Amazon Product Innovation Strategy

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In 1994, Jeffrey Bezos started amazon.com after identifying that Internet usage had grown at a rate of 2,300 percent per year. It began its operation in Seattle in a room 400-square foot, which was their office as Amazon.com was launched on the Internet in the year 1995. The goal of the business has always been the use of the internet in turning book buying into a simple, convenient and enjoyable shopping experience. The business was one of the most profitable Internet retailers at the end of 1996, receiving sales totaling $15.6 million. Amazon.com became the world’s biggest e-tail bookstore all over the world. The company continued to enlarge its customer base in addition to sales revenues, which has since increased yearly. The revenue of the firm has seen an increase from around $15.7 million in the year 1996 to almost $2.76 billion in the year 2000. Presently; Amazon.com is the biggest shop in buying anything online. It offers the world’s biggest products selection to 30million people in over 160 countries worldwide world making them a major online shopping site, which can be accessed through World Wide Web. The past several years has seen the company grow and experience rapid development.

The main core processes, which have made to the firm’s success remains price, section, convenience and service. Over 106 million people each quarter buying books, the company has made use of the convenience of online ordering. The next important element for the company in the process is selection. It is able to provide the world’s biggest selection, as they are an e-tailer, which makes use of virtual directories. The company keeps latest publications in stock to enable a speedy order fill, except that it directly orders a few other books that have been requested by their clients from the publisher. Such a business practice makes Amazon to experience low warehouse cost in addition to offering the biggest books selection at the same time. The other third main process for Amazon remains   service, which aims to provides their clients with everything like email notifications to notify them when their orders have been filled, chat rooms to enable their customers to have a discussion and book recommendation.

Amazon Product Innovation Strategy

Amazon allows their customers to search books with same titles and subject matters. Presently, around 63% of the company’s business is associated with repeat customers. Originally, the firm was an online bookseller, however with time it has expanded beyond the original product line. Clients can easily find anything at Amazon.com with the company trademark being catchphrase such as the earth largest selection, which the firm uses to promote materials and describe the lack of Amazon’s product accessibility (Wulfen, 2011). The company offers music, kitchen products consumer electronics, DVDs, toys, videos, software, beauty products, video games, tools, other products through different partners. Amazon provides offers services like film processing in addition, people and businesses are able to sell products through the Amazon’s website using its such as Amazon Marketplace, zShops services as well as Auctions. The company operates websites in several countries such as Us, Japan, Germany and France.

The firm’s business strategy linked to growth of market share and not profitability. The accomplishment of this goal has seen the company take advantage of any opportunity to form strategic partnerships to obtain additional business operations. For instance, Amazon bought Egghead.com, an online retailer, which was the company’s website after it went bankrupt in the year 2001. Other thing that the company bought from Egghead.com was intellectual property as well as product information. Another strategy was investing heavily on information technology. Certainly, Amazon’s better customer service and technology use remains two of the firm’s greatest strengths, which have made it to be the best, famed brand in relation to e-commerce. The reason for Amazon.com’s existence remains the sale of products through information technologies in addition to the internet. Amazon is booming in the e-commerce industry because of being an innovator. Amazon was the first online store to make use of site personalization.

Equally, Amazon makes usage of uses e-mail messages in marketing to its present customers, by keeping track of the client purchases and occasionally sends messages that have suggestions as well as promotional information for same products, which each individual customer can enjoy in terms of their interests in movies, books, electronic, music, and other products, Amazon.com is selling. The company has launched Amazon Access, which is a substitute version of the firm website aimed at their customers, who are visually impaired. The function of the sites remains compatible to the screen access software (Holt, 2002).

The vision of the company remains the provision of quality products as well as services using the available best technology at a rational price. This leads to extremely loyal customers, while at the same time, retaining the interests of the shareholders and keeping the firm profits in mind. Amazon aims at expanding geographically to increase the number of clients and to enhance their competitive advantage, which is infrastructure. The firm aspires to provide the excellent working environment for their employees, encourage career opportunities, and increase their responsibility in relation to environment together with the society.

Product Portfolio

The website Amazon.com has undertaken a measure to design and promote a sequence of electronic book readers called Amazon Kindle. The aforementioned device permits its clients to browse, shop, read and download stuff through wireless network systems. The project commenced with a single device before graduating to an array of devices whose generic core was the utilization of electronic ink and paper display while cutting down on power use up. Lab 126, which is an Amazon affiliate, is responsible for creating the Kindle brand. The rationale behind the name was that it was an intellectual exhilaration ignition metaphor.

The original Kindle was released in 2007, and has undergone mammoth metamorphosis since then. Amazon.com produced Kindle DX two years down the line, which featured a superior display. By the year 2011, the Kindle series included a Kindle Touch and Kindle Fire. The latter is a tablet computer with a reader app while Kindle Touch has a sensitive touch screen. Amazon later introduced Kindle apps which can be included in its product selection. They include Microsoft Windows, Windows Phone and Android. In addition to this software Kindle has a cloud reader which enables its operators to purchase and read Kindle books from a wireless internet provider.

