Executive summary
Amazon is a globally renowned and the most successful e-commerce retailer. The Seattle-based company was founded in 1994 and commenced operating as an online repository for books and continuously expanded to furniture, electronics, software, apparel, and jewelry. Amazon uses a hybrid money-making model, with some of its incomes coming from the commission levied on businesses selling their products on its platform. However, a significant proportion of its earnings are realized from the cloud services offered to other organizations, enterprises, and agencies. Amazon is an innovative business whose emergence and success can be attributed to the knowledge economy. Like any other entity, the company is impacted by many factors, including macroeconomic trends, demographics, socioeconomic shifts, and technological advancements. Political stability, governmental support, and an increased focus on cybersecurity by governments are fundamental political factors creating opportunities for the firm. Similarly, rapid technological advances, improving the efficiency of information communication technology, rising cybercrime, and internet penetration are among the technological factors affecting the business. Amazon can enhance its performance and profitability by exploiting the opportunities provided by the sharing economy and increasing the number of physical outlets.
Introduction
Amazon is a leading American multinational online marketplace and the world’s most valuable retailer by market capitalization. The technology company commenced its operations as a web-based marketplace for books and eventually diversified its business scope to such commodities as apparel, food, furniture, jewelry, software, and electronics. At inception, the founder, Jeff Bezos, envisioned building a virtual shopping place, an opportunity presented by the emerging and vastly growing internet phenomenon. Over the years, Amazon has extensively disrupted well-established sectors and industries through progressive and creative technological innovations. Consequently, the company’s products have dominated or ranked favorably in the respective segment markets, including artificial intelligence, cloud computing, and live streaming services. From this perspective, Amazon operates a platform-based model within which various business units are housed. Notably, the organization’s successes and growth are attributable to the digital revolution, technological advancements, and other socioeconomic trends, including expanding preference for online shopping. Although the coronavirus pandemic devastated many businesses worldwide, Amazon benefitted from the crisis as transactions on web-based marketplaces surged.
Products and services offered by amazon
As the world’s largest and most ubiquitous online marketplace, Amazon’s services and products portfolios are highly diversified. Although it commenced operating as an online bookstore, the company has continuously extended its offerings to include such commodities as clothing, electronics, food, music, and jewelry. According to Sadq, Nuraddin, and Hama (2018), Amazon has steadfastly pursued the strategy of being the earth’s biggest selection and the provider of the broadest assortment of goods and services. As the organization became more technologically driven, it expanded its scope and ventured into other emerging markets to provide such products as artificial intelligence, cloud computing, and the leading e-book reader, the Amazon Kindle. Amazon’s cloud computing is a market leader in providing comprehensive services, including packaged software as a service (SaaS), platform as a service (PaaS), and infrastructure as a service (IaaS) utility (Alqahtani and Gull, 2018). Other notable products offered by the giant retailer include the Amazon Echo brand of smart speakers, Kindle Fire, digital media players like Fire TV, and operating systems such as the Fire OS.
Amazon’s market share
Amazon commands a substantial share of the global e-commerce retail market and is poised to solidify its dominance as the popularity of online shopping surges. In 2020, statistics indicated that Amazon’s online market share had increased yearly, with the company controlling 47% of the segment in 2020 (Chevalier, 2021). The innovative omnichannel retailing approach, integrated artificial intelligence, seamless customer experience, and numerous competitively priced products and services have contributed to the company’s growth to become the largest web-based business. Additionally, Amazon Web Services (AWS) is emerging as one of the company’s most robust and promising business segments. In 2020’s third quarter, AWS was the leading cloud infrastructure service provider, accounting for an estimated 32% of the global cloud infrastructure market (Mlitz, 2021). Therefore, Amazon commands a substantial market share in the cloud computing and e-commerce segments.
