At the initial stage, products are purchased at wholesale prices from suppliers.
Purchased goods are placed on their own online platform using marketplace technology. This process is not represented in Ben Thompson's diagram, but this connection between Supply and Amazon.com should be added, since the percentage of third-party sellers in Amazon's total GMV (gross merchandise value) in 2018 was at 58%).
Satisfaction of consumer demand is achieved through interaction between site visitors and the Amazon.com online storefront, where orders for the desired products with delivery are placed.
To organize timely delivery job seekers data package of goods, it is necessary to coordinate the activities of distribution centers, duplicate stock, clearly organize processes, starting from the registration of an application until the moment the product is received by the client, and cooperate with other logistics companies.
The significant differences in the integration of Amazon and Walmart into the CSC are due to the different tasks in trade for which they were created. Later, the enterprises developed on the basis of the initial models (purchase of products, books, and later disks and other products).
Currently, the positions of companies in the CSC influence their ability to quickly and effectively enter specific new platforms.
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Value chain and the company's entry into new markets
The most predictable option for conquering new markets involves moving along the CSC into dependent segments.
In practice, the CSC has a significant impact on this process. If we consider the goals of conquering new markets from the position of the enterprise's place in the value chain, then an opportunity arises for an effective solution to a number of problems. As an example, let us consider the options for a company to enter related dependent market segments.
The development of a company and its product in the direction of neighboring dependent segments of the CSC is the most predictable option for business expansion, a method of entering new markets. It is important to choose the right direction of movement here. In practice, enterprise managers often instinctively determine the vector of development and gradually move towards the creation of a controlled vertically integrated model.
The company's entry into new markets
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A good example here is Amazon. The company is aggressively moving into adjacent dependent segments of the CSC.
Over a long period of time, Amazon has been building its own full-fledged technology for solving logistics issues. Currently, the company manages about 20 thousand trucks and 60 cargo aircraft. In 2019, Amazon's logistics system took first place in the list of the company's product delivery channels, providing about half of all deliveries.
Solving mainly its own problems, Amazon already serves 18% of the total volume of deliveries from online stores on the US market. It is quite natural that the next stage of the company's development will be related to the provision of logistics services to other enterprises.
At the same time, it is quite possible that the cost of delivery will be the most affordable on the market, since Amazon does not have the task of obtaining maximum profit from the new direction in the near future. In the current situation, it will be more profitable for the company to occupy the adjacent dependent segment of the CSC, and only then increase the profitability of the business. Such tactics pose a threat to Fedex and UPS.
FedEx delivery service
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These companies have been growing for a long time and are making profits, which are mostly related to Amazon's activities. Since 2000, Fedex and UPS have almost tripled their turnover and are profitable.
Another example of Amazon's strategy to enter adjacent dependent segments is related to the launch of sales under its own brands in several niches where other operators previously dominated. Amazon pays attention to attractive business sectors that the company can easily occupy, given the available resources and advantages that allow it to maintain a leading position in the market.