Evaluation of Problems in Amazon
Expanded Introduction to the Organisation
The company that I am going to expand my research for my project paper is Amazon. Jeff Bezos is the founder of Amazon, on July 1994 Amazon.Inc was first launched to sell books as online store but as time passed on in 1996 Amazon diversified their selling products publicly through their website and became Amazon.com. It’s headquarter is situated in Seattle, Washington DC though the first idea of selling products online took place in the garage of Jeff Bezos. Amazon’s logo tries to tell it’s own story; there is a smile line started from A and finished at Z- which symbolizes Amazon is willing to sell and deliver everything to everyone in all around the world. Almost two decades later we all can see how amazon has kept it’s promise.
Amazon, “The Company functions through three segments: North America, International and Amazon Web Services (AWS). The Company’s products include merchandise and content that it purchases for resale from vendors and those offered by third-party sellers. It also manufactures and sells electronic devices’’ (AMZN.O on NASDAQ, 2018).
The Company, on August 27, 2017 bought whole Food Market Inc., “which provides healthy and organic food and produces across its stores. The Company also serves a variety of products like bananas, avocados, large brown eggs, cultivated salmon and tilapia, baby kale and baby lettuce; which all are guaranteed as organic, animal-welfare-rated eighty five percent lean ground beef, creamy and crusty almond butter, gala and fuji apples, rotisserie chicken; again guaranteed as organic. The Company’s Whole Foods Market healthy and private brand products include Everyday Value in a whole year, Whole Foods Market, Whole Meats and Whole Catch which are little to no processed and refined available through Amazon.com, Amazon Fresh, Prime Pantry and Prime Now. The Company also provides Amazon Lockers; these lockers are available in Whole Foods Market stores. Consumers can have products shipped from www.Amazon.com to their nearest local Whole Foods Market store for pick up or if they want to return to Amazon during a visit to the store” (AMZN.O on NASDAQ, 2018).
The Company’s First segment is- North America segment, “this segment principally consists of merchandising sales of consumer products from their sellers of course and subscriptions or payments through North America-focused Websites, such as www.amazon.com, www.amazon.ca and www.amazon.com.mx. The North America segment includes shipping products from its North America-focused Websites”.
The Second is International segment- “This segment mainly consists of merchandising trades of consumer products from their sellers and subscriptions or payments through internationally-based Websites, such as www.amazon.com.au, www.amazon.com.br, www.amazon.cn etc. which are not local products or company of course, they are coming from different countries of the world. It even allows export sales from these internationally-based Websites to Mexico, Canada and the United States as well”.
The Third Segment is Amazon web Service (AWS) – “This segment consists of sales of computer, storage, database, and other service offerings for beginners, enterprises, government agencies and academic institutions” (AMZN.O on NASDAQ, 2018).
Last but not the least, Amazon offers many more other services, “such as publishing, certain digital content subscriptions, advertising and co-branded credit cards. The Company serves consumers through its retail Websites and focuses on selection, price and convenience. It designs its Websites to enable hundreds of millions of products to be sold by them and by third parties across dozens of product categories. The Company allows customers to access its Websites directly and through its mobile Websites and applications” (AMZN.O on NASDAQ, 2018).
The Company also serves authors and independent publishers with Kindle Direct Publishing, an online service that lets independent authors and publishers choose a royalty option and make their books available in the Kindle Store, along with its own publishing arm, Amazon Publishing. It also offers programs that allow authors, musicians, filmmakers, application developers and others to publish and sell content.
At a glance, Amazon’s products categories and services are- Though it started as an online bookstore, later diversifying to sell DVDs, Blu-rays, CDs, video downloads/streaming, MP3 downloads/streaming, audio book downloads/streaming, software, video games, electronics, apparels, furniture, food, toys and jewelry. The company also produces customer electronics-notably, Amazon Kindle e-readers, Fire tablets, and Fire TV- and is the world’s largest provider of cloud infrastructure services (IaaS). In 2015, Amazon suppressed Walmart as the most valuable retailer in United States by market.
Meanwhile, “Amazon has become the largest online retailer in the world by total sales and market capitalization. The world’s largest online retailer and second largest e-commerce company after Google with a brand value of USD 70.9 billion, Amazon enjoys a high level of customer loyalty and more than 50% of customers are repeat buyers.’’ (Amazon.com Company Profile).
