Amazon.com – the brink of bankruptcy

Amazon. com is a Fortune 500 company based in Seattle, Washington. It is the global leader in e-commerce. It was founded by Jeff Bezos in 1995, and has significantly expanded its product offerings, international sites, and worldwide network of fulfillment and customer service centers.

Today, Amazon. com offers everything from books and electronics to tennis rackets and diamond jewelry and operates sites in the United Kingdom, Germany, France, Japan, Canada, and China and maintain over 25 fulfillment centers around the world which encompass more than 12 million square feet.

Their Strategy

Amazon. com’s strategy was to leverage their position of having acquired a network of customers, suppliers and partners (through their bookstore business) to expand into an online superstore offering books as well as music, videos, consumer electronics, toys, video games, software and a full line of home improvement products. This strategy led to declaration of Initial Public Offer (IPO) that netted $50 million.

How Information Technology factored into that Strategy

With the products expansion at amazon. com came increased customer base, complexity of warehousing, inventory management, distribution and fulfillment. For the most efficient service to be provided, several steps in the ordering process had to be automated. This was why they invested heavily to quickly develop the best-in-class retailing, fulfillment and customer service capabilities required to support such a rapidly growing and increasingly complex business.

By 2000, amazon. com had spent over $429 million to build this state of the art digital business infrastructure and operations that linked nine distribution centers and six customer service centers located across the United States, Europe and Asia. That made it easy for them to partner with traditional retailers that wished to develop online retailing and take advantage of the network of customers that amazon. com already had in place.

The Market

The market was expanded as the dot-com boom arose. Amazon. com also took advantage of the internet to expand into international markets and by early 2001, it was selling products in over 160 countries.

Their Competition

Amazon. com’s competition ranges from retailers primarily in the music industry, video industry, book industry and entertainment industry to those in the apparel and accessories retail, auto parts retail, camera and optical goods retail sector. Other competitors not mentioned in the case study are ebay. com, Barnes and Noble Incorporated and Columbia house

Their Weakness

Their weakness to me was that they failed to form the right partnership early enough. They had partnerships with leading online retailers such as drugstore. com, living. com and pets. com but realized that the right partnership to be formed was with traditional retailers looking to develop online retailing capabilities.