How does Amazon save itself from the global economic crisis and all that naturally happens like Covid-19 Pandemic?
During the last few decades, it has been difficult for businesses to grow and maintain productivity since there had been significantly important events in known human history like wars, natural disasters, and regional conflicts. All the countries of the world are so closely in connection to each other that if any country happens to experience an unstable situation then immediately, its imports and exports are affected. Similarly, the companies get affected due to a large number of local and foreign investors' experiences and approaches. Specifically, at the time when they see a threat coming ahead. One of the significant events of the current era is the Covid-19 pandemic which has caused a great loss to the majority of companies worldwide. Even the giants have fallen off to the ground. Contrary to this situation, Amazon traveled oppositely while growing faster than ever. Its strategies not only saved the company itself but also created opportunities for locals and the foreigners alike to avoid unemployment and do business in a much-improved way. The current study focuses on how Amazon saved itself, created and maintained opportunities for sellers and buyers, its marketing strategies, and its nation’s friendly policies. The study is based on the chronological research approach, i.e. an attempt has been made to study Amazon as a business market from its origin to the day today.
Introduction to Important Terminologies
The economic effect is
a business-oriented term meaning the economic impacts on any affected business
relating to its methods and strategies adopted for cost and production,
marketing strategies, and adhering to the business rules. The other term
pandemic is defined as a widespread ailment to a country or in the whole world.
The Covid-19 pandemic outbreak begins on 31 December 2019 when it was first
reported to the World Health Organization. Therefore, economic effects on the
business company Amazon which is an online marketplace, are studied from the
beginning of the Covid-19 pandemic which largely spread to 225 countries of the
world. This pandemic outbreak caused major losses to the companies in terms of
sales and purchases, or revenue generation. Amazon was the strategically
luckiest amongst others for it has been successful during the worse pandemic
situation through its proper and refined business approaches.
As a matter of fact,
during the pandemic, the unemployment rate in America was the highest ever.
Therefore, Amazon while centered in the United States must have also faced
worse business conditions but we witnessed that Amazon not only progressed as a
company but also it brought new job opportunities for the people of America.
Consequently, Amazon also served as a savior of the youth of the United States.
Foundation of Amazon as a Marketplace
Amazon, as its name
suggests, is the largest of the online marketplaces that provide multiservice
like selling e-books, toys, music, movies, electronic goods, housewares, and
the list goes on. It was incorporated by Jeff Bezos in 1994 (Krishnamurthy,
2005). Bezos did not play blindly rather he conducted research in a quest to
find out which product could be possibly the best-selling product, initially.
He concluded that e-books may be the best option to be launched as a product.
The idea was not new since Silicon Valley launched the same idea in 1991
(Hall, 2022). However, Bezos got the better idea in the sense that Amazon
promised its customers the delivery of the book without bothering about the
location of its customers. Nevertheless, Bezos claimed that the company is not
a bookstore for it is a technology that is aimed at providing its customers the
opportunity of receiving simplified transactions. Bezos’ idea was to grow
faster and he introduced the company’s slogan “Get Big Fast” (History.com
Editors, 2015). He intentionally printed the slogan on the uniform of the
company’s employees. Though enthusiastic; the company got severe criticism from critics who were claiming that the company’s failure will be immediate and
earlier.
Criticism on; and Competitors of Amazon
It was in 1997 when
Barnes & Noble filed a lawsuit against Amazon for making the claim of being
“The World’s Largest Bookstore”. Barnes and Noble argued that Amazon was
falsely advertising the claim in advertisements and on its website. However,
both parties settled the matter collaboratively outside of judicial
functioning (Patrick M. Reilly, 1997). Along with Barnes and Noble, Amazon had
to compete with local booksellers. Despite facing the lawsuit as a newbie,
Amazon had also to beat the local sellers of its early regime. Amazon grew
rapidly and was able to deliver and distribute books to its buyers in the 50
states of the United States and to the 45 countries of the world. Businessinsider.com
published an interesting article claiming that in the early days of Amazon’s
birth when the office bell rang the whole staff used to gather around to see if
they knew the customer. Luckily, soon after, the bell was turned off since the
calling and purchasing were becoming frequent (Hartmans, 2021).
Some of the other major
issues that Amazon had to face were the allegations of product shortage or
unavailability issues while other serious allegations included anti-competitive
attitude—a business term used to define the attitude of any corporation to
remove or avoid the competition from the market American Booksellers
Association, 2020). The difficulties were not limited to Amazon since other
problems like logistic issues, etc. also troubled Amazon in its early days. Emergence
as a Huge Market
Amazon faced issues like any other small or large business startup may have faced during its initiation. Initially, it did not earn much profit to prove itself a business giant or tycoon. However, in 1999, soon after Amazon’s launching just after almost 5 years, the company was considered to be the “World’s Biggest Online Selling Platform” (Palumbo, 2021). The hurdles could not stop the company from its consistent growth. However, its first handsome profit-making days came in the fourth quarter of 2001 (Spector, 2009).