Business strategies of Amazon are “devotion to four principles: customer obsession rather than competitors focus, passion for invention, commitment to operational excellence and long-term thinking. These principles represent sources of Amazon’s competitive advantage.” (). As a result we can see that Amazon is leading as an e-commerce company with largest number of customers by maintaining their business strategies in the market.
Amazon has created gigantic, vast, competitive, and remarkable marketplace for employees to join the team. As a result “Employing 560,000 people worldwide and attracting two million sellers on its platform, the e-commerce giant earned USD 37 billion in fourth quarter, 2017 alone, a 42% increase compared to a previous year. Total sales increased 27% and 31% in 2016 and 2017, compared to the comparable prior year periods” (Annual Report, 2017).
As Amazon is leading one of the largest retailer and e-commerce companies in the world that does not mean Amazon don’t have any problems. On the other hand, the bigger the company is the bigger the problems are. Recently Amazon was facing few challenges like employees turnover as the size of human resources is so big in this company (it would be impossible to make all employees happy), to maintain Amazon’s prime status for customers which is misunderstood by them (two-days prime shipping advertisement), products qualities must need to maintain (giving away free prime memberships to dissatisfied customers to keep low quality products and give good reviews), try hard to keep company on number one by welcoming more and more third party sellers etc. might harm Amazon in long term in future.
Expanded Description of Chosen Problems
Why employee turnover rate is high in Amazon and how they fail to maintain work-life balance
Employee turnover is more or less common in every company. But precisely in Amazon this employee turnover is significantly high, that means something is seriously going wrong with the management of employees. After research on some articles about Amazon’s employee turnover I found out that Ruth Mayhew describes employee turnover as, “the number or percentage of workers who leave an organization and are replaced by new employees” (Mayhew, 2017, para. 1). According to Per payscale.com, “Amazon ranks as tied for second for shortest employee tenure among fortune 500 companies” (Companies, 2017). Robbins & Judge (2015) write, “A high rate of turnover can also disrupt the efficient running of an organization when knowledgeable and experienced personnel leave and replacements must be found to assume positions of responsibility” (p. 27).
So, why employees are leaving Amazon even though it’s profit is sky-rocketing. There are many reasons that involved in high rate of employee turnover in Amazon. Low motivation to achieve, managers failed to show leadership which results employees dissatisfaction, stressful work life which failed to keep balance of work-life balance strategy, organization cultures, target set-up and full fill no matter what, could be some reasons to leave Amazon. In 2015, Kantor and Streitfield wrote an article in New York Times, “At Amazon, workers are encouraged to tear apart one another’s ideas in meetings, toil long and late (emails arrive past midnight, followed by text messages asking why they were not answered), and held to standards that the company boasts are “unreasonably high” (Para 3).
It is not a good impression for any company that employees come, join, and leave. Because when an employee leaves a company and then the company hires a new employee this process involves cost. Interviewing costs, hiring costs, training cost, and low sales costs are some the costs that are involved. Employee turnover would definitely put a negative impact on company’s productivity, no matter what if it’s Amazon.
How 2-days prime shipping was misinterpreted by customers
Everything must be instant, quick and fast. 1-click job is done. Yes, we are restless souls when we order something from online and desperately waiting for it’s arrival message or e-mail or confirmation of delivery. Amazon’s one of the business strategies is no customers will wait long for arrival of their products. At first when Amazon launched it tried to deliver products to their customers within 4-8 days. They were somewhat successful in providing such service research said. StellaService, a company that measures customer service performance of online retailers, “There are 40 companies on our list, and Amazon has always been in the top 10. This year, we’ve seen them fall outside of the top 10, which is the first time we’ve seen that happen (Kate, 2016).”
Amazon prime was launched in 2005, since then it’s gaining popularity because of faster delivery service comparing to non-prime members is attactive though customers have to pay for their memberships. It is being suspected that Amazon is concentrating more and more on Amazon-Prime two-days free shipping concept and lag behind from their regular customers orders delivery. Certainly that does not mean Amazon is slower but not the fastest as well, they have shifted their concentration from regular standard shipping to two-days prime shipping to make more profits indeed by breaking promises to many non-prime customers. Regarding shipping service StellaService even said, “Then you have Apple getting two days faster and Best Buy getting three days faster, by either using a faster method to get packages to shoppers or by using stores to source inventory closer to shoppers’ homes (Kate, 2016).” For instance, in the fourth quarter, Best Buy orders were being delivered to StellaService analysts faster than Amazon.com orders, averaging three days for delivery. That includes the holiday season.