The device’s content can be purchased online in some regions with the use of standard Wi-Fi or a product of the Amazon’s 3G Whispernet. The latter can be accessed without the need of a wireless payment or regular subscription. In addition to this Amazon offers services such as Whispersync which enables users to harmonize the reading process in various Kindle hardware. The year 2010 was the first time ever for the Amazon firm to record a number of electronic books which surpassed the sales of paperback books.

Milestones & Important Events

Amazon experienced a prosperous year in 2011 not only because of its Kindle electronic book but also due to the introduction of the firm’s paramount Android tablet called the Kindle Fire. Immediately after the launch of the Amazon’s Kindle Fire, consumers purchased over 240,000 Kindle Fire devices beforehand. In that year the Kindle Fire was ranked on the Amazon retail website as the record breaking product. While his predecessor, the Kindle electronic book, was unable to document much of the android tablet he performed as well as of the latter on the market. Another milestone marked by the Amazon firm during this period was that all the Kindle applications could now be found in HP Touchpad software and Windows Phone 7. Other developments made were the introduction of new services that were rendered by Amazon such as Amazon Local, which is a site responsible for regular transactions tokens; GoyCloud services which aids government agencies and finally a new browser for Kindle Fire called Silk. Notwithstanding all the accomplishment mentioned above, Amazon as a firm experienced some grave concerns which threatened to hinder its progress too. It is in the same year that the Amazon’s web server experienced massive technical hitches which led to the collapse of sites like Foursquare and HootSuite.

Present Scenario Analysis

New Product or Innovation Description

The company has been highly successful in the manufacture of android based tablets and electronic readers.  Since the company’s focal point is the construction of connected devices the blueprint of the company’s future improvement will obviously encompass a set-top box for the television sets. The company Amazon is expected to launch a novelty device designed to stream live videos from the internet to a customer in their living room. The set-top box is connected to the TV sets to give consumers the right to make use of Amazon’s extensive video offerings. The new product from Amazon is set to compete with other products like Apple TV and other resourceful devices like Xbox. There are other set-top boxes that already require clients to access the video deals from Amazon. Through the construction of its individual system, Amazon is able to directly include its content to customers while improving on its series of devices and equipping inventors with a concrete motive for the creation of apps of the company’s digital ecosystem.

The Amazon Company has been making tremendous work in developing its stature in the video sector. Recently, it launched its first TV set-box pilot which is geared at collecting clients feedback on its services so as to enable it know if it should commence full operation of this series. The Amazon Company has also proceeded to pay all remunerations required for special live streaming privileges of hit shows such as Downtown Abbey. The implementation of the set-top box series will benefit the Amazon clients since it will permit them to access all its video offerings the traditional way (through one’s TV set). The Kindle TV is hopefully going to send shockwaves in the technological arena.

Market Description and Position

The world of technology has some companies controlling the mammoth share of it. In this instance the iPad elucidates the aforementioned dominance by recording sales of slightly above 14 million units in the last quarter of the financial year. Even though this is the case not every individual can afford to purchase an iPad since it is an expensive device. This is the juncture where the Amazon’s Kindle Fire assumes an important role. According to research conducted by various analysts, there has been a revelation that the fourth quarter sales of the Kindle Fire reached 5 million units thus placing this tablet on a level playing field with its competitors (iPad). Online retailers preferred to buy the low-end device ecosystem. The current research conducted by the Amazon Company reveals that Google’s Android control 39% of the tablet market while the Kindle Fire controls 57% of the above figure. It appears to be that the tablets are slowly edging out notebooks and PCs and the number of sales of the Kindle products keeps improving due to its low attractive prices and a loyal customer base. With all Amazon’s progress the tablet market will soon be split between this company and the Apple Company and any other company found in between is going to be in deep glitches.. The online retailer’s best-selling product remains to be the Kindle products since its introduction in early 2011.

Comparisons with Competitors

One vital thing that I have learnt from the tablet market is that size does not really matter. The Amazon Company echoes these thoughts since it unveiled the small Kindle Fire HD. The aforementioned device is stipulated to be the globe’s most advanced device in this series. An individual might perceive the above words to be far-fetched given the current alternatives available in the market. A solid assertion to counter this misconception is evaluating the hardware used in making the Kindle product; it is of better quality as compared to its competitors such as Nexus 7 of the Google Company. With due regard to the general appearance of the products, Kindle is more of the same as its competitors but Kindle have gone the extra mile to make its product wider and convenient to its consumer. In terms of its display superiority, the Kindle Fire HD shares an identical resolution power as its competitor Nexus 7. Proceeding to the internals of the device, no other competitor in the tablet market can share the same distinct advantage as the Kindle Fire HD. THE Kindle Fire HD exhibits a superior internal quality to its competitors. Its dual-core TI OMAP 4460 enables the Android program in the tablet to run smoothly without any hiccups.

