Perceptions of Online Retailing Service Quality †MyAssignmenthelp

Question: Discuss about the Perceptions of Online Retailing Service Quality. Answer: Introduction: The aim of the paper is to study application of business and management tools to an issues or a problem an organisation is facing. Amazon is a electronic commerce or ecommerce and cloud computing services and software providing company with its headquarters in the UNS. It is a public limited compnay listed on NASDAQ and has websites designed for its major markets like the UK, Australia and France. It is the leading ecommerce company in the world with Jeff Bezos as its founder, chairperson and CEO. Amazon sells a variety of commodities over the digital space like books, consumer goods and industrial goods. Thus, the consumer segments of the company include both household consumers and industrial consumers. The company also provides cloud-computing services, which enable multinational companies to manage their data. Amazon has decided to launch its own brick and mortar stores to diversify its retail business and enhance customer experiences of purchasing goods. Amazon is often attribut ed to disrupt the businesses of physical stores by introducing the system of offering thousands of goods online to customers. The issue the paper would address is, whether opening physical outlets to diversity its retail business would have be positive or negative effects on the company. The question, which the paper would seek to answer, is Should Amazons diversify its business into brick and mortar stores and would it impact its business negatively or positively? The researcher would consider secondary sources of data to gather information on the project. The secondary sources of information would be newspapers, financial reports of Amazon, articles, journals and magazines. The commentary would use SWOT analysis, Ansoff matrix and profitability ratios: Table of supporting documents: https://business.financialpost.com/news/retail-marketing/from-mouldy-strawberries-to-poorly-trained-employees-amazon-still-stumped-by-treacherous-800-billion-grocery-market MIT Technology Review Q1 2017 earnings Amazon 2016 Annual Report "Amazon's Newest Bricks And Mortar Store Opens In New York". 2017.Com. Amazon Opens New Offline Shop In New York". 2017. BBC News. https://www.bbc.com/news/business-40051886 The findings of the research would be based on SWOT analysis, Ansoff matrix and ratio analysis. The ration analysis would consider the gross profit margin ratio, which is the ratio of gross profit to net sales for a year expressed as percentage. Financial strength: Amazon is a public limited company listed on NASDAQ and has very strong capital base, which is its first strength. The graph shows that the share prices of the company are rising which predicts its growing financial strength. The company as a result, can source huge capital by floating shares in the market. Huge consumer base and revenue yield: Amazon is the largest ecommerce company and millions of customers use its websites to buy products all over the world, thus earning huge revenue. The graph shows that by 2016 second quarter, the company has earned revenue of $ 32 billion by selling products worldwide (Appendix 2)[2].These two strengths enable Amazon to source immense capital and revenue, which forms the basis of its third strength, its robust technology. Immense technological prowess: Amazon is technologically very strong and its financial strength enables to carry out consistent development in the existing technology and introduce new technology. This leads to its fourth strength, its aggressive product line offering a variety of products to its global base of customers. Huge product line: The products of Amazon consist of ecommerce websites, video streaming services called Amazon Prime, online books and cloud computing services. Amazon is aiming to diversify its product line by offering brick and mortar store to cater to the customers directly and offer them great shopping experiences. The stores would complement the online shopping services and would have automated payment process, which would enable the customers to pay for their purchases without intervention of cashiers. Frequent disruptions: The first weakness of Amazon are frequent disruptions in the internet connections all round the world disrupt the online sales of goods through the websites of Amazon. The company is heavily dependent on internet to sell products and offer services all over the world[6]. Thus, power and internet disruptions prevents people from placing orders on the website which leads of a heavy opportunity losses to the company. Not successful in all segments: Amazon leads the ecommerce market but does not lead in all its segments. For example, in video streaming segment, Youtube leads the market. The venture of Amazon failed because it failed to provide high quality food products. Its online grocery store failed to provide customers with fresh food items, which often resulted in sales returns, causing further losses. Thus, some ventures of Amazon are less profitable and often leads to the loss to the company. New products: