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Critical Analysis of Amazon Diversification
Amazon was created with the intention of it being a book selling website, but with its success Jeff Bezos diversified it into many different markets to expand his own company. The website is now used to sell/buy apparel, medicine, movies, electronics, and even grocery shopping for some people. With online shopping at its highest point it’s ever been, Amazon is pursuing the perfect strategies to keep their company at the absolute top. A few reasons why Amazon is as successful as they are today is because they are so innovative and compared to other online shopping websites, they are best known for their customer service.
One reasons as to how Amazon is so innovative is because of the making of the Amazon echo, which can be used for many things such as, playing music, check the weather or even check on your favorite sports team. It was a huge investment by the people of Amazon, but it was successful, and they sold over 22 million in 2016 alone. (Howland) This is just one of the brilliant innovative ideas of Jeff Bezos. Amazon continues its success and has so many daily shoppers mainly because of its unbelievable customer service. Amazon has a wide range of tools set out for customers track anything about their package or make any returns that are needed with no hassle. Amazons customer service team has won several awards for being so helpful to customers. Amazon has also expanded their customer service to many social media platforms which just increases the wide range of options you have to go for help.
Amazon basically develops new products to serve in existing markets. Amazon also offers free repair service. This where they can give assurance to the consumers for products like electronics and motor parts. This leads the customer satisfaction and people will tend to purchase more products from amazon. Amazon uses a conglomerate diversification strategy because they started off as a mainly book selling company, but they expanded into a new area of which they do not have much knowledge/experience with. This strategy usually carries a slight risk since there is lack of knowledge in the area you are expanding into. (Wasserman)
Amazon expanded throughout the entire US and became one of the biggest companies, but they also diversified into foreign places such as Japan, Europe, and Asian and Latin American countries. This helps Amazon diversify into different market and customer areas that they never could have thought that they would reach. It is a great idea to diversify no matter which industry you are in. Expanding into new and different markets will help your company in areas that you wouldn’t think of. Another huge advantage on Amazons side is being paired with googles search engine. For example: if you search for a product on google it will give you options from Amazon (if they are available on that website), alongside some options from other websites but Amazons would be most reliable to purchase from. Another reason Amazon is so successful is they strive to get the cheapest prices possible for their customers. Once operating expenses goes down the company will be able to provide goods and services at a cheap price.
Therefore, the selling capacity increase and this leads them to increase their revenue. A great strategy that Amazon uses is they form so many partnerships with non-online retailers to sell their product online. This causes the company to buy highly valuable brand name products which leads the companies to get more income while also expanding.
Amazon has also diversified their company so much just off executing the basic concepts perfectly. They built up a huge customer base and now they are taking over online retail because they give you no reason to purchase something off another website unless Amazon doesn’t have it available itself. They get enough information on their customers to know what to advertise for them and put out, and they also have enough distribution centers around the world which allows them to ship products at a very fast rate to anyone. The largest online market has also implemented plans to adopt a “Brick and Mortar” strategy. Amazon realizes that people are dissatisfied with shopping in stores and they want to change the entire experience. With this Brick and mortar strategy being implemented, Amazon would have their own physical store alongside the online one, and people could make purchases by just saying a few words to their Amazon echo. Another advantage Amazon is going to have over every online retailer is that, once this Brick and Mortar model is fully implemented, Amazon is going to have same day delivery using drones which is going to fulfill the customers’ needs like no other company can. Brick and Mortar is a popular strategy by many, but Amazon just started implementing the idea in around 2015-2016.
Amazon has also started creating “Amazon go stores” where customers can go in and buy any grocery essentials (breakfast,lunch,dinner,snacks etc.). What makes this store so amazing is that it is all advanced, you don’t have to wait on any lines, you literally just grab whatever you need, and you can go. The only thing you need to make sure you have before you go is the “Amazon Go” app installed on your phone. Shopping at Amazon go is also very time conservative because, if you have to go out to pick up some vegetables you run the risk of waiting on a 15-20 minute line if its busy, at Amazon go you can just go grab whatever you need and go and pay through the app. Amazon is really changing the entire shopping scene in every aspect whether it comes to, food, electronics, etc. The only negative to come out of this that is the effect on job loss. They way Jeff Bezos expands though it wouldn’t be surprising if they had them all over the world by the 2030s. (Caffo)
Amazon is striving most during the Holiday seasons because everyone goes on there to rush presents for their families. Also, Amazon knows how to convince customers to always go back to their website and purchase from them. For example, during the holiday seasons, Amazon loves to offer free gifts to people making purchases on their website. They have deals in which if you are someone purchasing a stereo set during Christmas time, they will offer to send you some Christmas time music CDs. They also have a wide variety of options of gifts but it is only on select items when you are shopping. If you are signed up with Amazon, they will also frequently send you emails with promo codes for free gifts/discounts. When customers get treated like this, they have absolutely no reason to not come back and shop from there.
It is mind-blowing how far Amazon has come since they started off as strictly selling books, and now they have paved their way to become the leaders of online shopping. Amazon has the widest selection of products in the entire world on their website which just goes to show how much they have diversified as a company. They use all forms of advanced technology to take care of all their customers and you can chat with customer service at any time. Many companies are entering this industry, it’s just a matter of what Amazon could do now to keep themselves at the top.
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