Amazon: Not Just a Book Store Any More

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Table of Contents

I. BACKGROUND:        

II. INFORMATION SYSTEMS        

1. Amazon Web Service        

2. Simple Storage Service (S3)        

3. Smart Analysis Search (SAS)        

4. Customer Relation Management (CRM)        

III. SUPPLY CHAIN MANAGEMENT (SCM)        

1. Customer Relation Management (CRM)        

2. Enterprise Resource Planning (ERP)        

IV. INNOVATION STRATEGY        

1. The Kindle        

2. Echo        

3. Digital Media        

V. RECOMMENDATIONS        

Works cited        

I. BACKGROUND:

Amazon.com has been selling a multitude of goods and services worldwide for the last two decades. Founded by current President and CEO Jeff Bezos in 1995, Amazon.com was originally designed for the book lover by providing them a virtual marketplace (Amazon n.d.). It didn’t take long for Amazon.com to become that largest book seller in the world and with this large market share was able to expand their business from just books, to toys, electronics, tools, and more in only 4 years. During Amazon’s infancy, it could take up to 30 days to deliver books to their customers (Al Imran, 2014). When compared to today’s 2-day prime shipping, that seems like an eternity.

As of this writing, Amazon is expected to far exceed their previous annual sales of $100 billion dollars. Amazon has become one of the fastest growing companies ever and is the fastest to reach $100 billion in annual sales (Berryman, 2014). While their consumer market is what most people think about when they think of Amazon, they actually offer services for four unique types of customers; consumers, sellers, enterprises and content creators (Berryman, 2014).

II. INFORMATION SYSTEMS

Being that Amazon was founding prior to the millennium dot-com bust shows how resilient the company can be to sudden market changes. Starting in 1995, Amazon kept their website system and order fulfillment systems on separate networks. They did this in an attempt to improve security. While this worked in the short term, the manpower needed to transfer data from one system to the next became overwhelming. Amazon decided to reinvent all of their systems and in 2000 spent nearly $200 million upgrading their systems. During this upgrade, Amazon realized several improvements that could increase their market share. Amazon developed the Amazon Web Service (AWS) and the Simple Storage Service (S3) as their main systems for this reason.

1. Amazon Web Service

The Amazon Web Service was designed to allow other retailers to sell goods through the Amazon platform but was also created to allow these retailers to also host their own websites within the AWS platform. Given Amazon’s huge market share, this meant increased reliability, ability for scalability and the access to the robust integration of the Amazon.com marketplace. While AWS has many huge advantages for other retailers, challenges exist from being part of such a large system.

With over 300 million active Amazon.com customers, every second there is the potential of thousands of customers searching for products and if lucky ordering these found items. With such an immense amount of traffic, the AWS must be fast, reliable, and secure. Remarkably, Amazon is able to ensure all three using their S3 architecture.

2. Simple Storage Service (S3)

Simple Storage Service (S3) provides the ability for companies both large and small to host and store data in a secure, reliable and highly-scalable way. Using this system, Amazon is able to leverage the scalability of their systems and sell the unused portions to other businesses as a source of revenue. Amazon’s largest S3 customer is Netflix. As a cost of only $31/TB, this solution allows Amazon to host any number of sites and with the highly scalable nature of the S3 architecture, can handle website spikes nearly instantaneously. For Amazon however, S3 was designed to integrate into their in-house CRM and SAS platforms.

3. Smart Analysis Search (SAS)

Given that Amazon processes data so quickly, they must be ever vigilant of tracking fraudsters and hackers from causing system breaches. Amazon is able to accomplish this using the SAS system. This system uses website analytics to track behavioral patterns. This tracking allows the SAS system to measure the likelihood that the customer isn’t attempting fraud. As a twofold solution, this system also helps to provide a personalized customer experience which in turn helps to serve customers effectively.  

4. Customer Relation Management (CRM)

Have you ever wondered how a website knows what you might be looking for before you do? Amazon, as well as most other companies, use CRM systems to mine data to help keep track of your information. In Amazon’s case, their website is the backbone of their CRM. Amazon uses nearly every aspect of their site to help build customer relations to assist in their search results. Amazon does this by creating unique algorithms not only for each customer, but for each item being searched. Amazon then takes each of the unique algorithms and allies them to the customer database. With this information, Amazon has finely tuned their CRM system to analyze the information and provide services accordingly.

III. SUPPLY CHAIN MANAGEMENT (SCM)

Nothing Amazon does with their web systems would be effective without a fully automated SCM system. For every successful retailer, there is an even more successful SCM system. For Amazon, and many other retailers, the CRM is responsible for managing all supply chain aspects. As mentioned previously, prior to the upgrade in 2000, Amazon used to have separate CRM and SCM systems. While many consider the huge successes of Amazon on their AWS systems, in reality, the real magic lives without their proprietary SCM systems. The main facets of the SCM are the CRM and the ERP.

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