AMAZON INTRODUCTION
Amazon.com, Inc. is an American electronic commerce company with headquarters in Seattle, Washington. It is the largest Internet-based retailer in the United States. Amazon.com started as an online bookstore, but soon diversified, selling DVDs, Blu-rays, CDs, video downloads/streaming, MP3 downloads/streaming, software, videogames, electronics, apparel, furniture, food, toys and jewellery. The company also produces consumer electronics—notably, Amazon Kindle e-book readers, Fire tablets, Fire TV and Fire Phone — and is a major provider of cloud computing services. Amazon also sells certain low-end products like USB cables under its in-house brand Amazon Basics. Amazon has separate retail websites for United States, United Kingdom & Ireland, France,
Canada, Germany, The Netherlands, Italy, Spain, Australia, Brazil, Japan, China, India and Mexico. Amazon also offers international shipping to certain other countries for some of its products. In 2011, it had professed an intention to launch its websites in Poland and Sweden.
HISTORY
The company was founded in 1994, spurred by what Bezos called his "regret minimization framework", which described his efforts to fend off any regrets for not participating sooner in the Internet business boom during that time. In 1994, Bezos left his employment as vice-president of D. E. Shaw & Co., a Wall Street firm, and moved to Seattle. He began to work on a business plan for what would eventually become Amazon.com.
Jeff Bezos incorporated the company as "Cadabra" on July 5, 1994 and the site went online as Amazon.com in 1995. Bezos changed the name cadabra.com to amazon.com because it sounded too much like cadaver. Additionally, a name beginning with "A" was preferential due to the probability it would occur at the top of any list that was alphabetized.
Bezos selected the name Amazon by looking through the dictionary, and settled on "Amazon" because it was a place that was "exotic and different" just as he planned for his store to be; the Amazon river, he noted was by far the "biggest" river in the world, and he planned to make his store the biggest in the world. Bezos placed a premium on his head start in building a brand, telling a reporter, "There's nothing about our model that can't be copied over time. But you know, McDonald's got copied. And it still built a huge, multibillion-dollar company. A lot of it comes down to the brand name. Brand names are more important online than they are in the physical world."
After reading a report about the future of the Internet which projected annual Web commerce growth at 2,300%, Bezos created a list of 20 products which could be marketed online. He narrowed the list to what he felt were the five most promising products which included: compact discs, computer hardware, computer software, videos, and books. Bezos finally decided that his new business would sell books online, due to the large world-wide demand for literature, the low price points for books, along with the huge number of titles available in print. Amazon was originally founded in Bezos' garage in Bellevue, Washington.
The company began as an online bookstore, an idea spurred off with discussion with John Ingram of Ingram Book (now called Ingram Content Group), along with Keyur Patel who still holds a stake in Amazon. In the first two months of business, Amazon sold to all 50 states and over 45 countries. Within two months, Amazon's sales were up to $20,000/week. While the largest brick and mortar bookstores and mail order catalogs might offer 200,000 titles, an online bookstore could "carry" several times more, since it would have an almost unlimited virtual (not actual) warehouse: those of the actual product makers/suppliers.
Since June 19, 2000, Amazon's logotype has featured a curved arrow leading from A to Z, representing that the company carries every product from A to Z, with the arrow shaped like a smile.
Amazon was incorporated in 1994, in the state of Washington. In July 1995, the company began service and sold its first book on Amazon.com: Douglas Hofstadter's Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought. In October 1995, the company announced itself to the public. In 1996, it was
reincorporated in Delaware. Amazon issued its initial public offering of stock on May 15, 1997, trading under the NASDAQ stock exchange symbol AMZN, at a price ofUS$18.00 per share ($1.50 after three stock splits in the late 1990s).
Amazon's initial business plan was unusual; it did not expect to make a profit for four to five years. This "slow" growth caused stockholders to complain about the company not reaching profitability fast enough to justify investing in, or to even survive in the long-term. When the dot-com bubble burst at the start of the 21st century, destroying many e-companies in the process, Amazon survived, and grew on past the bubble burst to become a huge player in online sales. It finally turned its first profit in the fourth quarter of 2001: $5 million (i.e., 1¢ per share), on revenues of more than $1 billion. This profit margin, though extremely modest, proved to skeptics that Bezos' unconventional model could succeed. In 1999, Time magazine named Bezos the Person of the Year, recognizing the company's success in popularizing online shopping.
Barnes & Noble sued Amazon on May 12, 1997, alleging that Amazon's claim to be "the world's largest bookstore" was false. Barnes and Noble asserted, "[It] isn't a bookstore at all. It's a book broker." The suit was later settled out of court, and Amazon continued to make the same claim. Wal-Mart sued Amazon on October 16, 1998, alleging that Amazon had stolen Wal-Mart’s trade secrets by hiring former Wal-Mart executives. Although this suit was also settled out of court, it caused Amazon to implement internal restrictions and the reassignment of the former Wal-Mart executives.
COMPANY VISION & MISSION
Amazon Vision Statement
We have provided below the content of the Amazon Vision Statement which details their outlook of the future. Effective and successful statements are powerful and compelling, conveying confidence and inspiring views of the future. The importance of these types of statements should not be underestimated. One good paragraph will describe the values, services and vision for the future. Whether you are looking to compose a personal or a company vision statement our samples and this example of the Amazon vision statement will provide you with some excellent ideas and inspiration.
"Our vision is to be earth's most customer centric company; to build a place where people can come to find and discover anything they might want to buy online."
The Mission Statement of Amazon.com :
Amazon.com has had a clear focus and a solitary mission since it began. Founder Jeff Bezos has publicly referred to the Amazon.com mission statement as the guiding force behind his leadership decisions many times in the company's 18-year history. It can be concluded that the success of Amazon.com as the top Internet retailing company in the world is due at least in part to their unwavering commitment to this mission and the daily execution of it. The mission and vision of Amazon.com is...
“Our vision is to be earth's most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.”
AMAZON CEO
Jeffrey Preston "Jeff" Bezos (/ ˈ b eɪ z oʊ s / January 12, 1964) is an American business magnate and investor. He is a technology entrepreneur who has played a key role in the growth of e-commerce as the founder and CEO of Amazon.com, an online merchant of books and later of a wide variety of products. Under his guidance, Amazon.com became the largest retailer on the World Wide Web and a top model for Internet sales. In 2013, Bezos purchased The Washington Post newspaper. As of March 2015, Bezos's personal wealth is estimated to be US$34.8 billion, ranking him number 15 on the Forbes list of billionaires.
AMAZON BOARD OF DIRECTORS
As of November 2014, the board of directors is Jeff Bezos, President, CEO and Chairman
Tom Alberg, Managing partner, Madrona Venture Group
John Seely Brown, Visiting Scholar and Advisor to the Provost at USC
Bing Gordon, partner, Kleiner Perkins Caufield & Byers
Jamie Gorelick, partner, Wilmer Cutler Pickering Hale and Dorr
Jon Rubinstein, former Chairman and CEO, Palm, Inc.
