Amazon Experimentation & Testing Strategy †Myassignmenthelp.Com

Question: Discuss About The Amazon Experimentation Testing Strategy? Answer: Introducation Amazon.com, Inc. was founded by Jeff Bezos in 1994. The company is located in Seattle, Washington and is a market leader in the e-commerce industry (Ernest, 2015). Amazon had about $ 136 billion in net revenue in 2016 (Landrecht Zhang, 2016). The company commenced its operations in 1995 when it opened its virtual doors for customers on the web. Further, it was incorporated in 1994 in Washington and also constituted as a legal corporation in Delaware in 1996 (Landrecht Zhang, 2016). The company is listed on the NASDAQ Global Select Market and uses the symbol AMZN. Amazon is the number one retail company in the world and provides technological infrastructure for businesses that have different business focus and range in size (Dages, et al., 2016). The company offers services to four types of customers that include enterprises, sellers, final consumers, and content creators. Amazon.com retail website is consumer friendly as it provides a wide range of selection, low prices, and the we bsite is easy to use. The internet site also provides convenience as all needs of consumers can be met in one online store. It is important to note that Amazon equally provides a platform for products from different sellers. The platform enables them to access a larger market for their products because of the strength of the Amazon brand (Ernest, 2015). As of 2016, the company employed 341,000 part-time and full-time employees (Lang, et al., 2016). The increase in the number of employees can be attributed to the expansion of operations by Amazon. Amazon.com also makes use of temporary personnel and independent contractors as a supplement to their workforce (Lang, et al., 2016). The number of customers has continued to grow. For instance, almost 50 percent of households in the United States are now subscribed to Amazon Prime, a membership program (Ernest, 2015). Also, 50 percent of all online searches begin directly on Amazon, and the company captures almost one in every 2 dollars spent by Americans online (Ernest, 2015). The market power of Amazon now rivals and exceeds that of Walmart. This can be attributed to the strategies that Amazon has been employing as will be discussed later. The company also has high growth prospects in the next 5years because 20 percent of the United States 3.6 trillion dollars retail market will have mov ed online, and Amazon.com is likely to attract about two-thirds of that market share (Zhu Liu, 2016). Some people have begun to say that Amazon is the Walmart of online retail (Zhu Liu, 2016). The company has become the giant of internet retail because of the strategies it has employed over the years. There are also challenges that like any other business, Amazon will possibly face in the future. But whether the company is well placed to overcome these challenges will determine whether or not the company will sustain its remarkable success. Therefore, the aim of this paper is to critically analyze Amazons strategies, suggest possible challenges that the company may face in future, and come up with potential strategies that Amazon can use to overcome these obstacles. Amazon.Com Strategy Analysis Business activities and strategies play a critical role in the future growth and development of organizations. These business strategies become more essential in case of companies such as Amazon that are doing e-business (Dimar, et al., 2016). Every business entity employs different strategies so as to remain in operation and make profits. Some use strategies that are aimed at maximizing profits while others use customer-centric strategies (Dimar, et al., 2016). An organization may also use more than one strategy to achieve its goals. The objective of this report is to analyze the business strategies of Amazon. The company has employed various strategies since opening its doors and lately Amazon has been focusing on making profits (Ernest, 2015). When Amazon.com was founded in 1994, it was mostly marketed as an online bookstore (Landrecht Zhang, 2016). The companys growth was initially slow, and it did not turn any profit until about seven years after it opened its virtual doors. Amazon started being profitable mainly due to the dot-com bubble and its change of business strategies. The company successfully transformed its corporate-level strategy into acquisitions, mergers, and partnerships (Landrecht Zhang, 2016). Amazon has a marketing strategy that can be attributed to its success as well. The company is customer centric and maintains that the most crucial component of the business are customers. Amazon has been labeled as the most customer-centric company by both its followers and customers (Landrecht Zhang, 2016). Partnership strategy As Amazon flourished, the share price of the company grew and enabled it to partner with and acquire various enterprises that operated in different sectors. For instance, Amazon has partnered with 2nd Watch, 8kMiles, Arcus Global, Drugstore.com, Living.com, Wineshopper.com, Kozmo.com, and Homegrocer.com among others (Klaus, 2015). In most of these partnerships, Amazon bought an equity stake to share in the prosperity of its business partners. Amazon also charges fees for placements on its website. The company equally demanded that publishers pay specific fees for advantageous position to boost books sales on its website (Klaus, 2015). Many of the online companies that Amazon initially partnered with failed between 1999 and 2000, but Amazon was not pulled down by its failing partners because it covered growth potential (Klaus, 2015). Amazon has also been able to strengthen its grip in various