Pros and Cons of Amazon's Diversification
Amazon.com’s E-Business Model
Professor Dr. Gary Shelton
BUS 508
July 23, 2011
Pros and Cons of Amazon 's Diversification
There are both pros and cons to this growth and diversification of Amazon. Since Amazon 's growth and diversification was done gradually, there was little chance for it to backfire on Amazon. Giving them the time needed to work out the problems. “The design of the marketplace can help to influence success by improving the flow of information, thereby reducing stress and enabling buyers and sellers to function more effectively”. (McMillan, 2002) By setting the main page to show consumers favorites based on prior purchases, Amazon was able to build a loyal customer base from which they could try different marketing and selling strategies. The company uses this customer base in their to expansion and diversification, based on their needs and wants. Amazon have also allowed many small businesses to partner with them to provide services, Expanding their business even more. By expanding and diversifying their business amazon has helped to pioneer the Business to Consumer e-business during a time when many dot coms were falling short.
“The cons of diversification include a lack of basic knowledge of a new industry, having double the sales team, and may be incompatible businesses”. (Diversification in Business, 2011) Amazon had their start with just selling books. However once they expanded into selling items such as clothing, grocery, and music, they had to contend with themselves and outside selling forces. When selling different items there is different product related jargon that the sales team would have to learn. Another thing that can be seen as a con is when a product doesn 't sell well due to bad reviews. “Posting feedback for a product may be counterproductive in the grand scheme of things. For one thing, it doesn 't ensure honest feedback”. (David and Pinch, 2006) since its very easy to change your online identity. Users
Professor Dr. Gary Shelton
BUS 508
July 23, 2011
Pros and Cons of Amazon 's Diversification
There are both pros and cons to this growth and diversification of Amazon. Since Amazon 's growth and diversification was done gradually, there was little chance for it to backfire on Amazon. Giving them the time needed to work out the problems. “The design of the marketplace can help to influence success by improving the flow of information, thereby reducing stress and enabling buyers and sellers to function more effectively”. (McMillan, 2002) By setting the main page to show consumers favorites based on prior purchases, Amazon was able to build a loyal customer base from which they could try different marketing and selling strategies. The company uses this customer base in their to expansion and diversification, based on their needs and wants. Amazon have also allowed many small businesses to partner with them to provide services, Expanding their business even more. By expanding and diversifying their business amazon has helped to pioneer the Business to Consumer e-business during a time when many dot coms were falling short.
“The cons of diversification include a lack of basic knowledge of a new industry, having double the sales team, and may be incompatible businesses”. (Diversification in Business, 2011) Amazon had their start with just selling books. However once they expanded into selling items such as clothing, grocery, and music, they had to contend with themselves and outside selling forces. When selling different items there is different product related jargon that the sales team would have to learn. Another thing that can be seen as a con is when a product doesn 't sell well due to bad reviews. “Posting feedback for a product may be counterproductive in the grand scheme of things. For one thing, it doesn 't ensure honest feedback”. (David and Pinch, 2006) since its very easy to change your online identity. Users
References: McMillan, J. (2002) Reinventing the Bazaar. New York: Norton and Co. Ltd. Resnick, P., Zeckhauser, R., Friedman, E. And Kuwabara, K (2000) Reputation systems. Communications of the ACM, 43 (12), 45-48.