Thomas O. Ryder, former Chairman and CEO, Reader's Digest Association
Patty Stonesifer, President and CEO, Martha's Table
ORGANIZATIONAL STRUCTURE
With so many different products and services, Amazon has a divisional structure. In a divisional structure, different departments for different products and services allow department heads to appropriately focus their resources and results, as well as monitor the organization's performance. This structure is best for such a large organization because it is the most flexible.
Amazon's organizational structure is comprised of CEO and founder Jeffery Bezos (pictured above) and an eight-member board of directors. The CEO oversees the Chief Financial Officer (CFO), the Chief Technology Officer and the following 8 departments: Business Development, eCommerce Platform, International Retail, North America Retail, Web Services, Digital Media, Legal & Secretary, and Kindle. The CFO oversees the Real Estate and Control department. International Retail oversees three separate departments.
China, Europe and India. North America Retail oversees the following five departments: Seller Services, Operations, Toys, Sports & Home Improvement, Amazon Publishing and Music & Video. The Web Services department oversees Amazon S3 and Database Services. Other departments include Product Development & Studios, Europe Operations, Global Advertising Sales, Computing Services, and Global Customer Fulfillment.
PRODUCT OF THAT COMPANY & THEIR SERVICES
When a new startup promises to change some part of the economy, it usually gets the benefit of the doubt. It’s small! It shares your frustration with, say, laundromats, or, if it’s really smart, shows you a problem with laundromats that you hadn’t considered before. It’s on your side, both of you aligned against those incumbent inconvenience-makers.
This is a strange ritual. It gives startups leeway to try more daring things; additionally, it gives them permission to flout any expected conventions of behavior, be they regulations, ethics, or mere manners. It also suppresses certain lines of thought. It encourages you to imagine what the world will be like when you can do [thing] with your phone—or even when [thing] happens automatically, without any input at all. It drafts behind the wonder of this possibility. It discourages you, however, from imagining what it means that this promise will be fulfilled by a particular company run by particular people with particular ambitions and ideas about the world.
Amazon creates a lot of startup-like things. But its motives and goals, after over twenty years of operation, are not less open to interpretation. Imagine if a small startup, or a
Kickstarter, offered a way to re-buy household staples with a small wireless button. You might not take it seriously! Even if you did, your mind would not necessarily race to a scenario in which toilet paper buying buttons are both taken for granted and controlled by a single commercial entity. You would allow space for this thing to be silly or cool or interesting and this would be easy because the question it asks about the future seems so narrow. Making the case for the inevitability of toilet paper buttons would be the startup’s accomplishment; your credulity—after all, you’ve been shown the future!—would be its prize.
Amazon’s button, introduced this week, asks a large set of additional questions about the toilet paper button future: How can Amazon create new forms of customer lock-in? How can Amazon develop new and profitable relationships with brands (which it may eventually replace with its own brands)? How close to full retail automation can Amazon come without alienating its customers? Amazon is admirably clear in its intention to become a logistics machine the likes of which the world has never seen. Its fixation on efficiency over profit is usually characterized as a rare example of true long-term planning, but it is better understood as a fixation on solving systems: an expression of a philosophy that demands not just the domination of a market, but the destruction of its appeal to competitors. It’s an economist’s dream, a business that has been allowed by investors to effectively operate as a non-profit dedicated to economic perfection. How does the button figure into that?
When Amazon shows us the future—when it can convince us, through cleverness or force of will, that it has discovered a new inevitability—it is also telling us that the future belongs, again, to Amazon.
This week, Amazon took its Home Services program national :
Amazon Home Services is a new and simple way to buy and schedule professional services such as furniture assembly, house cleaning, and lawn care directly on Amazon. We’ve handpicked the best service providers in your neighborhood and require all service pros to be background checked, insured, and licensed if applicable. Service pros compete for your business based on price, quality, and availability. If customers find a lower price for the same service and pro, we will match it. Pre-packaged services have upfront prices so you can add a service right to your cart. No special sign up or subscription is required. Your Amazon account is only charged after the service is completed. And best of all, all services are backed by Amazon’s Happiness Guarantee. If you’re not 100% satisfied, Amazon will make it right or give you a full refund.
Offers in my ZIP code include: voice lessons ($45, half hour); car stereo installation (~$100); a wide range of electrical, plumbing and repair services; and home cleaning ($99 for two hours). The selection is large enough to feel like a local directory; as a product, it clearly aspires to be the accountable, interactive Yellow Pages that the internet seemed to guarantee but never quite produced.
Where a smaller, newer company might focus on one logistical problem—gathering and vetting services OR providing a payment system for services—Amazon attempts to solve all of them at once. Based on a two-decade stretch of unbroken examples, we may assume that Amazon is not so much interested in participating in local economies as in managing and eventually replacing them. A consumer perception that finding a plumber is annoying is fairly well aligned with Amazon’s institutional perception that local service economies are, taken as system, spectacularly inefficient, and that an Amazon-run local economy would be better optimized. Amazon’s pitch, that “service pros” will now “compete for your business based on price, quality, and availability” suggests an orderly state of affairs in which power has been transferred back to you, the customer, away from variously competent and self-interested small businesses. Meanwhile, Amazon takes its commission, both at the time of sale and from the relationship: it gains as much, if not more, power than you do, presiding over your transaction with gentle but absolute control. If Amazon Home
Services succeeds—if it becomes, for lack of a better term, the Amazon of local service jobs—this power multiplies.
Startup culture is shared tolerance for cognitive dissonance. It is small companies making their cases for various inevitabilities; it is these same companies suggesting that they are what makes these inevitabilities possible. Startup culture is writing straight-talk blog posts about the future on your venture capital firm’s blog; startup culture is the ability to read VC straight-talk as densely coded strategy. Startup culture is a constant case for the sanctity of efficiency, which is its own reward; startup culture is rewarding the reduction of inefficiencies with the highly visible creation of new ones. Startup culture is innately critical of everything outside of itself; startup culture, under scrutiny, questions the value of criticism. Startup culture is just simple business, plain as can be; startup culture is exceptional.
Amazon hasn’t been a startup in over a decade, so when it wears the costume of a startup the effect is uncanny. Magical inevitabilities, as delivered by Amazon, sound a little too much like potential future monopolies. This is the problem Amazon has with so many of its new products: They are easy to see for what they are. They often feel, first and foremost, like solutions to Amazon’s problems, not yours. The Fire Phone answered questions nobody outside of Amazon could possibly ask. The Amazon Dash button answers Amazon’s needs without clearly addressing any of its customers’ (but who knows, we’ll see). The Kindle, on the other hand, solved a logistical problem that was interfering with Amazon’s optimization of the books industry while also solving a number of problems book readers didn’t know they had.
