E-commerce Strategy: Competitor Analysis2008Executive SummaryAmazon is the pioneer and the leader in e-commerce. It began with e-tailing books in 1995 but over the decade since then has grown to be a multi-product retailer, selling online consumer products like books, music, video, apparel, shoes, accessories, computers and mobile phones. The key differentiators that have been responsible for Amazon’s success are low costs, speed, customer orientation, decision-enabling information and reliability of order fulfillment. Amazon has a number of patented technologies like personalized recommendations, one-click shopping and so on that other retailers have successively followed.
Amazon has been able to offer low costs and discounted prices to customers because it keeps its operation costs low. Besides, it has agreements with search engines like Yahoo and Google by which customers are directed to other sites for products that do not feature on Amazon sites. The company has an efficient customer-tracking system that allows it to be in touch with customers like small local merchants do. Amazon has an efficient inventory management system although it buys most of the products from the suppliers and stock in its warehouses.
Recently, it has also begun to employ other distribution companies for stocking and shipping products like computers, mobile phones and books other than bestsellers. For a multi-channel retailer like V G Jones, which sells through ecommerce as well as brick-and-mortar retail stores, the website is an additional channel for selling. However, it can use the website to gain insight on customer preferences and to provide information on discounts, etc. However, it has to evolve a viable inventory system and business model that would be cost-effective. We propose a vendor-driven inventory system, in which the suppliers keep track of the stock movements and forecast product sales rather than the retailer.
This would reduce costs of inventory hold-ups at the retailers while also keeping control over the order fulfillment. IntroductionE-commerce is growing in most consumer products, particularly in consumer electronics, apparel, books, music, etc. E-commerce has changed the global retail scenario, with Australian shoppers able to buy from American retailers products shipped by British manufacturers. Although most of the revenue opportunities for online retailers are derived from low price, it is not essential for the retailer to offer the lowest price in each segment.
It is also necessary that the price is consistent and fair as perceived in the market. Besides prices, convenience, promotions and variety are the other determinants for driving online sales. The demographics of online shoppers have changed over the decade of existence of e-commerce. The first generation of online shoppers was tech-savvy, affluent, typically male. Of late, more middle class men and women are taking to online shopping. Hence, while earlier, specialized e-tailers like Amazon and eBay dominated 60 percent of the online global retail market in 2003, the share has come down to 52 percent and is expected to fall even further, with multi-product e-tailers increasing their market share (Liss, 2006).
Online shopping has grown on the basis of more people going to the internet. People are also getting confident to transact online with websites introducing technology for payment security and personal information protection.