An E-Commerce Retailer
Patrick Collins, Robert J. Mockler, and Marc Gartenfeld
HEADING INTO THE SECOND QUARTER OF 2003, JEFF BEZOS, FOUNDER AND CEO OF Aniazon.com, could look back over the last couple sets of quarterly numbers forAmazon.com and be proud Under pressure from the financial markets to abandon the company's oft-stated goal of sacrificing short-term profits for building long-term growth, market share, and increased shareholder value. Bezos proved that his online retail business model could produce operating profits. Now that Bezos had that issue taken care of, there were a number of new ones that needed to be addressed. Outside the overall economic malaise of the U.S. and world economies, the Internet Tax Moratorium law was up for renewal in November, with no assur-ance of its being extended, and online stalwarts eBay and Yahoo! were expanding into Amazoacorn's markets. Bezos was faced with the task of developing an effective differenti-ating enterprisewide strategy if Amazon.com was to survive and prosper against aggressive competition over the intermediate and long-term futures. Amazon.com is considered to be the premier online retailer in the world. Although it origi-nally started out selling only books, it has expanded into numerous other product lines, as shown in Exhibit 1. Some of these product lines include CDs, DVDs, and videos. However, in order to offer as large a product line as possible, Amazon.com has entered into contracts with numerous retail partners, such as The Gap and Eddie Bauer, to sell their goods through Amazon.com's web site. Some of these partnership agreements involve Amazoacom running another company's own web site. This type of partnership, known as "powered by Amazon." allows companies to use Amazon.com technology and patented web site capabilities, such as 1-Click Ordering. Two well-known retailers who have participated in this type of arrangement are Target and Toys 'R' Us. With the number of households having broadband access expected to increase to 29 mil-lion by the end of 2003 and the number of Internet users worldwide estimated at 500 millioa Copyright © 2003 by Dr. Robert J. MockJer of St. John's University. This case was reprinted from Case in Strategic .Management, Publication 34, pp. c6-l thru Cg-33, edited by Robert J. Mockler and Marc Gartenfeld. Contact Strategic Management Research Group (SMRG) 114 East 90th Street (IBX New York. NY. This case cannot be reproduced in any form without the written permission of the copyright holder. Dr. Robert J. Mockler. Reprint per-mission is solely granted to the publisher. Prentice Hall, for the books. Strategic Management and Business Policy-lOth Edition (and the International version of this book) and Cases in Strategic Management and Business Policy-lOth Edition by the copyright holder, Dr. Robert J. Mockler. This case was edited for SMBP and Cases in SMBP-lOth. The copyright holder is solely responsible for case content. Any other publication of the case (transla-tion, any form of electronics or other media) or sold (any form of partnership) to another publisher will he in viola-tion of copyright laws, unless Dr. Robert J. Mockler has granted an additional written reprint permissioa 10-1
I SECTION E Industry One—Internet Companies
DVDs and Videos Home
Online Auctions Partnerships Lw» Zshops «, Web site Management
it was becoming easier and easier for a person to shop from the comfort of home.' As defined by the Federal Communications Commission (FCC), broadband is a new generation of high-speed transmission services that allows users to access the Internet and Internet-related ser-vices at significantly higher speeds than by using traditional modems. It has the potential technical capability to meet customers' broad communication,...