Amazon has expressed its frustration with its dependence on humans in the highest court in the land, where it found sympathy. It has engineered its frustrations into robots and drones. It has made progress, certainly, but this progress has been frustratingly slow. Human friction keeps fucking up Amazon’s systems.
Home Services, then, represents a realization that Amazon has been approaching the problem of human labor at the wrong scale. It is not enough to treat it as waste that must be minimized. It can be embraced and made compliant with existing ecommerce systems. As long as it is necessary—for Amazon and for us—it may as well be packaged, inventoried, and sold. It can be shaped, subtly and slowly, into something a little easier to replace.
COMPETITORS OF THE COMPANY
Amazon Inc. (AMZN) is a multinational consumer electronics company and the largest Internet company in the United States as of November 2014. The company also sells a great deal of other consumer goods. Amazon.com operates in three general segments: media, electronics and other merchandise.
In the media segment, Amazon competes with auction site eBay (EBAY); media game-changer Netflix (NFLX); Time Warner Cable (TWX); Apple (AAPL), with iTunes; Google (GOOG) with its Play Store; and media producer Liberty Interactive (QVCB).
Amazon has several competitors in the electronics and general merchandise segment, many of which are brick and mortar rivals including Best Buy, Family Dollar, RadioShack, Staples, Target, Walmart, Sears, Big Lots, Delia and Systemacs.
In the electronics and general merchandise segment online competition includes Alibaba Group, LightInTheBox Holding Co., Overstock.com, PCM, Vipshop Holdings, JD.com, Wayfair Inc. and Zulily.
In the other operating segment, Amazon competes with several of the world's largest companies including CDW, PC Connection, Insight Enterprises, Google, Oracle; salesforce.com, Accenture and Citrix Systems, among others.
For its 2013 fiscal year Amazon reported $74.45 billion in revenue, and it has a market capitalization of $153.37 billion as of Nov. 20, 2014. Analysts' street consensus estimates see the online retailing pioneer reporting $89.49 billion in revenue for 2014. The company is also expected to report a loss for 2014 and return to profitability in 2015.
ACHIEVEMENTS
Jeffrey P. Bezos was born in Albuquerque, New Mexico. His mother was still in her teens, and her marriage to his father lasted little more than a year. She remarried when Jeffrey
was four. Jeffrey's stepfather, Mike Bezos, was born in Cuba; he escaped to the United States alone at age 15, and worked his way through the University of Albuquerque. When he married Jeffrey's mother, the family moved to Houston, where Mike Bezos became an engineer for Exxon.
From an early age, Jeffrey displayed a striking mechanical aptitude. Even as a toddler, he asserted himself by dismantling his crib with a screwdriver. He also developed intense and varied scientific interests, rigging an electric alarm to keep his younger siblings out of his room and converting his parents' garage into a laboratory for his science projects. When he was a teenager, the family moved to Miami, Florida. In high school in Miami, Jeffrey first fell in love with computers. An outstanding student, he was valedictorian of his class.. After graduation, Jeff Bezos found employment on Wall Street, where computer science
was increasingly in demand to study market trends. His went to work at Fitel, a start-up company that was building a network to conduct international trade. At D. E. Shaw, a firm specializing in the application of computer science to the stock market, Bezos was hired as much for his overall talent as for any particular assignment. While working at Shaw, Jeff met his wife, Mackenzie, also a Princeton graduate. He rose quickly at Shaw, becoming a senior vice president, and looked forward to a bright career in finance, when he made a discovery that changed his life -- and the course of business history.
The Internet was originally created by the Defense Department to keep its computer networks connected during an emergency, such as natural catastrophe or enemy attack. Over the years, it was adopted by government and academic researchers to exchange data and messages, but as late as 1994, there was still no Internet commerce to speak of. One day that spring, Jeffrey Bezos observed that Internet usage was increasing by 2,300 percent a year. He saw an opportunity for a new sphere of business, and immediately began considering the possibilities.
In typically methodical fashion, Bezos reviewed the top 20 mail order businesses, and asked himself which could be conducted more efficiently over the Internet than by traditional means. Books were the commodity for which no comprehensive mail order catalogue existed, because any such catalogue would be too big to mail -- perfect for the Internet, which could share a vast database with a virtually limitless number of people. He flew to Los Angeles the very next day to attend the American Booksellers' Convention
and learn everything he could about the book business. He found that the major book
wholesalers had already compiled electronic lists of their inventory. All that was needed was a single location on the Internet, where the book-buying public could search the available stock and place orders directly. Bezos's employers weren't prepared to proceed
with such a venture, and Bezos knew the only way to seize the opportunity was to go into business for himself. It would mean sacrificing a secure position in New York, but he and his wife, Mackenzie, decided to make the leap.
Jeff and Mackenzie flew to Texas on Independence Day weekend and picked up a 1988 Chevy Blazer (a gift from Mike Bezos) to make the drive to Seattle, where they would have ready access to the book wholesaler Ingram, and to the pool of computer talent Jeff would need for his enterprise. Mackenzie drove while Jeff typed a business plan. The company would be called Amazon, for the seemingly endless South American river with its numberless branches.
They set up shop in a two-bedroom house, with extension cords running to the garage. Jeff set up three Sun microstations on tables he'd made out of doors from Home Depot for less than $60 each. When the test site was up and running, Jeff asked 300 friends and acquaintances to test it. The code worked seamlessly across different computer platforms. On July 16, 1995, Bezos opened his site to the world, and told his 300 beta testers to spread the word. In 30 days, with no press, Amazon had sold books in all 50 states and 45 foreign countries. By September, it had sales of $20,000 a week.
The business grew faster than Bezos or anyone else had ever imagined. When the company went public in 1997, skeptics wondered if an Internet-based start-up bookseller could maintain its position once traditional retail heavyweights like Barnes and Noble or Borders entered the Internet picture. Two years later, the market value of shares in Amazon was greater than that of its two biggest retail competitors combined, and Borders was striking a deal for Amazon to handle its Internet traffic. By the end of the decade, as six per cent owners of Amazon, they were billionaires. For several years, as much as a third of the shares in the company were held by members of the Bezos family.
From the beginning, Bezos sought to increase market share as quickly as possible, at the expense of profits. When he disclosed his intention to go from being "Earth's biggest bookstore" to "Earth's biggest anything store," skeptics thought Amazon was growing too big too fast, but a few analysts called it "one of the smartest strategies in business history." Through each round of expansion, Jeff Bezos continually emphasized the "Six Core Values: customer obsession, ownership, bias for action, frugality, high hiring bar and innovation." "Our vision," he said, "is the world's most customer-centric company. The place where people come to find and discover anything they might want to buy online." Amazon moved into music CDs, videos, toys, electronics and more. When the Internet's stock market bubble burst, Amazon re-structured, and while other dot.com start-ups evaporated, Amazon was posting profits.