How third-party seller ruining Amazons good will and encouraging customers to leave fake reviews
As more and more third party sellers are joining the Amazon team the more qualities of products are decreasing. Amazon is such a platform for customers that it provides a giant field of product varieties with different range of prices. Mostly Amazon’s products price is comparatively less due to wholesalers from North-America and third party sellers as well. So it has a good side but it also have a bad side. I believe to get somewhat a better product customers willingly would pay a little higher price than lower quality products. For these numerous third party sellers it even created a dilemma for customers to choose one single products out of thousand varieties.
Nonetheless, to keep low quality and repetitive products, these third party sellers even have adopted different tactics to tell their customers to keep the product and give fake reviews of that product on Amazon; so that they can keep doing the business. The part of the blame also goes to Amazon. It’s being heard that many times Amazon even bribed their customers with free Prime membership to keep low quality products and change their bad reviews into good reviews. Sales will decrease if Amazon doesn’t take action because customers will lose their faith from this marketplace. And we are living in such century that every day new technologies coming, no wonder may be something bigger than Amazon might come and take over Amazon if Amazon doesn’t take necessary steps to protect themselves from this accusation and blames and get rid of it.
Preliminary Solution Options
Problem 1. Employee Turnover and Work Life Balance
- Managers need to be active more to build up communicational relationship with employees to better motivate them. So that employees could feel that they can go to their supervisors anytime to ask how things would be done or is that the way managers wanted their tasks to be done or vice versa.
- Introduce work recognition program, rewards employees for their remarkable performance.
- Managers must work out on Work-Life balance so that employees could be happier. Because managers must know people work for their families if they are unable to keep a balance between work and life, their performance would be not up to the mark day after day.
- Allow employees to represent their ideas how to do better and voice options for their opinions.
- Providing consistent feedback is also important to retention employees.
Problem 2. Delay Delivery and Prioritise Prime Shipping
- Non-prime members should be given priority regarding delivery on-time just like four or five years back. Amazon must remember that it impacts the company’s profile only to give priority to Prime-members to deliver their products on time.
- 2-days prime shipping concept should be explained properly on Amazon website. More to this, products that are under prime category should say what 2-days prime shipping means. Because one of the managers of Amazon told to news reporters that this concept is being misunderstood by customers. What they meant the prime product will leave the warehouse within 2-days not reaching to customers door-step within two-days.
- Amazon may set-up some prime physical locations to different cities with high sales volumes in the USA for pick-up. Just like BestBuy, Apple Store etc. If products are present in prime locations, customers can be notified that their products are ready for pick or delivery. This can faster delivery process also every single product don’t have to be in the warehouse of Amazon and after placing order it can be shipped from prime locations to it’s destination.
- Amazon may launch Prime-Air (planes and drones) or Amazon Flex (deliver packages like Uber-eat). Amazon flex could really be a good solution to faster delivery. Small packages, light weight packages can be delivered faster to prime members and non-prime members on-time.
Problem 3. Third Party Sellers and Fake Reviews
Amazon is a giant. Now it’s time to set-up quality checkers point for their International Segment which is a gateway for third party entrance.
Amazon could setup some benchmarks for product entries from those third parties. And if products are failed to full fill the standards then it will be rejected. This is how qualities of products could be upgraded because then manufacturers and sellers both parties would know that lower quality products have no place and value in Amazon.
This quality checking could be done automatically by installing Robos’ in Amazon. Many robos are already working in Amazon’s warehouses. These are engaged in sorting, packing, moving products from here to there.
Amazon has gained positive feedback from their customers through these years. So encouraging customers by giving them free memberships of Prime is not a good idea for a company like Amazon. Amazon must upgrade this policy of it’s business and save other innocent customers to spend their money on bad products.
Preliminary Analysis of Leadership and Organisational Behaviour Concepts Addressed in the Paper
To reduce employee turnover and increase retention employees, managers need to motivate employees enough so that they can be determined to reach company’ goals and full fill mission and vision. How to motivate employees have been discussed in chapter 7 of our course textbook. In chapter 7 Robbins and Judge wrote, “Motivation as the processes that account for an individual’s intensity, direction, and persistence of effort toward attaining a goal” (p 209). In this chapter these writers explained many motivational theories which can be applied in company’s different situation and on different employees’ perspective to motivate them to pursue company’s goal. High employee turnover rate in Amazon confirms that employees are not motivated enough which lead this turnover.
