Amazon Case Study

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is recommended for Amazon to have a physical store that is closely linked to their online store in the new market to establish their store presence. The combination of both the physical and online store will bring the benefits from both sides into one single place, satisfying the customers’ desire for the best of both worlds. They would also be catering to the Singapore market where traditional stores still prevail despite the rising popularity of online shopping.

Furthermore, there is a rising trend for online shops to set up their own physical stores as it increases their store presence, allowing them to forge closer customers’ relations that may ultimately boost sales (Walsh, 2016). Physical stores have also acknowledged the benefits online stores brings about as they ventured online and even prosper with their online stores (Tan, 2015). In other words, companies with both online and physical stores could gather more customers and generate higher sales compared to having just an online or physical stores by itself. Hence, it would be beneficial for Amazon to have a physical store to complement its online store. It is also important for Amazon to promote their stores and this could be done through social media.

Social media plays a significant role in online shopping. There is a large online community spread over the hundreds social media platforms (Hanna, Rohm & Crittenden, 2011). The social media also provide interactions between the companies and their consumers. This has resulted in multiple companies experimenting on the social media platform as part of their marketing strategy (Hanna et al., 2011). Retailers could not ignore the power of social media as it has become a determining factor in the customers’ decision in purchasing products (Fallon, 2014). Customers are using social media to update themselves with the latest sales or to search for review about the products they are about to buy. Hence, it is important for Amazon to market themselves on the social media platforms.

Implementation

Physical store

Every product on display in the physical store would be tagged with a Quick Response (QR) code as illustrated in Appendix 1. In order to purchase their products, customers are required to scan the QR code of the products they want into their virtual cart using the Amazon application. Each virtual cart is linked to the customers’ Amazon account. After shopping, the customer could choose one of the three payment methods as shown in Appendix 2. They could give their Amazon account identification number to the cashier in order to pay and collect their products immediately at the store. Alternatively, they could have their products delivered straight to their home. For this method, customers have the choice of making the payment online through the application or at the store, where cash is accepted.

The physical store also serves as a collection point for customers who have made a purchase online at the comfort of their home but do not wish to wait for the delivery.

Social media

Amazon should promote itself through social media, updating their customers on the latest discounts or new products. Apart from just promoting themselves, they could also use social media to reach out to their customers. Expanding on their Amazon application, Amazon could link their application to the various social media account. The customers would also be provided with an option of posting their purchases and reviews on their social media account (Appendix 3). This way, Amazon is able to market itself through the customers’ social media account as the customers’ “friends” would be able to see the post.

In order to incentivize customers to post their purchases, Amazon could convert the number of “likes” each post received into e-points. The e-points collected could be redeemed as vouchers or products. However, to prevent the conversion of infinite “likes”, the conversion of “likes” to e-points would be limited to 1000 per post.  

Feasibility

It is expensive to set-up a physical store. Companies are required to pay the rental of the store as well as maintaining their inventory. However, being a larger retailer company, Amazon has the power and money to do so. With reference to Appendix 4, Amazon annual income is calculated in millions, with their net income for 2015 being $596 million (Amazon.com, Inc., 2015). Though the start-up of the physical store may be costly, Amazon would be better off with a physical store when they first venture into the new market. The physical store would be able to help Amazon to reap more profits as compared to them promoting just their online store by itself to the new market.

The incorporation of technology used in the physical stores that link it to the online stores through the application requires advanced technology. This is feasible as such technology are already made available as seen in the virtual cart feature found on multiple online retailer websites and the use of QR codes to transmit information.

The promoting of Amazon through social media is simple and less costly as it only requires the company to design their social media web page to draw the attention of the customers. It does not require additional cost as it could just be an add-on feature to the application that was previously created for the physical store. 

Conclusion

The rise in online shopping is largely due to its convenience. Yet the benefits traditional shops bring about managed to ensure that physical stores are not forgotten too. Both online and physical stores have their own benefits that would attract different customers with different preference. By incorporating both benefits, Amazon is catering to the various preferences and is thus able to reach a wider pool of customers. Amazon might even be setting a new trend with this incorporation of the best of both worlds.

Reference

Amazon.com, Inc. (2015) Amazon.com, Inc. Form 10K. Amazon.com, Inc. Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Retrieved from: https://www.last10k.com/sec-filings/AMZN/0001018724-16-000172.htm

Fallon, N. (2014, April 30). The Future of Social Commerce: Shopping on Twitter, Pinterest and Beyond. Retrieved from: http://www.businessnewsdaily.com/6318-future-of-social-commerce.html

Hanna, R.L., Rohm, A., & Crittenden, V. (2011). We’re all connected: The power of the social media ecosystem.