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Effectiveness of Amazon.com

The concept of “Organizational effectiveness” is an abstract concept that can sometimes be difficult to measure. However, by determining certain proxy measures that are used to represent effectiveness, we can begin to see how certain sustainable competitive advantages begin to take shape and what that might ultimately mean for an organization in the long-term.

To demonstrate this, we must use a model that exemplifies the point. It is my “professional” opinion that Amazon.com is extremely effective, and for a plethora of reasons. For starters, it is worldwide company that is technically a “start-up”; now with revenues of well over $61 billion. They were able to achieve this due in great part to their customer service, fast and reliable shipping methods, variety, user-friendly interface, and innovative products and solutions (just to name a few).

Direct or proxy measures that support my claim include Amazon’s successful control of their warehousing and fulfillment centers, industry recognized and cutting edge technological advances and effective and/or creative use of that technology, to include smart phones to drones. It would also be wise to point out their own technology products such as Fire Phones, Fire TV, Artificial Intelligence systems such as Echo, video games, and more. You simply do not see this innovation from most other retailers.

I would say that Amazon.com continues to improve its effectiveness as a matter of principle. This attitude for success starts at the top of course. Their CEO, Jeffrey Bezos once said that success comes when you subscribe to three big ideas: Put the customer first; Invent; and Be patient. So Amazon remains dedicated to the customer, while continuing to expand and perfect their warehousing infrastructure. The result is an interesting and highly successful one that can be directly attributed to their rise.

Their efforts to improve effectiveness continue to be successful. The company appears to be perfecting their infrastructure, not just for themselves, but for third party sellers as well. “Fulfillment by Amazon” offers up their physical infrastructure to third-party sellers who want to outsource the warehousing of their inventory, shipping orders and handling returns. Not long ago, this part of the business grew some 40 percent in a single quarter. In fact, if we want to get real about it, Amazon boasts a growth rate of 231.9% from 2008 to 2012, compared to Wal-Mart’s 10.3% during that same time (NYSE).

Amazon.com might be banking on the idea that people are not patient and want their products fast and cheap. Regardless, they are figuring out a way to do that while reducing their overhead. As a frequent customer of Amazon.com, I can tell you that their customer service is second to none and I prefer dealing with Amazon.com than other retailer, period. It is really hard to get much more effective than that and it’s easy to see why they are outpacing their competitors.

Now if only I could convince Amazon to stop using the USPS as a carrier, they would be perfect.

David Robertson

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