Why has Amazon decided to create its own
Replay to the student’s discussion in 200 words.
Why has Amazon decided to create its own (e.g., private label) goods that compete with those from its suppliers?
Amazon could better serve its consumers if it owned its delivery services. Because Amazon ships so many things daily, depending only on the postal service might result in delays or other issues. There is also a significant impact from Amazon Prime memberships, which guarantee two-day delivery on the bulk of goods. It would be difficult for Amazon to deliver items in two days or less without their delivery infrastructure. Amazon also saves money by deploying its delivery service rather than paying another source to transfer each item, especially within a specific time range (Hanson et al., 2016). Amazon’s shipping service has a number of advantages. The reading also suggests that Amazon’s principal motivation for acquiring Whole Foods is summarized in a single line. Money.
Customers are now able to receive their purchases in a timely manner and do not have to leave their homes thanks to Amazon’s investment in a fleet of planes and trucks. If a buyer does not want to waste their time seeking, they are prepared to pay a higher price for the expenditures associated with delivery or travel. Amazon stands to benefit from this rise in popularity of its products. After observing the vast selection of products that the company could sell online and ship to clients, we noticed that other businesses started doing the same thing a few days later. When it comes to marketing, Amazon has always been one step ahead of the competition, coming up with innovative strategies to keep its consumers satisfied (Hanson et al., 2016).
To summarize, online marketers have had the ability to place bids on search terms in order to obtain the most prominent listing positions at the top of Amazon’s product search results pages. Here, the marketer’s products are labeled as “sponsored” above their descriptions. This practice has been going on for years. Companies are still competing for rankings on the first page, but experts and the study conducted by ProPublica discovered that the ideal position, which is the top left corner of the first page, is inaccessible for hundreds of product search phrases. During the course of this outbreak, Amazon has been advertising its own private-label products under the headline “featured from our brands” without first soliciting bids from other businesses.
Reference
Hanson, D., Hitt, M. A., Ireland, R. D., &Hoskisson, R. E. (2016). Strategic management: Competitiveness and globalisation. Cengage AU.
Replay to the student’s discussion in 200 words.
- What logic supports Amazon’s decision to purchase Whole Foods?
The logic behind Amazon’s purchase of Whole Foods was to add value to its business by enhancing the efficiency of its service delivery by offering quick food deliveries to its clients. Amazon was trying to solve the problem of slow delivery of organic food ordered by their customers. The acquisition cut costs Amazon spent on middlemen for deliveries ordered online hence ensuring efficient allocation of capital by saving costs from such operations. In this case, Amazon created value by improving its financial economies—unrelated diversification and through related diversification where it gained market power by blocking competition from Whole Foods Market or diverting the supply of Whole Foods Market organic food to its mainstream revenue generation.
As a result of the diversification, the value created is demonstrated in the gained market power in food retailing since it created disruptive effect in the food market. For example, large departmental stores Macy’s, JCPenney’s Best Buy felt the ‘shock waves of Amazon’s disruptive effect, and triggered them to beef up their abilities to sell their products online. This acquisition gave Amazon a competitive advantage that such large departmental stores and organic food retail stores could not withstand at the time (Imhanzenobe 2021). The disruptive effect is also evident in Walmart, which acquired Jet.com to boost its capacity to effectively and robustly compete and keep up with Amazon.
Answer preview to Why has Amazon decided to create its own
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