One of the best ways to gain and maintain competitive advantage is by expanding, and this is exactly what Amazon is doing. Recently, Amazon has taken an interest in other companys. In the last 10 years, Amazon has taken over a wide range of companies including, (IMDb), , , Joyo.com, , Accept.com and Exchange.com. Alexa Internet alone is worth $645 million (appendices 4). By buying these companies, Amazon hope to improve its competitive advantage by having money come in from these other companies and also to eliminate them as competitors. Another way to maintain competitive advantage is to maintain its cutting edge lead in internet know-how. Since the internet is a relatively new market and Amazon is one of its pioneers, Amazon certainly has more experience selling on the Internet than many of its potential competitors. Amazon should use its profit wisely improving its competitive advantage through innovation, relationships and improving reputation to capitalize on its competitive advantage. This can be done through better quality products and cheaper prices.
Another factor which could maintain competitive advantage for the company is to focus on certain rapidly expanding niche markets, for example specialising on Playstation 3 games. In doing this, the company would attain a high level of insight. Another example is that there's a big difference between selling football boots, and being a sports company. By becoming part of the sports community, Amazon could maintain competitive advantage. For example Amazon could organize for product-based or community-based sales management teams. However, this would increase and Amazon would need to do it carefully to be able to compete successfully with traditional sports-focused companies.
There are many factors that could lead to the loss of competitive advantage for Amazon. One being supermarkets. Supermarkets such as Tesco have begun selling media items such as DVDs, CDs and books. Not only are they doing this, but many of their products are at a cheaper price aswell (appendix 5). As I mentioned earlier, the majority of Amazon's Net Sales come from Media. Due to supermarkets such as Tesco selling these products, the amount of competition has increased which could potentially result in lower sales and profit for Amazon. One way around this is for Amazon to set up shops as customers are more likely to go to them for CDs and DVDs for example than supermarkets.
Supermarkets are not the only competitiors of Amazon. Play.com is also one of Amazon's main competitors. Currently, Amazon is the bigger company because it has gone international and has a wider range of products, but if play.com were to go international with a wider range of products, then there is a high chance that play.com could become leader of the games market. An advantage which Play.com currently hold against Amazon is that they offer free delivery on all sales through out their site no matter what the sale value. Amazon however, only offer free delivery with sales over £19(appendix 6). Because the majority of products Play.com sell are under this amount, Play.com could become the more popular destination for the consumer. If play.com were to go international it would be very difficult for Amazon to compete with them. If this were to happen, I think that Amazon would have to start selling a wider range of products to sustain their competitive advantage.
Although Amazon are facing increasing competition,from the reasearch I have gathered, I believe they do maintain and will maintain a competitive advantage. I think the main reason for this is because they are trusted and have a good reputation. Amazon were one of the Internet's pioneers and they are certainly one of the most experienced e-commerce companies in the world. They have maintained a profit since 2003 (appendix 2) an the fact that the company has gone international also ensures competitive advantage, they are now able to sell to many different consumers ranging from many age groups to many regions. Overall, I think that if Amazon stay in the steps they are taking at the moment, they can maintain their competitive advantage. Although there is new competition, these other company's do not have the same name that Amazon hold for selling goods on the internet. I believe that the competition will find it hard to compete against such a large transnational corporation.
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