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  1. 1. IntroductionHistory and Background of Amazon.comAmazon.comCourtesy Amazon.comIn 1995, Amazon.com sold its first book, which shipped from Jeff Bezos garage in Seattle. In2006, Amazon.com sells a lot more than books and has sites serving seven countries, with 21fulfillmentcenters around the globe totaling more than 9 million square feet of warehousespace.The story is an e-commerce dream, and Jeff Bezos was Time magazines Person of the Yearin 1999. The innovation and business savvy that sustains Amazon.com is legendary and, attimes, controversial: The company owns dozens of patents on e-commerce processes thatsome argue should remain in the public domain. In this article, well find out what Amazondoes, what makes it different from other e-commerce Web sites and how its technologyinfrastructure supports its multi-pronged approach to online sales.Amazon.com BasicsAmazon.com sells lots and lots of stuff. The direct Amazon-to-buyer sales approach is reallyno different from what happens at most other large, online retailers except for its range ofproducts. You can find beauty supplies, clothing, jewelry, gourmet food, sporting goods, petsupplies, books, CDs, DVDs, computers, furniture, toys, garden supplies, bedding and almostanything else you might want to buy. What makes Amazon a giant is in the details. Besides itstremendous product range, Amazon makes every possible attempt to customize the buyerexperience.When you arrive at the homepage, youll find not only special offers and featured products,but if youve been to Amazon.com before, youll also find some recommendations just for you.Amazon knows you by name and tries to be your personal shopper.Web Site Image GalleryCourtesy Amazon.comSee more web site pictures.
  2. 2. ¬ The embedded marketing techniques that Amazon employs to personalize your experienceare probably the best example of the companys overall approach to sales: Know yourcustomer very, very well. Customer tracking is an Amazon stronghold. If you let the Web sitestick a cookie on your hard drive, youll find yourself on the receiving end of all sorts ofuseful features that make your shopping experience pretty cool, like recommendations basedon past purchases and lists of reviews and guides written by users who purchased the productsyoure looking at.The other main feature that puts Amazon.com on another level is the multi-leveled e-commerce strategy it employs. Amazon.com lets almost anyone sell almost anything using itsplatform. You can find straight sales of merchandise sold directly by Amazon, like the booksit sold back in the mid-90s out of Jeff Bezos garage -- only now theyre shipped from a verybig warehouse. Since 2000, you can also find goods listed by third-party sellers -- individuals,small companies and retailers like Target and Toys R Us. You can find used goods,refurbished goods and auctions. You could say that Amazon is simply the ultimate hub forselling merchandise on the Web, except that the company has recently added a moreextroverted angle to its strategy.Online Commerce• eBay• Electronic Payments• TreeHugger.com: CleanTechStartupsIn addition to the affiliate program that lets anybody post Amazon links earn a commission onclick-through sales, theres now a program that lets those affiliates (Amazon calls them"associates") build entire Web sites based on Amazons platform. They can literally createmini Amazon Web sites if they want to, building on Amazons huge database of products andapplications for their own purposes. As long as any purchases go through Amazon, you canbuild a site called Amazonish.com, pull products directly from Amazons servers, write yourown guides and recommendations and earn a cut of any sales. Amazon has become a softwaredevelopers playground. A) Strategy Identification 1) Existing Marketing Mix (4P‟s)Promotional Alliances and Advertising
  3. 3. Promotional alliances and advertising were important devices employed early on by the firmsin their attempt to attract visitors. A promotional alliance is basically an advertising andpromotion contract combined with a long-run relationship. Internet allies provide links to thefirm‟s Web site and promote the firm‟s products. For example, consider Amazon.com‟s earlyalliance with Yahoo!, the popular search engine firm. Yahoo! provided direct links to relatedAmazon.com book titles from every Yahoo! search result. Searchers were invited to buybooks related to what they were searching for on the Web.The main benefit of promotional activities is that more consumers become aware of the firm‟sproducts and services. The cost of such activities includes transaction costs and fees that aredetermined by the opportunity costs of the ally or advertising outlet. This type of investmentinvolves diminishing returns because marginal benefits eventually fall