In chapter 8 Job Redesign- in same textbook it discussed Job redesign. Different job characteristics models were discussed in this chapter focusing on motivating employees through upgrading their work environment. For instance a proper lunch break, during work snacks and coffee can be served just to add some more spices in working environment, let employees listen to music while working could be some steps taken by Amazon.
In chapter 11 Communication- it discussed how communication can help a company to retain their employees’ in their company for long term. Robbins and Judge wrote, “Communication creates feedback by clarifying to employees what they must do, how well they are doing it, and how they can improve their performance (p 345)”. I have mentioned in Expanded Solution Options that how feedback is important for employees performances and satisfaction. These feedbacks help them to grow through their job and also help them to perform even better and they feel motivated as well.
Amazon, if successfully implement solutions by prioritizing it’s problems, it can grow even bigger and better than today. These implementation of solutions will not only solve employee turnover solution but also will help build up efficiency of Amazon’s and high volume sales. Approximate solutions mentioned in solution area of my report for faster delivery can help Amazon to set up a trademark for other e-commerce companies. Set up products standard may leave customers only one choice to order from Amazon. If Amazon takes care of these problems, may be the day is not so far when Amazon would lead before Google, Apple and other e-commerce company in this electronics commerce industry.
Noel, R., Lewis, K. (2018). Amazon joins trillion dollar club, on peace to overtake Apple. p8-8, 1p. Retrieved December 2nd, 2018 from Devry Library.
The article reports that Amazon.com Inc., has partnered with Apple Inc., to become the second publicly listed U.S. company with 1 trillion dollars, following the rise in retail and cloud computing. It mentions that Apple took 38 years as a public company to attain the trillion dollar target. It mentions that Apple’s iPhone and devices are popular with improved revenue.
Noel, R. and Lewis, K both are famous journalists. They work for Reuters Company. In 2018 they both have surveyed companies like Amazon, Apple, Google and so forth. How these companies are competing themselves and reaching the trillion dollars club and these companies long term vision for future achievement.
Chritopher, B., Gil, B. (2017). Analytics at Amazon speed: The New Normal. Vol. 22 Issue 2, p46-54. 9p. 1 Graph. Retrieved December 2nd from Devry Library
Many companies, including Amazon and Google, have turned instant fulfillment into competitive advantage and are being rewarded in the marketplace. As consumers adapt to this “new normal,” the expectation of instant delivery is crossing into other domains. For example, data analytics users can’t or won’t wait weeks or months for new analytics. Data analytics teams that can successfully meet requirements for rapid delivery of new analytics will play a high-visibility role in helping their organizations compete in the on-demand economy. Enterprises can improve the speed and strength of analytics using a process and tools approach called DataOps, which draws from process innovations in software development and lean manufacturing. Organizations that correctly implement DataOps experience significant improvements in the ability to produce robust and adaptive analytics. DataOps may be implemented in seven simple steps without discarding an organization’s existing analytics tools. [ABSTRACT FROM AUTHOR]
Christopher Bergh is a founder and head chef at Data Kitchen with more than 25 years of research, engineering, analytics, and executive management experience. Gil Benghiat is a founder and vice president of products at Data Kitchen.
- Petersen, R. (Jul 24, 2017). 50 Amazing facts about Amazon.com to inspire your company. Retrieved December 2nd, 2018, from https://biznology.com/2017/07/50-amazing-facts-about-amazon-com-to-inspire-your-company/
- “Profile: Amazon.com Inc (AMZN.O)”. (November 30, 2018). Retrieved December 30, 2018 from https://www.reuters.com/finance/stocks/company-profile/AMZN.O
- “Amazon.com on the Forbes World’s best employers list”. (June 6, 2018). Retrieved December 2nd, 2018, from https://www.forbes.com/companies/amazon/#72f83c306fb8
- Mayhew, R. (2017). Employee Turnover Definitions & Calculations. Retrieved December 2nd, 2018 from http://smallbusiness.chron.com/employee-turnover-definitions-calculations-11611.html
- “Companies with the Most and Least Loyal Employees”. (2017). Retrieved December 2nd, 2018 from http://www.payscale.com/data-packages/employee-loyalty/least-loyal-employees
- Kantor, J., Streitfeld, D. (August 15, 2015). Inside Amazon: Wrestling Big Ideas in a Bruising Workplace. The New York Times.Retrieved December 2nd fromhttps://www.nytimes.com/2015/08/16/technology/inside-amazon-wrestling-big-ideas-in-a-bruising-workplace.html
- Robbins, S. P., & Judge, T. Organizational Behavior. Pearson Education, Inc. 17th Edition.