Pre and post-pandemic performance
Amazon has consistently posted impressive figures in its financial statements, particularly the steady growth in its sales revenues, gross, and net profit margins. Although the company continuously improved its fiscal status year-on-year, a comparative assessment of its pre and post-pandemic performance indicates an explosive growth during the period following the coronavirus outbreak. For instance, Amazon’s sales volume increased from $177.87 billion in 2017 to $232.89 billion in 2018, representing a 30.93% growth. In the subsequent year, the company’s revenues expanded further by 20.45% to hit the $280.52 billion mark. However, in 2020, Amazon registered a $106 billion surge in sales, a 38% growth translating to a spike of 84% in net profit (Kohan, 2021). Notably, as the coronavirus crisis accelerated peoples’ transition to online shopping, Amazon became the default retailer and reported unprecedented order volumes, catapulting the company’s sales volumes to record levels. Therefore, Amazon’s profit and loss accounts demonstrated steady year-on-year growth and a remarkable improvement before and during the coronavirus pandemic, respectively.
Amazon’s business model and how it makes money
Amazon operates a diversified e-commerce platform-based model encompassing numerous business units. Although the company is perceived mainly as an online store, it has diversified its activities through acquisitions and venturing into new markets, creating a vast portfolio of products, services, and revenue streams. These channels include the online marketplace on which products are sold, advertising, cloud, and subscription services. Notably, web-based retail operations are the primary source of the company’s earnings. However, AWS is the leading contributor to the firm’s operating income (Cohan, 2020). Although Amazon makes most of its revenues from the e-commerce segment, it has high operational costs leading to thin profit margins. Therefore, Amazon earns its revenues from the commissions charged on vendors selling their products through its platform, advertisements, subscriptions, and transaction fees.
Socioeconomic trends affecting amazon’s business model
With consumer behaviors and needs evolving constantly, it is critical for businesses to comprehensively understand how social developments and transformations are impacting consumer expectations. Whether shifting demographics, growth in social connectivity, or emerging preferences, tracking socioeconomic trends is integral in developing a sound and responsive customer service strategy (Wali and Nwokah, 2018). This implies that a firm’s ability to stay competitive primarily depends on its sensitivity and responsiveness to the changes occurring in the society and economy in which it operates. The most prominent socioeconomic factors impacting Amazon’s e-commerce business include the ubiquity of internet access, the emergence of mobile-friendly online shopping platforms, and technological advancements. Melbha (2018) contends that the unprecedented increase in the use of technology in day-to-day life, complex networks, and connections allows consumers to place seamlessly access desired services. Moreover, these advances are created revolutionary connections between the economy and society, arousing the need for consumers to keep pace with the changes.
Additionally, a steady rise in consumers’ disposable incomes, an aging society, and the growth of a sharing economy are prevailing trends directly impacting Amazon’s business model. For instance, the changing social landscape is shifting people’s focus to renting or paying for the usage instead of owning due to the former’s cost-effectiveness (Ockwell et al., 2019). This explains the growing popularity of AWS through which individuals, organizations, and businesses access and utilize applications on a pay-as-you-go basis. Similarly, an aging global population is enjoying the ever-improving convenience of e-commerce, wide assortment of products, ability to compare products, and even exercise greater consumer assertiveness than in-person shopping. According to Bezirgani and Lachapelle (2021), commercial enterprises can capitalize on the burgeoning opportunities presented by an elderly population, particularly within the scope of web-based shopping. Therefore, rising net earnings, advancement in age, internet ubiquity, and the proliferation of sharing economy are various socioeconomic trends impacting Amazon’s business model.
Literature review on knowledge economy and drivers of economic change
Knowledge economy and solow’s model
Traditionally, natural resources and physical inputs were the foundations on which economic systems were built. However, the accelerated expansion of knowledge and the rapid reliance on automation are transforming the economic models of the developed world to become more dependent on skills and intellectual capital. Hippe and Fouquet (2018) posit that many advanced economies have increasingly departed from conventional economic activities and adopted a knowledge-intensive approach driven by information, innovation, and technology. Consequently, human expertise and skills sets have become invaluable business products and productive assets to be sold and yield returns. In this regard, these economies are anchored on the generation and subsequent exploitation of knowledge to develop a new economic value facilitated by innovation and information communication systems (Sira et al., 2020). The implication of this phenomenon is that industries and enterprises are emerging, with their most valuable assets being such intangible assets as processes and proprietary software contrary to the agrarian and industrial economies.