but marginal costs areindependent of the firm‟s actions (they are determined by the partner‟s opportunity costs).Ample research shows that the amount of search consumers engage in after entering a marketfollows an inverted U-shape over time: search tends to increase initially as consumers becomeaware of different brands and then to decrease once preferences are formed (seeBettman andPark 1980; Johnson and Russo 1984; Moorthy, Ratchford, and Talukdar 1997; Heilman,Bowman, and Wright 2000). Thus, promotional activities such as alliances and advertising aremost useful early on in a market‟s evolution before marginal benefits diminish.Offline Customer Service Center and Distribution Center ExpansionOffline customer service center and distribution center expansion involves leasing orpurchasing bricks-and-mortar facilities to warehouse products and handle shipping andservice. The benefit of offline customer service centerand distribution center expansion is thatmore customers can be served and shipping times can be reduced. The cost of offlineexpansion is determined by the opportunity costs of the facilities being purchased or leasedand theresources employed in the service effort. This type of investment involves diminishingmarginal returns for the same reason as with promotional activities: marginal benefits fromcontinued expansion eventually fall while the marginal costs are largely independent of thefirm‟s actions. Marginal benefits fall because, while early expansion efforts lead to largeincreases in the number of customers that can be served and dramatic reductions in shippingtimes, later expansion efforts have less substantial effects.Pricing StrategyA firm attempting to increase sales may lower prices to attract customers. However, pricereductions are easily imitated, leading to price wars that lower everyone‟s profits and provideno one with a relative advantage. Price reductions are not easily reversed because competitorsreact by lowering their own prices. Further, price reductions are usually publicized in order tomaximize their effect, and so they cannot be reversed without inducing a loss of reputationamong consumers. Economic theory strongly suggests that price competition will be a
  4. 4. problem for online retailers because they lack a critical source of product differentiation—location. Bricks-and-mortar retailers differ by location, and game theoretic models show howlocation differences allow firms to charge higher prices even when the goods sold areidentical in all other ways (Tirole 1988). In the absence of location differences, producers ofidentical goods engaged in price competition obtain zero profits unless one has a costadvantage. Partly for this reason, manufacturers often provide their retailers with localmonopolies (Carlton and Perloff 1994). The lack of location is critical in e-commercewherethe products sold are not differentiated from those of other retailers (books, compact disks,etc.).Product Line Expansion and Service ImprovementOne of the basic problems firms face when entering new environments is that they do notknow how consumers value the various products and service the firms can introduce. As aresult, mistakes are likely, and we should observe many initiatives that lower value. Further,many initiatives will have little or no impact on value. These facts taken together suggest thefollowing testable hypothesis:Hypothesis 4. If product line expansion and service improvement programs succeed as awhole, success can be traced to a relatively small number of successful initiatives. Manyinitiatives reduce firm value. Theory does not provide a clear guide as to what will work andwhat will not, but some of the relevant factors are the following: Should the firm focus onimproving its existing products and services or expand into unrelated activities? Should thefirm partner with other firms in its efforts or go alone? Should the firm explore foreignmarkets or concentrate on domestic ones? In order to address these questions, in the empiricalresults presented below, I consider product line expansion and service improvement programsthat involve acquisitions and alliances separately from those that do not. Further, I treatannouncements of all types that involve foreign expansion separately. 2) Website AuditI have mentioned Amazon many different times in previous articles and now I want to startanalyzing its strengths and weaknesses. Tackling such an e-commerce giant can be a bitoverwhelming in some respects, however it‟s necessary to look at their successes and failuresto see what should possibly be replicated in projects that come up for us as web designers.Amazon is one of those web giants that is loved by some, hated by others, but used by allwhenever necessary. So, how does Amazon do it? What makes them such a massive,successful presence on the web? Let‟s find out!
