An artificial intelligence strategy provides companies with relevant competitive advantages. Nevertheless, as one of the largest and most reputable tech companies in the world, Amazon has also banked on AI similar to its contemporaries. The specific AI strategy of the company has been evident in its operations, various business interests, and product offerings. It has been using practical AI applications across its value chain, integrated relevant technologies in its products, and has also been at the forefront of the latest developments in the various fields of artificial intelligence. This article explores and details how Amazon uses artificial intelligence.
Explaining the AI Strategy of Amazon: How the Company Uses Artificial Intelligence to Expand Its Business Interests and Add Value to Its Existing Businesses
The specific AI strategy of Amazon has been a critical part of its business strategy. The principles behind this strategy revolve around the expansion of its business interests and adding value to its existing businesses. This means that the company has been offering products based on artificial intelligence and has also been supporting the operations of its numerous businesses using technologies based on artificial intelligence.
Business Expansion and Product Diversification Through Artificial Intelligence
Some people would characterize Amazon as a retailer because of the global popularity of its electronic commerce platform and the acquisition and establishment of several online and physical retail stores. However, apart from its successful retail business, a sizeable portion of its revenues and a driver of its growth come from its on-demand cloud computing platform and application programming interface provider Amazon Web Services.
An integral part of the AI strategy of Amazon is to expand further the service offerings of Amazon Web Services. The company has an initiative that aims to make machine learning techniques accessible for organizations that are unable to develop their own AI algorithms and AI models or build and operate in-house AI infrastructure. This specific pivot from Amazon Web Services positions artificial intelligence as a service.
Take note that Amazon Web Services offers a set of machine learning services for individual and institutional clients. Some examples include cloud-based hardware resources for building and training foundation models or specific models, natural language processing or NLP applications such as text-to-speech and language translation services, generative artificial intelligence platforms for automated data analytics and chatbots.
Amazon is also a consumer electronics company. It has developed and marketed a line of smart speakers under the Amazon Echo brand and a line of domestic robots under the Amazon Astro brand through the research and development pursuits of Amazon Lab126. These consumer electronic devices were built using AI-related technologies such as natural language processing, computer vision, and artificial intelligence acceleration.
Nevertheless, based on the aforementioned, an important principle in the AI strategy of Amazon is to expand further the service offerings of Amazon Web Services and develop new products with AI as their defining feature. Amazon Web Services specifically empowers its clients to deploy their own cost-effective AI strategies while consumer electronic devices like the Echo and Astro bring the practical applications of AI to the consumers.
Improving and Optimizing Business Operations Through Artificial Intelligence
Another key principle behind the AI strategy of Amazon is to use AI-relevant technologies to improve and optimize the processes within its various businesses. The company has been acquiring resources and building capabilities needed to leverage AI across the entire organization and its subsidiaries. Nevertheless, as one of the largest tech companies in the world, it makes sense for it to depend on AI as a source of competitive advantage.
The specific Amazon.com electronic commerce platform demonstrates the different benefits that emerge from a well-designed and well-implemented AI strategy. It uses machine learning to power its recommendation engine. This engine analyzes the context and intention behind customer search queries while also keeping track of user behavior inside the platform. The recommendation engine drives 35 percent of total sales.
Furthermore, as part of its supply chain strategy and guiding decisions about the management of its supply chain, the e-commerce platform depends on various AI-related technologies. For example, to ensure that it has the right amount of inventory in the right place at the right time, it uses machine learning to automate the processing of historical sales data, customer behavior data, and other data about market trends to forecast demands.
It has also automated the processing of data critical to logistics management, procurement, warehouse management, and transportation planning using machine learning. Take note that Amazon has a dedicated software for determining suppliers, negotiating prices, and tracking orders. Robots are also an integral part of its warehouse operations. These machines have automated the entire storage and retrieval systems.
The brick-and-mortar Amazon Go stores have been equipped with an automated point-of-sales system to improve in-store customer experience and reduce operational costs. This allows customers to walk in, put items in their shopping bags, and then walk right out of the stores without needing to check out. The automated point-of-sale system is powered by artificial intelligence technologies based on computer vision and machine learning.
Lessons from the AI Strategy of Amazon: Demonstrating How AI Can Become a Source of Competitive Advantage and a Critical Part of a Business Strategy
There is so much to unpack from the AI strategy of Amazon. The company did not build its AI capabilities and relevant resources overnight. The leadership under former chief executive Jeff Bezos had been investing in research and development pursuits aimed at determining how the company could develop practical AI applications and understanding problem areas across its various businesses that AI can improve and solve.
Nevertheless, from the two-fold AI strategy, Amazon has demonstrated that organizations can benefit from AI either through the development of products that provide practical AI applications, improving and optimizing business operations using relevant AI technologies, or doing both. Note that Apple has a product-focused AI strategy while Google and Microsoft have both product-focused and internal-focused AI strategies.
