Retail Management

PGDM
TERM 5
Assignment Submission

on

AMAZON GO: Venturing into Traditional

Retail

Submitted to,

Prof. Sakthi Srinivasan

By,

Tirth Vira
19F257
1. Were Amazon’s diversifications through Amazon Go and Amazon Elements
appropriate? Given the company’s resources and capabilities? Were such diversifications
risky strategic moves?
The resources and capabilities Amazon possesses, the diversification through Amazon Go
and Amazon Elements was appropriate. Since the start, Amazon has focused on creating
services and products that ultimately change the way people consume goods in their daily
lives as well as excellent customer service. When looking at Amazon, their competitive
advantages are supply chain efficiency, their R&D team, customer centricity, and highly
successful marketing plans. As Amazon diversified into Amazon Go and Amazon Element,
these competitive advantages will play a key role in successfully diversifying the company
through online and offline sales. Given the size of Amazon’s customer base, which resulted
in $71.8 million digital sales in 2017 followed by Walmart in second place at $13 million,
Amazon has a sizable online footprint that can market the offline retail sales to.
Furthermore, Amazon can use the data from their online customers purchasing habits to
target market towards them. The offline strategy was risky for them as before this they have
been successful only in the online channels. Furthermore, the Amazon Go business is
focused on only Amazon Prime customers, which shrinks the size of their customer, base
right out of the gate. However, Amazon can leverage their online customer base by
lowering the total cost for an Amazon prime membership, which then in turn would
increase the customer base for the select Amazon Prime services such as Amazon Go.

2. Can Amazon reproduce its online retail success in offline retail segments? Will it be
able to become one of the biggest offline retail payers?
It is possible for Amazon to reproduce their online retail success in the offline retail space
due to their competitive advantages of supply chain efficiency, R&D, customer centricity,
and their marketing plans. Amazon also has a strong brand image coupled with improving
and growing public relations. As Amazon Prime members pay a yearly fee, they show a
sense of customer loyalty which will help generate sales in the offline market. Continuing
on, the idea of Amazon Go and the technology advancements it brings to the offline space is
a time saver for every customer while making shopping easier and more efficient.

3. As the first mover in its shopping technology, Will Amazon Go be able to succeed in the
long term?
As a company, Amazon has traditionally found a way to generate unique and value add
customer experiences by sustaining their competitive advantages. However, Amazon is
moving into a new offline segment with their new shopping technology, which may prove to
be quite different from their online segment. First off, when Amazon relayed the new that
they would be joining the offline segment, the other large players within the industry took
note of it due to the resources Amazon had to actually make this idea come to fruition.
With the Amazon Go idea, the tag line was “No lines, No Checkout, Just Grab and Go”. As
Amazon is the first mover in this technology driven shopping space, the firm currently has a
niche market, which essentially has eliminated the red ocean for the time being.
Furthermore, Amazon thrives on strategic innovation and R&D, therefore this technological
shopping advancement has put them ahead of competitors, but only for the time being. In
the end, this shopping technology will generate more Amazon Prime members, which will
help facilitate their long-term success.

Q4) 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?
Generally, Amazon’s strategy in the past was online only. In the online-only business model,
companies have to import taxes on their products internationally. Offline retail marketing
has its own challenges and hurdles. If Amazon wants to enter the offline business, they will
have to adhere to stringent laws and regulations and for brick and mortar, it is quite
complex and challenging. At a strategy level, they might need to think a few influencing
factors like cultural differences, buying behavior, and customer preferences. It can vary from
place to place, for example, price-sensitive consumers might seek discounts and offers, and
the customer journey of consumer may vary from place to place. In addition, the core magic
behind Amazon Go’s Strategy is “convenience”. Overall, Amazon might face challenges for
global expansion and will have to align its business model according to diverse consumer
needs.

5. Could Amazon’s offline retail marketing concept be developed globally?

Overall, the global growth of offline marketing may be restricted for Amazon. In the past,
Amazon has always operated fully online which means they only have import taxes on their
products as they use international services to deliver them. If Amazon wants to have a brick
and mortar presence on other countries, the laws and regulations are much more significant
for physical presence. Furthermore, a cultural aspect comes into play when you build these
types of supermarkets in other countries. The way people prefer to shop varies country to
country and Amazon Go may not fit the mold outside of many western countries.
The business model behind Amazon Go is convenience. In other countries, consumers may
be more concerned about prices rather than the convenience factor. In totality, the offline
retail market presents many more hurdles and risk factors to consider than the online space,
which may hinder their chances of global expansion.

6. Was Jeff Bezos the right person to lead the company in facing the challenges of new
offline retail ventures?
Jeff Bezos was an appropriate leader of the company when they were facing challenges in
the offline retail space. Throughout Bezos career, he has always been seen as an innovator
or industry disruptor, which is essentially, what Amazon, was trying to do while facing these
challenges. With his past record of accomplishment and vision for success, Jeff Bezos had
an element of trust that followed him which ultimately generated brand value. If Amazon
had tried this venture with a new leader, the level of trust and innovation may not have
been the same, which has ultimately led to the success of Amazon