T171 Exercise 3.3.6 Examining e-commerce operations

For the exercise I will use the online book, cd/dvd & video seller Amazon.

1: Does the business disintermediate other businesses?

Yes, Amazon sells its products and services directly to the end user thus it is bypassing the traditional retail outlets.

2: How does the business hope to make money?

The site makes most of its income from either direct selling to the customer or by reselling used goods and obtaining a small commission by acting on the seller's behalf. In addition they also use an affiliate scheme which allows other websites to obtain a small commision when a customer links to Amazon from their site.; this is a cheap method of extending their advertising reach and thereby increasing their potential revenue

3: What are the challenges for such a business?

Some of the main challenges for such a business are:-

Communications: As all most e-business sites ensuring accurate communications with the customer regarding orders is a challenge. It has taken a route used by many other sites, it firstly emails receipt of the order quoting a reference number and subsequently to emails details of the dispatch of the items ordered.

Trust and Security: The site uses secure encrypted to ensure that its customer’s personal data and valuable credit card details are protected from all unauthorised sources.

Delivery: This is is sub-contracted to other carriers. Amazon then has to co-ordinating the dispatch (from a number of warehouses and sources) with the information it receives from the carrier to ensure that the customer is advised of the actual delivery date

Products:. Amazon sells a vast range of books, cd/dvd's, video's and other products. Ensuring that its website is up to date with new releases, current prices and stock levels to match a fluctuating demand are all extremely important requiring 24 hour attention unlike a high street based retailing operation which is only opened for limited hours.

4: What additional features might the site offer?

This is one of the older online company's its current structure and customer interface is very well developed . It is hard to see what additional features could be added to improve the customer experience.