In October 2002, the firm added clothing sales to its line-up, through partnerships with hundreds of retailers, including The Gap, Nordstrom, and Land's End. Amazon shares its expertise in customer service and online order fulfillment with other vendors through co-branded sites, such as those with Borders and Toys 'R Us, and through its Amazon Services subsidiary. In September 2003, Amazon announced the formation of A9, a new venture aimed at developing a commercial search engine that focuses on e-commerce web sites. At the same time, Amazon launched an online sporting goods store, offering 3,000 different brand names. Amazon.com ended 2006 with annual sales over $10.7 billion. Amazon had become America's largest online retailer, with nearly three times the sales of is nearest rival.
The success of Amazon has allowed Bezos to explore his lifelong interest in space travel. In 2004, he founded an aerospace company, Blue Origin, to develop new technology for spaceflight, with the ultimate goal of establishing an enduring human presence beyond the Earth. From its 26-acre research campus outside Seattle and a private rocket launching facility in West Texas, Blue Origin is testing New Shepard, a multi-passenger rocket-propelled vehicle designed travel to and from suborbital space at competitive prices. New Shepard will allow researchers to conduct more frequent experiments in a microgravity environment, as well as providing the general public with an opportunity to experience spaceflight. In its mission statement, Blue Origin identifies its ultimate goal as the establishment of an enduring human presence in outer space.
As exciting as that prospect may be, Jeff Bezos has had more terrestrial innovations on his mind as well. In 2007, Amazon introduced a handheld electronic reading device -- the Kindle. The device used "E Ink" technology to render text in a print-like appearance,
without the eyestrain associated with television and computer screens. The font size was adjustable for further ease in reading, and unlike earlier electronic reading devices, the Kindle incorporated wireless Internet connectivity, enabling the reader to purchase, download and read complete books and other documents anywhere, anytime. Hundreds of books can be stored on the Kindle at a time.
In the year the Kindle was introduced, Amazon's sales increased by 38 percent, and its profits more than doubled. In 2010, Amazon signed a controversial deal with The Wylie Agency, in which Wylie gave Amazon the digital rights to the works of many of the authors it represents, bypassing the original publishers altogether. By mid-2010, Kindle and e-book sales had reached $2.38 billion, and Amazon's sales of e-books topped its sales in hardcover. With book sales increasing by 200 percent a year, Bezos predicted that
e-books would overtake paperbacks and become the company's bestselling format within a year.
With the introduction of the Kindle, Amazon quickly captured 95 percent of the U.S. market for books in electronic form -- e-books. The first major challenge to the Kindle's supremacy in the e-book market came in 2010, when Apple introduced its iPad tablet computer, which was also designed for use as an electronic reading device. Bezos responded aggressively, cutting the Kindle's retail price and adding new features.
In 2011, Amazon introduced the Kindle Fire, a mini tablet computer with a color touch screen, to compete directly with the iPad. Amazon also took the handheld e-reader to a new level of comfort and convenience with the Kindle Paperwhite, an illuminated touchscreen device that can be read comfortably in a darkened room. A Whispersync feature enables users with multiple devices to mark their place in one book and resume reading at the same place in another. Having already revolutionized the way the world buys books, Jeff Bezos is now transforming the way we read them as well.
Amazon now boasts a host of diversified subsidiaries, including AmazonLocal and LivingSocial. Business customers can employ Amazon's online infrastructure technology through Amazon Web Services. In 2012, Bezos launched Amazon Studios, crowdsourcing the development of feature films and television shows. Amazon plans to present the television programs through an online video service, the feature films in brick-and-mortar theaters. The company's share price increased 30 percent in 2012 alone, tenfold over the previous six-year period. Fortune magazine named Bezos its 2012 "Businessperson of the Year."
In 2013, Jeff Bezos purchased the newspaper division of The Washington Post Company for $250 million. In addition to The Washington Post, the leading daily newspaper in the nation's capital, the sale included a number of smaller local newspapers in the Washington, D.C. area. Bezos made the purchase as principal of a privately held company, rather than on behalf of Amazon. It was the first time in 80 years that the newspaper had passed from the control of the Graham family, descendants of Eugene Meyer, who bought the paper in 1933. At the time of the sale, Bezos expressed respect and admiration for the Graham family's stewardship of the Post and announced his intention to retain the existing management.
Jeff and Mackenzie Bezos continue to live in the Seattle area, and are increasingly concerned with philanthropic activities. "Giving away money takes as much attention as building a successful company," Jeff Bezos has said.
SWOT Analysis Amazon
Amazon is a profitable organization. In 2005 profits for the three months to June dipped 32% to $52m (£29.9m) from $76m in the same period in 2004. Sales jumped 26% to $1.75bn. Until recent years Amazon was experiencing large losses, due to its huge initial set up costs. The recent dip is due to promotions that have offered reduced delivery costs to consumers. This SWOT analysis is about Amazon.
Opportunities.
The company is now increasingly cashing in on its credentials as an online retail pioneer by selling its expertise to major store groups. For example, British retailer Marks and Spencer announced a joint venture with Amazon to sell its products and service online. Other recent collaborations have been with Target, Toys-R-Us and the NBA. Amazon’s new Luxembourg-based division aims to provide tailored services to retailers as a technology service provider in Europe.
There are also opportunities for Amazon to build collaborations with the public sector. For example the company announced a deal with the British Library, London, in 2004. The benefit is that customers c an search for rare or antique books. The library’s catalogue of published works is now on the Amazon website, meaning it has details of more than 2.5m books on the site.
In 2004 Amazon moved into the Chinese market, by buying china’s biggest online retailer, Joyo.com . The deal was reported to be worth around $75m (£40m). Joyo.com has many similarities to its new owner, in that it retails books, movies, toys, and music at discounted prices.
Threats
All successful Internet businesses attract competition. Since Amazon sells the same or similar products as high street retailers and other online businesses, it may become more and more difficult to differentiate the brand from its competitors. Amazon does have it s brand. It also has a huge range of products. Otherwise, price competition could damage the business.
International competitors may also intrude upon Amazon as it expands. Those domestic (US-based) rivals unable to compete with Amazon in the US, may entrench overseas and
compete with them on foreign fronts. Joint ventures, strategic alliances and mergers could see Amazon losing its top position in some markets.
The products that Amazon sells tend to be bought as gifts, especially at Christmas. This means that there is an element of seasonality to the business. However, by trading in overseas markets in different cultures such seasonality may not be enduring.
Disclaimer:
This case study has been compiled from information freely available from public sources. It is merely intended to be used for educational purposes only.
