Amazon.Com: the Brink of Bankruptcy Essay

2498 Words May 23rd, 2009 10 Pages
Amazon.com: The Brink of Bankruptcy Jeffrey Bezos, formerly a senior vice president for D. E. Shaw & Company, founded Amazon.com in 1994. D. E. Shaw is a Wall Street-based investment bank, and Mr. Bezoswas assigned to find good Internet companies in which to invest. During the summer of 1994, he stumbled across a Web site that showed the number of Internet users was growing by 2,300 percent per month. He quickly realized the vast potential of the Internet, and began putting together a list of possible products that he could sell on the World Wide Web. He eventually narrowed his list to music products and books. Although music products and books both had enormous potential, he eventually selected books because he believed that he could …show more content…
We're not just putting up a Web site. We do 90% of our customer service by e-mail rather than by telephone. Fourteen of our 110 employees do nothing but answer e-mail from customers. There are very few off-the-shelf tools that help do what we're doing. We've had to develop lots of our own technologies. There are no companies selling software to manage e-mail centers. So we had to develop our own tools. In a way this is good news. There are lots of barriers to entry" (Kotha, p. 10). Amazon continues to focus on developing its business, which has translated into market share gains. Amazon's sales growth is exceptional, as evidenced by a 5-year growth rate of 457.91%. Additionally, the Company's turnover ratios are excellent compared to its competitor group. However, the Company's net profit margin is atrocious at (37.98%). The Company's fulfillment costs as a percentage of revenues remain well above traditional retailer levels making it difficult for Amazon to compete in the long-term as it would hold a significant competitive disadvantage in terms of outbound distribution costs. It would be the desired outcome for Amazon to use its competitive strengths (powerful brand name, management experience and distribution and technology infrastructure) to achieve its objectives. Amazon current stated objectives are: 1) To put customer

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