The arrival of the Information Age and the boom in digital technological advancements have fueled the explosive growth and transition to the knowledge economy. Today, tech-based companies like Amazon are the propelling forces behind the United States economy. Notably, the value of these entities is premised on their extensive expertise and knowledge assets as opposed to lands and factories, which characterized the agrarian and industrial economies. From this perspective, knowledge-based economies are driven by advances in technology, which facilitates information pooling and sharing, and the subsequent innovation and creation of new commodities and services. Khan (2016) asserts that the increased diffusion of information communication technology (ICT), particularly the internet, has created an opportunity within supply chain management and even provided access to global markets. Therefore, enterprises such as Amazon utilized their expertise and knowledge to innovate and create web-based marketplaces by using the existing ICT infrastructure and the available data, such as the ever-increasing number of internet users.
In the United States, brick-and-mortar retail businesses have been undergoing tremendous evolution since the arrival of e-marketplaces. Although the phenomenon of e-commerce is relatively new, Kim and Ammeter (2018) contend that changing consumer demands, improving the online shopping experience, and customer-centric interfaces have increased people’s reliance on making web-based purchases. For instance, the e-commerce sales in the United States grew by 214% from 2006 to 2005, highlighting the progressive transformation of buying behaviors (Kim and Ammeter, 2018). Ferrera and Kessedjian (2019) corroborate this perspective and assert that the internet and digital technology enabled the radical acceleration of the popularity of web-based marketplaces. Notably, as global economies underwent extensive digitization within the last two decades, a phenomenon corresponding with the growth in online purchasing behaviors. Ferrera and Kessedjan (2019) argue that these occurrences provided unprecedented possibilities to consumers, including enhancing access to global, local, and regional markets, greater customer assertiveness, and a broader assortment of products and services. Therefore, the successes registered by such e-commerce enterprises as Amazon can be attributed to the technological advances of the last two decades as direct outcomes of the growth of knowledge economies.
The advent and spread of e-commerce result from innovation and rapid technological advancements, as demonstrated by the increased reliance on computerization. In this regard, the resultant long-run changes in output levels within an economy can be linked to the technology revolution, which created new products based on human intellect. Notably, Solow’s Model explains the growth and proliferation of e-commerce to the widespread accumulation of specialized skills and knowledge, particularly extreme computer literacy. According to Zhao (2019), technological progresses exogenously change the relationship between inputs, such as labor and capital, and the output of commodities and services. The implication of the alteration applied to the two components is intensive and sustained growth. Additionally, continuous innovations and knowledge advancements occurring in the ICT realm, including emerging concepts such as artificial intelligence, big data analytics, and algorithms, continue to create and expand opportunities in modern economies. In this regard, e-commerce enterprises such as Amazon are continuously venturing into new frontiers by developing innovative products and services based purely on the existing ICT infrastructure.
Over the years, e-commerce has consistently revolutionized the retail market segment, upending established brick-and-mortar brands, while others have been compelled to create an online presence. Tolstoy et al. (2021) note that the digital transitioning and the significance of online shopping are outstandingly pronounced in this industry. Such digital establishment modes as websites have progressively replaced or supplemented physical installations such as stores and outlets. In the United States, the value and number of transactions conducted in online marketplaces have been steadily rising and are expected to grow exponentially in the coming years. According to Shen (2020), 90% of large firms, 60% of small businesses, and 80% of medium-sized enterprises in the US were already operating web-based markets. Notably, this exponential growth can be attributed to various enabling factors, including supportive macroeconomic dimensions, demographic and socioeconomic shifts, and technological advancements.
Drivers of economic change affecting and challenging the business
Economic changes are shifts within the structure of a country’s systems, resulting in adjustments to cultures, societies, and lifestyles on a national or global scale. These alterations are triggered by various factors, including macroeconomic dimensions, technological advancements, and demographic and socioeconomic movements. The former encompasses such elements as inflation, interest rates, trends in employment, and national output. Similarly, technology issues such as the emergence of new knowledge, computer application, and other aspects of the digital environment direct influence the success or stagnation of e-commerce. The demographics and socioeconomic trends, including life expectancy, education level, and high incomes, are integral components in the e-commerce industry.
