Distribution SuccessAmazon has been largely successful in its efforts to optimize and continuously expand its distribution network for customers around the world. The strategy has been instrumental in developing channels which attract new customers and allow them to purchase a variety of products from different vendors. A spirit of flexibility is important which enables many vendors to sell and distribute their products on Amazon that cannot be sold on other websites. The approach is in stark contrast to other organizations and enables the business to reap the profits and other benefits from a widespread distribution chain around the world. An important step towards understanding the challenges and opportunities that are available in advancing product distribution on a global scale and supporting an environment whereby customers have access to virtually millions of products is necessary as Amazon moves forward with its strategic focus.
Amazon’s Pricing Model
Amazon has established a pricing model which offers different prices for specific products for its Prime members with free two-day shipping. The pricing model is effective because it can charge different prices for its Prime customers versus its other customers because many vendors can sell the same products on the same website. The pricing strategy is dynamic, particularly as it sets different prices for different types of products and may experience diverse performance outcomes (Reimers & Waldfogel, 2017). Amazon sets its prices to achieve a greater competitive advantage and to be mindful of the key factors which contribute to establishing prices within the organization and how it is impacted by societal and retail trends as a means of stabilization or volatility within this pricing model and has many advantages over its competitors and their products because it has almost every product available that an individual might need and serves as a one-stop shop for diverse products that include groceries, electronics, and books, among many others.
Differentiation and Positioning
Amazon has used differentiation in positive ways to separate itself from the rest of its competitors through differentiation in the sale of its products and market positioning which will have a positive impact on performance outcomes. To be specific, products must be meaningful and provide value to customers; therefore, this serves as a key driver in the development of attracting and retaining customers over the long term (Wirtz & Lovelock, 2017). The organization must continue to evolve and to create opportunities for differentiation which will impact sales growth in a positive manner and support changes throughout the product infrastructure so that differentiation is possible (Wirtz & Lovelock, 2017). Amazon’s differentiation and positioning are effective because they provide millions of products without having to leave the home, as a person can buy endless items from water to makeup to pet supplies and even televisions. Product differentiation has enabled the company to attract customers worldwide because they make it convenient and less time consuming than shopping at a traditional retail store, and in addition, its name recognition provides the company with a competitive advantage that is not seen in its closest rivals.
Macro and Micro Environment
Amazon continues to grow and thrive and its recent acquisition of Whole Foods Markets demonstrates its level of diversity and strength in attracting new customers and retaining significant market share. This reflects the importance of understanding how to achieve greater differentiation and provide customers with a wide variety of products to meet even their most specific needs (Wirtz & Lovelock, 2017). In a macro environment, branding is critical because it allows the organization to stand out from the rest; however, in a micro environment, branding is less relevant and other characteristics are considered which impact employees and their contributions to the organization (Zentes, Morschett, & Schramm-Klein, 2017). The company should expand its horizons with groceries and continue to explore growth by expanding its same-day and delivery capabilities beyond what already exists.
- Reimers, I., & Waldfogel, J. (2017). Throwing the books at them: Amazon’s puzzling long run pricing strategy. Southern Economic Journal, 83(4), 869-885.
- Wirtz, J., & Lovelock, C. (2017). Positioning Services in Competitive Markets. World Scientific.
- Zentes, J., Morschett, D., & Schramm-Klein, H. (2017). Retail Branding and Positioning. In Strategic Retail Management (pp. 185-206). Springer Fachmedien Wiesbaden.
