Back in the days the promise of Amazon was “Earth’s biggest bookstore”. How easy to believe! Millions of books at a good price with a brand named after another earth’s biggest.
Then Amazon moved on from just books to CDs/DVDs/Games. In my view all still very logic and Amazon executed the right strategy to stay “Earth’s Biggest” in these categories. How? By being The Biggest.
It did not stop there, Amazon expanded further, according to their website “today, Amazon offers everything from books and electronics to tennis rackets and diamond jewelry.” Still, this enormous expansion works. When living in New York City we “amazoned” pretty much everything. Amazon became “Earth’s Biggest Retailer“. This positioning was supported with help of “Amazon Prime”: free 2 day shipping for a yearly fixed fee that tremendously helped taking away the two headaches of internet shopping: delivery fees and delivery time.
At the moment Amazon has expanded even further. This time however the expansion goes beyond the Retail category. This expansion is where future problems for Amazon will come in.
The Amazon.com shopping experience is now split in “Digital” and “Physical”. In other words: the line extension split is made very explicit to consumers. Why will this not work in the long run?
Firstly, Amazon has expanded the brand from retail to digital media consumption. As we know expanding brands in new categories include a risk: consumers can get confused with your current position. Why risk it? Fast forward a couple of years and think about what consumers would answer to the question “What is Amazon in one word?”: is it web shopping, cloud storage, a sort of Netflix or still the best place to buy products online?
Secondly, this move endangers Amazons current positioning of Earths Biggest in physical goods, a position they should simply not give up! There is plenty of competition that has a very reduced scope and focus, such as The Book Depository. Book Depository sells well… books (and only books) but differentiates with free worldwide shipping. Since we live in Finland it has become my number one go to book site. So Amazon will need to improve in all the sub categories of the products they are selling to stay Earths Biggest.
Thirdly, in “Digital” goods Amazon is far from being Earths Biggest, and even if Amazon would be in terms of numbers they are not in consumer’s mind. In this space there is lots of existing and established competition.
The option I would have recommended to Amazon is to strongly consider launching a new brand, let’s say Everest. Amazon did it right with Kindle. Calling the current Kindle product the “Amazon reader” would have been a disaster. Think about it… would a consumer go to a shop to buy an Amazon? No, they wouldn’t, but they do go to the shop for a Kindle. And it pretty successful: Kindle is now synonymous with e-books/ digital reading.
Everest would on one hand be an part of Amazon, just like how Kindle and the Kindle Store are today. On the other hand on Everest.com would attract new customers who not necessarily would go to Amazon.com for digital media consumption. The “only” thing Amazon would need to make sure is that Everest.com would create a consumer need based on something new, not serving consumers the same or very similar stuff they can get with the established players.