Understanding the Replication Model

The Amazon Digital Platforms

Amazon provides numerous products and services integrated through a single website. In order to accomplish this task, Amazon must utilize a digital platform based on a replication model. One can see this model in the manner in which its supply chains are vastly extending from its own warehouses and from independent sources that ship direct to consumers, but link through the single platform that standardizes business and selling processes but maintains autonomy of independent business units.

Independent Sellers

One of the greatest examples of the replication model is the independent sellers that Amazon utilizes. The Amazon platform is composed of seller tools such as websites, product areas, and payment processing. This model creates a standard approach to selling in which a seller (of any size) can list their products on Amazon and build a business (Amazon, 2015). For example, an author can sell his or her books on Amazon using Amazon’s publishing platform. An author page which lists his or her books is standardized such that any author will have a page which is designed using the same web page code but requires the input of their personal data (Amazon, 2015). Author pages will typically looks the same in so far as the design is concerned. This is true of Amazon's seller websites and other seller areas.

There are tremendous advantages to the replication model for Amazon and sellers. For Amazon, individual sellers can provide diversity of products along with revenue for using Amazon’s platform. The business intelligence which is derived through this model is also beneficial in that it allows Amazon to take advantage of specific trends in the market. For example, one of the most profitable areas of the Amazon business model has been the expansion of the company into digital and electronic services. Since the 1990’s e-readers have continued to be a popular product. The Amazon Kindle, now in its 5th generation, is the leading e-reader. The Kindle continues to be the most popular e-reader due to its quick responsiveness and ease of reading in different light sources. The by virtue of the way that Amazon’s digital platform is designed, it can remain independent of the business units which use it but also implement products and services which are based on these units such as the Kindle which has greatly expanded the market for book sales into the digital realm.

The replication operating model quadrant appears to be the best for optimum performance of Amazon. However, there are some serious drawbacks to this model which hamper its ability to expand the business in many areas. Replication has the downside of in which “business unit managers have limited discretion over business process design, even though they operate independently of other business units” (Ross, Weill, & Robertson, 2006). The businesses which comprise Amazon are limited by the standardized platform of Amazon such as not being able to alter the construction or HTML code used in the pages of the site. As well, the policies for selling on Amazon are also limiting, because of being a one size fits all approach (Amazon, 2014). For instance, a seller can only sell products and services which are approved in Amazon’s terms of use and they must abide by pricing restrictions due to Amazon fees. Perhaps the largest of disadvantages to this model is the fact that Amazon’s replication model creates the problem of compartmentalization.

The Amazon site is carved out into many different areas of competency and while this seems like a good organizational approach it has the negative impact of creating a confusing and sometimes time consuming customer experience. This can be readily seen in the manner in which sellers are divided by function. If you are a writer, you must use the Author Central to post your biography and showcase your books (Amazon, 2015). However, to publish your book you must use KDP which is the eBook publishing platform (Amazon, 2015).

This becomes even more confusing if a person sells more than just books. If a person sells products, then he or she must use the seller area which is again compartmentalized by goods. Even from a customer level, this is an awkward system since the person must move through different areas of their account in order to access different products and services. In the picture to the right, the menu from Amazon exemplifies this issue as every area of customer access is compartmentalized. One can see readily how all streaming music, video, and other digital products are compartmentalized (Amazon, 2015).

The replication model has negatively impacted the ability of Amazon to integrate services and products efficiently. For example, the Kindle was a large success, in part because it maintained its core competency of being an e-reader. This proved to be a good strategy in the beginning because it expanded the book market for buyers and sellers. However, when competitors such as Apple entered the market by making tablet computers which are also e-readers, this created serious issues for Amazon. Unlike the first generation Kindles, the IPad presented many selling points such as intensive graphics and media players as well as access to a cloud storage for the media (Hapke, 2010). Companies such as Apple and Microsoft would expand the reader market utilizing clouds and multimedia programming which offers more integration of products and services. Although Amazon did release the Kindle Fire and its own cloud storage system, there is still a lack of integration as each area must be accessed differently due to compartmentalization of services caused by the replication model. Companies like Microsoft and Apple were able to gain a large market share due to providing a more user friendly environment (Hapke, 2010). By providing a more integrated and customizable environment this allowed for Microsoft and Apple to retain customers and create a brand loyalty through better functionality (Hapke, 2010). Currently, Amazon still lacks this level of integration and user experience due to its replication model.

The current replication model works for Amazon but does have limitations. Despite these limitations, the model may be the only method for digital platform architecture due to the fact that Amazon must maintain its relationships with independent business units which requires a specific standardization to make it work properly. For this reason, expansion of products and services may be possible but not a complete streamlining and simplifying of the integration of services. What may work best for Amazon is the design of an application which unifies its processes on a single dashboard page which is user friendly and less confusing.

References

Amazon . (2014, May 25). Terms of Use. Retrieved from Amazon: http://services.amazon.com/content/Terms_Conditions.htm?ld=SEUSSOAGOOGB1190650079AS

Amazon. (2015). Amazon. Retrieved from Amazon: http://www.amazon.com/

Amazon. (2015, May 9). Author Central: Moses Siregar III. Retrieved from Amazon: http://amzn.to/1J01Gkd

Hapke, S. V. (2010, February 6). What is the kindle’s future? Retrieved from Huffington Post : http://www.huffingtonpost.com/stephanie-vaughn-hapke/what-is-the-kindles-futur_b_451871.html

Ross, J. W., Weill, P., & Robertson, D. (2006). Enterprise Architecture As Strategy: Creating a Foundation for Business Execution. New Jersey: Harvard Business Review Press . Retrieved from http://amzn.to/1JyQglx

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