  5. 5. Amazon has built its business slowly and methodically (founded in 1994 and launched in1995, posting their first profits in 2002). The original concept was simply to sell books online;however it quickly branched out into other diverse products. In fact, many other large retailcompanies now use Amazon to power and host their websites (Borders, Virgin Megastores,Target, Sears and many more). It seems that these companies have adopted the “if you can‟tbeat „em, join „em strategy.” In a nutshell, the Amazon system works. It works so well thatAmazon.com attracts over 50 million visitors every month from just the United States alone.Even though the Amazon website is so humongous, they create a personal feel for every user.Every time I log in, they have suggestions for me based on my previous orders or searches.Sometimes I think…‟how nice‟ while at other times I think, „I‟d never buy that item.‟ Thepoint I‟m trying to make here though is that they are engineering their site toward onething…THE END USER. The list of „benefits‟ offered to the customer is pretty lengthy. Yes,all of these benefits are geared toward the goal of making money for Amazon…but isn‟t thatthe reason capitalism and free enterprise exist? Yes, they are trying to make a buck…but theirapproach is user friendly. Customer product reviews, shipping discounts, their own credit cardwith bonuses, Amazon Prime membership, 1-Click ordering, product forums, etc. are all greatways to get the customer involved. Amazon‟s goal isn‟t just to be a place to purchase items.Their goal is to make it an experience…a good experience. They want it to be an experiencethat people will want to be involved in over and over again.http://www.webdesignideas.org/2008/01/14/what-makes-amazon-so-successful/
  6. 6. Amazon has become a „one stop Internet shopping destination.‟ Because of their appeal, theynow have over 900,000 associates (their term for affiliate marketing companies). Simplyput…you can buy almost anything on Amazon. You can usually get it at a reasonable pricetoo. With their adherence to The Long Tail economic principle, they also give people easyaccess to hard to find items as well. Sometimes these are specialized products that aren‟tavailable in your nearest brick and mortar store. This ability to offer people hard to locateitems simply by searching on one website is of great comfort to millions of people around theworld. “Can‟t find it at the store? Look on Amazon.” I know of several families who live inremote areas of Alaska within the Arctic Circle who use Amazon as their grocerystore…because they don‟t have a local grocery store. They order their supplies through theInternet and pick them up at the airport. It‟s a pretty awesome setup for them. This is just oneof many different niches that Amazon fills. The cumulative total of these small niches resultsin posting revenues like the ones they posted in 2006 ($10.7 billion).
  7. 7. From the customer end of things, Amazon‟s site is simple in appearance and simple to use.The order process is easy. This is the most critical component of their entire site. Keeping theordering process uncomplicated is what really makes customers return. If you were to onlyuse two key components of Amazon‟s site and replicate them into your own site or your nextcustomer‟s site, they would be customer features and simplicity in giving the customer results.Whether those results are retail oriented or information oriented, keeping the process simplewill in the long run create happier visitors on the site. Whether you love or hate Amazon, youhave to recognize the fact that they are successful as a website. In recognizing that, look atwhat you can use from their example to make the next website you design a successful one.Amazon Tools, Marketing and Community
  8. 8. The goal is pretty straightforward: "To be Earths most customer-centric company wherepeople can find and discover anything they want to buy online." The implementation iscomplex, massive and dynamic. Amazons marketing structure is a lesson in cost-efficiencyand brilliant self-promotion. Amazons associates link to Amazon products in order to addvalue to their own Web sites, sending people to Amazon to make their purchases. It costsAmazon practically nothing. Some associates create mini-Amazons -- satellite sites that donew things with Amazon data and send people to the mother-ship when theyre ready to buy.Amazon Light, built and maintained by software developer Alan Taylor, is one of thosesatellite sites.The Gold Box Theres probably a little "Gold Box" icon at the top of the Amazon.com homepageevery time you visit. This box holds special treats for you: Time-sensitive discounts. Once youclick on the Gold Box and view an offer, you have to complete the transaction (if you want it) in aspecified time period. After that time period, the offer disappears.The level of customer tracking at Amazon.com is another best-of-breed system. Using the data itcollects on every registered user during every visit to the Web site, Amazon points users toproducts they might actually be glad to discover -- and buy. Amazon recommends products thatare:• similar to what youre currently searching for (on-the-fly recommendations that use up tons ofprocessing power)• related to what youve searched for or clicked on at any time in the past• purchased by other people whove searched for what youre searching for or have bought whatyouve bought
  9. 9. You can even customize the recommendations by giving Amazon more information aboutyourself and your interests and rating the products youve already purchased.A recent development in customer tracking actually collects information on people whomay have never visited Amazon.com. Amazons gift-giving recommendations collect dataon the stuff you buy for other people. For instance, if you buy a toy train set in Decemberand ship it to your nephew, Amazon knows you give gifts to a boy aged four to 10 wholives in Ohio and likes trains. Might your nephew enjoy the latest addition to that trainseries? Might he also have an interest in RC cars? Amazon will give you all sorts of ideasabout what to get your nephew when the next holiday season rolls around.This type of information gathering has generated a fair amount of controversy. Some sayAmazon gathers too much information for comfort, and the Electronic PrivacyInformation Center reports that in 2000, Amazon started sharing its customer data with itspartners and subsidiaries. The concern has increased with the tracking of "gift-givinghabits," because the gift-giving information Amazon collects could be about minors,which is against the law, and because the gift receivers dont even know that their name,age, gender, location and interests may be stored in Amazons database of customerinformation.Despite concerns about Big Brother Amazon, tons of people love the personalizedexperience Amazon offers. Its not just sales offers -- theres a community onAmazon.com thats based on people providing even more information about themselves toother Amazon users. People write their own reviews, recommendations, "So Youd LikeTo..." guides and "Listmania" lists based on Amazons product offerings and share themwith all of Amazon.com. One Listmania list, "The Top 25 Weirdest Items You CanPurchase Through Amazon!" by Sheila Chilcote-Collins of Van Wert, Ohio, includes a jarof S.E.P. (Stop Eating Poop) that should make your dog stop eating its own feces; birdfeed in the form of live caterpillars shipped to your doorstep; and a book entitled "OwlPuke" that comes complete with a genuine pellet of regurgitated owl meal. You can makeany sort of list you want, and any Amazon member can view it and rate it.
