CC BY
15
UDC 659.2
PROBLEMS AND PROSPECTS OF ELECTRONIC BUSINESS IN AN INTERNATIONAL ENVIRONMENT
Wang Ying, Y. A. Anikina
Reshetnev Siberian State University of Science and Technology 31, Krasnoyarsky Rabochy Av., Krasnoyarsk, 660037, Russian Federation E-mail: 1509963138@qq.com
The arrival of the era of big data has brought tremendous changes to companies, governments, science and other fields. The article presents the current state of the development of electronic business in an international environment on the example of Amazon.
Keywords: electronic business, problems, prospects, internet, Amazon
ПРОБЛЕМЫ И ПЕРСПЕКТИВЫ ЭЛЕКТРОННОГО БИЗНЕСА В МЕЖДУНАРОДНОЙ СРЕДЕ
Ван Ин, Ю. А. Аникина
Сибирский государственный университет науки и технологий имени академика М. Ф. Решетнева Российская Федерация, 660037, г. Красноярск, просп. им. газ. «Красноярский рабочий», 31
E-mail: 1509963138@qq.com
Наступление эры больших данных принесло огромные изменения в компании, правительство, науку и другие области. В статье представлено современное состояние развития электронного бизнеса в международной среде на примере компании Amazon.
Ключевые слова: электронный бизнес, проблемы, перспективы, интернет, Amazon.
As an increasingly dominant Internet retailer, Amazon's annual revenue grew by more than 20%. But Amazon's business is not mature enough, which means that the future development of Amazon is highly uncertain. There are five main problems that Amazon faced currently.
First, the degree of rivalry within the industry was increased. With the rapid development of electronic business, Amazon is facing a constant threat from competitors. On the one hand, the challenges mainly come from publishers, physical bookstores, wholesalers and online bookstores. For example, Barnes and Noble.com, borders.com, Google and Facebook. These competitors can provide customers with a series of high-quality products and a wide range of choices to satisfy the changing needs of consumers, which enforce Amazon to keep an eye on the latest developments in the industry and seize the frontier business opportunities. On the other hand, the frequent price war has begun quietly, especially for some small retailers who have just entered the online retail market, their operating costs are so low that there will be more room for price fluctuation. It will be more inclined to choose these low-cost shops for price-sensitive customers. This also affects the brand loyalty of Amazon to a certain extent.
Second, the threat from new entrants was increased. More and more competitors have entered the era of network operation so as to open up a new Internet market and better enhance the brand effect and customer loyalty of their companies. The operating cost is often much lower than that of physical bookstores because of the simplicity and convenience of online operation. Therefore, publishing companies, physical bookstores, wholesalers and small businesses have gradually entered the new area, which further aggravates the threat to online marketing of Amazon, and makes the competition of online marketing more intense [1].
Секция «Проблемы и перспективы международной интеграции в современном бизнесе»
Third, the bargaining ability of customers are enhanced. Nowadays, with the vigorous development of the Internet today, customers could purchase through various convenient ways. In order to increase its market share, Amazon has been engaged in various commodity price wars actively while adhering to the principle of "customers are God". Amazon try to provide customers with more convenient and thoughtful services, resolve consumer demands and shopping disputes in time, and safeguard the legitimate rights and interests of consumers earnestly. The purpose of these practices is to better meet customer needs and enhance customer loyalty. Thus, we can see that the customers have the supreme right in the whole purchase process, and they are more likely to acquire goods with higher prices, which force Amazon to lower prices. In short, the bargaining ability of customers are relatively high.
Fourth, the bargaining ability of suppliers are decreased. Amazon is the mainstay of the e-business market at present, especially when Amazon announced that it would have enter into the traditional publishing industry, and began to sign contracts with writers directly, which further consolidated Amazon's monopoly position in the field of books and dealt a heavy blow to the traditional publishers. The best example comes from the conflict between Amazon and Hachette, a traditional French publisher, which insisted that Amazon priced its e-books above $9.99. While Amazon insisted on price cuts and promotions, even said it would reduce orders from Hachette. As the war between the two sides escalated, Amazon refused to sell books published by Hachette, announcing that the blockade of Hachette by Amazon. Amazon uses its monopoly position to exert pressure on the traditional book manufacturing industry and depress the price of e-books deliberately, which also shows that it has a strong influence on the supply price of the supplier.