sectors by partnering with other companies. It has equally consolidated its strength in vario us sectors by using technology to accelerate the promotion of products and distribution through these partners. Other retailers can sell their products through the internet using Amazons infrastructure and user interface via what the company refers to as Syndicated Stores program (Voigt, et al., 2016). For instance, in the United Kingdom, Waterstones, the largest classic bookstore found competition with online stores challenging and expensive. Waterstones eventually formed a partnership with Amazon where the online retail giant distributes and markets its books for a commission online. Similarly, in the US, Borders makes use of the Amazon merchant platform to distribute its products (Voigt, et al., 2016). Amazon has the same arrangement with Toys R Us, a toy retailer. These partnerships are beneficial to Amazon because it enables the company to expand its customer base into the customers of other suppliers. Also, customers who purchase in one category like books are also attracted i nto buying into categories such as electronics and clothing (Dages, et al., 2016). Amazon Marketplace also enables other retailers and Amazon customers to sell their used and new books as well as other goods apart from the regular categories. Another partnership strategy is the Amazon Merchant program. This program allows third parties that are bigger than the companies that sell through the Amazon Marketplace to distribute their products through Amazon. Amazon, in turn earns sales commissions per unit or fixed fees (Ernest, 2015). This kind of partnership can also enable customers to have a wide variety of products to choose from and conveniently buy them through one checkout process. Amazon has equally formed partnerships with smaller companies via its affiliates program which was launched in 1996 (Ernest, 2015). Experimentation and testing strategy Amazon terms the philosophy of testing and experimentation as Data beats intuition. The company uses automation and experimentations that are real time to personalize its content (Weniger, et al., 2015). This is for the reason that actual behavior of the consumers is the effective way to decide on tactics. The company has an experiments culture of which A/B tests are crucial elements. For instance, Amazon uses A/B tests when deciding on new home page design, different algorithms for recommendations, moving features around the page, as well as changing search relevance rankings (Weniger, et al., 2015). The company usually tests new treatments against prior control treatments for a week or a few days. The system will then randomly indicate treatments to visitors and measure ranging variables like revenue and units by category, length of session, session time among other parameters. The new features are then launched if the metrics that are desired are substantially better statistically (Weniger, et al., 2015). However, tests that are statistical pose a challenge because distributions are not always normal. Another challenge is that since A/B tests are run every day, they may conflict because of overlapping. Also, there are long term effects where some features have positive impacts for the first few weeks and opposite effects where shifting navigations can temporarily degrade performance. The company also finds that the online experience of their users evolve and their online actions change. This implies that Amazon.com has to test its features and evolve continuously. This is also in line with the companys customer-centric strategy (Weniger, et al., 2015). Technology The experimentation and testing strategy as discussed above must be easily supported by technology which can be hard to achieve when management of content is standardized (Mosca, et al., 2015). Amazon has been able to stay competitive by developing the technology it uses internally and with an investment that is significant which in many instances not available for other companies that do not have the needed focus on the online channels (Mosca, et al., 2015). In using their own proprietary technologies, and technologies that are licensed from third parties, the company has implemented many functionalities and features that improve and simplify the experience of customer shopping. It also becomes easy for third parties to sell their products on the Amazons platform, as well as facilitate the companys fulfillment and customer service (Mosca, et al., 2015). Amazons strategy is to place more emphasis on the development efforts and constant innovations by enhancing and creating specialized and unique proprietary technology and to acquire or license technology that is commercially developed for other applications where appropriate and available (Mosca, et al., 2015). The company regularly invests in many technology areas, including the seller platform. For example, A9.com is a subsidiary that is wholly owned by Amazon and is focused on search technology A9.com, as well as other Amazon sites, digital initiatives, and web services. According to (Mosca, et al., 2015), Amazons technology approach can be said to be distributed development and deployment. For instance, the home page Amazon has some content slots or pods that call web services for features. This makes it easy to make changes to the contents in the pods and also where the pods are located on the screen (Mosca, et al., 2015). Amazons website contrary to many sites makes use of flowable page design which allows it to benefit from the real-estate on screen. The company also uses technology that can support many e-retails that are standard. Amazon makes use of application sets for validating and accepting orders made by customers, tracking and