Amazon Inc was founded by Jeffery Bozos in 1994. He believed that the use of internet was increasing at a rapid pace. He thought it would be a good idea to open an online book store. His idea was to provide people a platform that was easy to use and let people sell and purchase books online.
The idea of opening the book store was successful from first years as the business reached astonishing revenues of $15 million in 1996. This made amazon one of the most successful online book stores. As years passed on amazon continued to grow as the growth of internet users started to grow it is now estimated that amazon serve customers in over 160 countires and offer different products not just books they’ve now expanded the business into selling products such as electronics clothing grocery and health and beauty products.
The competition of amazon has risen dramatically over the past decade with more online retailing businesses coming around however competitors have far less market penetration and business than amazon this is proven by the fact amazon Is now placed in the top 100 list of fortune global 500 with revenues of over $135 million.
Amazon has a type of behaviour that it shows customer satisfaction as being no.1, that if a product is defected, it would not cost anything to have it sent back to them. The product will be returned with one that is new and will have warranty.
At amazon.com customers’ orders are handled in-house and to achieve this they established distribution centres and each distribution centre is equipped with the latest material-handling equipment technology. For instance, each distribution centre has a pick-to-light system which uses a terminal display mechanism to guide a worker through the picking and packing process; frequency technology is used to direct workers to warehouse locations with a radio signal, and voice technologies which allows computers to communicate instructions to workers.
Perhaps the biggest political threat Amazon UK faces and continues to face is the consequential impact of Brexit, a move predicted to cause both political and economic upheaval and uncertainty for the UK economy(Douglas and Gross 2016). The implications to leave the EU are many, not least the fact that it is already creating Brexit inflation as prices continue to escalate, in part due to a weakening pound against the dollar and Euro. (Davies 2017; Mintel 2016).Economic factors
Despite Brexit, Amazon has stated its expanding its UK workforce by 5,000 taking its total UK workforce to more than 24,000 (Cox 2017). Nevertheless, many experts believe Brexit will affect Amazon. Firstly, there’s a high chance that future hiring could become more difficult. This is because Amazon tends to rely on low wages, often immigrant workers to staff its fulfilment centres — those jobs start at £7.35 an hour — workers who may suddenly find it harder to work in the UK (Taylor 2016).
The social aspect of the PESTLE framework deals with the sociocultural changes and how they may either positively or negatively affect an organisation. According to Mintel (2016), there is a behavioural shift in the way customers are using smartphones. The rise of phablets (smartphones bigger than 5 inches) has meant that phablet owners were more inclined to use their phones to perform more complex or time-consuming tasks, such as online shopping, which presents opportunities for online retailers such as Amazon.
Technology is no doubt a big driver of business success. It presents many advantages that swirl around efficiency and effectiveness. Nonetheless, technology can also be a threat to businesses. Data breaches and hacking that compromise the sensitive information of an organization and its clients, and that lead to fraud, are common. According to the British Retail Consortium, fraud and cybercrime against retailers rose 55 per cent (Megaw, et al., 2016). “The majority of retailers were victims of some form of cyber-attack in 2014/15” (Megaw, et al., 2016). This staggering cyber insecurity is a threat to Amazon like all online retailers.
A legal environment either impedes or it facilitates business survival. While Amazon isn’t facing any legal challenges at the moment, like Google and Starbucks, it has had a somewhat fraught relationship with HMRC. In 2014, for example, the company paid just £11.9m in UK taxes, and though it agreed to pay corporation tax on UK sales in May 2015, it was after public pressure and lots of media shaming (Mazzini 2016)
Environmental issues have become global due to the ill effects of climate change that have been scientifically determined to be consequences of human activity. There is a global drive to preserve the environment, or at least not to destroy it further. As such, Amazon has been a target for instance, while it agreed to pay corporation tax on UK sales, Ethical Consumer magazine decided to boycott it, denouncing “cheaper shopping at the expense of our public services” after the tax avoidance row(Mazzini 2016).
Task 2: A report on any one of these eight topics covered in the lectures
After completing a business description about Amazon and discussing how and where the business ventured from, in this following report I will now discuss business policies, activities with a specific external factor. The topic I will be talking about is globalisation and the effects of the ever rising quality of technology.
Amazons Mission Statement: To be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices
Globalisation is integrated with finance, economics, communication and trade. It provides a national perspective of the joint world in which free movement is involved, of goods and services. The ‘Amazon Affect’ Refers to the ongoing evolution and disruption of the retail market, both online and in physical outlets, resulting from increased e-commerce. The name is an acknowledgement of Amazon’s early and continuing domination in online sales, which has driven much of the disruption.
When we talk about amazon effect the major 3 issues that come to mind are Economy, Retail and international sales
The growth of amazon has had serious detrimental issues within the whole retail sector. Due to the Amazon Effect, the entire retail industry is slowly shutting down competitors such as sears are facing problems with stores running it is estimated that sears is closing 150 stores across the states. Not just sears but also other retail business feel the effect due to the rapid growth of amazon. Every year the list of store closures and bankruptcies due to decline in business increases. It is already evident that our ability as consumers of products to run to the shop for something is being impacted due to the fact local businesses and retails are being affected and therefore having to close
And this has an impact on real estate. As online sales come to over 11% of all holiday sales in 2016, and Amazon accounts for 40% of all those sales, it is clear people just don’t go to stores any more anywhere near the way they once did. Historically prime retail real estate was considered valuable
Brexit is one of the current major issues and worries for all businesses and retailers that operate on a international scale within Europe. Brexit will to lead to higher labor costs, an over-supply in certain skills and a shortage of others, said Global Equities Research. This will reduce or altogether eliminate profit margins of many businesses — thereby reducing the overall value of the businesses in Britain
Amazon has a quick and efficient supply chain management. The combination of sophisticated information technology, an extensive network of warehouses, multi-tier inventory management and excellent transportation makes Amazon’s supply chain the most efficient among all the major companies in the world. (Rick LeBlanc,2017)
Amazon’s supply chain heavily depends on outsourcing of its inventory management. Especially the products that are not frequently purchased or ordered are not stored in regular Amazon warehouses. It may come as a surprise to you that nearly 82 percent of Amazon’s sales comprise of third-party sellers. That amounted to $22.9 billion in 2016.