Introduction
Amazon was founded by Jeff Bezos in 1994 and is now one of the largest technology companies in the world. However, the company was not always as successful as it is now. The service has improved for many years, and it continues to do so to reach the current level of development. This study will consider the business giant’s strategic approaches to the planning and location of facilities, procurement, costs, product quality, and customer service.
Facility Location
Cost Strategy
Strategically, Amazon chooses where labor costs are low or lowest. This optimizes the business’s operating expenses and allows it to maintain competitive prices (Lin, 2022). Production facilities are located in regions with low labor costs to minimize overall production costs.
Amazon aims to have centralized facilities. This strategy contributes to optimizing the commodity supply chain and logistics operations, which reduces the company’s transportation costs (Majed et al., 2018). Centralization of facilities creates coordination and economies of scale.
Quality Strategy
To improve the quality of production, Amazon is looking for places near sources of innovation. The company is trying to have its jobs located in areas with highly qualified staff who can potentially work there (Onyusheva & Seenalasataporn, 2018). Such an approach is more likely to draw on local reserves and enhance collaboration with innovative organizations. In this way, the capacity to produce products will also be expanded, which favors the business’s success.
Customer Service Strategy
Amazon has distribution and executive centers next to its target audience. Thus, the company pays special attention to customer satisfaction by placing its strategic facilities next to them (Ukeni, 2022). This allows the business to make deliveries in a shorter time and meet customers’ expectations aimed at fast service.
In addition to centralized facilities, Amazon also uses decentralized facilities, which include customer service centers. This enables these offices to support their customers locally (Onyusheva & Seenalasataporn, 2018). The approach emphasizes how business seeks to meet the diverse needs of buyers, even when they relate to consultations.
Facility Layout
Cost Strategy
The Amazon facilities plan aims to optimize the power of storage facilities. This means making maximum use of the space and height required for storage (Ukeni, 2022). Placing a large volume of products in the same area can reduce the overall operating costs of storing goods. Thus, the correct distribution of products can ensure the efficiency of the business.
Quality Strategy
Amazon pays much attention to the visual layout of its products, as the priority is accessibility and clear visibility of the products. This approach speeds up the process of completing orders. It allows for minimizing the number of errors in the selection of goods (Majed et al., 2018). Visual organization improves operations’ quality, ultimately improving customer satisfaction with the service provided.
The Amazon site plan includes an integrated flow of goods. This means that the company tries to minimize unnecessary transfers and optimize the process of fulfilling orders from its customers (Onyusheva & Seenalasataporn, 2018). This approach facilitates continuous work with goods, reducing delivery delays and improving production efficiency.
Customer Service Strategy
The Amazon site layout is designed to minimize queues among clients. This approach to design is beneficial during peak periods of the company’s workload, such as an increase in the number of orders (Lin, 2022). This approach is customer-oriented, so it aims to improve the overall user experience and increase customer satisfaction.
Amazon uses layouts that aim to increase the loyalty of the company’s clientele. These innovations aim to provide the buyer with an interactive experience that will be unusual and exciting (Majed et al., 2018). For example, a company’s physical stores allow its customers to test and study the product while interacting with its ecosystem.
Purchasing
Cost Strategy
Amazon uses an economies-of-scale strategy that allows it to access suppliers in regions with lower production costs. The company’s procurement strategy is aimed at low-cost suppliers, especially from foreign countries (Ukeni, 2022). In this way, Amazon receives goods at low prices, which helps to reduce delays. Amazon buys many products by negotiating with suppliers. The company reorganized its practice of bulk purchasing, opening favorable price conditions for it.
Quality Strategy
Amazon’s supplier selection criteria are strict, and each must meet quality standards. The company focuses on purchasing from high-quality suppliers to improve the buyer experience (Onyusheva & Seenalasataporn, 2018). The company strives to send quality products to customers, so this factor is a priority. To provide greater quality assurance, Amazon requires ISO certification from suppliers (Ukeni, 2022). This certification ensures that the supplier complies with recognized product quality standards so that the company can trust it.
Customer Service Strategy
Amazon’s strategy favors local suppliers. This approach allows the company to offer a wide range of products and support local businesses (Onyusheva & Seenalasataporn, 2018). In this way, customers’ wishes for local products can be satisfied. Amazon is committed to maintaining strong relationships with suppliers to serve its customers promptly. This ensures frequent product delivery, and the company can replenish its stocks regularly and quickly fulfill buyers’ orders.
Conclusion
In conclusion, Amazon’s strategic approaches led the company to its success. The cost strategy of the company is to select low-cost labor and production locations, centralized production locations, and low-cost bulk procurement. The company guarantees the quality of products, places objects near innovation centers, and makes purchases from verified suppliers with ISO quality certification. Customer service aims to centralize and decentralize facilities for convenience, reduce queues, and purchase from local suppliers. Amazon’s strategies align with buyers’ needs, so the business giant has retained global leadership in e-commerce.
References
Lin, K. (2022). A comparative analysis for emerging e-commerce business owners: Shopify & Amazon. SHS Web of Conferences, 151. Web.
Majed, S., Zana, Nuraddin, S., Hawre, & Hama, S., Vian. (2018). Analyzing Amazon’s success strategies. Journal of Process Management New Technologies, 6(4), 65–69. Web.
Onyusheva, I., & Seenalasataporn, T. (2018). Strategic analysis of global e-commerce and diversification technology: The case of Amazon.com Inc. Journal on Global Socio-Economic Dynamics, 1(8), 48–63. Web.
Ukeni, C. S. (2022). The strategy behind the business success of Amazon: A case study. Texila International Journal of Management, 8(1), 116–131. Web.