Yahoo and Amazon: Building a Competitive Advantage
History of Amazon.com
The founder of the company was Jeff Bezos. He had gone to Seattle after leaving his job as a senior vice-president. He was not informed about the Internet. However, he came across information that there was an increase in the use of the internet at 2300%, which convinced him that this was a good investment opportunity. Without understanding more, he joined the globe of electronic commerce without having any experience in retailing.
He made the decision to establish a company in Seattle because it had a wide range of technical talents and it was near one of the biggest book wholesalers situated in Roseburg. At first, he thought of a bookseller business. He had two visions; firstly, he wanted to establish the globe’s most consumer-centric company. Secondly, he wanted to start up a place where customers could purchase anything. He, later on, launched a ‘Your Store’ service, hence changing his dream into a reality.
Amazon provides sellers with the ability to sell commodities on the Amazon website, but only products that are available in the present product catalog are available to sell. Additionally, it provides a monthly fee-based program for businesses operating on a large scale that enables them to sell a large number of items using the Amazon warehouse to transport goods to their prospective customers and bulk listings. It is also the responsibility of Amazon to process all the payments for customers. The deposit earnings are deposited in the customer’s bank account after every two weeks. Amazon also provides a list for all brands and products that are barred from the Amazon website.
Brief History of Yahoo
Yahoo.com was started at Stanford University. It was founded in 1994 by David Filo and Jerry Yang (Searchenginedirectory.biz, 2012, p.1). They found a website called Jerry and David’s guide to the global wide web. The guide acted as a directory to other websites and in 1994, they renamed the website Yahoo. The Yahoo.com domain was established in 1995. Yahoo grew faster in the 1990s and expanded into a web portal, followed by high–profile acquisitions.
It offers web hosting and web design tools to help an individual in building his/her store or warehouse online. It also entails search engine optimization tools and sharing of social media. Every plan comprises yahoo shopping bids, discounts, and ads that are available on email marketing tools. It also has more than 1000 email addresses that are used for web hosting, and domain, and offers services24/7. It also provides various membership plans that have monthly charges. It also accepts third-party credit cards and pays pal through accepted payment gateways, but the most fundamental plan does not back up APIs used to support the prevailing back-office systems (Searchenginedirectory.biz, 2012, p.1). Just like Amazon, yahoo also has restrictions on the type of items that are supposed to be sold on their website and stores. Yahoo does not accept the sale of banned drugs, firearms, and live animals.
Amazon.com has been successful because of several factors, for example, the company has various resources and abilities to meet the challenges that are presented by threats and opportunities. These resources have enabled the company to be an international leader in the retail industry. Secondly, the brand name that is used in the online-retail market makes the company very strong (Marketingplan.net, 2014, p.1). This is because of the victorious exploitation of its first-mover advantage. It is also capable of leveraging this brand name the moment it understands its plans for its growth in the future. The good technological infrastructure gives it an added advantage over its competitors. It has the capability of opening up a new store that has varied products very easily because its major shopping technologies can be easily used again.
The factors that have affected the success of Yahoo.com include Yahoo finance which is ranked between the top economic research and news websites in the United States of America with over 37 million visitors per month. Additionally, it also provides finance stock quotes, exchange rates, and monetary reports. It provides some monetary management tools. Another service that makes Yahoo.com have a competitive advantage is Yahoo sports. It has more than 45 million exceptional visitors per month. Fantasy sports make yahoo very competitive, this is because there is no other website that is famous in sports like Yahoo (Marketingplan.net, 2014, p. 1).
Both Yahoo and Amazon make sure that they have enough resources to favorably compete with their rivals. This enables them to carry on with their activities without any challenge. Secondly, both companies use the strategy of re-investing their profits in order to diversify activities and expand their companies. They also focus on the diversification of products to increase revenues. The intended strategies are to become a world-leading company. This is evident in yahoo.com which is the leading website in sports. Additionally, Amazon.com is also recognized as the largest online market for selling books (Spainhower, 2014, p.1).
Amazon.com has obtained a competitive advantage because of its marketing strategy. It uses outstanding marketing strategies that make use of the participatory network. It also uses new ways of advertising that result in noticeably targeted messages for the viewers of the website. This system depends on its network of participants so that it can directly target potential customers. With the increasing number of sites displaying Amazon logos and advertisements for Amazon products, other companies have also started to advertise their products on sites. The good marketing strategies used by Amazon.com enable the company to improve on its customer experience. It also uses various types of advertisements, for instance, online advertising that is carried out through e-mail campaigns, portal advertising, and Associates program. The main aim of the marketing strategy is to increase the number of customers on the websites and create awareness about the availability of the products on the market.
