Amazon.com was founded in 1994 as an online book retailer. Now, the largest retailer of books has also become the largest online retailer with a customer base of over 30 million people. Amazon competes in a vast array of markets including: books, movies, digital readers, computers, consumer electronics, pet needs, groceries, health and beauty aids, toys, clothing, jewelry, shoes, sporting goods, tools, automotive, hardware, building supply, and more. Despite their large product offering, Amazon has maintained its strong brand.
Imagine if Toys-R-Us, the largest toy retailer began selling books or if the NBA began selling hardware online. The threat of consumer confusion would rise, thus bringing into question the value of the Toys-R-Us and NBA brands. Some analysts question the wisdom of Amazon.com selling products that are typically sold in the business-to-business markets. For example, you can now purchase industrial, laboratory, and scientific supplies from Amazon.com. (See Appendix – comparison and contrast chart of Amazon.com, Barnes and Noble, and Borders.)
Discuss the pros and cons of Amazon’s growth and diversification of business and specialization, and make recommendations about what Amazon could have done differently.
The study comprises of Amazon.com which started its history by selling books and now one of the online market leaders globally not only for books but products from various categories. Company started with a mission to be Earth’s most customer centric company. In order to become the largest and convenience online store for all, there are major problems or threat being faced by Amazon.com in succeeding its mission. The major problems are Amazon facing are and may be some of Amazon.com recommended solutions such as; technology integration and R&D, strategic cost analysis, differentiation, inventory, visionary & informative, keep customers in the loop on everything, shipping & delivery, expansion to Asia Region, word-of mouth advertisement, and expansion of the product line. In order to remain competitive in the market, it is necessary to not only understand the book industry as a whole, but to know what your competitor’s objectives are in the market. Two of Amazon.com largest competitors are Borders Group, Inc. and Barnes and Noble. Realizing the immense potential of setting up a retailing business on the web, Jeff Bezos was faced with the following dilemma: Out of the endless items that could be sold on the internet, which item would give him the most profitable business opportunity? Although Jeff had no previous experience in book retail, he decided on selling books because of the following factors: There is a broad field of book publishers and too many books to be carried by any single bookstore. Books may be classified as “search” goods as opposed to “experience” goods, which must be experienced before they are bought. This characteristic of books makes them amenable to sell over the Internet. There is plenty of room for bringing down margins, i.e. offering customers deep discounts. Jeff started Amazon.com, Inc. in 1994 in his garage in a Seattle suburb, wrapping orders and then delivering them to the post office in the family car. The company opened its virtual doors in July 1995 and went public on May 15, 1997 (The IPO price was $18.00, $1.50 adjusted for the 2-for-1 stock split payable on September 1, 1999). Jeff Bezos and his family own over 50% of Amazon.com. Amazon.com is listed on the NASDAQ as AMZN.
Amazon.com is the only bookseller in the world’s top 500 websites. According to one analyst report, Amazon.com is estimated to have over 80% of the online bookstore market. However, with time, Jeff’s vision for Amazon has evolved much further than just being the earth’s biggest bookstore. The vision is to be the world’s biggest one place-shopping stop for online shoppers; to become a premier general online retailer by leveraging its...