Amazon.com's Kindle: Publishing Industry's iPod?

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Themes: Strategy
Pub Date : 2009
Countries : US
Industry : Services

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Case Code : INA0111
Case Length : 25 Pages
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Amazon's Product Extension: From e-tailing to e-reading cont..

In the beginning, Amazon sold hard copies of books at lower rates. It maintained a large inventory of books in its warehouses. Through its warehouses, it supplied books to its customers as and when they placed an order without any time lag. Later, as the technology developed and more content being published online, it came up with the digital versions of the books.

Initially, the website of Amazon did not gain recognition. Many customers did not revisit the site after buying books. In order to attract more web traffic, Amazon included a new feature to its site wherein customers were allowed to post their comments and reviews of the books. This idea clicked well as more customers began visiting the website assuming it to be an online community. Gradually, the business of Amazon gained momentum.Since inception, Amazon has been innovating continuously to expand its business. Bezos banked on the internet to strengthen business.

Speaking on the strength of Amazon, Bezos said,"A huge fraction of our effort historically has gone into building the infrastructure that lets a Web-scale business run."¹⁹

By 1998, the company diversified into selling CDs and DVDs. It soon expanded into dozens of other product categories like - auto parts, toys, electronics, home furnishings, apparel, health and beauty aids, prescription drugs and groceries - and thus revolutionalised the concept of e-retailing/commerce. Being an online book retailer in the beginning, its business model was confined to the sales of products and services available within the company's portfolio. Given the range of products available, it gave a unique web-using experience for its customers like shopping convenience, ease of purchase, decision-enabling information, a wide selection, discounted pricing and reliability of order fulfillment to the customer.

Over the years, it ventured into unrelated businesses. It even transformed itself from an online retailer to a leaser of web space to other retailers. By 2001, Amazon provided a platform for third party to sell their products through Amazon. Through this extended feature, it helped the customers to find whatever they want through their site. Amazon had the experience of selling all kinds of electronic goods like phones, cameras, PCs, laptops, etc., through its site. It moved into new categories and new markets with more dexterity and creativity. It consistently banked on its core capabilities and came up with potentially disruptive businesses.

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19]"Amazon Wants to Run Your Business", http://www.businessweek.com/magazine/content/06_46/b4009008.htm, November 13th 2006