Amazon.com’s e-business Model
Yasmar E. Figueroa
Prof. Daniel Frost
BUS 508, Strayer University
April 29th, 2011

Amazon’s Growth 1. 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.
Amazon has diversified immensely in the past years; its products and ventures provide variety for the customers. The benefits of this growth and diversification is that is expanding its horizon, trying to reach to more customers and people that may be looking for something more than books; because of the service that they have provided during the years the customers feel comfortable buying on the site and believe in the quality of the products and services that they provide. Another benefit is the fact that in the state that the economy is right now, it is a good an idea to be diverse and have variety in your business. That means that you have different sources of income that can help the company through tough times; therefore if one of the businesses is not doing that good or is going through tough times the company has those other businesses that can keep the company afloat.
But being too diverse can also be dangerous to a company; new ventures mean that attention needs to be put into that particular project while running your already existing operations. Sometimes diversifying too much or having too many ventures at the same time can make a company lose its focus and essence; also trying to do different projects that are so different from one another can cause the end result to suffer. The planning, implementation, and execution of a business plan may suffer as well because the company might be trying to do too much at the same time. At the same time if it is a new field of business that has nothing to do with what the company is known for most probably is unknown territory therefore if proper research is not done it could be a very costly venture for the company. Amazon needs to be careful in not stepping into businesses or fields that are tough or that may not have as many opportunities for them because then it will cost them not only money but like most companies is your image and name what is on the line as well.
I think Amazon has been very smart about their business and how they have expanded over the years; they have researched the market and provided what people need which have made their business successful. Their main focus in every product or services that they provide is the customer; they provide what they need and convenience which is a must in this fast paced live and market that we currently have. 2. 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.
If Amazon had split up and become a family of brands I don’t think it would have had the same impact. Even though, we see a lot of companies branching out and having a family of brands I believe that in their case what has allowed to have the success that they have is their name. A person knowing the company and the service that they have provided over the years is probably their best marketing strategy. Word of mouth is how most people know about Amazon and their services and prices therefore having that name associated with any of your products and ventures will attract your current customers as well as new ones. Also in this fast paced world that we live in one of the main things that drive customers is convenience, just like Wal-Mart, Amazon provides a variety of products in one place making the shopping experience for customers easier. Instead of going from one place to the other, people can find what they need in one place. Also, one of the main concerns for shoppers online is privacy; with Amazon current shoppers feel safe about their information and the company’s policies regarding their customers’ personal and confidential information; if the company split up maybe customers would have reservations about sharing their information with a new company that even though it has the same parent company, customers may be a little hesitant about whether or not whoever is running that company may provide the same service as Amazon does. People rely a lot in what they already know therefore having another public face, even though is run by the same parent company, a lot of people may not associate that with Amazon and may not even know that is run by that company, therefore that could cost of company to lose clients or not be as successful as they planned. 3. Determine if it would be possible for Barnes and Noble or Borders to extend their markets in the same way that Amazon.com has. Explain your rationale
As of this moment I don’t think any of these companies are or will be able to extend their markets in the same way that Amazon has done; I don’t think they have neither the vision nor the financial resources to do so. We all know that Borders closed stores all over the United States and Puerto Rico therefore that is an indicator that the company is not in a good position to expand into other ventures that can cost them even more money. I think that the difference between Amazon and these other companies is that since the beginning the founders of Amazon had a vision of conquering different markets and offering different services and products to their customers obviously having in mind that is needs to be done step by step and it will take them time but they had that vision since the beginning because they are a customer driven company. These other companies had a very short-term vision of the business and in a way I don’t think they have evolved with society and with the market, I am not even sure if at the beginning they thought that far ahead which Amazon did since the beginning. Their business plan and their vision was to everything to their customers and throughout the years they have managed to do so. In my opinion Barnes & Noble represents more competition to Amazon than borders; they represent the best of both worlds because they have physical stores plus a strong presence in the web market. But the fact is that because they have physical stores their expenses are higher and they are faced with challenges that Amazon doesn’t have to face which limits their changes of expanding in the way Amazon has done. Because of that I can see them being a competition to Amazon in the book area and electronics but I don’t see them diversifying into completely different markets like Amazon has done. 4. 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.
In order to include brick and mortar outlets Amazon would need to evaluate how much this would cost the company and most importantly how this would impact their strategy. At this moment the way Amazon does business is working well for them so in way is it worth it to change it? In my opinion, the way they distribute their products is great, they have saved a lot of money by not having brick and mortar outlets allowing them to have a vast inventory and variety for their customers. With the amount of customers and the expansion in products and services that the company provides I don’t think it would be a good idea to include brick and mortar outlets; they have a great turnaround for their inventory, the shopping experience for the customer is easy and pleasant so if is not broken why fix it? The way that they do business is very advanced and innovative so why go back to having an actual store when right now e-business is what is taking over the market. They should focus in continuing to expand and provide the easy shopping experience for the customers instead of focusing in having an actual store or more distribution centers.

Appendix Criteria | www.Amazon.com | www.BarnsandNoble.com | www.Borders.com | Functionality | Very easy for new customers to navigate through it. It is very functional and practical especially for someone that wants to shop and be in and out quickly | To me was not easy to navigate and to find the right place where I should go. The structure of the website makes it a little bit difficult especially for a new user. | I don’t think this website is very functional to navigate. For me as a first time user I am completely lost and don’t know where to look. | Design | Very simple design yet attractive for customers and organized. Everything is accessible | Their design it stands out a little bit more. They have moving visual and brighter colors that captures the attention | Their design is simple yet too much. Meaning that they use very light colors but the content is everywhere | Content | It has a great variety of products and everything is divided in their own sections with lots of information. | The way their content is set up is a little disorganized for my taste. It looks like everything is everywhere therefore making it difficult for the customer where to go. Also it looks as if they don’t offer as much variety as they do just because of the way is set up. | This website is too disorganized for me. I would not buy here cause just getting to the home page and seeing everything everywhere basically takes my motivation to even explore even more | Originality | They have a very common website, it is very standard | Their website is very colorful and incorporates moving elements which makes it very original | To me it looks like an amateur did the website. | Professionalism | There are no offensive images or words and everything is done in a professional manner to please the customer | They are professional and doing everything by the book. Nothing offensive or discriminatory on the website | They are also professional providing information about each step when you are purchasing a product. | Effectiveness | Their website is very effective and straight on when trying to do a purchase. Even as a new user it allows you to process everything pretty quickly | They are effective and the process of purchasing is quickly. My main concern would browsing part which I feel could use more work | When it comes to purchase it gives you the option to continue as a guest without signing in which makes it very effective for someone that doesn’t have the time or is not going to be a regular user |
References
Amazon.com Annual Report (2010). http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-reportsannual
Kurtz, D. (2010 Update). Contemporary business: 2011 custom edition (13th ed.). Hoboken, NJ: John Wiley & Sons.

www.Amazon.com www.BarnesandNoble.com www.Borders.com