Discuss whether or not Amazon has lost its identity by expanding into markets well beyond

books.

Amazon, the US based multinational e-commerce company, is America's largest online

retailer. The company, founded in 1994 by Jeff Bezos and originally based out of his garage,

debuted as an online bookstore. Shortly after its founding, Amazon diversified its product line,

offering CDs, DVDs, electronics, toys, apparel, food, downloads and a wide variety of other

goods. In 1995 Amazon posted net sales of $511,000. Today, Amazon has a globally recognized

name, a customer base of 25 million, and, as of 2009, posted net sales of $24.5 billion.

In discussing the point of whether Amazon, a company that has garnered enormous amounts of

publicity and financial success, has or has not lost its identity, it is important to define how

identity is established. Is a company's identity formed by the products and or services it offers

or by a clearly defined corporate ethos? If in fact, a company's identity is formed by the

products and or services it offers then it can be argued that Amazon, which originally started

exclusively as a book seller, has indeed lost its identity. However, given the exponential growth

and success Amazon has achieved over the its short history, a deeper perusal into corporate iden-

tity is merited. “Corporate identity comes into being when there is a common ownership of

an organizational philosophy that is manifest in a distinct corporate culture — the corporate

personality.” In examining Amazon's corporate philosophy, one discovers that an emphasis on

quality customer service is a recurring theme. Amazon's corporate mission statement starts with

the following, “Our vision is to be earth's most customer centric company.” In a 1997, in

Amazon's first letter to its shareholders, company founder Jeff Bezos states, “obsess over cus-

tomers”, and “We will continue to focus relentlessly on our customers.” Almost 15 years since

its founding, in a 2009 letter to shareholders, Jeff Bezos continues to place an emphasis on

Amazon's customer centric approach to business, Bezos states, “Start with customers, and work

backwards. Listen to customers, but don't just listen to customers-also invent on their behalf...we

can assure you that we'll continue to obsess over customers. We have strong conviction that that

approach- in the long term- is every bit as good for owners as it is for customers.” It is apparent,

that Amazon's growth has not resulted in a loss of identity. In referring to a 2006 survey, where

Amazon was voted tops among all retailer in customer service, Maris Daugherty, senior con-

sultant at J.C. Williams Group, says “Amazon keeps growing at an amazing rate, and you can't

grow like that just on product assortment.” From its inception, Amazon's identity, it's corporate

culture, was not attained by merely providing a diverse selection of goods and services. Rather,

Amazon's identity was derived by an almost obsessive attention to customer service and

satisfaction.

Recommend what Amazon should do to protect its brand

Amazon is in the enviable position of being the internets top retailer. As its competitors fight

to close the gap in market share, Amazon may have an opportunity, temporary as it might be, to

divert resources into shaping their public perception. The following are 3 points to consider in

protecting Amazon's brand. First, obsessive monitoring of social media outlets. With websites

such as Facebook, which now boast a membership of over 500 million users, and Twitter, which

averages 1.99 billion “tweets” per month, social media website are growing at a staggering rate.

As of May 2010, 75% of all active U.S. Internet households visited a social networking site. The

average american now spends 6 hours, 35 minutes a month on social media. In a 2008 AdAge

article, a report by ZenithOptimedia states, “Recommendations from family and friends trump all

other consumer touchpoints when it comes to influencing purchases.” In the era of social media

the consumer's opinion yields more power than ever before. One negative comment has the

potential to result in a firestorm of bad publicity. Monitoring and quality control via social

media outlets must become a serious point of consideration for any company seeking to establish

or maintain its brand. Second, recognize a correlation between consumer security and company

profits. The number of consumers shopping online continues to grow. As time goes by,

consumer confidence in purchasing online also grows. However, it would be risky from a

company to become lax about consumer perceptions regarding online security. In a poll by The

National Cyber Security Alliance, more than 63% of respondents reported that they did not

complete a website purchase because of security concerns. Amazon must prominently display all

online security features, clearly and persistently present them to its online shoppers. Amazon has

created a reputation of being “customer obsessed”. In order to ally any remaining consumer

concerns over online security, it would behoove Amazon to also create a perception of being

security obsessed. Last, a commitment to innovation. Amazon needs to continue to find new

products to sell and new ways of selling. Research and development must be viewed not as an

expense but rather a key to Amazon's expanding and ultimately protecting its brand.

Recommend what Barnes & Noble and Borders should do to recapture some of their online

market share

Sucharita Mulpuru, vice president and principal analyst for Forrester Research states, “People

are just shifting their dollars to the web...” and “The web is definitely a channel where people are

able to find better prices and better values”. Internet sales will grow at 10% a year for the next

five years and will account for 53% of all retail sales in the U.S. These stats do not bode well for

traditional “brick and mortar” stores. Posited here, are ideas for the recapturing of market share.

Barnes & Noble and Borders should seek to rapidly consolidated there brick and mortar stores.

Stores that are not profitable should be closed and employees discharged. This plan may not

have a direct impact on their online share but it could free up assets to be more competitive in the

online world. Second, these companies must continue to aggressively pursue licensing

agreements with publishers and authors in flourishing electronic book market. Sales of

electronic books have grown by 172.4% since 2002. If this trend continues electronic books will

become a considerable part of the book industry sales. Last, completely rebrand their brick and

mortar stores. The stores can be redesigned to revolve around a series of workstations. The

stations could be isolated or networked for group activities. The workstations could operate with

a social media style program and powered through the company's online site. Customers could

work, play, research and shop all from one workstation.

At one time Dell sold computers exclusively online, now the same computers are available

in retail stores (Wal-Mart for example). Discuss whether or not you foresee Amazon

expanding its channel of distribution to include retail locations

Amazon has achieved a great deal of success in online retail. However, Amazon faces intense

competition from companies like Walmart, Staples, Apple, Best Buy and several others. These

competing companies all combine online sales with traditional off line retail stores. It would

seem, in order to remain competitive into the foreseeable future, Amazon must eventually open

traditional brick-and-mortar stores. One notable reason for this theory is the current consumer

mindset. We live in an era of instant gratification. Consumers need to see and feel the products

they are about to purchase. Devices such as TV's, Computers, Mobile devices, etc. are products

that customers generally need to experience before buying, and in this area, Amazon cannot

compete.