  10. 10. Beyond e-commerce and its trappings, some of the more recent Amazon endeavors have the company branching out into new realms. Amazons Mechanical Turk project seeks to combine community, technology and compensation. Using the Mechanical Turk system, software and Web developers can post tasks they need help with, usually tasks related to things computers cant do but humans can, like quickly caption a set of photos. Anyone can post a task, and the person who completes it gets a small amount of money in return. Amazon gets a commission on each completed transaction. In a much more visible trek into the unknown, Amazon has funded the A9 search engine. It has full search capabilities, mapping functions, a toolbar with pop-up blocking and an easily accessible personal search history. A9 also provides a "Diary" where you can makes notes to yourself about specific Web pages and lists of recommended links for you to check out based on your previous searches. In keeping with Amazons omnipresent marketing techniques, you can sign up to get an Amazon.com discount for using A9 on a regular basis, and when you type in a search term, youll see a display of Amazon book results related to that term. From a "Wheres Amazon going?" point of view, perhaps the most notable project is the previously mentioned Amazon Services subsidiary. Amazon Services is building complete e-commerce solutions for companies that are potential Amazon competitors, leaving open the possibility that Amazon will ultimately head in the direction of technology service over retail sales. E-crmeCommerce clearly changes the way companies do business. But eBusiness is more than just sellingand shopping on the Internet. eBusiness involves enhanced customer service through closer online6 Customer Service in the eCRM Market
  11. 11. links with suppliers and trading partners. An eBusiness must synchronize a company‟s eCommerce,customer service, and supply-chain strategies into an integrated, enterprisewide system that enablesreal-time, interdepartmental access to customer data to ensure superior, personalized service to allcustomers. Amazon.com is the model eCompany for personalized services. Amazon‟s softwareremembers buyers‟ past selections, favorite authors, and category preferences; suggests purchases basedon those choices; and notifies consumers via e-mail when books matching their preferences are available.Internet technology enables and even forces companies to operate more efficiently with customersand partners, bring new products to market faster, serve customers better, and adjust ever faster toquickly shifting market changes—and to do it all better than their competitors. To achieve all that,eBusinesses must improve and integrate core business processes, from the customer-facing contactcenter to back-office systems.To deliver an eCRM strategy that extends front-office sales force automation functionality beyondisolated sales, marketing, and customer support departments, an eBusiness must synchronize itseCommerce and CRM solutions with multimedia contact centers, back-office applications, Webservers, and a variety of other internal and third-party systems and platforms. Customer supportsystems that coordinate phone, fax, e-mail, and Web-based self-service capabilities help eBusinessesmanage customer profiles, contact center information, and sales histories through each point ofcustomer interaction. The solutions also enable consumers to enter orders, track account status, andsolicit support via the Web as seamlessly as if they were phoning a customer service agent or meeting face to face with a bank loan officer. B) Environmental Analysis 1) SWOTAmazon, a Fortune 500 company, is one of the leading online retailers in the world. Thecompanyoffers products in various categories through its e-commerce website amazon.com and otherinternational websites. Leading market position in online retail format enables Amazon totarget alarger customer base and enhance its brand image. However, exposure to internet fraud mayproveto be unfavorable for Amazons business and will affect both revenues and bottom linenegatively.Strengths WeaknessesFree shipping offers would be a challengein the long runAmericas largest online retailerRobust brand image enhances bargainingpower Patent infringement issues erode
  12. 12. Diversified into product lines other than stakeholder confidencebooks to strengthen customer reachKindle builds strong presence in the eBooksspaceOpportunities ThreatsPoor publicity with publishers due to thepricing modelAcquisitions extend product line andstrengthen technical platformLaunch of Apple‟s iPad intensifiescompetitionIncrease in online retail sales in the USForeign exchange fluctuationStrengthsAmericas largest online retailerAmazon, a Fortune 500 company is also Americas largest online retailer, with nearly threetimesthe Internet sales revenue of the runner up, Staples, as of January 2010. The company offersproducts in various categories through its e-commerce website amazon.com and otherinternationalwebsites. The online format helps Amazon to rotate its inventory rapidly and reduce itsinventorymanagement cost thereby offering merchandise at comparatively cheaper price. In addition,theonline retail format enables the company to enhance customer satisfaction as it offerscustomerswith broader selection and greater access to information. Leading market position in onlineretailformat enables Amazon to target a larger customer base and enhance its topline.