Number of Employees and Employment Structure of Amazon
Amazon works in two
ways. It hires its workers for the physical offices, and also it hires sellers,
managers, and other staff remotely. According to Statista.com, Amazon has
currently 16, 08,000 employees all over the world. Additionally, it has to hire
an additional number of employees to its staff every year to fill up the space
that holidays may create. These workers work in warehouses and some work as
delivery drivers but the list does not end here, Amazon also has corporate
employees. According to businessinsider.com, Amazon’s median employees earn a
handsome average amount of dollar 29,007 per year (Dailey).
Working Conditions at Amazon
The working conditions
at Amazon are a bit controversial. Some authors claim that the working
conditions at Amazon are pathetic, unfriendly, and unjust since workers have to
work 12-hour shifts (Aditya, 2021). Similarly, some claim that working at
Amazon is difficult since the work is fast-paced, and the company is constantly
in demand of perfect output from its employees. It has also been noted that
Amazon has faced the events of employee injuries and has been on the hit list
of critics for unsafe and insecure workplaces. However, Amazon has a plan that
is aimed at ensuring the safety and security of its employees by 2025(Wasserman,
2021). There are some interesting facts related to working conditions. It has
been reported on truthout.com that the state of California passed a bill that
ensures and directs Amazon to give its employees a bathroom break. This bill
came into existence since a survey report revealed that 74% of Amazon warehouse
workers avoided bathroom breaks concerning the fear of not being capable of
meeting the quota of packing if they went to the bathroom.
Personal Reflection on Working Conditions
Although all seems good
when we talk about Amazon as an open opportunity for business ideas; however,
when it comes to its working conditions then we see that Amazon will have to
work hard to make the working environment labor-friendly and sustainable.
During my research, I came across some hard and fast facts about working
conditions that are objectionable. I cross-checked the reports that talked
about Amazon’s warehouse and the issues that the workers and delivery
drivers face. I believe that Amazon should work closely to resolve the issues.
Human beings are the best part of any business since they have the capacity to
create, develop, change what already exists, and bring in new ideas which can prove
to be a pathway to success for any business. If workers are not satisfied then
the best part of the business is missed.
Literature Review on Amazon
Amazon is just not a
market place but it is the outcome of the great idea that Bezos brought into
practice. He was a computer and electrical graduate who formerly worked in an
investment bank ("Jeff Bezos"). He resigned from the bank and then
worked on his idea of creating an online store. He did not know much about the
field of the internet; however, he conducted research and found that the
internet was growing at an extremely fast pace approximately at the rate of
2300%. Therefore, he concluded that bookselling is an implementable idea, and
Seattle is the best place to launch such an online marketplace owing to the reason
that Seattle at that time was considered to be a more technologically grown
area. The realistic and traditional approach that Bezos took to enhance his
business and make Amazon a perfect marketplace is the idea of being
customer-centric (Majed, et al.2018). Presently, Amazon is providing
multifaceted business opportunities (MOHAN, 2021). It is not like it was in its
early days. Amazon provides its sellers an opportunity of opening their own
accounts and set up their own businesses; businesses should meet the guidelines
of Amazon ("Amazon.com: Sell Products Online with Selling on
Amazon"). Subsequently, Amazon is not only the sole property of Bezos in
the sense that millions of online sellers are registered on Amazon with their
products. They are free to market their product. Actually, Amazon is like a
Bazar where different sellers are selling different products and goods
(Pereira, 2020). Anyone can log in to Amazon and then place his/her order with a
simple payment method. Fortunately, Amazon does not scam but its
customer-centric approach is helpful in building trust and value. Sellers are
presented in a number of ways. A buyer can choose his/her buying section. It
means that one can search for the desired product. Then, he/she can filter
his/her search values by selecting the “best sellers” option. A seller is
trusted and considered to be an authentic and reliable storekeeper on
Amazon by the number of positive reviews. For sellers, it provides them the
opportunity of doing SEO (Search Engine Optimization) within Amazon in a number
of ways. They can rank their product by doing its proper SEO by using the
users’ friendly keywords, i.e. Sellers use software that helps them to analyze
the keywords that their potential customers use while searching for their
desired product (Connolly, 2022). Subsequently, Amazon is a giant that
develops, deals with and maintains up-to-date software technologies for its
users ("8 Innovative Ways Amazon Has Changed the World"). Above all,
it is a platform that enables its sellers and buyers to give feedback so that
Amazon could know the needs of both the sellers and buyers (Williams, 2021).
Additionally, Amazon is using a refined set of business strategies that
provide a wonderful opportunity for internet users to use affiliate marketing.
For instance, any blogger or brand, or website can create an Amazon affiliate
account and market the products of Amazon. Once a potential buyer clicks
through Amazon’s affiliate link from any external page and lands on Amazon and
ultimately orders that product then the provider of that link gets a handsome
amount of commission from the revenue generated by that product (Prater, 2021).
Amazon is not only a marketplace to buy and sell products but provides an open
opportunity to skillful people. For instance, a person opens a store on Amazon
then hires another expert in the field and pays him/her to maintain the store.
