Question

I need an answer to this question mentioned below Regarding Amazon Inc.

You should imagine that you have been tasked with reviewing the current strategies and performance of the company that you selected and identifying a major problem that it is already facing or will likely be confronted with in the near future. Finally, you have to suggest two courses of action to address this problem and recommend the one you prefer.

Answer 1

Counterfeit products: Its third party sellers are poorly managed. The programs for them are flawed. The third party contributes 13% in revenue of Amazon and is growing manifold. This is high margin section as these sellers make investments for their inventory and provides fees and a % of sales to Amazon. The problem is Amazon doesn’t vet their third party sellers and as they command huge space online, approves all of them. Though Amazon is working on it but is still short of major breakthrough. It guarantees payback of full amount to buyers who get affected by no delivery from sketchy sellers but only when customer reports it. This gives bad shopping experience to customers and with it Amazon can’t maintain its steady growth.

Amazon has been poor in its HR policies that are impacting its employee greatly. Amazon could face severe problems if it continues it poor working conditions in future. It has started to face problem in hiring especially at its warehouses.

It has hugely invested to mitigate counterfeit products.

• Its team works round the clock taking actions on reported issues and has systems that can figure out copyright violations. Customers get their amount back if they are not delivered the item.
• Amazon started Brand Registry to avoid the problem of sketchy sellers. The brands can sign up this program that will protect their trademark. The brands can check their own products that are sold by third party sellers for authenticity.
• Its Project Zero will ask brands to give a unique manufacturer number to all their products that could be checked by Amazon for checking its originality.
• Amazon people also pretend to be shoppers to identify fake products on its website.

But it is not sufficient.

The additional strategies can be:

• It needs to put checks in supply chain by collaborating with its partners. It needs to invest in sophisticated technology that has feed forward control features so as to vet the company and its product before they are displayed on website.
• Educate customers and communities widely about shopping real products only.

The first strategy needs to be pursued as Amazon cannot sit back and ask brands to take care of their counterfeit. It provides a platform thus is responsible for full security and sellers who sell through it. Thus it needs to come up with strict policy for qualification of third party sellers. It can ask them for brand authentication sent to Amazon directly before allowing them selling on their platform. This would avert fake sellers.