Amazon.com

Essay by danster13University, Master'sA+, October 2006

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Introduction

Whether 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-Add

For 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...
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