Amazon has grown from a small online book seller to a retailer and service provider
Amazon has grown from a small online book seller to a retailer and service provider that has changed both physical and online retailing. The opening case of Chapter 6 (“Amazon’s Successful Growth Through Its Corporate Diversification Strategy”) describes a series of actions the company has taken as it has grown through diversification. It expanded from books, to movies and music, and then on to all sorts of other goods that it stocked and shipped from its warehouses. I then went on to provide its “marketplace” to other sellers, allowing buyers to purchase directly from other companies on the Amazon website. (You may have purchased your textbook this way.) Please supplement this short case with further research in order to provide more details and support for comments in your thread. In answering the questions below, support your reasoning with the concepts and terminology from Chapter 6.
- Why has Amazon decided to create its own (e.g., private label) goods that compete with those from its suppliers?
Then replay to the student post in 150 words.
- What logic supports Amazon’s decision to purchase Whole Foods?
The main reason amazon purchased whole foods was to provide quick delivery of groceries. They cut out the middleman and became the middleman increasing their own profits and being able to control the delivering of groceries. This also gave people incentives to sign up for a prime membership because when they shop at whole foods with a prime membership, they receive discounts. They were ahead of the curve of grocery delivery and saw the growing demand from consumers and capitalized on it and made it a viable option for people.
Replay to the student post in 150 words.
- What logic supports Amazon’s decision to create its own shipping services (e.g., air and truck transport)?
Amazon creating their own shipping services makes a lot of sense; by providing their own air and truck transport, Amazon has a lot more control and flexibility over how and when their products are shipped. This way, Amazon does not need to solely rely on another party like FedEx or UPS to deliver their products, especially when they guarantee two-day deliveries. Additionally, by using forward vertical integration in the supply chain, it lowers their production costs since they do not have to pay as much money to third-party shipping companies. While Amazon still outsources for their delivery services given the ever-increasing demand, they have significantly reduced costs by also providing their own trucks and air transportation.
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