Strengths.
Amazon is a profitable organization. In 2005 profits for the three months to June dipped 32% to $52m (£29.9m) from $76m in the same period in 2004. Sales jumped 26% to $1.75bn. Until recent years Amazon was experiencing large losses, due to its huge initial set up costs. The recent dip is due to promotions that have offered reduced delivery costs to consumers.
Customer Relationship Management (CRM) and Information Technology (IT) support Amazon’s business strategy. The company carefully records data on customer buyer behaviour. This enables them to offer to an individual specific items, or bundles of items, based upon preferences demonstrated through purchases or items visited.
Amazon is a huge global brand. It is recognisable for two main reasons. It was one of the original dotcoms, and over the last decade it has developed a customer base of around 30 million people. It was an early exploiter of online technologies for e-commerce, which made it one of the first online retailers. It has built on nits early successes with books, and now has product categories that include electronics, toys and games, DIY and more.
Weaknesses.
As Amazon adds new categories to its business, it risks damaging its brand. Amazon is the number one retailer for books. Toy-R-Us is the number one retailers for toys and games. Imagine if Toys-R-Us began to sell books. This would confuse its consumers and endanger its brands. In the same way, many of the new categories, for example automotive, may prove to be too confusing for customers.
The company may at some point need to reconsider its strategy of offering free shipping to customers. It is a fair strategy since one could visit a more local retailer, and pay no costs. However, it is rumoured that shipping costs could be up to $500m, and such a high figure would undoubtedly erode profits.
TECHNOLOGICAL ADVANCES
Since starting out as an online bookseller in 1998, Amazon.co.uk has expanded year on year and now offers customers more than 100 million items in over 30 product categories, ranging from health and beauty to sportswear and groceries.
The company's phenomenal growth is due in part to its technological innovation. From Amazon 1-Click, which dramatically speeds up the ordering process, to Recommendations, which determines customers' interests by examining their previous purchases and rated items, Amazon has been focused on making the online shopping experience as seamless as possible.
"Innovation is part of the Amazon DNA and over the past 15 years we have been constantly adding and refining technology that enhances and improves the experience of all our customers," said Xavier Garambois, Vice President of EU Retail at Amazon.
"Our focus has always been on providing services that help customers find the right product for them, and then ensuring that ordering and delivery is a fast and seamless process. There are now eight fulfilment centres across the UK where tens of millions of products are readily available to be delivered to customers via processes that not only rely on great technology but also teams of great people."
Garambois added that Amazon technology is also providing platforms for UK businesses and individuals to drive success.
"The Amazon Marketplace allows thousands of UK businesses to sell their products to customers across the UK and all over Europe whilst programmes like Kindle Direct Publishing are providing independent authors with a shop window of millions of readers." Recommendations
Amazon.co.uk determines customers' interests by examining the items they've purchased, items they've told Amazon they own, and items they've rated. Their activity is then compared with that of other customers on the site. Using this comparison, Amazon.co.uk is able to recommend other items that may interest them.
Reviews
Customers can submit written or video reviews for any product listed on Amazon.co.uk to help other customers make purchase decisions. Customers are encouraged to share their opinions, both favourable and unfavourable as Amazon.co.uk wants customers to get the information they need to make smart buying choices.
Amazon Wish List is a personalised list of all the things that customers would love to own from the Amazon.co.uk website. With Universal Wish List, customers can now add products from any website to their Amazon Wish List with one click. Friends and family are able to view the list and use it to purchase the perfect present.
Autorip
Amazon AutoRip gives customers free MP3 versions of CDs and vinyl music they purchase from Amazon. When customers purchase AutoRip CDs and vinyl, the MP3 versions are automatically added to their Cloud Player libraries where they are available, free of charge, for immediate playback or download.
Additionally, customers who have purchased AutoRip albums at any time since Amazon.co.uk first opened its Music Store in 1999 will find MP3 versions of those albums in their Cloud Player libraries - also automatically and for free. More than 350,000 albums, including titles from every major record label, are available for AutoRip, and more titles are added all the time - customers can just look for the AutoRip logo.
Kindle
Kindle is the bestselling e-reader family and this September, Amazon.co.uk launched the All New Paperwhite - the sixth generation of Kindle. The Kindle Fire family of tablets also launched in 2012 - the Kindle Fire and Kindle Fire HD 7", followed by the Kindle Fire HD 8.9" in 2013. Print on demand / disc on demand
To avoid keeping stocks high, less commonly requested items can be printed or made on demand. This process takes place at the fulfilment centre and takes just minutes to complete. Orders can then be processed as normal. The finished item looks almost identical to the original book / disc. Amazon Web Services
Amazon Web Services enables web developers to integrate Amazon.co.uk features and content into their websites. AWS provides start-up companies with low-cost, easy to use infrastructure needed to scale and grow any size business.
Amazon Cloud Drive
Amazon Cloud Drive lets customers securely store their digital files in the Amazon cloud and access them anywhere using the Cloud Drive desktop client or any web browser. Amazon
customers automatically start with 5GB of Cloud Drive storage for free, with additional storage available from £6 a year for 20 GB.
Amazon Cloud Drive is built on Amazon Web Services, so customers need not worry about losing their photo collection or important documents to a hard drive crash.
Random Stow
The storage of items in a randomised order at fulfilment centres to maximise the chance of multiple items on the same order being near each other. The fulfilment centre management system knows the location of every item and is able to work out the shortest travel distance to pick the orders.
The SLAM (Scan, Label, Apply, Manifest)
At the end of the packing process, packages move along conveyor belts to the SLAM where the package is weighed to ensure it is the anticipated weight (and that therefore the right items are inside). The SLAM also scans the barcode on the package and prints and adds an address label to the package.
This ensures customer confidentiality, as this is the first time that a customer's address is matched up with their package. The whole process takes less than 1 second per package.
Amazon Storyteller
Amazon Storyteller is a new application from Amazon Studios that lets you turn a movie script into a storyboard. You choose the backgrounds, characters, and props to visually tell a story. A successful storyboard can tell the full story of a script, or capture its essence in short form, like a trailer. The idea is to build an audience for your story and see how people respond to it.
Amazon Studios
Amazon Studios is the original movie and series production arm of Amazon. Amazon Studios is developing feature films and episodic series in a new way; one that's open to great ideas from creators - and audiences - around the world.
Kindle and Kindle Direct Publishing is revolutionising the books world by giving authors the opportunity to publish their books and earn a larger share of revenue with Amazon.co.uk's 70 per cent option. Many authors are using this as a way to get their books in the hands of readers across Europe.
Mechanical Turk
A crowdsourcing Internet marketplace that enables individuals or businesses (known as Requesters) to co-ordinate the use of human intelligence to perform tasks that computers are currently unable to do.
