Analysis and solution
Notable online retailer Amazon was faced with a lawsuit in early 2012 after its failure to guard its sensitive customer data from malicious individuals known as hackers. The attack featured cracking of online shoe and clothing retailer Zappos as subsidiary of Amazon where computers had their account and customer information stolen such as credit card numbers. As a result of this incidence the company faced lawsuits from its customers. This suit was aforementioned in principle following the company’s inability to safeguard the clients’ sensitive information, (Fowler & Vascellaro, 45).
Several lessons were learnt from the Zappos hacking incident such as the importance of security in any marketing strategy. From such incidents information technology security experts can present demonstrations of the enormous risks undertaken with inadequate human resources and limited security funding (Ping, 23). It was also learned that any breach to information access creates a negative image to the brand of any organization or firm. Despite the efforts of information technology executives, companies still fail to understand the losses that weak IT security systems poses and the associated threat. It is from incidents like this that support can be gathered that would advocate for greater security mitigations.
Zappos's business model is based on the utilization of relation marketing which is a marketing approach that is based on the direct market campaign responses. These campaigns focus on retaining the customer while satisfying them as opposed to dominative emphasis on transaction of sales. The main sources that can be attributed to the company's steady but rapid growth have been through personal recommendations with most of its customers being loyal clients. Its customer service industry reputation has been strengthened by its viral marketing strategies, while offering attractive special offers on components such as assisted shipping and favorable company policy.
One can see from Zappos's organizational policies that their forms of customer relation and general business operations aim at identifying the extended value of the relationship with its customers through long term communication. This transcends beyond promotional sale advertisements which are perceived as being intrusive. However, it is established that this has been supplemented with the growth of the internet that has opened up markets to be more collaborative and dynamically social (Fowler & Vascellaro, 45).
On the other hand Amazon holds value in its propositions for price and related convenience. This is also translated in all categories of its products. This has allowed the firm to extend its market reach while deepening the relationship among its customers. Its basic business model structure is characterized in a way such that its key partners are its suppliers and manufactures with a network of sellers and publishers. Its major activities being merchandising and product design, key resources are its physical warehouses and its human resource pool. The company's revenue streams are its sales from retail, electronic books and their related content, commissions from its retailer sales and prime monthly subscriptions (Ping, 23).
This has allowed the company to model its cost structures in such a way that they are driven by cost and related economies of scale. This in turn has allowed the firm to gain a substantial domination of the online market industry share. This has been undertaken through implementation of its fair traditional retail standards as its business model with utilization of the internet as a business platform. This has allowed it to thrive in the existing digital age, while offering favorable execution of its business model as it seeks to develop new business models.
References
Fowler, G. Vascellaro, E. "Media and retail companies and how their businesses meld into online models". Wall Street Journal Asia. 2010. Print.
Ping, W."Online phishing as viewed by online shoppers". International Journal of Computer Science. 2011. Print.