  13. 13. Robust brand image enhances bargaining powerWeaknessesFree shipping offers would be a challenge in the long runAmazon‟s policy to ship products free of cost would result in fluctuating gross margin for thecompany.In addition, Amazon (through its Amazon Prime program) offers unlimited shipping to itscustomerat a fixed minimal charge per certain period. Despite an increase in fuel and shipping costs thecompany continued with its old pricing and offers. Though free shipping is a majorcompetitiveadvantage for Amazon, reliance on low or free shipping to strengthen business could be amajorchallenge for the company in the long run.Patent infringement issues erode stakeholder confidenceThe company is currently involved in various patent infringement cases. For instance, inSeptember2009, SpeedTrack filed a complaint against the company for patent infringement in the UnitedStatesDistrict Court for the Northern District of California. The complaint alleges, among otherthings, thatAmazon‟s website technology infringes a patent owned by SpeedTrack. Most recently inDecember2009, Nazomi Communications filed a complaint against Amazon for patent infringement intheUnited States District Court for the Eastern District of Texas. The complaint alleges, amongotherthings, that the processor core in Kindle 2 device infringes two patents owned by Nazomi.Also in the past, the company has been controversial for its alleged use of patents. The "1-click
  14. 14. patent" is perhaps the best-known example of this. Amazons use of the one-click patentagainstcompetitor Barnes and Nobles website led the Free Software Foundation to announce aboycott ofAmazon in December 1999. The boycott, an outcome of eroding stakeholder confidence, wasdiscontinued in September 2002. Patent infringement cases have affected Amazon‟s brandimagein the past and may further harm its brand equity in the future.OpportunitiesAcquisitions extend product line and strengthen technical platformAmazon has expanded its business operation and product offering through variousacquisitions. InNovember 2009, Amazon completed the acquisition of Zappos.com, an online apparel,footwearand accessories retailer. This acquisition will enable Amazon tap into internet sales of apparel,thelargest online-shopping category and one in which Amazon has had limited success in thepast.Later, in February 2010, the company acquired Touchco, a touch screen technology company.Amazon will merge Touchco‟s technology and staff members into its Kindle hardwaredivision. Thisacquisition would expand Amazon‟s platform to encompass more functionality and morecontent onKindle. It will also help Amazon address some of the form-factor issues with the Kindle.Theseacquisitions are likely to add new customers and complement Amazons existing productportfolio.Increase in online retail sales in the USAlthough the US retail sales have been heavily hit by the economic turmoil, the online retailsales
  15. 15. recorded a growth rate of 11% in 2009 compared to 2.5% for all retail sales. Consumers areprioritizingprice over other criteria for selecting products. According to industry sources, online sales inthe USare expected to at a compound annual growth rate, CAGR (2009-2014) of 10% toreach $250 billion,up from $155 billion in 2009.Among the online retail sales categories, the eBook market is witnessing strong growth.Accordingto Association of American Publishers, revenues made from eBook sale increased from $25.2millionin 2006 to $169.5 million in 2009. The reasons for the growing popularity of eBooks includetheproliferation of exciting new e-reading devices; screen reading rivaling paper; contentselection; freeeBooks as the gateway drug; lower prices; and great selection. The US wholesale eBook salesforJanuary 2010 were $31.9 million, up 261% from the same month a year earlier. Further, it isestimatedthat eBooks would account for 6-8% of the total US book sales in 2010 up from 3.1% in 2009.Amazon is a leading player in the online retail format, deriving about 52.3% of its revenuesfromNorth America. The projected growth in the online retail sales and the eBook market in theUSprovide an opportunity for the company to capitalize on consumer demand.ThreatsPoor publicity with publishers due to the pricing modelPublishers relationships with Amazon have been strained due to Amazon’s pricing model. Publishersand others have been concerned about Amazon’s policy of pricing eBooks at $9.99, regardless ofthe price tag publishers put on them. Amazon takes a loss on some books at that price, and thepublishers fear that if the $9.99 tag continues, Amazon will force publishers to lower their wholesaleprices, cutting into their profits. As a result, publishers are withholding their titles from Amazonbecause of its pricing model. For instance, in January 2010, Macmillan announced that unlessAmazon sets the price of new e-books to $15, the publisher will not distribute new books to Amazon