The Requesters are able to post tasks such as choosing the best among several photographs of a store-front, writing product descriptions, or identifying performers on music CDs. Workers (called Providers in Mechanical Turk's Terms of Service, or, more colloquially, Turkers) can then browse among existing tasks and complete them for a monetary payment set by the Requester.
Disclosure:
Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.
SOCIAL RESPONSIBILITIES OF COMPANY Corporate Social Responsibility At Amazon Business Essay
This report has developed a concise overview of the CSR practices at Amazon.com, the largest online retailer in the world. Through the use of several issues and the assessment of these issues on the basis of CSR theories the report has shed a different perspective on the company's practices.
The following issues have been discussed in the report:
In the US Amazon is actively seeking to avoid sales tax by creating legal business structures such as shell companies and affiliate companies. Although it is not illegal the company is actively using a loophole in legislation and thereby gaining a competitive advantage over smaller companies. There have been several reports on harsh working condition in the warehouses and customer service centers of Amazon. In addition there have been and anti-unionization efforts by Amazon to prevent employees from becoming powerful.
In Germany the company has been taking public subsidies several times for re-hiring the same temporary employees.
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These issues have been assessed at end of each chapter and have tried to develop an understanding of the behaviour of the company. Although the company was not acting illegally it is willfully searching for methods to generate or save money. It can be said that the company has a reactive behaviour towards CSR.
In chapter 5 Carroll's Pyramids has been applied to all the business activities of Amazon. With regards to the bottom of the pyramid the company is acting moderately well, however when moving up the pyramid their practices becomes less ethical. For the top of the pyramid, philanthropy, it can be said that the company is not making any efforts in that area.
The main recommendations for Amazon with regards to CSR are: Amazon should become a more proactive company rather than reactive, being more open about their CSR and sustainability performance would make the company more transparent and Amazon should look to restore the balance between the 3P's, people planet profit.
As a final section the lessons learned have been added to the report. In this section I explain the importance of teaching CSR to business students. Educating business students on CSR will help to create a better world.
Contents Introduction
The purpose of this report is to provide the reader with an overview of the CSR practices at Amazon.com, hereafter Amazon, the world largest online retailer. In addition to these activities Amazon is also engaged in developing consumer electronics e.g. the Kindle e-reader and Kindle Fire, and is one of the largest providers of cloud computing services.
This report will mainly discuss the issues that are perceived to be bad or not socially responsible. The issues used in the report are perceived bad in the opinion of the media and the public.
In order to place the CSR practices into perspective the ethical theories deontological, virtue ethics and contractarianism will be used. In addition Carroll`s Four-Part definition of CSR will be used to develop a further understanding of the issues.
After carefully reviewing the different perspectives on the amazon case the final part of the report will conclude and make some final recommendations to improve their CSR practices. At last a personal note is made about the CSR lessons learned.
1. Methodology
Developing this report has required some extensive research into the topic of Corporate Social Responsibility and into Amazon.com. In order to write a report that would discuss the general CSR practices at Amazon it was important to develop a better understanding of the company and its business operations.
Secondary research
The sole method of research has been secondary research into various sources. First of all the research focused on developing a better understanding of CSR. Therefore study books were used as well as the lecture notes from the CSR classes from Mrs. Murphy. Once a solid understanding of CSR was developed the research on Amazon was started.
Finding information on the CSR practices of the company were rather difficult as the company does not publish a CSR report or a sustainability report. The primary sources of information were therefore books, magazines and websites. Online search results were extremely difficult as in many search engines the domain authority of Amazon is higher as the websites that report on their CSR practices. For many search queries the Amazon website would fill the first pages with products offers instead of the websites that report on the company.
A complete list of the used sources can be found in the Bibliography. 2. Sales Taxes
Over the past decade Amazon has been accused of tax avoiding by only charging sales tax for customers in only eight American states, out of the 45 states with a statewide sales tax. From a European perspective it is important to understand the differences in tax payments and tax collection in the United States vs. Europe.
The European system forces companies to collect value added taxes which have to be paid to the countries government in which the company operates. In comparison the American system uses a method of sales taxes which can vary between 1% and 10% according to the state. However in the Quill Corp. v. North Dakota Ruling (1991) it was ordered that states cannot collect sales tax if the
company has no physical presence (nexus) in the state. What could not be foreseen in this case was the growth and the impact of online sales which enabled companies to easily sell goods without a presence in a state. Making use of the loophole in legislation companies are enabled to sell goods without the additional sales tax, and thereby gaining a competitive advantage over their competitors.
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One of the many companies making use of this loophole in legislation is Amazon. The controversy lies in the fact that the company actively seeks to avoid the tax. Amazon is operating in all of the 50 states, of which 45 have state-wide sales tax, however it only pays sales tax in 5 states in which it has a clear presence (http://www.amiba.net/resources/news-archive/amazon-nexus-subsidiaries). By creating subsidiaries, affiliates and shell companies Amazon avoids presence in most of the other states.
In addition to actively avoiding sales taxes the company is also actively lobbying against national legislation that would help states to collect sales tax. In 2010 the 'Main Street Fairness Act' which aimed to find a solution for the sales tax problem, failed in Congress. Noteworthy is that the members of the Congress met four times with Amazon lobbyists. Amazon spent $610,000 on lobbying in 2010 in addition the company spent over $200,000 to support the elections.
As more and more states are urging Amazon to pay sales tax the company is often able to overcome these threats. Threatening to cut loose with local partners and affiliates or to remove their facilities to another state helps them overcome the threats from state governments.
Assessment from an Deontology point of view
To assess the issue with the sales taxes at Amazon the deontologist point of view will be used. This theory emphasizes that one has duties & rights to behave in a certain manner. It is often referred to as the call of duty. A positive point of view would be the duty to do something whereas the negative point of view is the duties not do something.
The difficulty of this issue's is hidden in the fact that the company is using loopholes in the legislation but by doing so it creates a competitive advantage over companies that operate in the state in which Amazon does not pay any sales tax.
As the issue mentioned companies that are trading inter-state do not have to pay sales taxes if the company has no physical presence in the state. By creating shell companies, affiliate networks and
subsidiaries Amazon is avoiding the sales tax. One of the purposes of a tax is to finance government projects such as the development of roads, airport and other infrastructure. Through these legal constructions Amazon is able to avoid the sales tax but is still benefiting from the benefits for which their competitors have to pay.