Macroeconomic dimensions
Macroeconomic dimensions are the specific aspects and characteristics of an economic system as a whole. It integrates trends in inflation, employment, national output, consumer spending, monetary, and fiscal policies. As a critical factor closely monitored by investors, businesses, and consumers, inflation directly influences the demand for goods and services offered in online marketplaces. Additionally, it triggers an increase in the cost of such inputs as internet, electricity, computer maintenance, and online advertising. However, an empirical study conducted in the US by Lv, Liu, and Xu (2019) demonstrated a bidirectional relationship between inflation and online retail marketplaces. This implies that although inflation generally results in the rise of commodity prices, e-commerce, as an efficient sales method, plays a pivotal role in suppressing the cost of commodities. In this regard, inflationary fluctuations have had minimal effect on impeding the expansion of web-based shopping.
Additionally, fluctuations in a country’s employment levels directly impact the demand for commodities and services. A steady expansion in the global labor markets over the years has been providing incomes to previously unemployed individuals, leading to an increase in demand and consumption (Paul et al., 2018). Brulle et al. (2019) argue that an upward trajectory in the number of working people dilates demand levels at the individual and household levels. This implies that there will be a recorded significant boost in the overall proportion of retail purchases, a considerable proportion of which will be made through such online platforms as Amazon. Conversely, a decline in employment levels minimizes the number of people with discretionary powers to make purchases. Moreover, the shrinking of the labor market will ultimately trigger a reduction in the demand for commodities demanded. For instance, Schmidt, Benke, and Pane-Farre (2021) posit that the emergence of Covid-19 resulted in massive layoffs, which eventually led to a drastic drop in purchasing frequency. Therefore, employment is a critical macroeconomic component which directly influences peoples’ demands, and subsequently, the e-commerce business.
Further, consumer spending across the various shopping outlets, including web-based purchases, generally follows the business patterns and cycles. During expansion, demand for commodities and services increases significantly in response to the rising employment and growth in personal incomes. In contrast, economic downturns are associated with reduced discretionary spending habits as joblessness rises and earnings decline. In this regard, the national output as a macroeconomic factor can accelerate or stifle demand in general, including the purchases conducted on online platforms. Consumer confidence due to a robust or steadily growing gross domestic product (GDP) and other economic indicators stimulates spending habits due to the positive outlook on the economy. From this perspective, improving a country’s national output will trigger a rise in the retail markets, some of which will be conducted online. Therefore, the national output directly influences demand and web-based marketplaces.
Demographic and socioeconomic shifts
Businesses are increasingly embracing e-commerce and escalating their online presence in response to the changing demographics socioeconomic trends. Such factors as an aging population and education levels globally are primarily attributable to the explosive growth in online transactions. A relatively educated and informed population is propelling the emerging trend of e-commerce (Maat and Knonings, 2018; Lim et al., 2016). Notably, individuals advanced in age seek to benefit from the convenience, efficiency, and an almost limitless shopping scope offered by web-based marketplaces. Computer literacy, expansion of internet coverage, and the desire for self-assertiveness are outstanding socioeconomic trends fostering the growth of e-commerce (Maat and Konings, 2018). Additionally, the interconnectivity of markets, the ability to compare prices and reviews, and the potential of seamlessly shopping further afield as supported by other auxiliary services such as global payment platforms have facilitated online shopping’s boom. Moreover, the global population is becoming more diverse, heterogeneous, and spending differently, with a particular propensity for technologically facilitated activities (Bucko, Kakalejcik, and Ferencova, 2018). Therefore, an aging, knowledgeable, and tech-savvy generation with unique needs has contributed to the rapid growth of online markets.
Further, rising income levels in the world as a demographic variable are creating a new segment of online shoppers and positively influencing the adoption of web-based marketplaces. Various studies have illustrated the high value and preference attached to convenience by affluent individuals. This explains the ongoing development of new services designed to enhance shoppers’ experience by online retailers. According to Maat and Konings (2018), the globally increasing income levels correlate with the growth of online shopping sales. Moreover, individuals with higher earnings are predisposed to making more frequent virtual purchases than those with low financial capabilities. From this perspective, the expansion of people’s incomes over the years has been an influential demographic and socioeconomic factor promoting the adoption of e-commerce, thereby stimulating its popularity.
