The worldВ’s largest online retailer, Amazon, has constantly amazed the world with super-quality service, new ideas and an unusual approach to business for two decades. Dealing with almost no advertising, Amazon forces people to monitor each of its innovations. Today, Amazon is a multifaceted company represented in different industries. Amazon offers a wide range of products and provides millions of customers with a personalized service. The success of Amazon has given rise to a new attitude to retailing. Jeff Bezos, the founder and CEO of Amazon, changed the perception of e-commerce worldwide after introducing the firm to the global market. Bold decisions in logistics helped Amazon enter the world market and internationalize the company, but the errors made in the Chinese market did not allow Amazon to be ranked first in South Asia.
Jeff Bezos has been trying to improve online delivery services since 1994. Delivery speed is a critical indicator for e-commerce: if the time for sending goods from the store to the customer were too long, the buyer would simply go to the nearest shop. From the very beginning, Bezos realized that only thanks to the fast and reliable service of order delivery, the online trade will be able to entice clients from the usual offline retail outlets (Sayyed, 2017). In 1999, Amazon invested $60 million in a startup Kozmo.com, which promised to deliver household trivia within the metropolis within just one hour (Sayyed, 2017). Branded orange couriers appeared in New York and San Francisco, but already in 2001, the company ceased to exist (Sayyed, 2017). Many IT-observers believed that the reason for the failure was the very idea of speedy delivery of goods in the city. However, Amazon reached other conclusions and successfully conducted the business model of Kozmo when it entered the markets of China, India and other developing countries (Sayyed, 2017). Notwithstanding, Amazon has made a strategic mistake in the Chinese market. In China and almost all South Asia, Amazon is just one of several electronic commerce companies, with Alibaba Group as a leader (Sayyed, 2017). For some reason, Amazon missed the opportunity to become a big e-commerce player in China. Moreover, it is estimated that Amazon only owns about two percent of Chinese e-commerce market (Sayyed, 2017). Nevertheless, Amazon introduced their service Amazon Prime in China. Even though the time that has passed since the launch of the service in China is too short, it has proved to be effective in the United States.
In the US, the company immediately promised free shipping within just two days, which meant that Amazon would be forced to use expensive express delivery services from FedEx and UPS. The popularity of Amazon Prime was gaining momentum: eight million people have registered in the service in five years. On the eve of the 2011 holiday season, Amazon realized that the FedEx and UPS capacities are not enough to fill all orders and the time to create an alternative service (Kumar, 2017). The place for experiments was chosen in the United Kingdom, where the reform of postal logistics was adopted. In 2013, Amazon launched its own fast delivery to fulfill all the services promised to customers (Kumar, 2017). Therefore, this decision has improved the firmВ’s position, at the same time, playing a decisive role in the development of local mail. The administration of Royal Mail counted on the delivery of parcels to cover the deficit of incomes, which arose due to the reduction in the turnover of letters (Kumar, 2017). However, the stand-alone Amazon service nullified the plans of the postal service.
Last summer, Deutsche Bank announced its own study of the area of international transport of goods and logistics services. Apparently, in the end, Amazon will ensure the delivery of commodities directly from the factory in China to the client in the US or Europe using not only airplanes and cargo ships but also unmanned cars and drones. In addition, Amazon will introduce the service ahead of time: if an individual regularly orders the same items, the company will prepare the parcel in advance (Kumar, 2017). A box with oneВ’s favorite shampoo or replaceable filters for the coffee machine is already waiting for delivery when one presses the В‘place an orderВ’ button. In Amazon, logistics is considered as a large mathematical equation, and real full-time scientists work on it (Kumar, 2017). However, Jeff Bezos does not disclose the intention to capture the market of the online orders delivery. In this regard, there are leading players who have established a monopoly on the delivery of orders. Nevertheless, Amazon is also a monopolist in another area; therefore, it perfectly understands all the shortcomings of a large company. When one needs to quickly introduce new technologies, corporations are often inferior to their young brave competitors. Bezos said that Amazon is developing an infrastructure that will complement but not replace FedEx, UPS or the USPS (Kumar, 2017). The businessman assured that he is not going to displace these firms from their business niche, but did not deny that the pricing policy can facilitate the transition of customers to Amazon services (Kumar, 2017). Actually, this happened almost in all branches of service delivery, in which Bezos engaged.