Although the operations of Amazon are completely legal the public opinion is that the legislation surrounding this topic is old-fashioned and should be updated as soon as possible. Furthermore it is viewed that the companies have a duty to pay taxes. However the deontology point of view also acknowledges that there are limitations to what a duty demands. Therefore it is rather difficult to judge whether the sales tax issue is bad or normal behaviour
3. Work conditions and anti-unionization
effortshttp://www.thebiographychannel.co.uk/biographies/jeff-bezos/mainPhoto/jeffbezos225.jpg.html
Amazon employs over 51,000 people around the world. Their employees are referred to as Amazonians and are employed at corporate offices, fulfilment centres, customer service centres and software development centres. These facilities are located across North America, Europe and Asia (www.amazon.com/gp/jobs)
Jeff Bezos Ceo of Amazon The following section was taken from the letter to the shareholders written by Jeff Bezos (2011) the CEO and founder of Amazon.
Amazonians are leaning into the future, with radical and transformational innovations that create value for thousands of authors, entrepreneurs, and developers. Invention has become second nature at Amazon, and in my view the team's pace of innovation is even accelerating - I can assure you it's very energizing. I'm extremely proud of the whole team, and feel lucky to have a front row seat.Â
-This section of the letter emphasizes the value of the employees to the company. It shows the companies understanding of the importance of the employees for the development of the company. Although this letter in general is moderately positive about the Amazonians there are labor issues at Amazon that stay unaddressed.
Being a public company like Amazon means that shareholders are always pressing for price efficiency and reducing costs. In February 2000 Bezos promised to "drive towards profitability in each and every business we're in" (Saunders, 2002). Not much later employees at the customer service and warehouse departments started to complain about long hours, 50 to 70 hours weeks
during the holiday seasons, no time of during holidays, changes in shift without warning and poor management which does not acknowledge the issues.
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As a response to the deteriorated working standards a group called "Day2@Amazon.com/WashTech" started a campaign to unionize the complaining employees, starting in Seattle. An immediate response from Amazon was to start an anti-union campaign in the US. Not long after both parties started their campaigns Amazon laid off 1300 workers of which 850 in Seattle. Ever since the attempt to unionize in Seattle Amazon has expanded to states that have regulations that make it more difficult for employees to join a labor union.
Similar reports have been made in the United Kingdom in 2001 where warehouse employees in Milton Keynes tried to unionize themselves. Similar to the US - Seattle case employees complained about the harsh working conditions in the warehouses. In a response to the attempts of employees to unionizing themselves Amazon hired a 'union-busting' firm called the Burke Group. Their aggressive tactics scared employees from unionizing and while doing so 4 former union supporters claim they were fired for their activism. (http://www.word-power.co.uk/viewPlatform.php?id=23)
Similar reports about the harsh working conditions in the UK have been made in 2008 and 2010. In the newspapers employees have complained about night shifts that were cut short in the middle of the night and managers threatening to fire employees if they call in sick during 7 days a week shifts (The Herald Scotland, 13 Dec. 2010).
Assessment from an Utilitarian point of view
To assess the issue with work conditions and anti-unionization efforts at Amazon the Utilitarian point of view will be used. This theory suggests that the act that produces the greatest amount of good over bad for everyone affected is the right act.
To debate this issue it is important to identify the stakeholders in this matter. The most important stakeholders in this issue are: the employees of Amazon, the company Amazon e.g. the CEO and the company's shareholders.
First of all the employees of Amazon that are working in the warehouses and the customer services departments have experienced the consequences of the bad working conditions and the anti-unionization efforts. For them this situation has not produced any good. Efforts to improve
their working conditions have been thwarted by the management of the company. In the US the right to unionize is far less developed as in Europe and the barriers to create a union are therefore lower in Europe. However the contrary has been true as the company has successfully prevented the employees from creating a union in the UK and diverted the influence German unions (Borstel, 2011).
The second stakeholder in this issue is Amazon and the management of the company. Having clearly said that they wanted to create profitability in every business they are operating the management has clearly placed the importance of profit over their employees. Generating profits and thereby increasing the stock price has been more important. The company's point of view also emphasizes that by being profitable the company is able to create permanent jobs.
The final stakeholder(s) in this matter are the shareholders of Amazon stock. This group has the sole purpose of generating a profit from their stock portfolio. It is in their interest that the price of Amazon stock grows year over year as the company has never paid any dividends to its shareholders (Amazon, 2011). Their point of view is that as long as the customers of the company are satisfied and the company is being profitable this creates the greatest amount of good.
From a deontology point of view Amazon has considered that there current actions create the biggest happiness. The management has a two-fold argument to explain their behavior. By creating profits the company is able to create permanent jobs in the near future. This enables them to employ more people in the long term. The second argument argues that by creating profits their shareholder will benefit more which will help them to invest into other companies and by doing so creating more jobs and prosperity. These two arguments outweigh the harsh working conditions at Amazon according to the management.
4. Taking public subsidies
In chapter 3. "Work conditions and anti-unionization efforts" the importance of cheap labour at Amazon was already emphasized. An article of the German magazine Der Spiegel (Janko Tietz, 2011, p. 83) brought the news that Amazon is systematically cashing in on German job creation subsides.
During the Christmas season Amazon has to hire extra employees to deal with the increase in orders during the holiday season. At the biggest German warehouse in Leipzig it has to recruit an additional 4500 workers.
In order to stimulate companies to hire unemployed people German government has set subsidies to cover the cost of the first two training weeks of a newly hired person. During these two weeks the employer can decide whether the applicant will be hired. This subsidy was introduced to aid the re-entry of unemployed workers by making it financially more interesting for companies. In practice this means that Amazon only has to pay for 4 weeks instead of the full 6 weeks. After these 6 weeks most of the temporary workers are not hired as the busy holiday season is over. Although Amazon is hiring workers, and thereby benefiting from the subsidy, the company is also re-hiring workers after their first contract is finished. This enables the company to apply for the subsidy for a second time without the need to actually train the newly hired employees.
The German local governments are aware of these business practices and are disappointed by the company. However Amazon is not the only company exploiting the subsidy as this practice is not illegal. Local authorities have acknowledged that there is some vague language in the legislation which enables companies like Amazon to benefit from.
Amazon has responded by the allegations on their website by stating that they have turned several hundred temporary contracts into permanent contracts at their Bad Hersfeld site. In addition it states that creating permanent jobs is the general long-term goal, but only when their business growth allows it.
In the meantime estimates are that Amazon is making two or threefold earnings through these subsidies.
Assessment from an Virtue Ethic point of view
To assess the case of taking public subsidies at amazon the virtue ethics point of view will be used. This theory emphasizes the role one's character and the virtues that one embodies. One view is that those virtues are identified in terms of benefit and harm.
The behaviour of Amazon displayed in both this case as well as in the work conditions case suggests that the traits the company is showing is benefiting them and harms those who are involved.
In the case of the subsidies issue the company showed their bad traits by wilfully exploiting the loophole in the legislation. Although the initial step of hiring people and applying for the subsidy would be considered good behaviour, the second step would consider it bad behaviour. The process of re-hiring in order to apply for subsidies a second time harms both the employee as well
as the tax payer. The employee has not been given a contract in the first place as Amazon wanted to benefit from the subsidy, and thereby leaving the employee in uncertainty and without a job. The second harmed group, the tax payer, could argue that their tax money has been spent several times for the same purpose whereas it could have been used for other purposes.