Finally, there are some alternative threats to industry competition. The main alternative threat of Amazon comes from the traditional physical retail industry and the C2C (customer to customer) model. First of all, traditional physical stores could provide a good shopping environment and pleasant shopping enjoyment, which is beyond Amazon's online shopping. Secondly, the growing sales market of C2C model can provide more personalized customization according to the needs of consumers, and the cost is lower than that of B2C (business to customer) market, which shows that C2C model can provide customers with more cost-effective products. From the above two alternative threats, we can see that Amazon will face many challenges in the external environment.
Similarly, there are five key points for the future development of Amazon [2].
The first factor is the ultimate e-commerce penetration rate of the retail industry and perhaps it is the most important determinant of Amazon's future value. The retail sales online are expected to account for about 13% this year, up from 12% last year. It is obviously that the penetration rate of e-commerce will increase dramatically in the coming decades. This paper divides the retail industry into four different categories to analyze the potential of electronic business. The first group includes car components and tire stores, electronics and electrical stores, sports goods, books and music stores, which currently have a penetration rate of 38% for e-commerce and may eventually reach 90%. The second category includes furniture and household goods stores as well as clothing and accessories retailers, which will be limited to some extent and may eventually reach 70% penetration. The last group includes health and personal care stores, pharmacies, and other general commodities. The future of electronic business in pharmacies is the most difficult to predict.
The second one is the market share of electronic business in the United States. Amazon is the undisputed king of e-commerce in the U.S. and its market share is 34%. There are two factors that will contribute to the stability of the current market share and even slightly increased. First, Amazon is not worried about seizing the market share by using price strategies in certain categories. In addition, more and more third-party sellers are coming into Amazon market, which expands the supply of Amazon's online orders. Therefore, even if Amazon's share of products sold in its own market remains stable, the "effective" total market value provided by Amazon continue to grow [3].
The third factor is the market share of electronic business in non-U.S. market. The market share of Amazon varies in the international market, but it is still the leading e-commerce retailer in some countries, such as Germany, the United Kingdom, Japan and Canada, which account for more than 80% of retail business outside the United States. We estimate that collective retail e-commerce sales in these countries will reach $34 billion in 2019, while the total international retail market value of Amazon will be equivalent to 19% of that amount. It is noteworthy that the contribution of China, which is the largest
retail market in the world is not included here. The market share of Amazon in China is estimated to be less than 1%, far behind the market leaders such as Alibaba and Jingdong.
The next aspect is the market share of network services. Amazon Web Services (AWS) is the leader in providing public cloud computing and storage currently, but unlike the business of e-commerce, there are already many giants competing in this area. With time going by, it is risky that the fierce competition will lead to the decline of this market share [4].
The final point is the return of investment in the electronic business and cloud businesses of Amazon. The market dominance of Amazon has enabled it to earn returns far higher than the cost of capital in recent years.
References
1. Paavo Ritala, Arash Golnam, Alain Wegmarn, Competition-based business models: The case of Amazon.com. Industrial Marketing Management, Volume 43, Issue 2, 2014, (43), pp. 236 - 249.
2. McKinsey Global Institute. Big Data: The next frontier for innovation, competition and productivity, McKinsey Global Institute, 2011.
3. G. D. Karagiannopoulos, N. Georgopoulos, K. Nikolopoulos. "Fathoming Porter's five forces model in the internet era", info, 2005, (6), pp. 66-76.
4. Wendy. Amazon: Five Key Points for Future Development. US Securities Intelligence Agency, 2017.
© Wang Ying, Y. A. Anikina, 2019