In the United States, Amazon entered into contracts for the delivery of goods with the USPS to reduce dependence on the services of monopolists such as UPS and FedEx. In November 2013, it was announced that the post will deliver parcels from Amazon on Sundays, and the company itself began to deploy a network of sorting centers using machine-learning technology (Sayyed, 2017). Automated machines sort the parcels by barcode and promptly forward them to the client at the nearest post office (Sayyed, 2017). However, even such extraordinary measures and careful preparation were not enough to deliver the entire volume of New YearВ’s orders to online Amazon customers in time.
It was literally an error in the AmazonВ’s strategy. Notwithstanding, none of the participants in the commercial chain В‘seller ?logistics company ?buyerВ’ raised an official charge to reveal who is still to blame for the logistical failure of the end of 2013, when the collapse happened on the eve of Christmas with the delivery of parcels (Kumar, 2017). Some of UPS employees informally explained that one of large customers of logistics services enlarged the volume of parcels that need to be delivered without prior approval. The corporation had to urgently seek additional aircraft, storage facilities and increase the number of jobs nicknames for this period. Similar measures have been taken; however, not all Amazon orders were delivered on time, and the latter did not hide its displeasure (Kumar, 2017). The firm blamed their counterparties for the delay in holiday shopping.
Although Amazon realized that the client is not interested who is responsible for poor service, the company did realize that clients need timely delivery. Therefore, during 2014 the venture tried to be better prepared: it opened twenty-three stationary sorting centers in the US and introduced the above-mentioned service Prime Now (Kumar, 2017). First, it appeared in New York, and now it is already available in forty US cities (Kumar, 2017). In order to deliver the goods on time, the couriers use all available means of transportation, namely cars, bicycles, scooters, public transport among others (Kumar, 2017). The most popular units of express delivery are drinking water and toilet paper. However, the organization calculated that since the beginning of Prime Now, 300 thousand condoms have been delivered through the service (Kumar, 2017). It is not hard to fathom that there is no other market courier service that brings such an order to a client within an hour.
In September, Amazon launched the innovative Amazon Flex service, which makes it possible to earn users who have an auto, spare time and inspiration to join the Amazon logistics scheme. The mobile service operates on the principle of Uber, and the orders from the online store take the role of passengers (Sayyed, 2017). The corporation runs the program during the maximum demand. For example, on July 31 last year, the couriers of Amazon Flex brought the copies of the book В“Harry Potter and the Cursed ChildВ” to customers of Prime Now (Sayyed, 2017). Nevertheless, not all cities are positive about Amazon's innovations. Mayor of Paris Anne Hidalgo was indignant at the firmВ’s intention to introduce Prime Now and not coordinating it with the authorities of the metropolis. It deals with the fact that Amazon carriers will spoil traffic and pollute the capitalВ’s air, and it will also affect the trade balance and harm the interests of local business.
In turn, the logistics companies UPS and FedEx do not recognize the threat to their market, at least publicly. Amazon intends to subordinate the service delivery of goods as the partner expansion of capacity (Sayyed, 2017). Fred Smith, the CEO of FedEx, considers a full-fledged competition between his experienced logistics company and Amazon as something rather impossible (Sayyed, 2017). However, even investors at the Wall Street became agitated when Bezos started leasing planes and mastering cargo airports last year (Sayyed, 2017). Moreover, Amazon has already shown successful tests of delivery of products by an unmanned vehicle, it can bring logistics services to a completely new higher level.
Thus, Amazon succeeded in internationalizing the business due to bold decisions in logistics. While Amazon is steadily conquering the world market, leading delivery services continue to underestimate Bezos. It may be wrong of them since a businessman who managed to bring a bookstore from the garage to the global level is unlikely to stop until he has made the absolute majority of the Earth inhabitants resort to their services. Then, probably, Amazon will engage residents from other planets since JeffВ’s space ambitions are not inferior to the ideas of Elon MaskВ’s.
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