In his book, The Operating System of the Amazon Corporation and Jeff Bezos, writes about how Amazon’s unique “third-party” model can benefit everyone. But it turns out that what Amazon started off with was its very own unique brand, the Kindle. And this brand has already grown so large that it is now the hottest gadget among teens and Gen Xers, and among business professionals in general. So what makes the Kindle such a phenomenon? Let’s examine a few of the most-frequently asked questions:
Does Amazon have its own life force? Jeff Bezo explains that Amazon’s “third-party” structure enables it to do just that: sell nothing special to its customers at any time, and then use all the money generated from the “no-load” sales of books and movies and music and other on-demand services to fund its own research and development wing. Jeff Bezo emphasizes that this represents a tremendous competitive advantage: Since no one else can do what Amazon can, they’re able to do it on a much larger scale, and thus to drive its margins higher. As a result, Amazon’s stock price is now higher than that of the largest publicly traded companies in America.
Can Amazon compete with Wal-Mart? The current landscape at Wal-Mart is fraught with problems, to say the least. Many retail experts say that the company cannot survive a decade without being willing to fight for market share against its most competitive competitors. On the other hand, a growing number of business experts are also saying that it would be premature to write Amazon off the market, simply because of its size and scale. Indeed, a more realistic analysis of its business model would conclude that instead of competing against Wal-Mart and its big-box rivals, it should be focusing its efforts on becoming the one-stop shop for anyone who wants to buy anything and everything.
Why should you care about Amazon’s ambitions? To understand why you should care, you first need to understand how competitive markets work. If you were looking to enter a particular market, you would want to take the time and do the research necessary to identify its key features, its target customers, and what kinds of products it sells. Once you have done that, you can then start to develop a plan on how you intend to penetrate and ultimately dominate the market. Amazon has done this with its online retailing business, and with even greater vigor and ambition it intends to continue on this course.
Is it likely that Amazon can succeed on its own? No, not at this stage. But it is also by no means certain that it could not be successful. Jeff Bezo knows that competition is a good thing, and he has spent decades building up Amazon’s distribution systems, is selling technologies like Kindle, and is creating an online shopping platform. He has also spent years working with top industry executives, and developing strategies that would allow him to dominate the sector in the future.
Now he is trying to apply those strategies to e-commerce, and he clearly understands that to take the fight to the brick and mortar world of traditional sales will take a significant amount of resources from Amazon’s management team. Jeff Bezo has all the tools necessary to take on the major players in the brick and mortar market. If he can build up Amazon’s online retail store to the point where it can comfortably and successfully compete with those giants of the world and take a significant portion of the online retail market, then he may very well have a fighting chance at turning his business into a major success. At the very least, it will give Jeff Bezo something to fall back on if the traditional online retailing business tanks. And for any aspiring Internet entrepreneur, this may very well be the path to success!
