Over the last two decades Amazon has grown at an exponential rate and retained many advantages over its competitors along the way. Amazon has primarily two different types of competitors, brick and mortar retailers, and other online retailers. To distinguish itself it had to prove to be better than the rest through competitive advantages over each type of competitor. First, to establish Amazon as a powerhouse in the online retailer industry, it had to prove to be superior over traditional retailers, brick and mortar retailers.
One specific competitive advantage that Amazon took used to separate itself was its access to a significantly larger customer base. By being an online retailer they can provide goods to more than just local customers. In the late 1990’s Bezos made it his goal to make Amazon more accessible and invested in its supply chain and distribution network allowing it to provide goods to a greater range of clients. This new increased distribution capacity far exceeded that of traditional brick and mortar retailers.
Another advantage it had of retail stores was its ability for customers to write reviews. Amazon allowed customers to post and read reviews on products and used it to their advantage. Their research team found it to be extremely beneficial in completing sales by sorting the highest rated comments first and allowing customers to easy display the types of comments they are looking for. This is a feature that Amazon expanded rapidly and did a lot of research on to make it as beneficial as possible.
It is also a feature that brick and mortar retailers cannot replicate in stores and helped them distinguish themselves from those traditional stores, offering advantages to buying online over buying in store. Offering an auction business similar to that of eBay’s provided yet another feature for it to use as an advantage over brick and mortar retailers. Amazon had become more diverse and was able to provide a greater range of features to its customers than traditional stores could, and had the sales to prove it.
Their auction business added approximately an additional five million unique customers in 2001. Amazon’s ultimate advantage over brick and mortar retailers is its ability to collect a revenue from so many different sources of business, whether its via fixed price sale, auction, shipping, or e-commerce. Amazon also has advantages over other online retailers, such as eBay. Its main advantage is its advanced comments and reviews. Amazon has invested a lot of research into making its reviews as useful as possible and has succeeded in this plan.
Not only do the positive reviews help to convince customers to buy the products they are questionable about but they’re seller reviews also gives potential customers trust that the products they intend to purchase will actually come as expected. The sellers are given a rating, similar to product ratings, on a five-star basis. Many customers are reluctant to purchase items, especially expensive ones that they have never seen before from someone they have never seen before. An element of doubt exists in customers’ minds that is erased by these reviews and makes them feel more comfortable with spending their hard earned money.
In addition to their reviews, Amazon also offers its own insurance policy to insure items up to $250 in the event that a seller fraudulently represents a product. This provides even greater assurance to customers and prevents those who are reluctant to fray away from Amazon and visit other site they may feel to be more trustworthy. Another advantage Amazon has over some other online retailers is its size and reputation. Amazon has built a mega-business which has a name for itself.
Customers know they can get anything from Amazon and it has become a one stop shop for whatever goods they so happen to need. The size of Amazon has allowed it to carry a vast number of different product lines and offer a broad range of services while still upholding fast delivery times through its advances distribution centers. Amazon has built a fantastic company which still continues to grow through constantly improving its business model and plan. Amazon exploits its advantages in order to stay ahead of its competition and remain a powerhouse in the retail industry.