Additionally, it provides daily shipping options globally, and in the United States of America. Although marketing costs do not consist of promotional offers and free shipping, it is regarded as the most effective advertising tool (Spainhower, 2014, p. 1).
The company aims at providing a variety of products at the lowest cost in a conducive environment that supports online customer experience. Although competencies like online customer experience, selection, and experience have mostly contributed to the present success of Amazon.com as the largest company in online book retailing, it is significant to note that each of these competencies is supported by a group of participants. My argument is that every competence relies on participatory networks. Additionally, these competencies, without the support of participatory network, can be easily copied by rivals. This is because majority of the strategies of Amazon.com can be copied by its rivals like Barners & Noble, which has enough resources to contribute to the development of a website and maintain technologies to retain standards as those of Amazon.
Amazon has also focused on price leadership as one way of attracting new customers and maintaining old ones. Additionally, it reduces overhead expenses by stocking only part of its inventory, instead of depending on the efficient distribution channel to distribute orders for products that are out of stock (Spainhower, 2014, p.1). Amazon.com also gets its extra benefits from online third party sellers. Its seller marketplace permits external merchants to give out their products for sell through their website. It also gives a guarantee that compensates buyers in the event that they have been supplied with defective products. Through this system, sellers are offered less costly outlet in which to sell their commodities in order to have trust in Amazon.
Core Competencies for Yahoo.com
Yahoo has always followed a backward integration strategy and hence has achieved ownership of its suppliers. Yahoo’s suppliers are its workers who make sure that all products are accessible on the website and who provide customer support (Spainhower, 2014, p. 1). Yahoo is supposed to put into consideration the labor force using both financial and non-monetary enticement to uphold the valuable workers. Secondly, their threats of substitutes are high. The current development in technology has led to several changes in consumer preference. Presently, majority of the individuals’ access use their e-mails or get information about products and services using their tablets or smart phones.
Amazon.com can use the differentiation strategy. This is whereby products are offered to customers through exceptional features and characteristics of an organization’s products rather than selling the products to customers at the lowest cost. This can be done through development of the features and quality of the product. The value can be created through reducing buyer’s expenses. High quality products will imply a reduction in breakdowns that can result in a quick response to problems (Spainhower, 2014, p. 1). Increasing the performance of the buyers can result in an improvement in the performance leading to increased levels of enjoyment. Lastly, sustainability and this can result in barriers by attitudes of reputation and exceptionality. This can be significant to a company because exceptionality and reputation creates high switching costs. This strategy is important for Amazon.com because of various reasons; firstly, being the largest online book retailing, it has various competitors and therefore must come with such a strategy to compete favorably with its rivals. The reputation and exceptionality of the products of the company will make it difficult for another company to start producing similar products. The functional level strategy that can be used by Yahoo.com is corporate strategy. These strategies entail having a competitive advantage through selection and management of various types of businesses competing in various industries or product markets (Spainhower, 2014, p. 1). Yahoo.com can have a competitive advantage over others if it diversifies its business. Companies are in a position to diversify its activities if it has the ability and its core competencies have various uses. Therefore, Yahoo.com can have an added advantage over its rivals if it diversifies its business.
Marketingplan.net. (2014). Marketing Strategies of Amazon.com. Marketingplan.net. Retrieved 23 April 2014, from http://www.marketingplan.net/amazon-com-marketing-strategies/
Searchenginedirectory.biz. (2012). History of Yahoo! Search Engine | Search Engine Directory. Searchenginedirectory.biz. Retrieved 23 April 2014, from http://searchenginedirectory.biz/search-engine-histories/history-of-yahoo-search-engine/
Spainhower, M. (2014). Turning Participants into Profits: The Case of Amazon.com. Mikespainhower.com. Retrieved 23 April 2014, from http://mikespainhower.com/resume/amazon_final.htm
Varsavsky, M. (2008). The brief history of Yahoo | Martin Varsavsky | English. Retrieved 23 April 2014, from http://english.martinvarsavsky.net/general/the-brief-history-of-yahoo.html