Amazon case study: Back in 1995, when Amazon.com first went online, its founder Jeff Bezos saw a breakthrough opportunity in changing the retail shopping experience. Amazons strategy took advantage of trends Bezos observed, especially a growing number of consumers shopping on the Internet. Laws back then didnt require the collection of sales taxes on online sales, which offset shipping and handling charges. Early investors were patient as Amazon lost $3 billion from 1995 to 2003. They shared Bezos belief that if Amazon consistently delivered value and satisfaction, customers would come back, buy more, and tell their friends. Bezos and his investors predictions were on target. Amazon wasnt just lucky to be in the right place and time. Amazon understands its mission and its strengths and weaknesses. Amazons mission statement helps the company keep its attention on what matters most: We strive to offer our customers the lowest possible prices, the best available selection, and the utmost convenience. With this focus, Amazon pioneered community features such as customer reviews and customer questions and answers, which help customers discover new products and make more informed decisions. Amazon Marketplace gives many sellers the opportunity to compete directly with Amazon. Amazon also expanded into new product markets, over time adding electronics, home and garden, health and beauty aids, industrial tools, clothing and shoes, cloud computing services, and more. Amazon now has more than 50 percent market share of online sales in the United States. One of Amazons most important resources is its access to and use of data about customersespecially how customers behave on the Amazon site. For example, when customers visit its site, Amazon knows what they search for, which pages they visit, what they buy and dont buy, and whether they read reviews or shop around before purchasing. These data and Amazons artificial intelligence systems help it deliver shopping experiences unique to every customer. Amazon combines these data with knowledge gained from observing tens of millions of other customers to anticipate its customers wants and needs. These insights help Amazon sell highly targeted and personalized advertising directly to many companies. For example, when a Seattle-based physical therapy chain was looking to expand, Amazon showed its ads only to local customers who had recently bought knee braces. Amazon recognized opportunities in other countries, initially launching new sites in the United Kingdom and Germany. Like the United States, these markets offered a large number of customers with access to the Internet and high incomes. Amazon is now in 17 countries, including Australia, Canada, France, India, and China. Not all of these efforts have gone well. Whereas many Chinese consumers have access to the Internet and growing incomes, Amazons share of Chinas e-commerce sales are stuck at less than 2 percent. In China, Amazon faces strong domestic competition from Alibaba and JD.com, which control 43 percent and 20 percent of Chinas online market share, respectively. In India, Amazon faces headwinds from regulations crafted to protect local retailers. A new Indian law targets Amazon and prohibits foreign companies from holding online inventory and selling it directly to customers. Amazon continually strives to make shopping convenient. For a $119 annual fee, Amazon customers receive free two-day shipping on select products and free access to select videos, music, and more. Amazon is also setting up warehouses near major metro areas and testing different delivery approaches. For example, local inventory enables Amazons Prime Now program to offer one-hour delivery in some markets and same-day delivery in others. Amazon hopes to someday use drone aircraft to deliver small packages in 30 minutes or less. Right now, a patchwork of local lawsrather than technologyis holding up this plan. Striving for utmost convenience, Amazon knows it needs physical stores, too. Amazon hopes to leverage two of its greatest resourcesits technological expertise and financial resourcesto find ways to improve the in-store shopping experience. Amazon is testing a new grocery store concept called Amazon Go, which lets customers walk in, grab what they want, and walk outwithout having to swipe a card or stand in a checkout line. These customers are not getting everything for freeafter all, Amazon is in business to make a profit. Artificial intelligence and sensors placed throughout the store track items customers place in their physical baskets, and the Amazon Go app places those same items in their virtual shopping carts. When finished shopping, a customer simply walks out, and everything is charged to his or her Amazon account. Is this whats next for retail? And when will Amazon bring this to Whole Foods, which it recently purchased? Page 60 Another innovation, the Amazon Echo, was created to make life (and shopping) better for Amazon customers. Echo is a nine-inch-tall smart speaker. When a customer calls out Alexa, Echo wakes up and connects to a personal digital assistant. From there, a user can ask Alexa to play music, turn on lights, deliver news and sports scores, report the weatherand of course place an order on Amazon. Its so easy a six-year-old can do itand one did. When a little girl from Dallas, Texas, asked Alexa to send me a KidKraft Sparkle Mansion dollhouse and some sugar cookies, they arrived at her home two days later. After the surprise delivery, Mom and Dad activated parental controls to add another step to the ordering process. Amazons diverse product line means it needs to monitor a wide range of strong competitors. Amazon engages in price wars with Walmart over books, toys, and DVDs; fights Netflix and Hulu in video streaming; and battles Facebook and Google for online advertising. Amazon has never been afraid to tackle markets with strong competitors. On the contrary, it seeks large and growing markets where it can leverage its strengthscompany size, technology skills, efficient operations, and creative personnel. To grow in these competitive and fast-changing market environments, Amazon must continue to anticipate market trends and adjust its marketing strategies

.1 Review the Amazon case study that opens this chapter. Create a table like the one belowand fill in the empty cells. If necessary look back at Chapter 2 to remind yourself of the definitions of threat and opportunity. Then describe how each of the three trends could be seen as a threat or an opportunity for Amazon. Table Summary: Table divided into three columns shows blanks for students response to answer possible threats and opportunities for three emerging trends. The column headers are marked from left to right as: trends, threat, and opportunity. Trends Threat Opportunity eBay becomes a larger competitive rival Artificial intelligence (see Whats Next?) Faster Internet connections emerge across Africa