which Amazon develop to intensify the interest in online retails. The company gains benefits
from higher revenues due to rapid growth population based on low cost competitive
advantage and its rather aggressive marketing campaign via Amazon’s website (Simthson,
2017).
In part of Product Development, Amazon focuses on supporting customer
functionalities which generate differentiation of competitive advantages. Development and
offering new products accelerate revenues such Amazon Web Services (AWS) which cost
leadership support comprehensive growth to mature research and development (R&D)
investment for rapid product development (Simthson, 2017).
Diversification is a significant part of intensive growth for Amazon. For example,
Audible was acquired to expand the e-book sector onto audiobooks and the related products.
Correspondingly, Amazon also attract more customers due to its cost leadership as Amazon’s

59
 STRATEGIC ANALYSIS OF GLOBAL E-COMMERCE

core competency is gainining new market shares through aggressive acquisition (Simthson,
2017)

Vision and Mission in Relation to Competitors

Amazon.com business overall has been identified as 3 segments, each having its
potential and current competitors.

E- Retail Business
In the e-retail business, Amazon faces serious competitors from e-bay and Walmart,
both having a competitive advantage due to low-cost factor. Additionally, there are server
competitors in the field of electronic and general commerce ready to compete. These include:
Best buy, Family Dollar, RadioShack, Staples, Target, Walmart, Sears, Big Lots, Delia and
Systemac. Moreover, speaking internationally, the competition also includes Ailbaba Group,
LightInTheBox Holding Co., Overstock.com, PCM, Vipshop Holding, JD.com, Wayfair Inc.
and Zuilly. These are quite active online merchandising platforms market with significant
potential for growth. Amazon must verify regularly it still has enough competitive advantage
to resist these quite strong competitors (Investopedia, 2017).

Electronic Devices, E-Book Ecosystem And Media Segment

At the electronic devices market, Kindle is the main device that Amazon releases as it
has its unique identity. But the main competitor is Apple, and it has many functionality
devices such as iPad with its iTunes services. At this market, Amazon must consider
additional investment in functionality to compete with Apple Inc. (Investopedia, 2017).
In the segment of e-books and audiobooks, Amazon does not have many competitors.
On the other hand, there are many new competitors that are still developing and already
trying to gain their market share of this business.
Media segment demonstrates the highest rate of competition at this market overall
because there are already quite many competitors such as E-Bay, Netflix, Warner Cable,
Apple, Google Play and also minor players.

Internet Services
Within this operating segment, Amazon competes with such global companies as
CDW, PC Connection, Insight Enterprise, Google, Oracle and in parallel to that, it also
competes with Salefoce.com, Accenture and Citrix System in the apps segment
(Investopedia, 2017).
Gartner magic quadrant assigns Amazon as the leader of this market segment, however,
Microsoft is gaining its market share due to Office 365 popularity which is increasing day by
day.

Future Strategy

Referring to the business canvas already presented above, Amazon is able to offer a
value proposition in terms of both price and convenience to ensure continuous customer
relationship under self-service automation. Most probably, Amazon will continue to expand
focusing on these 2 building blocks (Digital Business Models, 2016).

60
 The EUrASEANs: journal on global socio-economic dynamics, № 1 (8), 2018

Low-cost orientation and maximization

Amazon publishing is one of the most recent ventures of this company providing the
tools for on-demand publishing and giving new authors access to the Amazon store. This
extension of Amazon publishing is likely to cause some troublemaking in the industry
eventually (Digital Business Models, 2016).

Maintaining revenues from the electronic devices segment diversifying it at the same
time
The segment of electronic devices has the highest competition with quite many market
leaders such as Apple Inc., Huawei, Google. Anyway, the latest statistics on revenues in this
segment clearly shows that electronic devices are still able to provide the highest revenue and
rapidly accumulate net profit. But the value proposition of Amazon could not compete here
in the long run, especially when being compared with the leader – the Apple. Also, Amazon
might eventually find it difficult to compete with Chinese Huawei due to the low cost the
latter is offering. That why this business line needs to be on high alert in terms of maintaining
the market position with potential reconsideration of direction for investment and
competitive advantage position.

