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Amazon.Com Essay

2205 words - 9 pages

IntroductionWhether one believes that Amazon.com is headed for the rocks as a long-term investment, or that after all the turbulence of the dot com bust, it is still destined to become one of the World's great innovation and financial success stories. One thing is for sure; the story will not play out as extremists on either side of the fence have suggested. Despite the fact that Amazon is still unable to generate "real" profit - as opposed to profitability in segments of its business while other segments languish - it is still a viable business entity with impressive market share and brand advantage in an ever-expanding online World market. On the other hand, Amazon still has a long way to go before it can prove to be the World's first pure-play online retailer with profit margins to challenge the likes of traditional retailers like Wal-Mart, Sears, Home Depot, Costco, or other retail giants.Customer Value-AddFor the successful retail businesses cited above, the strategies evolved over time and illustrated the innovation and determination of the respective organization. For the most part, traditional retail successes have offered lower cost and greater selection in one convenient location. Similarly, Amazon will need to employ a slow-growth e-business "evolution" strategy rather than the pre dot com bust "revolution" strategy that many companies espoused. Coltman et al describe the strategy as "... an incrementally more efficient medium rather than a price revolution. For example, the real prices of books and CDs were some 9 per cent to 16 per cent lower through online retailers than through traditional booksellers in 1998 and 1999" (Coltman et al, P.68).In other words, Amazon will have to show price, selection and convenience value to its customers, just like Wal-Mart, Sears, Home Depot, and Costco have for theirs. While Amazon has already done this to some degree, it needs to build upon its customer value successes and limit the number of failed partnerships and expensive ventures that have marked its past. In other words, offering lower prices and a wide selection does not mean being all things to all people--the lines must be drawn somewhere, and they will most likely be drawn at the point where a new idea adds to Amazon's already considerable debt with no appreciable financial benefit.This suggests an evolutionary strategy away from Amazon's original "get big fast" strategy that attempted to procure more customers at any cost. The consumer value that Amazon may be able to offer, however, could prove to be more than lower prices and better selection of product. For example, the basic convenience of shopping from home does offer additional cost savings simply for the fact that one does not have to drive to a "convenient" location. Additionally, online sales offer the ultimate convenience of shopping from home, or, with the addition of wireless technology, from anywhere one happens to be. Further consumer value-add may be offered by profiling...

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