Generally, the area where the Amazon reigns supreme is the ecosystem competition. The Kindle series is equipped with the Amazon MP3, Instant Video and Kindle Store. Due to the aforementioned services the Kindle is ranked second to Apple Company in the digital market. Even though this is the case if one is to consider the reading capability in the devices the Apple Company will be overhauled from its perch. Other competitors like Google have made numerous attempts to be at par with the kind of services offered by Amazon’s Kindle but have proved to be unsuccessful. Google have incorporated Google Play experience in its devices but it has not exhibited head to shoulder advantage as the Kindle.

Current Competitive Strategies/Outcomes

The Amazon Company developed the Kindle with a view of storing electronic books. Although the e-book concept was introduced in the early ‘70s it is currently in its initial phase of implementation (Anthony, 2012). The Amazon’s e-book readers create an appeal to clients who seek the latest technology at a low-end price. The clients represent different segments of the market and have varying needs. With due regard to the fact that there is existence of different clients who represent different segments of the market, the age group targeted by the e-books is age 40. Research conducted by Amazon reveals that most people between the age of 35 and 55 own e-books. To date there are only a few e-book readers available in the digital marketplace. This digital market has dominant companies such as Sony but none of the companies has made a move to cement their position as the supreme company in this market. In the final quarter of the year 2007 the Amazon Company entered the digital market by introducing its own e-book called the Kindle which was sold out in hours after its official release.

Although the Kindle is not the dominant force in the digital market, it possesses a head to shoulder advantage when compared to its competitors (Cooper & Scott, 2009). These advantages are attributed to competitive strategies that were implemented so as to counter the current competition in the market. The first strategy was to design the Kindle to line impeccably with the Amazon online retail store. The Amazon online retail store hosts multiple titles which have the ability of being ordered through an electric format. Due to the aforementioned fact and the inherent wireless nature of the Kindle the device can be used by its clients independently. Kindle users can access the Amazon web retail store and download magazines, books among other things in their Kindle devices. The other strategy the company implemented when designing the Kindle is by ensuring that they have a large client base. The company managed to construct a large customer base through its existing online retail store. Thus, the Amazon Company through its online retail store advertised its new product which would prove to ease convenience with regard to access and utilization of the online retail store. The Kindle inventors in designing the device envisioned a product that would go the extra mile to fascinate the readers while ensuring that they are not bothered with what kind of actual reading device one is using. Various concerns that the reader may raise such as eyestrain, battery life, device portability were all considered when tailoring the device. In simple terms the product (Kindle) was tailored to meet the customer’s expectations.

The level of success experienced by the Kindle stimulates other firms to join in the e-book industry since it proves to be easy to imitate one’s success. The move mentioned above tends to lead to heightened competition in the digital marketplace. However, the Amazon Company conducted a competitor analysis and created a situation of conflicting goals for its competitors. The implementation of such a strategy ensures that any form of retaliation by the competitors would hurt their mere existence or dominance in the market. With strict regard to this point one realizes that the Amazon Company started focusing more on mini-tablets/e-book readers such as Kindle Fire HD. This move accelerated the changeover of all Kindle products released to smaller size of which its competitors such as the Apple Company are yet to produce. Even though the focus on the smaller modes of the devices proves to be detrimental to the continued creation of the bigger devices, the company gets to create a new dimension (Schermerhorn, 2010).

Currently, the implementation of this strategy proves to be baring fruits for the Amazon Company since established firms such as the Apple Company are exposed to conflicting goals (whether to improve on its bigger designs or shift its focus to smaller devices). So far the Kindle Fire HD is enjoying a good share of the digital market since it is the smallest and most effective tablet in the marketplace. Amazon’s competitors are being penalized for the sake of their current strategies.

Summary

It would be considered a myth for people to have the perception that product innovation is accorded only to big companies with large amount of resources or special minds like the late Steve Jobs. The reality of the matter is that any company of any size that has or lack a genius is capable of creating ethos of product innovation and gain the ultimate goal of sustainable growth. In the industrial and digital marketplace, product innovation stands to be the life blood of the companies partaking in that particular marketplace. The transformational strategy that would guarantee the long survival of any company can positively be touted as successful product innovation. Any firm whose departments mutually reinforce the product innovation strategy stands a higher chance of success in the marketplace.

Works Cited
  • Anthony, Scott D. (2012). The Little Black Book of Innovation: How It Works, How to Do It. Boston, Mass: Harvard Business Review Press.
  • Cooper, Robert G, and Scott J. Edgett. (2009). Product Innovation and Technology Strategy. Ancaster, Ont.?: Product Development Institute.
  • Holt, K. (2002). Market oriented product innovation: A key to survival in the third millennium. Dordrecht: Kluwer Academic Publishers Group.
  • Schermerhorn, John R. Management. (2010). Hoboken, N.J: Wiley,.
  • Wulfen, G. (2011). Creating innovative products and services: The FORTH innovation method. Farnham, Surrey, England: Gower Pub.

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