Amazon Case Project

Analysis of Amazon's Current Business Model

There are so many business operations that Amazon manages well such as logistics, vast retail selection, developing new inventions, and pushing the territories to satisfy the consumers fully. However, the invention of Fire Phone is a complete failure (Carr). The e-commerce company has finally realized this and is currently focused on the development of electronic devices The hardware strategy failed some years back, as the company swayed from Kindles to tablets and phones (Carr). Amazon lost focus on tablets and phones, and the planned validation for some of the current hardware is even feebler than the prior ones. The Fire Phone was developed and evaluated to contest with smartphones such as of iPhone, and Samsung Galaxy gadgets to name but a few (Carr). However, at that time, the phone market was tough to penetrate owing to consumer allegiance and firm holding for the tablets and phones. Thus, an analysis of the Fire Phone invention and the current Amazon's business model would reveal the best strategy to manage the project.

AMAZON'S CURRENT BUSINESS MODEL

Known as one of the best and major internet sellers in the entire globe, Amazon has an elaborate case study concerning the corporate model (Digital Business Models). Even by studying its customer trade operation, it is evident that the organization is everything, but a typical dealer. Though the company sells commodities at a regular markup, it has also initiated alternative selling policies by performing as the entry for other stores (Carr). Besides, it has a strong market for old commodities. However, selling is only a portion of the business when analyzing Amazon.

LINES OF BUSINESS

The organization describes its lines of trade regarding commodity lines, sales lines, service lines, AWS, satisfaction, publication, and digital information subscription (Carr). The other lines include advertising and co-branded credit cards (Carr). However, in this context, the paper would define Amazon's business line in three forms namely online trade, the Kindle ecosystem, and the internet services.

Online Retail. Online retail entails goods traded by Amazon and is known as cheap (Carr). It stocks numerous products on its many websites and delivers to a large selection of consumers. Likewise, the company sells the products at the lowest cost and gets low profits. Equally, Amazon invented an online book seller that has progressively enlarged into music and movies (Carr). Aside from that, the bookseller incorporated electronics and domestic merchandises. Apart from the sale, the company also acts as an intermediary for other retailers. It stocks goods in its website and charges a commission for every item purchased (Carr). Similarly, the company stocks and sells used commodities through its seller marketplace (Digital Business Models). In addition, the bookseller generates income for the company without incurring the warehouse overhead costs (Carr). It also uses the sites to advertise and ship of commodities where it charges for every sale and advertisement since it provides the channel.

Internet Services. It is impossible to describe Internet services as a particular line of business since it is entangled with both Kindle and its retail operations. According to the customer, Amazon has started to offer services like Amazon Prime (Carr). They allow easy access to kindle library at a fixed annual cost. The service incorporates the subscriptions and all the retail models to deliver extra customer value. Besides, Amazon offers other Internet services known as Amazon Web Services (AWS) (Carr). It also manages a large number of servers despite not being the core business.

Kindle Ecosystem. Amazon has enlarged its operations to develop and supply Kindle tablets (Digital Business Models). It was initially developed as an electronic book reader to supplement the virtual bookseller. However, the Kindle is a functional tablet and media device. With the device, Amazon acts as both a traditional retailer and manufacturer (Carr). There is a claim that the company sells the tablets at a loss, but it does not admit the allegations. However, by selling these tablets at a loss, the company anticipates higher purchase of the electronics, books, games and videos to recover the loss.

FIRE PHONE INVENTION

The newly invented Fire phone could fit in the Kindle ecosystem since both are hardware (Digital Business Models). However, this would simply increase losses in the model. Markedly, the Fire Phone faces stiff competition from smartphone giants like iPhone and Samsung (Carr). This implies that the market of the device is too little, but the production cost is higher because Amazon has dedicated more resources such as the development of the Lab126's industrial design studio (Carr). The Fire Phone Project has more weaknesses compared to strengths. Some of the strengths might include highly priced items at 199 dollars that might symbolize higher returns to the company (Carr). In contrast, the weaknesses include high production costs, low sales, low market share, outdated design, unrealistic objectives, and the project developed with individual intentions. Despite being designed using the latest technology, Fire Phone did not convince the customers mainly because of its higher retail price (Carr). Other clients’ concerns include: they consider the gimmicky features worthless, and the industrial design and ecosystem are ineffective (Carr). Besides, the phone does not support particular applications that are very useful to customers.

RECOMMENDATIONS

Amazon should discontinue the manufacture of more phones immediately. The organization had a 170 million dollars' worth of unsold Fire Phones, and a loss of 437 million dollars is anticipated as the lowest in the past fifteen years. Furthermore, it records a minimal quarterly revenue of 20.58 billion dollars (Carr). This confirms the challenges that come with the innovation of Fire Phones. Therefore, Amazon should dissolve the project and invest its resources in viable projects like online services and cloud computing. Markedly, the organization’s growth declined from 42 percent in the year 2009 to a mere twenty percent in 2013 (Carr). Similarly, the growth is anticipated to fall by between seven and eighteen percent in the consecutive years. All these challenges have resulted from one factor; the innovation of Fire Phone. Therefore, for the company to realize increased growth, improved sales, and most significantly higher returns, it has to stop the manufacture and purses sales for the already produced phones.

Works Cited

Carr, Austin. The Real Story behind Jeff Bezos’s Fire Phone Debacle and What it means for

Amazon’s Future. Fast company Magazine, 2015. Web. 5 Feb. 2016

Digital Business Models. Analysis of the Amazon Business Model: retailer, service provider and

Hardware Innovator, 2015. Web. 5 Feb 2016