  16. 16. when they are released. In response, Amazon banned titles, both paper and digital, published byMacmillan by refusing to directly sell them. But now Amazon is forced to give into Macmillan’sdemands because of the publisher’s monopoly over its titles. Following this, pressure from otherpublishers is also growing. Amazon’s strained relationship with its publishers will not only affect thecompany’s bargaining power but also impact its topline as revenues from the eBooks segment formsa major part of Amazon’s business.Launch of Apple’s iPad intensifies competitionApple’s entry into the eBooks market through the launch of iPad in April 2010 poses a threat to thegrowth outlook for Amazon’s core book franchise and the future of the company’s Kindle device.The Kindle starts at $259 and is designed mainly for reading text on a gray-and-black screen. TheiPad starts at $499, but with the higher price comes more functions: a color touch screen fordownloading books from Apples new iBookstore, surfing the Web, playing videos and games andmore.Furthermore, the iPad gives publishers an opportunity for a new agency pricing model. Apple hasasked publishers to set higher e-book price points for best sellers at $14.99. Book publishers arepushing back on Amazon’s $9.99 pricing now that they can sell the same eBooks on the iPad for$14.99. Five of the six major publishers signed up for the Apple pricing model, including: Penguin,Harper Collins, Simon & Schuster, MacMillan, and Hachette.Apple’s entry into eBooks through iPad is clearly changing the competitive landscape and wouldadversely impact Amazon’s dominant position in the eBooks market.Foreign exchange fluctuationAmazon derives a significant amount of sales from its international operations. In FY2009, thecompanys international segment accounted for 47.7% of the total revenue. Net sales and relatedexpenses generated from the international websites are denominated in the functional currencies(local currency) of the corresponding websites and primarily include Euros, British Pounds, andJapanese Yen. These internationally-focused websites are exposed to foreign exchange ratefluctuations. Due to this the companys consolidated revenues might record significant gains orlosses on the re-measurement of intercompany balances. For instance, as a result of fluctuationsin foreign exchange rates during 2009, revenues of the international segment decreased $174 millionin comparison with the prior year. Fluctuation in foreign currency rates would affect Amazons financialplanning process.Amazon. 2) PEST AMAZON.COM ANALYSIS: POLITICAL, ECONOMICAL, SOCIAL AND TECHNOLOGICAL PEST Analysis is a simple but important and widely-used tool that helps you understand the big picture of the political, economical, socio-Cultural and technological issues that we are operating in. PEST is used by business leaders worldwide to build their vision of the future. POLITICAL International policies: International policies in particular countries may interfere with the expected growth of the company for example; google.com has been banned in China for governmental decision arguing that Google threatens the community and national market with inappropriate contents in his data bases. In addition, Google has lost potential market, as China could be, due to political decisions.
  17. 17. Regulations: safety above e-commerce is not considered as an important issue in variouscountries for example, 76% of internet users in Peru do not trust internet web pages andnever have experienced a purchase online, a survey conceded by “EL TIEMPO” (nationalnewspaper in Peru) conclude that internet users do not believe online contents and in somecases such as internet crime, one cannot attend to legal authorities into the field becausethose do not exist.ECONOMICALCurrency fluctuations: in various countries where currencies are highly devaluated incomparison with the dollar, it may bring additional costs to the company. Furthermoresome products‟ prices may be increase, affecting the main attraction of the company(lowest prices).Economical tendencies: in most cases, individuals rather buy in their neighbourhoodstores, than going online. Customers prefer doing the regular commercial process of goingto the store, paying the product and getting it instantly than going online, processing theirbank details and waiting for several days to obtain the item.SOCIALEthical and religious factors: In some cultures Internet use is not allowed due to the factthat at some point contents may damage their cultural, ethical and social believes.TECHNOLOGICALAmazon.com is a company highly involved into the technologically field, and its successhas been well achieved over the past six years, although many challenges face Amazon inthe fast paced environment of the Internet hence, amazon.com has to face this challenge,finding innovative ways to stay ahead of their competitors.