Amazon is known as the largest online retailer. In the past, it expanded its business to include various manufacturing industries related to food, diaper, and housekeeping products by launching the Amazon Elements brand. However, this expansion has not proven successful as it failed to be profitable. In 2015, the company slowly gained traction as it surpassed Walmart as the most valuable online retailer in the United States. And in 2016, it was named the 4th most valuable company in the country. The company is now contemplating moving into the offline markets. At the end of the year 2016, the company established Amazon Go, the company's first offline retailing store in Seattle. Can it reproduce its online retail success in offline retail segments?
Wiboon Kittilaksanawong and Aurelia Karp
Harvard Business Review (W17398-PDF-ENG)
June 28, 2017
Case questions answered:
- Can Amazon reproduce its online retail success in offline retail segments? Will it be able to become one of the biggest offline retail players?
- Being the first mover in a “checkout-free” convenience store, how can Amazon Go maintain its competitive advantages in the long term? How can the company avoid failures such as the diaper brand it introduced in 2014 and make Amazon Elements successful? How should it differentiate the products it offers via Amazon Elements from the products of other suppliers on its platform?
- Could the company’s offline retail marketing concept be developed globally?
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Amazon Go: Venturing into Traditional Retail Case Answers
1. Can Amazon reproduce its online retail success in offline retail segments? Will it be able to become one of the biggest offline retail players?
From the case “Amazon Go: Venturing into Traditional Retail,” we can assume that the company’s first years will be challenging. This is mainly due to strong competitors and the high capital expenditure required to create its offline presence.
The establishment of non-digital markets nonetheless falls in line with the company’s interests. It is, therefore, an attractive investment.
The company has already started its investment in offline businesses by going against expectations. It has established Amazon Go, Amazon Books, and Amazon Fresh.
Thanks to its competitive advantages in R&D, marketing planning, supply chain efficiency, and customer focus, the company can replicate its online retail success in offline retail.
In addition, to drive the offline market, the company has a strong brand image. It constantly improves and grows public relations. These actions insinuate that customers will tend to shop from the company over competitors due to the brand’s market share in online retail. It has also stood strong amidst the emergence of competitors and has retained its positive popularity.
Furthermore, since Amazon Prime members pay an annual fee, they demonstrate a kind of customer loyalty that will help generate sales in the offline marketplace.
Finally, the idea of Amazon Go and its technological innovations in the offline space saves every customer time. It would make shopping more accessible and efficient.
2. Being the first mover in a “checkout-free” convenience store, how can Amazon Go maintain its competitive advantages in the long term? How can Amazon avoid failures such as the diaper brand it introduced in 2014 and make Amazon Elements successful? How should Amazon differentiate the products it offers via Amazon Elements from the products of other suppliers on its platform?
The company’s main competitive advantage regarding Amazon Go is that they are the…
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