Technological drivers of change
Technology is the principal fuel behind the evolution, growth, and existence of e-commerce. As ICT continues to advance and evolve, the popularity of online shopping is increasing. Notably, these progresses contribute to the continuous improvement of the effectiveness of web-based marketplaces, including enhancing seamless, economical, and efficient communication (Al-Tit, 2020). Additionally, these changes and innovations reinforce consumer confidence and security when making electronic payments to settle the financial dues for goods and services purchased through online platforms. Similarly, shoppers can enjoy borderless markets, compare prices, reviews, and quality, and ultimately order their desired items or services (Al-Tit, 2020). Notably, the wide assortment of commodities, supporting logistics such as order tracking, the proliferation of payment options, interactive interfaces, and applications have made purchasing relatively easy, transparent, and enjoyable.
Moreover, the explosion and subsequent adoption of the latest mobile capabilities are playing an integral role in stimulating the growth of e-commerce. Such technological advances as affordable computers, internet penetration, and an overall decline in communication costs and expenses associated with installing and maintaining digital infrastructure have enabled attracting people and connecting them to the virtual markets. From this perspective, the future of online marketplaces such as Amazon is poised to improve even further as the era of smartphones intensifies. Therefore, the development and widespread adoption of affordable and accessible technologies such as smartphones and computers, expansive internet penetration globally, and generally declining communication costs are playing a central role in the growth of e-commerce.
One of the most prominent factors challenging the growth and adoption of online shopping habits is the risk of fraud and deep-seated consumer behaviors and beliefs. Bezes (2016) and Ariffin, Mohan, and Goh (2018) argue that shoppers’ security concerns related to identity and credit card frauds have significantly hampered people from embracing the web-based marketplaces. Despite implementing robust protective mechanisms such as chargebacks and stringent personal identification requirements, individuals are still reluctant to accept online purchasing as a risk-free shopping mode. Moreover, people are still attached to the conventional in-store buying due to the psychological satisfaction of physically examining the product features and attributes before making the purchase decision (Vishag and Enrique, 2019). Therefore, increasing incidences of fraud of traditional consumer deep-rooted consumer practices present a significant challenge to e-commerce.
Impact of legal framework and political factors
Pestle analysis.
Role of political factors in the economic growth and development of amazon
In the US, the rapid growth and expansion of Amazon to the current online retail giant has been significantly influenced by conducive and enabling conditions. Progressive regulations and policies designed to enhance the safety and security of online shoppers created opportunities for Amazon and other e-commerce operators. For instance, the Payment Card Industry Data Security Standard (PCI-DSS) requirements, among other legal frameworks which addressed consumer concerns and guaranteed security, effectively encouraging more people to make online purchases. Consequently, the resultant growth registered in commercial and trade activities spurs economic development in the country. In this regard, an enabling legal framework has considerably contributed to the blossoming of e-commerce in general and provided opportunities for the thriving of organizations such as Amazon. A comparative assessment of the US and China’s laws governing online marketplaces indicates that the former has adopted a minimalist but progressive approach, which stimulates the industry’s growth (Shen, 2020). This implies that the protective customer-related regulatory guidelines governing e-commerce in the US have accelerated the growth of such online retailers as Amazon.
Additionally, the federal and state governments have been combating the threat of cybercrime through various legislative proposals. Notably, these authorities and other agencies recognize that criminal activities targeting online marketplaces and shoppers undermine the enormous benefits accruing from web-based commercial activities (Ajayi, 2016). In this regard, the proactive strategy adopted by the US in mitigating the occurrence, incidences, and severity of cyber-attacks has generally enhanced the safety and security of undertaking commercial activities through the internet. Consequently, such organizations as Amazon have benefitted from the array of these deliberative policies, ultimately influencing their expansion and growth. Similarly, the stringent product regulations and associated laws seeking to reduce counterfeit and substandard commodities on sale, effectively guaranteeing consumers quality goods. Notably, the US escalated its efforts against imitations and poor-quality merchandize by subjecting online retailers to heighten scrutiny and inspection. The implication of these laws is that businesses engaging in web-based commerce are increasingly pressured by the legal systems to vet the vendors selling products through their e-commerce platforms.
