Amazon.com's E-Business Model
Dr. Etido Akpan
May 1, 2011 (Resubmitted May 11, 2011)
Amazon.com's E-Business Model2
1. 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.
Amazon.com, the largest online retailer in the United States, was founded by Jeff Bezos in 1994 and the site went online in 1995. Amazon.com first started out as huge online bookstore, now the company sells products such as CD's, DVD's, toys, MP3 downloads, computer software, furniture, video games, apparel, electronics, and food among other things. When a company offers so many different products in different categories there are bound to be some pros and cons associated.
The most obvious pro that came from the growth and diversification of Amazon.com is their profitability. When Amazon.com finally did see some profit it was six years after it first launched on the web, with a profit of $5 million to now annual revenues of $6.7 billion.(Amazon.com, 2011) With offering so many different products, Amazon.com has a greater potential to make the most profit because there is literally has something for everybody. Founder Jeff Bezos' goal for Amazon.com was to have every product in the alphabet, (Amazon.com, 2011) with having such a large product selection, profit is bound to follow, eventually.
Another pro for Amazon.com is their customer base and loyalty. The company currently has 130 million active customer accounts and 2 million active sellers. (Amazon.com, 2011) The more the product line up grows and diversifies, the more their customers will grow and diversify as well. When Amazon.com only sold books they had a large consumers presents, but only from people who wanted to buy books. Now the consumer presents isn't just for those who like to read. Amazon.com was able to grow the customer base by offering different things that interested different people. Such as electronic junkies, they may never want to read a book in their lives but now they can go to same website as avid book readers and get the things that are personalized to their lifestyle. And for those customers who Amazon.com's E-Business Model3 want to purchase electronics and books Amazon.com is definitely going to a their one stop shop.
Whenever there are pros, cons will always follow. Amazon.com has been involved in many lawsuits from their competitors such as Walmart and Barnes and Noble. (Amazon.com, 2011) The lawsuits consisted of such things as, Amazon.com stealing trade secrets from Walmart by hiring former Walmart executives and Amazon.com saying they are “the world's largest bookstore” (Amazon.com, 2011), Barnes and Noble claimed Amazon.com was not a bookstore at all, they were book brokers, respectively. These types of lawsuits should be expected when a company starts dipping into the profitability of their competitors because they sell the same products at a cheaper price. To avoid some of their legal issues Amazon.com's management teams should do extensive research about their competitors to make sure things they say or claim to be can not be disputed by another company. I know that is hard to do but when you claim the to be the world's largest anything, make sure what is being said is a a fact without a doubt.
Another con from Amazon.com having such a large portfolio is as simply as they sell too many products for those consumers who like consistency, such as myself. Many customers do not like shopping at a places that has so many products unrelated to one another. It is hard to trust a company who does not specialize in one or even just a few products. I go online to their website looking for just music to listen to and I am bombarded with everything but music. When offering so many different products...