Assignment #2: Amazon.com’s E Business Model
Professor Michael Padgett Contemporary Business July 22, 2009
This paper discusses Amazon.com’s business operations, the pros and cons of Amazons growth and diversification, along with determining the impact of Amazon.com if it had split up and become a family of brands. Also in this report an evaluation to determine if it would be possible for Barnes and Noble or Borders would be able to extend their Markets in the same way that Amazon.com has and finally determine what Amazon.com would need to do to expand their distribution chain to include some brick and mortar outlets, and whether or not this would be a good idea.
Assignment #2: Amazon.com’s E-Business Model
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.
One would have to look at all aspects of the benefits along with the pros and cons of trying to bring growth and diversification, especially in an internet environment. The main factor of choice would be the peoples trust in the company. When looking at a one word name, there should be several things that come to mind which would ensure that people will remain connected to the brand. Right now Amazon’s name stays on peoples mind as of now, and the plan is for the name to stay there, but to make that happen Amazon is faced at looking at what it has already and what it can do to structure change for the better. To do this, Amazon has to evaluate its pros and cons.
People know when it comes to online buying, Amazon’s name stand out for the most part because people can purchase many different items through the Amazon website. Amazon has provided a way to have attractive schemes to gain the interest of many types of consumers by pitching adds on various websites with direct links to Amazon.com. Having diversity in Amazons business benefits them in ways that Amazon has entered in to many different markets so that they can sell almost anything. Having relations with other retailers where Amazons logo is presented helps retailers get product normal that may not have been sold of the shelf because of the popularity that Amazon has.
Having the opportunity to shop on Amazon.com and actually put many different things in a cart that normally one would have to shop at different locations or websites is also a direct benefit from shopping at Amazon.com along with its price savings. Growth and diversification has always been the main idea of running Amazon, it has the capabilities to have leverage of economies of scale, increased market share, increased power of the brand, and have a strong marketing platform. Some cons would include cost of entry into new business verticals, diluting the brand by overreach, and diversion of core resources to non-core competencies.
Determine the Impact if Amazon,com had split up and become a family of brands (for example, “Amazon” for books, “Supertoys” for toys etc.), each with a different public face but all run by the same parent company. I think in order for Amazon.com to make improvements in their process, they have to somehow use another marketing tool to separate their business in to smaller sub-categories. Another aspect to look at is how Amazon in its diversification process, remain efficient to handle the transition it is trying to make. It is one thing to be an “all in all” company, but with being that, certain qualities should not be compromised in the process of making this happen which could result in poor performance. The cost to separate the website into different segments would cost extra money in the process which means the over-all cost to run the business would increase.