Further, political stability plays a fundamental role in the economic growth and development of any country. According to Sweidan (2016) and Chirwa and Odhiambo (2016), such events as violence, protracted wars, upheavals, clashes, and terrorist attacks adversely impact the economic progression of a country. Shumetie and Watabaji (2019) corroborate this view and argue that political instability condenses physical capital, leads to a decline in investments, cuts foreign direct investments, triggers high inflation rates, and extensive levels of unemployment. Notably, the US has enjoyed prolonged periods of political tranquility, which has been a critical driver of attracting investment and spurring commercial activity, translating to economic growth and development. From this perspective, the overall calmness in the country has provided the ideal environment for the company’s shareholders to inject more funding for the organization due to the resultant confidence in recouping their investment. Similarly, the absence of hostilities has enabled the government to devote a significant proportion of its resources and efforts towards promoting economic growth through policies, administrative proposals, and regulations. Therefore, political calmness is an indispensable component for economic growth and development.
Implications of sharing economy for amazon
Technological advances and shifts in societal values have birthed new approaches to doing business, which uproot traditional practices. The incorporation, progress, and success of Amazon can be significantly attributed to the retail giant’s ability to tap and exploit the rapidly emerging sharing economy. According to Gorog (2018), this continuously evolving economic structure denotes the rising business models and platforms focused on maximizing scarce resources. This objective is accomplished through collaborative systems encompassing the creation, production, trade, distribution, and consumption of goods and services (Hamari, Sjoklint, and Ukkonen, 2016). The implication of this emerging socioeconomic ecosystem is that it allows individuals and organizations to utilize the existing human and intellectual resources, ideas, and structures. Notably, this phenomenon, like other technological advances, will directly impact Amazon and other online retailers.
The access and utilization of spare capacity and other freelance services will significantly boost Amazon’s delivery and fulfillment of consumer orders. For instance, the organization launched ultrafast shipment distribution by enlisting the services of a crowdsourced network of drivers. Through the new program coded Amazon Flex, service providers can engage in shifts through an android-based application, which alerts them whenever delivery opportunities arise in their area. From this perspective, exploiting the incidental opportunities to sharing economy will help Amazon reduce its overall operating expenses and enhance efficiency in its operations. Ultimately, this will translate to better financial performance and customer satisfaction (Kobis, Soraperra, and Shalvi, 2020). Therefore, Amazon will enhance its operations and simultaneously reduce its overheads by tapping into the sharing economy.
Influence and impact of legal systems, antitrust laws, and the development of social economy on amazon
The prevailing legal systems and the rising social economy are indispensable factors which will directly influence the operations of Amazon. Notably, the growing popularity of social economies is likely to solidify Amazon’s position in the market as the organization ranks among the enterprises seeking to satisfy the unmet or inadequately fulfilled needs. However, as a leading corporation, Amazon is highly likely to be pressured to play an even greater role in enhancing the accomplishment of social goals through its commercial activities. Additionally, the legal systems are continually improving and intensifying consumer security and guaranteeing the integrity of goods and services. However, the tightening and enforcement of antitrust laws, particularly in the US, could ultimately break Amazon’s dominance (Flood, 2016). Thus, the legal systems, the development of a social economy, and the implementation of antitrust laws present challenges and opportunities to the online retailer.
Conclusion
Amazon is a dominant player in the e-commerce industry, whose growth and expansion can be attributed to the knowledge economy. Notably, the organization operates in an emerging and evolving marketplace influenced by shifting macroeconomic dimensions, demographics, socioeconomic trends, and technological advances. However, such changes as rapid internet penetration, reducing costs of ICT and communication, and enhanced cybersecurity are critical components presenting prime opportunities for the growth of Amazon. Moreover, the progressive crackdown on web-based criminal activities is continuously strengthening the attractiveness of online marketplaces by eradicating the criminal elements. The implication of these interventions is that they will promote online shopping habits and eventually benefit web-based marketplaces like Amazon. Similarly, the accelerated expansion and adoption of the sharing economy provides multiple opportunities, which the firm can exploit to enhance its operations, minimize overheads, and improve efficiency. This implies that Amazon can report even better performances by exploiting the opportunities offered by the existing infrastructure through the sharing economy.
