Amazon.com’s open market program comes with various benefits to both Amazon and the likes of Toys “R” Us and other toy sellers. To start with, the approach allows Amazon to make strategic plans that will allow it to be ahead of other e-commerce competitors like Walmart. As such, Amazon can offer incentives that allow it to create a pool of loyal customers (Zhu & Liu, 2016). To other retailers and third-party participants like Toys “R” Us, the open market approach allows them to access the wide pool of customers that are attracted to the Amazon.com website. Eventually, they can compete successfully with other retailers.
Before entering the agreement with Toys “R” Us, Amazon.com should have considered a number of benefits that would emanate from such a deal. For instance, the deal would ensure that Amazon.com stands a better chance of availing a wider variety of goods to customers by increasing the number of retailers (Mangalindan, 2006). Also, such an agreement would be helpful in promoting Amazon.com’s market dominance over competitors. On the negative side though, such an agreement would lead to conflicts since retailers may seek to be independent of Amazon’s influence. Additionally, failure by a retailer to avail goods to customers would end up hurting Amazon’s business. For example, in 1999 Toys “R” Us was unable to avail goods ordered by customers on its website during a peak season (Mangalindan, 2006).
The decision to have Zappos operate on its own website was motivated by the fact that the retailer had already managed to create immense customer loyalty based on buyer experience rather than reduced low prices as opposed to Amazon at the time of the deal (Baird, Gallegos, & Shelton, 2012). By offering a variety of shoe products, free shipping, and refunds, Zappos had developed a unique customer base that Amazon would not have wanted to interfere with. The only thing lacking was advanced company management that would better be provided by Amazon with the aim of upholding the culture of providing unforgettable buyer experience (Baird et al., 2012). Amazon’s management believed that Zappos only needed the leadership of on outsider firm for it to keep up with the trend of uniquely meeting customer needs.
Amazon purchased the Internet Movie Database with the aim of acquiring the ability to collect and store information about customers’ tastes for filmed materials. By analyzing and studying such information about customer behavior, Amazon can construct accurate estimations of customer needs, which helps it to avail variety as per the company’s mission (Mellahi & Johnson, 2000). For example, based on previous customer purchases, the company can suggest compact disks that customers may like to buy. This eventually increases sales and customer loyalty. Besides, based on the data, Amazon gains the ability to estimate the number of movies that buyers are likely to buy in future, hence securing better deals with publishers (Mellahi & Johnson, 2000). In the end, the company is able to stick to the everyday low pricing approach which improves the company image to customers.
Baird, H., Gallegos, B., & Shelton, B. (2012). Zappos: Delivering happiness to stakeholders. Retrieved from https://danielsethics.mgt.unm.edu
Mellahi, K., & Johnson, M. (2000). Does it pay to be a first mover in e-commerce? The case of Amazon.com. Management Decision, 38(7), 445-452