E-commerce Company Free Essay Example, 2500 words

The company does not over supply products to its agents hence; it keeps a control on the price of the products. They distribute products to their agent through direct Amway stores which are operated by the company itself. They do not go for retail marketing hence; supplier’s switching cost is low. The agents generally invests in the company to be authorized sellers hence, it has low tendency to switch as they are part of the company’s stake (Geunes, 2009). Bargaining power of customers Consumer’s bargaining power is high due to the competitive market filled with international brands providing same quality products. Competitors like L’Oreal, Avon, Oriflame and VLCC are established players in the international market. The consumer’s switching cost is low and Amway does not resort to price differentiation strategies depending on the market and its demand, though it maintains its quality standards of the product (Fournier, 2009). Threat of substitutes Threat of substitute is high as there are other competitors in the international market. The competitive brands hold larger market share and presence in the global market arena. They provide higher quality products in lower prices. We will write a custom essay sample on E-commerce Company or any topic specifically for you Only $17.96 $11.86/pageorder now The factors implemented by the competitive brands follow the price and product differentiation strategies. They spend heavily on promotional and marketing communication activities in which Amway lags behind. Herbal products are also gaining position in the international market giving Amway tough competition (Amway, 2013). Threat of new entrants The threats of new entrants are low since many companies are registered as MLM companies. They maintain a loyal customer base and maintain long term relationship with its customers. They believe in enhancing customer experiences by giving customized products depending on the requirements. They have a low product differentiation and are more expensive than other consumer brands hence, consumer preferences are low. The existing MLM companies are Mary Kay, Cosway, Nuskin, Avon and Herbalife. Amway has already created an established brand name for itself in the cosmetic market with the launch of Artistry, which is very popular in the international market and has secured the highest rank in the global market (Amway, 2013). Rivalry Amway faces tough competition from both consumer retail products as well as MLM companies. Brands like L’Oreal, VLCC, Kerastase are the global competitors of Amway. Among the MLM companies are the brands Cosway, Avon, Oriflame, Mary Kay etc.