Whatâ€™s Amazon Really Up To?
As online marketers, we should be proud of Amazon.comâ€™s exceptional success. More than anything else, this is a company that has proven from the very beginning that it is an online marketer through and through.
It is now a fading memory that Amazon started as an online bookstore. At one point, itâ€™s slogan was â€œearthâ€™s largest bookstore.â€ Looking back on it, founder Jeff Bezosâ€™ strategy to name the company after the worldâ€™s largest river was prophetic. Amazon eventually grew to the point that it was offering every conceivable kind of product, not just books. A feature article last week in Bloomberg Businessweek called Amazon â€œthe company that ate the world.â€
There are two basic reasons Amazon successfully transitioned from being an online bookseller to being an online seller of everything. First, the company built an outstanding reputation for excellence in value and customer service. Customers always got what they wanted (usually at the lowest price available), when they wanted it, and Amazon backed up the sale with great support. Second, Amazon essentially built the model for online innovation. They pioneered affiliate programs, recommendation engines, and customer-oriented shipping policies; for example, free shipping over $25 became the gold standard. They embraced other online sellers who might be competitive, invited them to the party, and let them play in a large e-commerce marketplace where everybody wins. They flexed their considerable muscle in the fight against an Internet sales tax.
Next on the scene was Amazonâ€™s entry into digital media, first songs, and now eBooks, movies and everything else. Not surprisingly, the company followed the same strategy as with physical products — dabble with digital first, and then blow it out. So now Amazon is a media giant that has the potential to do an end run around companies like Netflix.
Then came the Kindle eReader, leveraging the rapidly growing eBook market. Kindle quickly grabbed dominant market share, and Amazon Kindle Publishing is growing like wildfire. Speaking of fire, thatâ€™s the name of Amazonâ€™s latest hot product, Kindle Fire. Says Jeff Bezos:
â€œKindle Fire brings everything weâ€™ve been working on at Amazon for 15 years together into a single, fully-integrated experience for customers — instant access to Amazonâ€™s massive selection of digital content, a vibrant color IPS touchscreen with extra-wide viewing angle, a 14.6 ounce design thatâ€™s easy to hold with one hand, a state-of-the-art dual core processor, free storage in the Amazon Cloud, and an ultra-fast mobile browser — Amazon Silk — available exclusively on Kindle Fire.â€
Pundits may pontificate about whether or not the $199 Kindle Fire is the rival tablet that will finally challenge Appleâ€™s iPad, but frankly, theyâ€™re missing the point. Read between the lines of the Bezos statement about Kindle Fire and youâ€™ll see whatâ€™s really going on here. Amazon is more Google than Apple, creating an online world that uses devices to support it. Itâ€™s not about Kindle Fire at all — thatâ€™s just an entry point to the gigantic Amazon online world and all it offers. On the surface, Kindle Fire may look like an iPad killer, but I think itâ€™s more akin to Gilletteâ€™s legendary razor strategy: You sell the razor so the consumer buys the blades, time and time again. Kindle Fire is Amazonâ€™s razor; its blades are its ever-growing mass of digital content and everything else it has to sell.
Thatâ€™s probably why the Kindle Fire was part of a larger product announcement that included two new touch Kindles (Kindle Touch at $99 and Kindle Touch 3G at $149) and a new rock bottom price of $79 on the low-end Kindle. All of these high value utilitarian devices are variations on the razor. First and foremost, they are conduits to things to buy from Amazon. They all have their place in the greater scheme of things. They all lead down the yellow brick road to the ultimate goal — entangling the consumer in the giant shopping universe that is Amazon. Not that thereâ€™s anything wrong with that.
Now VentureBeat has surfaced a rumor that Amazon may buy Palm from HP. Some say the rationale would be for Amazon to get its hands on webOS so that the company could further differentiate its Kindle line, which is currently based on the Android operating system. Thatâ€™s not surprising, is it? After all, if the deal happens, Amazon will have yet another way to improve its razors.
Amazon has done a miraculous job of selling and delivering physical merchandise using the online channel. With the Kindle family, Amazon has the opportunity to do the same thing with digital content. This is a company that knows where it is going — and how to get there.