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Explore Amazon's history, competitive advantages, product offerings, target market, and solutions to quality control problems, with recommendations for future success.
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Group C Howard Chow Brian Devlin BenjyFinkel Brett Paterno Henry “Hank” Frank
Introduction • History • Retail Strategy • Retail Mix • Problems
History • Started in 1995 as an online book store • Strategically placed in Seattle (Silicon Valley) • IPO May 15,1997 • First online “book store” • Eventually started selling DVDs, music CD's, computer software, hardware, video games, electronics, toys, furniture, apparel and much more • Acquired Zappos in 2009
Competitive Analysis • At first competitors were just Barnes and Noble and Borders • Nook Vs. Kindle • Now threats include places like Wal-Mart, and eBay • Market Price vs. Auction Price • In store convenience vs. at home convenience
Store Design • Easy-to-use website • Headquarters in Seattle and Luxembourg City • Warehouses located near major airports • Software Development Centers
Product Offerings • “World’s Largest Bookstore” • Private Labels: • Pinzon • Amazon Basics • Amazon MP3 • Amazon Fresh • Amazon Unbox • Amazon Web Store • Amazon App Store
Target Market • Demographically • Male or Female • Ages of 18-50 • Any race • Income from lower middle class to upper class • Must have a computer or smart phone to access internet • Customers who know what they want and how much they want to spend
Retail Format • Pure Play E-Tailer • Convenient online shopping; Open 24/7 • One of the world’s largest • Pricing depends on product and brand • Ranges from moderately priced to expensive high end products • Extremely wide range of products • Internet website with visual merchandising • Customer friendly and easy to navigate • Strategy: Serve customers conveniently with the best quality products at an affordable cost and the quickest way possible
Competitive Advantage • Amazon Prime • Dynamic Pricing • Personalized Service • Huge product assortment • Innovation (one-click-ordering) • Successful online retail leader since 1994
Merchant quality control • Independent 3rd party merchants selling products • Discrepancies in price, quality, shipping • Can reflect poorly on Amazon’s reputation
Merchant Quality Control • Example: • A customer wants a tricycle, but wants it in a specific color • Base product sold for $83.99 with standard shipping • Color not offered by Amazon, so customer must buy from Amazon Merchant
Merchant Quality Control • Example Continued • Given the following options: • Consequences • Higher prices • Confusing shipping options • Varying shipping times • Indefinite product quality • Less appealing customer experience
Solutions to the Problem • Price match guarantee • Shipping guarantee • Satisfaction guarantee • Amazon Quality Supervisors
Amazon & publishers • $10 price point • Publishers fighting back • Backed by Apple • Agency Model • Over wholesale model
Recommendations • End the conflict • Market penetration strategy is dangerous • Selling below cost not very smart (eBooks, Kindle Fire, etc.) • Public image • Lawyer/Court Costs • Price Point • $25 • Price sensitivity analysis • Kindle Sales doing great • Book industry vs Music industry • Pursue authors • Give publishers share of Kindle sales → ← • $10 • $17.81
Misc. recommendations • Physical Stores with full multi-channel integration • Too many markets/products • Expand on existing projects before taking on new ones