Despite the fact that there are two groups being harmed by this practice Amazon would like to emphasize the importance of temporary workers. This group of employees helps them to maintain a high service level during the holiday season which enables them to make a profit. In the long term these profits can create permanent jobs for those who were initially hired as temporary workers.
5. Carroll`s Four-Part Definition of CSR
While CSR is constantly changing it is important to use and theoretical framework to asses a company's commitment towards CSR. This section of the report will use Carroll's four-part definition to analyze the commitment of Amazon to CSR.
In the work of Carroll (1979) he developed a theoretical frame work which could be used to assess a company's commitment towards CSR. To use this model it is important to understand that the (public) expectations placed on companies evolve over time and can be country and culture depended. Therefore CSR is a continuous process between corporate behavior and the expectations of society.
The Four-Part theory was developed in 1979 and later developed into a pyramid model (Carroll, 1991). The pyramid is displayed below and should be interpreted in order of importance from the bottom upwards.
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Economic responsibilities - As a foundation companies are responsible to produce goods and services in a profitable matter. In addition companies create jobs and create career opportunities. All other functions are underpinned by the economic role of business in society.
Legal responsibilities - Although companies have their economical fundamental role they are expected to comply with the laws and regulations of the country they operate in. The legal
expectations apply to companies, as juristic entities that can act as persons, and the employees they employ regardless of their responsibility.
Ethical responsibilities - Companies are also expected to comply with the ethical norms of a society. Because these are normally not written in law and are therefore not a legal requirement it is difficult for companies to behave and follow it. However there is an inherent link between legal and ethical emergence of new laws. It can be expected that current ethics will be used in future legislation.
Philanthropic responsibilities - As the top of the pyramid business might engage in activities that go beyond what is expected of them. Activities include: volunteer work, sponsorship of philanthropic institutes and donations to non-profit organizations.
Assessment from Carroll's pyramid of CSR
While assessing Amazon it has become clear that the main focus of the company is to be as profitable as possible for their shareholders. As Bezos (2000) stated "drive toward profitability in each and every business we're in" it has been obvious that the company is focused on profitability. As seen in chapter 3. "Work conditions and anti-unionization efforts" Amazon currently employs over 51,000 workers around the world. The same chapter also highlighted some worrying issues with regards to working conditions and the anti-unionization efforts. Nonetheless it is noteworthy that the amount of jobs the young company has created is impressive.
So far this report has discussed two issues in which Amazon was involved in legal controversies although their business practices in Germany were completely legal the sales tax issue in the United States is more controversial and by some marked as illegal. The same could be said of the anti-unionization efforts of the company in which some employees claim to be illegally fired (Gall, 2004). In the case of the sales tax Amazon has been actively seeking methods to avoid this tax and even filed law suits to object new legislation that would force them to pay sales tax (Hansell, 2008). For the legal assessment of Amazon it could be said that they are actively seeking for loopholes or vague interpretations of legislation but are still operating within the legal boundaries.
As far as the ethical behavior of amazon there are many small issues that are reported during the past decade. An old practice of online retailers that has been used in the early part of last decade, and is being reintroduced by some companies, is different prices based upon one's zip code or country. Some customers reported that the prices of products fluctuated depending on their
location or entered zip code (Ramasastry, 2005). Bezos responded by calling the differences in price a mistake and that it would never happen again.
Another broader ethical issue involves the review section of Amazon's product pages. For many internet users the reviews on the company's website are their primary destination to gather information to make a buying decision (Business Wire, 2010). Amazon has been accused of removing reviews that would harm sales.
In addition the harsh working conditions that were mentioned by Amazon warehouse employees or taking public subsidy's multiple times make it hard to claim that Amazon is operating in a fully ethical manner.
With regards to philanthropy the company is not known for its generosity. In respect to other tech companies in the Seattle area Amazon is one of the few that does not do charity giving. The only record of Amazon donating money has been small grants of about $25,000 towards 80 non-profit writers groups (Martinez and Heim, 2012). Critics noted that these donations are in the interest of Amazon as the largest online book seller. They emphasize that Amazon would benefit from these small grants as it would generate future profits.
Besides the small grants there are no other records of the company being active in philanthropy which is highly remarkable for a company with an operating income of $862 million and a total equity of over $8 billion according to the company's annual report of 2011.
Conclusion on Carroll's pyramid of CSR applied to Amazon
Applying the pyramid developed by Carroll to Amazon the company does not come any further than the base of the pyramid. Although it is generating profits and is an economical stable company and generating thousands of jobs around the world there are some issues surrounding the working conditions of warehouse and customer service employees.
When moving up the pyramid the controversies and issues become more frequent. For the legal part it is debatable whether the company is operating fully legally. The issues with regards to ethics are somewhat worrying as they are more frequent and show a reactive CSR behaviour rather than a proactive behaviour. With respect to the top of the pyramid, philanthropy, it can be concluded that the company makes only very small efforts which are close to no efforts.
This report has discussed three issues regarding bad business practices at Amazon. Although the aim of the report was to develop an overview of the CSR practices at Amazon it proved to be difficult to find example of active CSR behaviour. In order to provide an overview it has been chosen to assess all the issues from different points of view. By doing so the report has tried to develop and understanding of the reasons behind the business practices at Amazon.
In general it can be said that the behaviour discussed in this report can be seen as reactive. In none of the examples used Amazon is actively seeking for improvements in its operations. The only active behaviour the company has shown is in finding loopholes that can be used to save money. It can be concluded that the bad behaviour of Amazon outweighs their normal behaviour. However if the company would have been more open about its CSR practices this report could have been more positive.
Recommendations
On the basis of this report there are several recommendations to be made about the business practices of Amazon on how it could perform better on CSR.
In general the company is having a reactive strategy in which they follow other examples or wait until they are legally supposed to. Becoming a more pro-active company whit regards to CSR would be the most important improvement in their CSR strategy
Throughout the report it has appeared that from the bottom line: people planet profit (3P's) for Amazon only profit can be applied. Many of their bad CSR behaviour can be linked to their aim to be (highly) profitable. Getting the balance right between the three elements of the bottom line would be a great improvement.
As mentioned in the letter of the CEO Jeff Bezos the employees are important however it does not always act by those words as could be seen in chapter 3. Amazon should not only be good for its corporate office employees but also for those working in the customer service department and warehouses. Improving the working conditions would help restoring the balance between the 3P's. In the report there have been two cases in which Amazon has been actively seeking for loopholes in legislation. The assessment showed that although it is legal the behaviour is to be considered bad. Therefore the company should focus less on exploiting those loopholes.
