Amazon.com 1

Joe Ricardo

Business 620

APUS

October 25, 2015

Amazon the Online Retail Juggernaut

Amazon

Introduction

Amazon is currently the world’s largest online retailer but it was a long road for this

company to get to their dominant position. The company was founded in July of 1994 by Jeff

Bezos and it was not until a year later that the company sold its very first book. By May of 1997

Amazon.com Inc., began its first public offering. The company quickly expanded from an online

book store to an online retail company selling numerous products and services. The company

eventually expanded globally and fulfills orders in over 200 countries. The company is now the

largest online retailer in the world and is continuing to expand every day with new innovative

technologies and programs to increase the customer’s satisfaction and experience.

Amazon a High Technology Company

Amazon is a high technology company because much of their success has come with the

technological improvements to their website, which has made for a much better customer

experience. Amazon’s retail website is a superior website compared to competitors such as eBay

and other online retailers. Not only does Amazon provide competitive prices and convenience,

but their site is easy to use, their search results are very accurate and they have a great selection.

They use customer traffic data to direct their users to other products that are similar based on

what they have purchased as well as what they have viewed. Amazon’s Prime which gives their

customers 2 day delivery on products directly sold by Amazon and its direct affiliates, also offers

their customers their streaming service. Amazon Prime compared to Netflix and Hulu has a

much larger selection, although many of their offering cost extra to rent, usually for a nominal

extra fee.

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Amazon the Online Retail Juggernaut

State Taxes

For the most part Amazon collects state taxes in most states. They in fact collect state

taxes in 25 states, those states comprise of 77% of the country’s population (Davis, 2015). For

years Amazon attempted to avoid the complications of numerous state tax laws by not charging a

state tax on its customers. It has recently even cut ties with retailers in several states to avoid

their high tax rates. There is really no federal laws to give online retailers a clear cut template on

how to conduct their business in the 50 states and territories but there are attempts to pass

legislation such as the Marketplace Fairness Act. Until some sort of clear legislation and

guidelines are set in place online retailers will continue to find loopholes around current policies

to avoid state taxes and offer their customers better prices than their mom and pop and brick and

mortar competition. I think Amazon should avoid sales taxes in as many states as they can until

legislature forces them too, and continue to keep their competitive advantage.

Investing in Same Day Delivery

Amazon is currently testing out same day delivery in select markets for their Prime

customers. The city in which I live in Orlando has become the 18th city that Amazon has

introduced their same day delivery to (Arnold, 2015). Personally the Primes 2 day delivery was

sufficient for me, but many consumers want immediate gratification and this is what Amazon is

fulfilling in select markets. This helps to eliminate the one advantage brick and mortar stores

have in being able to give their customers the products they purchase in real time. Many items on

Amazon and through other online retailers can take as long as several weeks to arrive to the

customers, especially those being shipped from overseas. Investment by Amazon is a good one

because it provides people with the ease of access to products from the comfort of their own

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Amazon the Online Retail Juggernaut

home an advantage that was only previously available by going into a brick and mortar store and

purchasing the product in person.

Drone Delivery

Amazon has also introduced a drone delivery is in the development with plans of having

the capability to deliver packages in 30 minutes to customers door steps (Pramuck, 2015). The

program is expected to be available in select markets in the next few years and will be called

Amazon Air. Amazon is still waiting for the FAA to complete its regulations on drone operations

before finalizing the program. Until these regulations are put in place Amazon would be jumping

the gun on the drone deliveries and to reform the program to the changes that would come in

regulations would be more costly to overhaul. Once they can get the program up and running it

will help reduce the cost of delivery by not having to pay for a delivery driver. It will also create

the convenience of immediate gratification to customers who can get their products almost

immediately after ordering them.

Amazon Kindle

Amazon released its first Kindle e-reader in 2007 for only $79 which allowed customers

to read books from the convenience of their own portable device (Pearce, 2013). In 2010, Apple

unveiled their iPad, the first commercially successful tablet computer. In order to compete with

Apple, Amazon came out with the Kindle Fire with a retail price of $199, which was more than

$300 less than Apple’s iPad’s. Even with the huge discounted price Apple has continued to

dominate the tablet computing market with a 60% share. Amazon’s Kindle and the variety of

Android tablets continue to stay behind the iPad’s even with the discounted price and what many

feel is a superior experience. Apple consumers have a brand loyalty not seen in with many

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brands. Amazon needs to create more incentives for the purchase of their tablets, possibly several

free months of Amazon Prime.

Conclusion

Amazon is the dominant player in the online retailing market. In order to remain at the

top they must continue to improve their website and services to remain the number one online

retailer. Many top competitors come and go for instance MySpace was overthrown by Facebook,

Yahoo! lost its top search engine spot to Google, and eBay lost its top spot as an online retailer to

Amazon. With the rapid changes and advances in technology today it is easy for a once top

competitor to lose its position to a more innovative and motivated brand. For now Amazon will

remain at the top of the online retail industry, and their future dominance will depend on their

continued improvements upon their site. It will take a lot of continued hard work to stay ahead of

the competition but their main concern needs to remain on the ease of use of their website,

customer support and speedy deliveries.

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Resources:

Arnold, K. (2015). Same-day Amazon Prime shipping hits Orlando. Orlando Sentinel. Retrieved

from http://www.orlandosentinel.com/business/os-amazon-same-day-shipping-orlando-

20151021-story.html

Davis, C. (2015). Sales-Tax-Free purchases on Amazon are a thing of the past. Tax Justice Blog.

Retrieved from http://www.taxjusticeblog.org/archive/2015/06/sales-

tax_free_purchases_on_am.php#.Vi1FzX6rTIU

Pearce, J. A., & Robinson, J. R. (2013). Strategic Management: Planning for Domestic

& Global Competition (13th ed.). New York, NY: McGraw Hill.

Pramuk, J. (2015). Why Amazon’s drone delivery is growing trickier. CNBC. Retrieved from

http://www.cnbc.com/2015/06/17/why-amazons-drone-delivery-is-growing-trickier.html

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