The hired person is named the Virtual Assistant. Amazon is a big, great, and
friendly marketplace for sellers, buyers, and the people that provide their
services related to Amazon-like store maintenance, etc (Palanica and Fossat,
2021). Amazon is different from the traditional marketplaces that only provide
the service of selling and delivering products. It’s a storehouse that is huge
and provides endless services. There are an estimated 9.5 million users of
Amazon (Dave,2022). Its Kindle books section is still considered the best part
of Amazon. There are success stories of Amazon sellers that were not
capitalists formerly but now they are million and billionaires. The best part
about the marketplace is that it is unbiased. Unbiased in the sense that it
provides equal and open opportunities for people throughout the world
without bothering about their political, religious, and racial origins and
affiliations. However, some critic Amazon for setting search priorities in
terms of making a huge amount of profit (Fussell, 2021) It is fairly a
marketplace that saved America in the time of the Covid-19 Pandemic by creating
numerous opportunities for the American youth (Palmer,2020).
Methodology and Research Design
Since the current study
is an approach towards finding the facts and success strategies of Amazon in
the time of the Covid-19 Pandemic; therefore, a case study approach is being
adopted that will base on an extensive literature review comprised of the stats
and other facts related to Amazon. One of the benefits of selecting the case
study method is that it allows researchers to focus on one research area and
conduct thorough and deep research (Ebneyamini and Sadeghi Moghadam, 2018).
Similarly, the literature review method is the right approach in the sense that
Amazon is a company, and facts about Amazon can only be best understood through
the research that has been already conducted on Amazon. Secondly, the available
surveys and online published data can also provide a sound basis for a better
understanding of the company. Thirdly, the company’s fast success can be
recorded and interpreted only by peeping into the historical development of
Amazon and its strategies or business policies. Therefore, the review approach
for online published data is being adopted.
Data Collection
Data about Amazon is
collected through reliable sources and from the company’s website. Currently,
Amazon is number 5 amongst 6027 companies in the world having a total amount of
share price of 3,352$ as of today, March 30, 2022. And, the market cap. Is
1719.8B ("Amazon Market Cap 2006-2021 | AMZN").
Here is the list of
Amazon profit earning data with a change in average scale, from the year 2015 to
2021.
Amazon’s Revenue Per Year
|
Year |
Profit |
Change% |
|
2015 |
|
20.25% |
|
2016 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2019 |
|
20.45% |
|
2020 |
$386.06 B |
|
|
2021 |
$469.82 B |
21.7% |
Table:
1.1 Data Source: ("Amazon (AMZN) - Revenue")
https://companiesmarketcap.com/amazon/revenue/
Compotators to Amazon
It is evident that
Amazon has a fair number of competitors. For instance, on the side of
technology, Amazon has to compete with Google for AWS. Also, Amazon has to
compete with the home products of Google. Similarly, it has to compete with
Netflix. The list does not end here; there are other B2B and B2C e-commerce
stores that are directly competing with Amazon. Simply, any online business has
to face Amazon as a competitor, and it is also true for Amazon.
Nowadays, Amazon is
often compared with Alibaba which is a similar platform to Amazon. However, the
facts show that Amazon is one step ahead of Alibaba since Amazon is ranked at
9th most visited website in the world and Alibaba is ranked 10th
("Difference Between Amazon and Alibaba | Difference Between", 2019).
Discussion
The results shown in
Table 1.1 reveal that Amazon has massively grown contrary to the situations
that all the best and the largest companies in the world faced in the pandemic
era. The successful strategies of Amazon became the reason for Amazon to not
only survive when most of the businesses and corporations collapsed but also
moved forward on the track to success by increasing its workforce for delivery
and other business-related affairs (Harty and Rapp, 2021). Other successful
reasons include charging third-party sellers a reasonable fee that adds to the revenue of Amazon. Additionally, Amazon gets its share when a registered seller
sells any item on Amazon. The sellers are comfortable with this double charging
since they are able to grow their business and get huge revenue for their
online stores. Amazon’s sellers' and buyers’ interface is amazingly simple. A
seller needs not to highly technology graduate but with a simple knowledge of
computers, a seller can run and manage his/her store. Similarly, a buyer on
Amazon is not worried about being scammed by the sellers or he is not worried
about making online transactions for Amazon provides them a secure environment
for selling and purchasing goods and items. Additionally, Amazon has also a
fair policy of copywriting. Sellers are not worried about online theft or
violation of their brand or product copyrights. These features enable Amazon to
get trusted worldwide. Above all, shipping to different countries also broadens
the scope of Amazon as a marketplace.
Conclusion
Amazon has proved that
business needs a strong foundation of trust and customer facilitation. Amazon’s
policy of getting feedback from its customers, creating business strategies,
adding more products to the selling list, and enabling sellers to look for their
competitors and adopt the legal and authorized steps and research to get on the
top of the list, has enabled Amazon to run a sustainable business. These
reasons helped Amazon refrain from a potential decline in the time of the
Covid-19 pandemic. Contrarily, by adopting these successful strategies, Amazon
kept on growing in the stressful pandemic regime. Currently, Amazon is becoming
an uncontrollable successful business tycoon.
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