Amazon unrelated diversification strategy
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Still, he needed a product that would lend itself easily to online sales in order to break ground in this new arena. After brainstorming many possible ideas, Bezos settled on books, which are easily sourced and warehoused. Books are also an ideal commodity because they are iden-tical products regardless of where they are purchased in a brick-and-mortar bookstore or online. This in turn reduced customer uncertainty about transacting online, which was new at the time.
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Also, an Internet store can carry a significantly larger inventory of books than typical bricks-and-mortar establishments. When Jeff Bezos started Amazon.
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As of December 31, , Amazon employed more than , employees. Yet, wood doors turning into desks remain a staple at Amazon, where strict cost control is paramount to this day.
The online startup set itself apart from other Internet merchants by pioneering one-click shopping, customer reviews, and order verification via e-mail. Early on, customer service representatives wrote personalized emails to each customer after orders were placed.
As a result, the startup rapidly outgrew its square-foot office which was actually a garage in Bellevue, Washington. Over the next few years, Amazon moved to new warehouses several times to accommodate its growing volume of business. Riding high on consistent growth each quarter, Amazon completed a successful initial public offering IPO on May 16, Amazon executed a series of strategic alliances as well as acquisitions to rapidly expand its prod-uct and service offerings.
› /11 › amazons-rare-unrelated-diversifi. Unrelated diversification strategy happens when a company offers or manufac · diverse products which have no relation to each other. · Amazon first started as.
For example, Amazon bought junglee. Among the companies acquired were HomeGrocer.
Evaluate Amazon's Diversification Strategy.
Internationally, Amazon added warehouses as well as country-specific sites in in the United Kingdom amazon. This proved to be only a temporary setback, as the company quickly entered a new phase of prod-uct and service proliferation. In that same year, Amazon was contracted by Borders to provide inven-tory, fulfillment, content, and customer services. The company expanded its presence in consumer product segments by partnering with hundreds of clothing retailers in to initiate a clothing sales department. Shortly thereafter, Amazon launched another site called askville.
It was designed to connect users by allowing them to ask each other questions about anything. Amazon launched its premium subscriber service, Amazon Prime, in In an attempt to boost Prime membership, Amazon acquired rights to exclusive content from Discovery Communications and other content providers, providing Prime customers with access to unlimited instant streaming of more than 18, movies and some 2, TV titles.
To accelerate this, the company built a set of in-house infrastructure services that would allow its retail business to move more quickly. Amazon, however, only needed its full capacity for about six weeks of the year, during each holiday season. Amazon quickly realized that such on-demand web services and computing power would be valuable and useful for other companies and formed a business around the infrastructure.
Subsequently, entities ranging from tech startups to government agencies such as the CIA have rented server space, storage, and computing capability from AWS. On a local level, in Amazon started a dry grocery service in Seattle, expanding it in to include perishables. Amazon also continued its growth in the entertainment industry. In , the company launched an MP3 site that sold audio files to users without copyright restrictions. It also acquired Brilliance audio, an audiobook publisher, and launched a video-on-demand service that allowed users to stream or download movies and TV shows.
This included a social-networking site exclusively for book lovers called Shelfari. Amazon also launched Endless.
In , Amazon also ventured into hardware development with the release of the first-generation Kindle, which sold out in less than six hours. This was not surprising because Amazon sells its Kindle devices at or even below cost. Subsequent editions incorporated new features such as a larger screen DX , a keyboard Kindle Keyboard , and a touchscreen Kindle Touch.
To take advantage of the anticipated popularity of e-books and e-readers, Amazon launched Kindle Direct Publishing KDP in conjunction with the Kindle in , to make it easier for authors to self-publish books.
On a local level, in Amazon started a dry grocery service in Seattle, expanding it in to include perishables. As Bezos gazed out of the office window into the darkness, he could not help but ask himself that very question: What should be the fourth pillar of Amazon? Amazon launched its premium subscriber service, Amazon Prime, in Briefly write your. For Bezos, the technology and industry convergence he had experienced in the last few years was unprecedented. A few months after the launch, Amazon added the Tap and Dot devices as lower cost alternatives to the Echo. This creates the opportunity for commerce at just about any moment for the consumer who carries the device.
An author can publish their work through KDP quickly and have it available around the world the next day via Kindle devices and the Kindle app. In , sales from e-books surpassed paper book sales for the first time.
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Sales of the Kindle itself were estimated at 20 million units in Amazon runs Zappos as an independent subsidiary with its own site zappos. The breadth of products and services on offer at Amazon helped insulate it from the worst of the fallout from the — global recession. However, the focus on peripheral businesses has hit company profits because Amazon invests heavily in areas such as new fulfillment centers to improve shipment times, expansions of the Amazon Prime media service, and development of its smart devices.
In , Amazon introduced Amazon Basics or its own brand of products e. Amazon branding its own products further lowers costs and it also increases the percentage of sales that it retains.
In , the company launched AmazonSupply now AmazonBusiness to offer business clients prod-ucts such as mechanical parts, janitorial supplies, and medical supplies. By , the AmazonBusiness catalog of products features 2.
Here’s the one glaring problem with the Amazon-Whole Foods deal
In , Jeff Bezos announced that Amazon would start working on drone delivery of packages under the name of Prime Air. On the trip, drones rely on GPS data to chart a course and drop packages. While this initiative was welcomed by customers, the project was delayed due to several issues including battery life of drones, weather, unreliable GPS data, and aggressive birds.
Nonetheless, on December 7, Amazon Prime Air completed its first deliv-ery using a drone. The AFC is expected to essentially be an airship flying at altitudes of 45, ft. The patent explains a method for drones to fly into the warehouse, pick up the items to be delivered and deliver them, all while continually airborne.
To complement the Kindle, Amazon has launched peripheral smart devices. In , Amazon launched the Fire smartphone. This creates the opportunity for commerce at just about any moment for the consumer who carries the device. Despite the promise and the launch fanfare, the device proved to be a major disappointment. In other words, corporations with multiple business units tend to do better when the corporation can add clear value to the individual businesses and vice versa.
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The problem here, as I see it, is that the resources and capabilities that make Amazon such an exceptionally effective competitor are quite distinct from the resources and capabilities that Whole Foods has focused on and developed over a long period of time. As part of a class in strategic management that I teach here at the University of Notre Dame, we compare and contrast two retail businesses with substantially different modes of operation — Whole Foods and Aldi.
In contrast, Aldi pursues a cost-based competitive advantage. Its value proposition is to provide acceptable-quality goods, most of which are private-label, at the lowest possible price, with no frills, minimal advertising, and a utilitarian in-store experience.