Amazon introduces new products to cater to the new customer needs and create new customer experience. The newest product, which the company has launched, is a line of brick and mortar stores. The customers can visit these stores to buy Amazon products and make payments. One can point that all several multinational companies like Levis have both physical stores and online stores where they sell their products. Thus, in the light of this fact one can predict that Amazon would also be successful in earning profits from the physical stores. The brick and mortar stores would strengthen the power of Amazon to rich to the customer needs to create excellent purchase experience. Truly, the stores would complement the online sales of Amazon. Global presence: Amazon has regional websites dedicated to all its markets to cater to the region specific customer needs. This global presence allows Amazon to cater to a large base of customers earning high revenue. Stiff competition: Amazon faces stiff challenges from companies like Google and Microsoft, which market similar products. These strong competitors threaten the market position and revenue generation of the company. Data theft: Amazon is always under threats from data thefts and virus attacks. This creates a huge threat to the knowledge bank of the company, which require it to invest millions of dollars to secure its data against these threats. The Ansoff matrix above presents four quadrants namely, market development, market penetration, diversification and product development. Amazon in case of market development, Amazon must enter new markets like countries in South America and Africa where it has no operations with existing products like ecommerce services. The company must try to penetrate its markets of America, Europe and Asia by providing existing products at cheaper rates[12]. Amazon must try to introduce its new product, physical stores in existing market and earn huge revenue by selling products offline besides selling them online. As far as diversification is concerned, the company must introduce the offline stores in the new markets only after its gain high positions in those markets. Profitability ratios: Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013 Dec 31, 2012 Gross Profit 47722 35355 26236 20271 15122 Net Sales 135987 107006 88988 74452 61093 Gross Profit Margin: 35.09% 33.04% 29.48% 27.23% 24.75% Figure 2. Pie chart showing profit margin of Amazon The above table shows that Amazon earns high profits by selling a wide variety of products all round the world. This means that the company must diversify its business into new segments like opening brick and mortar stores initially in the US, its home market and later on enter its host countries like the UK. Analysis Evaluation: The analysis of the SWOT, Ansoff matrix and profitability ratio brings into light several facts, which show that opening brick and mortar stores would profit Amazon. First, Amazon has a huge investor and customer base providing it with capital and revenue respectively. One can interpret from this finding that Amazon can amass huge amount of fund to finance its brick and mortar stores. Secondly, its financial strength has allowed the company bring about immense development in its technology. This can help the company cause disruptive innovation by introducing stores with digital payment systems capable of accepting payments faster from customers. One can interpret from the success of multinational companies like Levis that physical stores can be used to strengthen market presence and enhance online sales of goods. This it can be evaluated based on this ground that Amazon would be successful in capturing huge market by opening physical stores. Thirdly, the interpretation of the Ansoff matrix of Amazon shows that the company should introduce the stores initially in its home country namely, the US and then expand it into the host markets. Fourthly, the profitability pie chart of Amazon shows that the company has shown increase in profit margin from 2012 to 2016. An evaluation of the profitability ratio points out to the growing market position of Amazon. Thus, based on the findings and their analysis, one can summarise that Amazon should expand its market presence by opening a physical store. Conclusion: The discussion at length shows that Amazon should diversify into brick and mortar stores. However, it can be recommended in the light of the discussion that the company should introduce the brick and mortar stores in its home country and gradually expand it into the host countries. I can point out upon reflecting on the topics covered that, the study does not cover areas like the market position of Amazon in the physical retail business. This is because the company has just embarked on the business venture and analysis of the performance in brick and mortar store business is subject to future investigations. Bibliography and references: "Amazon - Investor Relations - Annual Reports, Proxies And Shareholder Letters". 2017.Phx.Corporate-Ir.Net. https://phx.corporate-ir.net/phoenix.zhtml?c=97664p=irol-reportsannual. 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