Political factors such as trade restrictions, tariffs, antitrust laws, tax policies, labor regulations, environmental frameworks, and the absence of hostilities have been integral in the growth of Amazon. Notably, these components cumulatively determine the degree to which a country is conducive to investment, new ideas, emerging technological advances such as e-commerce, and even the pace of economic development. For instance, the relatively low corporate tax, tranquility, and a positive future outlook will encourage the company to make additional investments. Therefore, the political and legal factors within which Amazon operates are fundamental considerations which will foster further growth and success of the company. However, such proposed legislative frameworks as the tightening of the antitrust laws are likely to break the organization’s dominance in the coming years.
Recommendations
Amazon remains the leading online retailer but could enhance its operations and performance significantly by implementing various proposals. For instance, although web-based purchasing habits are rising, the company should expand its physical presence and establish stores across the country to tap the market of those still reluctant to embrace digital purchasing. Additionally, the firm should start focusing on emerging markets, particularly in the developing countries, since these jurisdictions also have significant internet penetration and other ICT infrastructures. Moreover, Amazon should explore other areas from which it could benefit, such as tapping the sharing economy and channeling the free capacity to other engagements, such as escalating market penetration and enhancing cybersecurity.
Task be: drivers of change report
Although Amazon operates in a highly dynamic technology-driven industry, such factors as changing demographics, socioeconomic trends, technological advancements, and geopolitics will impact the business in the future. Notably, interactions and developments between these elements generate new practices, lifestyles, and patterns, which ultimately engender a wide array of outcomes. For instance, technological innovations and digital evolutions are creating new opportunities while simultaneously eliminating others. Similarly, fundamental transformations such as the widespread of a digital lifestyle demand new skills, managerial approaches, and regulatory strategies. In this regard, it is imperative for organizations to keenly monitor the occurrences which directly impact their business. In respect to Amazon, the drivers of change have varying significance, timeframe, and distinctness, mainly due to the highly technological nature of the industry.
Significance, timeframe, and definition of technological drivers of change
Technological drivers of change denote disruptions emanating from the progresses and innovations within the computer world. In the e-commerce industry, within which Amazon operates, such advancements as cloud technology, mobile internet, improvements in computing power, the Internet of Things, and the growth in the ICT sector are indispensable. Notably, mobile internet and cloud computing rank the highest in the online shopping sector at 34%. It refers to the applications which facilitate efficient service delivery and opportunities to enhance workforce productivity. This implies that this is among the most critical and fundamental drivers of change in the online retail business. The timeframe of this component was between 2015 and 2017, indicating that the effects have already been felt. For instance, Amazon utilizes Amazon Flex, an android-based mobile application, to enlist the services of product distribution. Additionally, mobile internet and cloud technology allow consumers to access the products and services offered by vendors without the need for specialized computer software or technology. In this regard, cloud technology and mobile internet are fundamental elements facilitating the effective and efficient operations at Amazon.
Significance, timeframe, and definition of demographic and socioeconomic trends
Indications from the changing demographics and socioeconomic trends highlight the centrality of these two components for the success of Amazon. Flexible working programs and changing work environments denote the transformations and disruptions of workplace innovations such as remote working and teleconferencing. In respect to Amazon, this component ranks highest in significance at 44%, and its impact has already been felt in the e-commerce industry. For instance, Amazon can access and utilize service providers such as drivers when needed, which helps to keep the operational costs low, improve performance, and enhance profitability by retaining a lean pool of full-time workers. Additionally, the rising middle class in emerging markets is a critical consideration for Amazon ranking at 23%, which indicates an expanding market for goods and services offered by the organization. Similarly, pressures emanating from the transition to a greener economy, climate change, and depleting natural resources, whose effects have already been felt, are pushing e-commerce players to adopt efficient processes and operations. The organization is continually exploring measures to minimize the pressure exerted by over-exploitation, which explains Amazon’s participation in the sharing economy.
Significance, timeframe, and definition of geopolitical volatility
Rising geopolitical volatility denotes the forces and pressures stemming from the global relationship between countries. It is an influential force that is continually shaping and disrupting industries. Notably, this is a highly fundamental component for Amazon, considering that this organization is a multinational establishment. Indeed, the timeframe of this driver of change has already been felt, particularly within the last few years as the US and China engaged in trade wars. The confrontations were characterized by the imposition of taxes and the banning of some organizations from trading in either of the countries. This implies that such events play an integral role in the operations of multinational corporations like Amazon.
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