Real-Time Case 2
12/1/2009 Brief History of Amazon.com
Jeff Bezos, an entrepreneur, created Amazon.com in 1994; the business was originally run out of his garage in Washington. With the additional investments from Nick Hanauer and Tom Alburg, Bezos was able to create the more user-friendly website that we are used to. As Amazon.com’s customer base began to grow Bezos realized that he was going to have to add variety to the products Amazon.com offered. Bezos hit on a successful idea when he added the feature that allowed customers to write their own book reviews. In 1997, Amazon.com went public and it continued to increase its product lines to include CDs, movies, and toys to its inventories. Amazon.com was …show more content…
Given its internet base, Amazon.com’s success may be easily duplicated by copying its web materials. However, all forms of business must consider external threats to an organization of this nature. All successful businesses face the threat of competitors that produce similar products or services and adopting similar strategies. Substitute products and alternative offerings produced by firms in similar industry that satisfy customer needs, are one of the five basic competitive forces that effect industry structure. Firms that operate in industries with few or no substitutes are more likely to be profitable.
Amazon.com has significant market share. Market share is the percentage of total market sales attributed to one competitor. It would be difficult for a new competitor to simply copy Amazon.com’s web materials and develop a successful business. Amazon.com’s market share likely gives them bargaining power as a buyer. The buying power of Amazon.com may also give the company distribution channel ties based on long-standing or even exclusive relationships. The new entrant must create its own channels of distribution. New entrants may also face problems related to capital requirements, economies of scale, brand identity, product differentiation, and slow industry growth.
Easy access to strategies due to web copying is