Amazon is one of the largest companies in the world, selling all kinds of goods and services via the Internet. This is the only marketplace with such a large selection of goods for every taste, which will be delivered anywhere in the world in a short time. Nowadays, Amazon is associated with the word success since it grows at an incredible rate, absorbing more and more market segments. According to the report, Amazon’s revenues reached over $469 billion in 2021, and its impressive growth challenges major retail competitors, including Walmart and eBay. Amazon is in an advantageous position; however, it has to realize different strategies to keep itself competitive and stay in that position.
First, private brands should be developed to improve Amazon’s competitive advantage. It involves attracting loyal customers and creating the product unique. This is possible by selling the product at a lower cost or by adding some other features to an ordinary product. Strategic investment in the sale of self-branded products on the platform of Amazon will help increase the value of Amazon at a low price. Amazon has approached many firms that they can purchase under their brand names. Amazon’s revenue will skyrocket with the growth of private brands featured on the company’s platform.
This strategy recommendation is supported by SWOT, SPACE, and BCG. One of Amazon’s strengths is its customer loyalty. Thus, creating a private brand would allow a company with an impressive customer base to outperform its competitors. Given that Amazon is an aggressive company, product and market development are essential to maintaining its position. The development of a private brand will increase its competitive advantage and the strength of the industry.
Secondly, the expansion of the grocery delivery sector can also be considered to improve Amazon’s competitive advantage. The grocery store will always be in demand. Moreover, Amazon can expand the range of these stores by offering categories of goods that are only available on the website. Packaged Facts (2019) notes that there are currently 21 Amazon Go convenience stores that offer cashless shopping. Amazon can expand its business to most large and mid-sized US cities and ultimately go global. By this recommendation, entering the food market in other cities, towns, and foreign countries can lead to attracting completely new categories of buyers. With the expansion into the grocery market, the result will be a new way to shop at grocery stores and expand delivery into rural areas.
It is crucial to use leadership skills to encourage innovation and company improvement. One of these is customer focus, a business strategy focused on customer needs. Customer orientation is a central element of the marketing concept of management, which involves the development and maintenance of competitive advantages in the market through the most complete satisfaction of customer needs. Creating and offering additional value to consumers is an important condition for obtaining competitive advantages in the market. One of the expected results of purposeful work with clients is the formation of a loyal client base of the company, which in turn has a number of positive effects. Among them are reducing the costs associated with customer service and consumer price sensitivity and spreading positive feedback. Wilson et al. (2020) affirm that with the help of a customer focus, sales improve as customers see the quality of goods and services and understand what they are paying for. Moreover, this approach increases competitiveness and reduces customer churn. It is noteworthy that Amazon consolidates this strategy in its principles, which the company refers to as customer obsession.
To stay competitive and maximize Amazon’s value, it is important to optimize untapped opportunities. One of these is a powerful marketing channel – Amazon Pay-Per-Click (PPC) advertising. Amazon PPC is an advertising model where advertisers pay Amazon a commission per click. Packaged Facts (2019) notes that although Amazon has earned $31 billion from advertising, while the world’s main video service YouTube has $29 billion, the profit from this direction is only 7% of total revenue. What’s more, Amazon’s ad revenue growth slowed down from 88% in the second quarter. According to Harvey (2019), selling additional digital space is a profitable vehicle that brings in money during uncertainty. Thus, the expansion of the advertising business opens up new opportunities for the company.
An equally significant area in capitalizing on untapped business opportunities can be working with cryptocurrencies. Dealing with certain crypto payments in an online retail store can be a good way to increase your competitiveness. Wilson et al. (2020) assert that this would save companies hundreds of millions of dollars per year in credit card processing fees alone and greatly reduce the risk of chargebacks. Moreover, blockchain payments will reduce the number of fraud-related incidents. However, Amazon’s ambitions may be larger – the company has been developing its own Amazon Coins cryptocurrency for several years. So far, it can only be used for games and applications hosted by Amazon, but they are already quite popular among users on their own. Thus, creating its blockchain-based payment system could bring the company’s income to a new level and strengthen its leading position.
Harvey, J. N. (2019). Localizing global marketing strategies: Emerging research and opportunities. IGI Global.
Packaged Facts. (2019). Amazon strategies and the Amazon shopper (2nd ed.). Packaged Facts.
Wilson, A., Zeithaml, V., Bitner, M. J., & Gremler, D. (2020). Services marketing: Integrating customer service across the firm (4th ed.). McGraw Hill.