placing orders with suppliers, assigning and managing inventory to customer orders, and making certain that products are properly shipped to customers. Amazons transactions processing systems can also handle many different status inquiries, millions of item, requests about wrapping of gifts, and multiple methods of shipment. The systems enable customers to decide whether to receive single or several shipments that are based on availability and to track how each order that has been placed is progressing. Besides, the applications authorize processes such as charging and accepting the credit cards of customers (Mosca, et al., 2015). Future Challenges The internet has made inroads into many facets of our everyday lives. Apart from business information, a lot of personal information is also digitized now and stored in computers that have internet connections. Systems that are internet connected stand a higher risk of destruction or tampering by cyber criminals. Because of the threat of cyber-attacks, internet users are predisposed to privacy threats as marketers use invasive and aggressive tools to collect customer information. Also, with more people embracing internet purchasing, e-retailers will likely face tax challenges too in future. Cyber-attack challenges Online and mobile channels will continue to evolve. It will carve out new markets and bring many opportunities for established organizations like Amazon and new companies (Veroef, 2016). Unfortunately, there will likely be significant disruption to e-commerce payment systems and processes. The anonymous, interconnected, and instantaneous nature of these channels has led to the development of malicious threats that target retail services companies and e-commerce and their customers (Veroef, 2016). Digital fraud and cyber-crime will continue to rapidly evolve with criminals using techniques that are increasingly sophisticated to target vulnerable people, technologies, and processes. If the cyber-crime threats are realized successfully, they have the potential to undermine important digital services, cause severe damage to the image of a brand, and lead to significant operational and financial pain for companies and their customers. The challenges of cyber-crime can also imply that thes e criminals can deface websites and steal data that is valuable from the systems (Veroef, 2016). Taxation Challenges E-commerce has become the new normal because services and goods have shifted to a digital platform from a physical one. Services and commodities have also become digital as they are transacted online. The current laws of taxations could present serious challenges in e-commerce in future, especially transactions that are international in nature (Owen, 2015). Conclusion Online trading has grown, will continue to exist, and will be used extensively in future. E-commerce will likely evolve in future and companies will need to change their strategies if they want to remain competitive. Also, competition in E-commerce is likely to increase in the future because many traditional retail stores will have online platforms. Leading online retailers like Amazon will need to find ways of retaining profitability and sustainable development that is long term. Even though there are challenges in e-commerce, Amazon will overcome these challenges and stay competitive in future because of the innovativeness of the company. Recommendations To prevent cyber-attacks and achieve security objectives, it is imperative to recognize that it is essential to protect customer data and services. Therefore, it is important to have a company-wide security model to protect customers. Consumers also need to be educated on cybersecurity and protection of their personal data and privacy. With regards to taxation challenges, Amazon should collaborate with governments to come up with tax laws that will accurately recognize and deal with e-commerce. References Dages, J., Li, M. Moore, C., 2016. Walmart V. Amazon. The Economist Case Competition, II(6), pp. 12-25. Dimar, K., Kuchar, R. A. Ragas, M. W., 2016. Book Battles: A Strategic Communication Analysis of Amazon.coms Dispute with Hachette Book Group and Authors United. Corporate Strategy, III(7), pp. 12-20. Ernest, J., 2015. Critical Evaluation of how well placed Amazon is to Sustain its Historical Online Retailing. British Journal of Marketing Studies, III(6), pp. 31-42. Klaus, P., 2015. The case of Amazon.com: Toward a conceptual framework of online customer service experience. Journal of Services Marketing, I(8), pp. 16-36. Landrecht, T. Zhang, J., 2016. Amazon.com. Business Strategy, IV(4), pp. 23-45. Lang, S., Tinder, L., Zimmerman, J. Harrison, J. S., 2016. Amazon.com: Offering Everything from A to Z. Journal of Business, I(5), pp. 23-30. Mosca, P., Zhang, Y., Xiao, Z. Wang, Y., 2015. Cloud Security: Services, Risks, and a Case Study on Amazon Cloud Services. Int. J. Communications, Network and System Sciences, IV(16), pp. 7-13. Owen, R., 2015. The Amazon Tax Issue: Washing Away the Requirement of Physical Presence for Sales Tax Jurisdiction over Internt Business. Journal of Law, Technology, and Policy, VII(8), pp. 29-38. Veroef, P. C., 2016. Challenges and Solutions for Marketing in the Digital Era. European Management Journal, II(2), pp. 23-47. Voigt, K.-I., Buliga, O. Michl, K., 2016. Business Model Pioneers: How Innovators Successfully Implement New Business Models. 2nd ed. New York: Springer. Weniger, S., Weiss, T. Loebbecke, C., 2015. Innovating for the Mobile End-User Market: Amazons Kindle 2 Strategy as Emerging Business Model. Corporate Strategy, V(4), pp. 3-16. Zhu, F. Liu, Q., 2016. Competing with Complementors: An Empirical Look at Amazon.com. Journal of International Journals, IV(10), pp. 34-40