E-commerce Amazon.com is the world’s most famous company when it comes to selling goods online to consumers. Amazon was founded in 1995 and has established itself as the market leader in terms of online storefronts (Rappa 2010). In terms of its e-business model, Amazon only uses the Internet as its method to sell good to customers (“Amazon.com” n.d.).
Because Amazon has no physical location, it is able to save on operating costs. Many other competitors also use a physical store along with their online presence to reach their customers. Amazon is able to lower its costs because it can offer customers lower prices than competitors. Lower production costs result in savings for customers because Amazon is able to pass those on.
Despite selling products for very little profit, Amazon is able to gain traction in the market simply because of the sheer volume of orders that it processes every day. Because Amazon focused on selling it products online from the very beginning, it was able to become well-known as an online goods store.
With Internet purchases increasing year on year, Amazon is well-placed to dominate the market for years to come. New market entrants are simply unable to compete with the purchasing power that Amazon has through its vast number of customers.
The disadvantage to Amazon only selling through the Internet is that if the Internet is affected in any way over the next few years, the business will feel the effects of that. This is why Amazon should consider diversifying its business model so that risk is lessened.
“Amazon.com.” (n.d.). Berkeley. Retrieved from http://www.ocf.berkeley.edu/~elram/
Rappa, Michael. (2010, Jan. 31). “Case Study: Amazon.com.” Retrieved from http://digitalenterprise.org/cases/amazon.html