Case study report:

Amazon

Student: Dana Alimbek

De Montfort University

Discipline: The context of business

Group: Evington

Student ID: 1512

Executive summary:

This report is conducted to examine Amazon’s strategy and factors that may affect on the

company before and after Covid-19 was escalating around the world. Report will include

overview of the Amazon, what happened to the company during the pandemic and what factors

affected Amazon to any outcome out of Covid-19.

1. Overview on the Amazon

2. Types of products and services

3. Three strategies of Amazon

4. Revenue sales

5. Amazon during Covid-19

6. Net sales during pandemic

7. Conclusion

8. References

Amazon is one of the biggest companies of online purchase segment. It was found in 1994 as

a college textbook online platform. Due to the main constant offer over their evolving includes

better price, convenience and better selection, company has evolved into the corporation.

Amazon offers for their clients 4 main segments as devices and services, Amazon web services,

delivery and logistics and entertainment. Devices and services segment is contained of such

products like Alexa, Echo, Fire tablet, Kindle, Fire TV, Blink and Ring. These product

inventions are made by Amazon with the aim of combining both devices and services in one and

make technologies more accessible with a bigger value for the clients. Amazon web services is

the world’s largest cloud computing service which lets startups, leading companies and

customers to securely store and use their data instead of owning servers and data centers.

Amazon also offers delivering goods from their platform which combines various categories of

products from different stores, orders can be delivered by robots (Scout), airplanes and cars to

the doorstep. This segment is one of the most successful and demanding in Amazon, especially
due to the current situation with Covid-19. It is convenient for customers to shop online and get

their products without going out to the specific store, in addition Amazon Prime allows to have a

monthly or yearly subscription on delivering. Finally, segment of Amazon entertainment gives

opportunity to access music, videos, games, streams on Twitch platform, TV shows and movies

(Amazon, no date). This report will discuss strategy of Amazon before and after situation due to

Covid-19 and examine effects of the pandemic on the structure of work and income of the

company.

The CEO and founder of Amazon Jeff Bezos has his mane strategy of continuous evolution

and exactly this evolution of offering various products and services online gave the opportunity

to the company to expand and build the company into franchises. Amazon has a generic strategy

of cost leadership in a broad market segmentation, also known as a Type 1 Strategy. The

definition of Type 1 strategy is when a company offers various services in the large market and

socioeconomic background (“Strategic Management”). Amazon follows the strategy totally, they

have a broad market segment globally and big range of products, the same situation with the

socioeconomic background. Although, this strategy has been effective for Amazon, but most of

their competitors can not imitate this strategy within their businesses. Because Amazon is

offering and adapting vast categories of products and services fast enough to have high interest

of customers and still make a big profit. Along with the cost leadership strategy company utilizes

differentiation, which is having more services and products than the competitors and delivering

these services in a fast pace. The third strategy that Amazon has is unrelated diversification, they

started entering existing market by offering textbook and now they have over 80 labels in

partnership, also one of the next segments that they enter is pharmacy. The company is in a

constant grow and has seen a substantial growth in revenues since 2016, there is a 27.66%
increase in revenues every year. Even though Alibaba is not at the level of Amazon, it is still one

of the largest competitors of Amazon along with the Walmart in the industry of online shopping

marketplace (Flamand, Wisher, Riley, 2020).

Covid-19 affected negatively on the global economy and caused crisis, more than million

people around the world died due to the virus. Lockdown in almost all counties due to the

pandemic affected different segments of businesses as well and e-commerce companies were not

an exception, lots of companies had to stop working because of the losses. However, Amazon

company managed pandemic without shutting down and made more profit in revenue, than

before. Consumers turned to the Amazon first for the essential products during Covid-19 like

hand sanitizers, face masks and disinfectants because of the empty shelfs in the stores due to

pandemic crisis. CommerceIQ stated that between February and March the toilet paper sales

increased up to 186% in Amazon, medicine for cough and cold increased to 862% from year to

year. While in the U.S. widespread unemployment was detected, Amazon was hiring more

people to manage orders from shoppers and deliver as fast as they can. So, they hired more than

175,000 new workers between March and April and in the three months they ended up hiring

36,400 more people. Amazon had to follow the rules to stop extreme fast spreading virus among

the workers in the warehouse, so they demanded from the workers distance, wearing face mask

and testing for the Covid-19 constantly (Palmer, 2020). At the end of July 2020 Amazon

announced that it had doubled its quarterly profits to $5.2bn in comparison with $2.6bn at the

same point in 2019. This shows that net sales were increased up to 40% (Harris, 2020).

Moreover, in September of 2020 Amazon introduced in their marketplace Luxury stores, which

is a long-lasting digital platform for luxury fashion. This platform was created in collaboration

with Luxury stores, also because of the Covid-19 pandemic. Because most of the luxury stores
were not digitally prepared to the pandemic, so they needed a platform for the further existence

in the market (Watanabe, Akhtar, Tou, Neittaanmaki, 2021).

In conclusion, Amazon before Covid-19 was already big company, especially on e-commerce

segment with its own mane strategy which is cost leadership. The company was always evolving

in their products and services to offer for the consumers lower price, fast delivering and big

range of goods. This strategy allowed Amazon to stay actual in all times and grow every year,

also even due to the pandemic company was working with its clients because of the increased

demand on essential products. This situation played a big role on Amazon’s net sales growth in

2020, when lots of businesses were shutting down.

References:

1. Amazon, no date. [Link]

2. Flamand, Olivia J.; Wisher, Aaron; and Riley, Shannon, "Strategic Plan: Amazon"

(2020). Undergraduate Theses, Professional Papers, and Capstone Artifacts. 309.

[Link]

3. Harris J., (2020). How Amazon became a pandemic giant-and why that could be a threat

to us all. The Guardian. [Link]

amazon-became-a-pandemic-giant-and-why-that-could-be-a-threat-to-us-all

4. Palmer A., (2020). How Amazon managed the coronavirus crisis and came out stronger.

CNBC. [Link]

[Link]
5. Watanabe C., Akhtar W., Tou Y., Neittaanmäki P., (2020). Fashion-driven textiles as a

crystal of new stream for stakeholder capitalism: Amazon's endeavor.

[Link]