Expand services and satisfaction areas using previous investments

The Amazon’s revolution in delivery in some parts of the US is a real challenge for all
other online merchandisers. And Amazon today is quite able to transform its business even
further applying Amazon’s own technologies development (Digital Business Models, 2016).
Moreover, its market dominance will continue in the near future too as Amazon
explores new product and services categories in which this company has clear expertise in
terms of e-commerce innovation. Moreover, it is able to apply a variety of traditional
business model in the context of digital transformation (Digital Business Models, 2016).

Diversification as codevelopment of the competitive advantages

One of the drawback from mergers and acquisitions carried out by Amazon is that it
could take some time and efforts to align all these businesses to each other. But Amazon
must in any case converge its technologies and competitive advantages before the next wave
of M&As which would most probably cover logistic integration systems and expanding the
coverage onto new countries (CBInsights, 2017). This will have its effect on the financial
statementa and complexity of operations too.

Differentiation of services driven by AI

The lately released service by Amazon is AutoRip which is a music merchandise
operating in a cloud. There is also an expectation that this services may be later enlarged onto
movies and books, and later – on allowing also purchases of physical (Digital Business
Models, 2016). This emerging market is already highly competitive. Amazon needs to build a
brand new business pillar for that which another pillar, both being convergent and divergent
from other Amazon businesses by means of Artificial Intelligence (AI).
This is only one example of cloud service diversification on which Amazon must focus
in the course of its continuous development.

61
 STRATEGIC ANALYSIS OF GLOBAL E-COMMERCE

Conclusion

There are numerous arguments and comments from various sources mentioned
Amazon.com business in its many diversifications. But it is already evident that emerging
markets and newer business segments are pushing forward new competitors for Amazon.
Thus, the company will have to broaden its development strategy in every single business
area, specifying more clearer the direction in which Amazon is planning to maintain its
competitive advantages so that only to survive and but also keep its leading market position.

References:

Adamkasi. (2017, Apr 27). BCG Matrix of Amazon. Retrieved from BCG Matrix Analysis:
http://bcgmatrixanalysis.com/bcg-matrix-of-amazon/
Amazon.com. (2015). 2014 Annual Report. Amazon.com.
Amazon.com. (2017). 2016 Annual Report. Amazon.com.
Amazon.com Inc. (2016). 2016 Amazon.com annual report. Retrieved from Amazon - Investor
Relations: https97664%26p%3Dirol- reportsannual&usg=AFQjCNHhRpojgMCtOwg
LtohorihHDd3F0g
Canvanizer. (2016). Create a new Business Model Canvas. Retrieved from Canvanizer:
https://canvanizer.com/new/business-model-canvas
CBInsights. (2017). Amazon Strategy Teardown: Building New Business Pillar In AI, Next-gen
Logistic and Enterprise Cloud Apps. Retrieved from CBInsights:
https://www.cbinsights.com/research/report /amazon-strategy-teardown/
Chaffey, D. (2014, Jun 30). Amazon's business strategy and revenue model: A history and 2014
update. Retrieved from Smart Insights: http://www.smartinsights.com/digital-marketing-
strategy/online- business-revenue-models/amazon-case-study/
Digital Business Models. (2016, Jul 08). Analysis of the Amazon Business Model. Retrieved from
Digital Business Model: http://www.digitalbusinessmodelguru.com/2013/07/analysis-of-
amazon- business-model.html
DPTHRNBR. (2017, Feb 19). Chapter 5 Analysis: Applying the VRIO Framework to Amazon.
Retrieved from MGNT 7160: Amazon Blog by Dillon:
https://mgmt7160.wordpress.com/2017/02/19/chapter-5-analysis-applying-the-vrio-
framework-to-amazon/
Dudovaskiy, J. (2017). Amazon Porter's Five Force Analysis. Retrieved from Research
Methodology: https://research-methodology.net/amazon-porters-five-forces-analysis/
Expert CRM Software (n.d.). Amazon CRM Case Study. Retrieved from Expert CRM Software:
https://crmsystems.expertmarket.co.uk/Amazon-CRM-Case-Study
Farfan, B. (2017). Amazon.com's Mission Statement. Retrieved from The Balance:
https://www.thebalance.com/amazon-mission-statement-4068548
Forbes (2015). Will UPS, FedEx Lose Out To Amazon? Retrieved from Forbes:
https://www.forbes.com/sites/greatspeculations/2015/12/29/will-ups-fedex-lose-out-to-
amazon/#1688a3935ca6
Fortune 500 (2016). Full List. Retrieved Sep 13, 2017, from Fortune 500:
http://fortune.com/fortune500/list/
Fortune 500 (2017). The World's Most Innovative Companies #3 Amazon.com. Retrieved from
Fortune 500: https://www.forbes.com/companies/amazon/
Greenspan, R. (2017). Amazon.com Inc. PESTEL/PESTLE Analysis, Recommendations.
Retrieved from Panmore Institue: http://panmore.com/amazon-com-inc-pestel-pestle-
analysis- recommendations

