What is the most important issue and why?

Amazon.com has a leading edge in the e-commerce world. It has a strong customer base, name recognition, quality assurance, and immense inventory. However, as with many online retailers, there are certain aspects of conducting business over the web that creates difficulties and the need of important strategic business planning. The ease of use over the Internet has been an important facet Amazon has focused on; more specifically their “1-Click” feature of their web-design allows quick and easy use of their services. On the other hand, the ability of a people to search multiple websites and services has allowed Internet users and potential customers of Amazon to shop based on price. If a person in search of a particular title is able to find it, for example, on 20 different web sites for a lower price, there is a high chance they will chose that site over Amazon. There is no denying that Amazon has a vast inventory, consumer base and reputation for quality; but, with the changing economy, low-price mentality, and an awareness to people of the limitlessness nature of internet shopping, price can be a leading determining factor in someone’s purchase.

Recommendations and why it will work:

The case pointed out many key factors of Amazon’s success due to its business strategy, expansion mindedness, recognizing opportunities and understanding their key success factors. The potential problems that Amazon needs to address were also noted. How would Amazon be able to keep their prices in competition with smaller, more price-focused web business? Amazon needs to improve its operating efficiencies and most importantly its inventory control. They need to raise inventory turnover and create a better system of carrying it due to the high holding costs of inventory. In addition, reduce “split shipments” to lower operating costs.

Amazon has grown so large and operates in numerous locations that their inventory growth has multiplied just as rapidly. In any industry you are in, inventory control is a key success factor and needs to be addressed along with the growth of the business. Without having an efficient inventory and operation, the cost of maintenance will be a burden on the overall financial success. In Amazon’s case, the growth factor has been exponential and their diversification has placed them among the elite in Internet companies and e-commerce. This growth and product range needs to be maintained in an efficient and strategic sense.