Blog 4(Part a)-A superior innovation in the business model -Amazon

By following the rapid trend in the change of e-business, firms are required to innovate their business model to fit in the environment and capture value. Amazon is one of the biggest online retail stores which were established in 1994, it gained a net sale of $64 billion in the second quarter of this year (Statista 2019). Amazon started its business for selling books at the beginning, but the growth of technology forces it to transform into a diverse business base.

The innovation of Amazon can be seen from many aspects by referring to the four actions in business model innovation, which is eliminate, raise, create and reduce (Crawford 2018). To begin with, Amazon increases its products types which include electronics, commodities and clothes. The need among various customers can be satisfied, which increases its customer segments to expand a bigger market. Secondly, advanced technology is used as the key resource for Amazon to compete in the market, Kindle, Alexa and cloud service are launched as a first mover advantage in the online setting.

Thirdly, it simplifies the supply chain by eliminating intermediators that the distribution channel and the purchasing process are easier than the past. Finally, Amazon realizes a superior firm cannot be restricted by one business approach, B2B and B2C can be all involved in the process. On the one hand, it provides Amazon Prime which offers exclusive benefit such as free shipment and discount only for subscribed members (Frankenfield 2019). This can be a way for customer retention which also related to the revenue model that Amazon charges subscription fee as a profit source. On the other hand, it uses current online platform to do advertisements for other firms, the acquisition has also shown its effort for generating profit (Frankenfield 2019).

All in all, these aspects have successfully assisted Amazon to keep ahead from its competitors and increase its market share. The adjustable business model enhances the capability of Amazon which from a book store to ‘the biggest selection on the earth’ (Montgomery 2016). The development of customer experience and relationship can still be crucial for Amazon to enhance its competitive advantage through this innovation.

References

Chaffey, D. & Ellis-Chadwick, F. (2019). Digital Marketing. England: Pearson.

Crawford, K. (2018). Amazon Innovates With Its Business Model, Not Drones. Retrieved from Wired website: https://www.wired.com/insights/2014/01/amazon-innovates-business-model-drones/

Frankenfield, J. (2019). How Amazon Makes Money. Retrieved from Investopedia website: https://www.investopedia.com/how-amazon-makes-money-4587523

Montgomery, S. (2016). How Amazon Innovates to Stay a Step Ahead. Retrieved from business website: https://www.business.com/articles/how-amazon-innovates-to-stay-a-step-ahead/

Statista. (2019). Amazon: quarterly net revenue 2007-2019. Retrieved from Statista website: https://www.statista.com/statistics/273963/quarterly-revenue-of-amazoncom/