62
 The EUrASEANs: journal on global socio-economic dynamics, № 1 (8), 2018

Gregory, L. (2017). Amazon.com Inc.’s Vision Statement & Mission Statement (An Analysis).
Retrieved from Panmore Institute: http://panmore.com/amazon-com-inc-vision-
statement- mission-statement-analysis
Griswold, A. (2016). Amazon will soon dethrone Best Buy as the top seller of consumer
electronics. Retrieved from Quartz: https://qz.com/712709/amazon-will-soon-dethrone-
best- buy-as-the-top-seller-of-consumer-electronics/
Gupta, S. (2017). 3 Ways Amazon CEO Jeff Bezos Makes Tough Decisions Without Being
100% Sure. Retrieved from Fortune.com: http://fortune.com/2017/05/11/jeff-bezos-
shareholder-letter/
Hanlon, A. (2017). How to use the BCG Matrix. Retrieved from Smart Insights:
http://www.smartinsights.com/marketing-planning/marketing-models/use-bcg-matrix/
Kotelnikov, V. (2008). Amazon.com. Retrieved Sep 10, 2017, from 1000 Venterures
Breakthrough e-Coach: http://www.1000ventures.com/business_guide/
cs_biz_model_amazon.html
Miller, C. C., & Bosman, J. (2011). E-Book Outsell Print Books at Amazon. Retrieved from The
New York Times: http://www.nytimes.com/2011/05/20/ technology/20amazon.html
Mohan, M. (2016). All Things Amazon: A List Of Over 21 Amazon Products & Services.
Retrieved from Minterest: https://www.minterest.com/all-things-amazon/
Pratap, A. (2016). Amazon Pestel analysis. Retrieved from Cheshnotes:
https://www.cheshnotes.com/amazon-pestel-analysis/
Schreiber, Z. (2016). Is Logistics About To Get Amazon'ed? Retrieved from Tech Crunch:
https://techcrunch.com/2016/01/29/is-logistics-about-to-get-amazoned/
Sharwood, S. (2017). Gartner confirms what we all know: AWS and Microsoft are the cloud
leaders, by a fair way. Retrieved from The register Biting the hand that feeds IT:
https://www.theregister.co.uk/2017/06/19/gartner_confirms_what_we_all_know_aws_and
_mi crosoft_are_the_cloud_leaders_by_a_fair_way/
Simthson, N. (2017). Amazon.com Inc.’s Generic Strategy, Intensive Growth Strategies.
Retrieved from Panmore Institue: http://panmore.com/amazon-com-inc-generic-strategy-
intensive-growth-strategies
Stone, B. (2009). Amazon’s Expanding With Deal for Zappos. Retrieved from The New York
Times: http://www.nytimes.com/2009/07/23/ technology/companies/ 23amazon.html?_r=0
Web Scraping Services. (2016). 398 Million products are sold on Amazon.com. Retrieved from
Web Scraping Services: https://www.scrapehero.com/how-many-products-are-sold-on-
amazon-com-january-2017-report/

Paper submitted 04 September 2017

Paper accepted for publishing 12 November 2017
Paper published online 01 February 2018

63