Amazon aggregators obtain and nurture e-commerce brands over innovative businesses with industrialists to scale the developed Amazon products and advance income for their stockholders. These aggregators search for the Amazon vendors they consider great auction potential to consolidate and run an e-commerce business portfolio (Tripathy, 2018). This research essay explicitly explores porter’s five forces on information systems perspectives to analyze Amazon aggregators based on their rivals, market entry, customers, suppliers, and substitute products. Porter’s five forces are an important element because they ensure the comprehension of the major competitive forces impacting Amazon aggregators.
Amazon aggregators compete with several firms, including big Walmart and small retail stores. The international scope of e-retail operations has exposed Amazon aggregators to various exterior forces. Hence, Amazon aggregators ensure they remain tough amidst dynamics in the current settings of virtual retail environments. Based on “Porter’s five forces analysis framework”, the exterior factors impacting Amazon aggregators include competition, new entrants’ risk, the threat of alternatives, suppliers’ negotiating power, and customers’ bargaining power (Varelas & Georgopoulos, 2017). Amazon aggregators operate in a competitive environment, whereby they compete with firms like Google, Alibaba, Walmart, Target, and Rakuten.
The external factors responsible for Amazon aggregators’ resilient, competitive rivalry in the contemporary online selling environment include the high assertiveness of businesses, the presence of alternates, and low switching costs. Retail businesses are normally assertive; thus, they exercise a solid competitive dynamism toward one another. For instance, Amazon aggregators strive with powerhouses such as Walmart, which owns a significant e-retail platform that enhances its development (Jindal et al., 2021). Adopting information systems into Amazon aggregator’s competitive rivalry will maintain low charges, increasing their profits.
Amazon aggregators encounter the robust strength of substitutes due to their accessibility. For example, Walmart’s store’s mortar brick act as an alternative to the e-commerce service for Amazon aggregators. Additionally, cheap switching expenses perpetrate a strong power on Amazon. The cheap switching costs relate to customers’ low hindrances to migrating from one e-retailer to another (Nicolle & Leroy, 2017). Based on the exterior elements in Porter’s five forces analysis on Amazon aggregators, the rivalry is a top concern for their long-term aptitude (Sakle & Pahari, 2020). Implementing information systems in the substitute goods and services of Amazon aggregator ensures the aggregators differentiate their goods and services hence attracting more customers, which also improves their productivity and increases their profits.
The bargaining power of Amazon aggregator’s consumers is also an external factor that affects the online retail firm. Amazon’s mission and vision statement illustrate Amazon’s consumer-based focus on the e-commerce industry (Arnet et al., 2019). This facet of the ‘Five Forces’ Analysis framework defines the power of customers on businesses. External factors supporting the solid intensity of the bargaining influence of Amazon aggregator’s customers include quality information, substitutes, and low costs for switching (Farah et al., 2020). The customers of Amazon access vital information concerning the services and products of online vendors. The bargaining power of Amazon aggregators affects Amazon regarding the proficiency of consumers to find substitutes for its online retail service.
Cheap switching charges make it easy for individuals to shift from Amazon aggregators to other companies like Alibaba and Walmart. Hence, based on ‘Porter’s five forces analysis, Amazon should consider the solid negotiating influence of customers as a significant aspect in countering firms’ encounters in the industry of e-commerce (Al-Ameedi, 2021). Implementing information systems into Amazon aggregators’ bargaining power builds ties between their suppliers and customers. Building customer relationships is vital since it increases sales, reduces customer erosion, delivers invaluable promotion, boosts employee confidence, and turns clients into a business’s R&D sector.
Amazon’s negotiating influence on suppliers is another key factor impacting the online retailing of its aggregators. Suppliers regulate the accessibility of materials and supplies Amazon requires for its operations, including hardware elements for information networks. The power of suppliers and the online e-commerce environment is defined in the aspect of Porter’s five forces analysis framework (Culpepper & Thelen, 2020). Amazon’s average intensity of suppliers’ bargaining influence is based on small populations, average forward incorporation, and moderate magnitude of suppliers. Small populations enhance suppliers to enforce a robust force on Amazon’s online trading. Using Amazon’s ‘Five Forces’ analysis, the exterior factors illustrate the average significance of suppliers as a crucial element in online retail business settings.
The threat of substitutes significantly impacts Amazon’s online retail business. Amazon aggregators compete with various substitutes in the online retail business. Based on Porter’s Five Forces, factors that support the threat of substitution for Amazon aggregators include low costs for switching, low substitutes’ costs, and the presence of substitutes. Amazon is determined to address the strong substitutes’ forces, which jeopardize its online retailing (Sadq et al., 2018). Substitution is one of the strategies for future success in the e-commerce retailing of Amazon aggregators. Information systems enable Amazon aggregators to increase market entry competitions, protecting them against competitors and improving their competitive advantages.
The emergence of new entrants in the online retailing industry reduces the market share of Amazon aggregators. Issues leading to the risk of novel entrants for Amazon aggregators include cheap switching expenditures, high expansion costs, and economies of scale. Amazon aggregators’ existing customers easily shift to different firms, empowering novel firms to implement a strong influence against Amazon aggregators. Nonetheless, the high price of brand advancement in online retailing deteriorates the influence of new entrants on online retail’s performance. Information systems increase Amazon’s market entry competition hence protecting the competitive advantages of the aggregators. Precisely, porter’s five forces model will help Amazon aggregators examine their business’s attractiveness and pinpoint the sections they should adjust to enhance their profitability.
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