Retail Management

(MKT 6010)

Amazon Go- Venturing into traditional retail

SUBMITTED TO: SUBMITTED BY:

Prof Subhojit Sengupta GROUP 9
Celeste Bhattacharya (20F518)
Prathamesh Nilkanth (20F539)
Shruti Desai (20F549)
Sidharth Unni (20F551)
Unnikrishnan U (20F560)
Q1. Were Amazon’s diversification through Amazon Go and Amazon Elements appropriate, given
the company’s resources and capabilities? Were such diversifications risky strategy moves?

ANSWER

The diversification through Amazon Go and Amazon Elements was acceptable given Amazon's
resources and skills.

Amazon has focused on offering services and items that improve the way customers acquire
products in their everyday lives since its foundation, as well as great customer support. When it
comes to Amazon, the effectiveness of their supply chain, their R&D team, and other factors, their
competitive advantages include client personalization and very effective marketing methods. These
strategic benefits are crucial in diversifying the company's revenue streams.
Amazon's diversification into Amazon Go and Amazon Element boosted both online and offline sales.

Amazon has a substantial online presence to sell off-line retail sales, given the size of its client
base, which resulted in digital revenues of $71.8 million in 2017, followed by Walmart in second place
with $13 million. Amazon will also use information obtained from its online shopping habits to tailor
the market toward them.
Amazon has the particular advantage of having significant insights into the commercial and
operational dynamics of making a product and the intricacies related with it, having run an online
retail platform vehicle working closely with a lot of vendors and small manufacturers. Those findings
will undoubtedly aid in making initiatives such as Amazon Elements a success.

With respect to resources and capabilities, the launch of Amazon Go and Amazon Elements
was a good option; Amazon has the ability to adapt and succeed in every segment they enter. It was
able to generate these new offers without needing to spend millions of dollars on advertising and
other marketing operations because of its strong brand awareness. Using its massive client datasets,
Amazon might adjust its product offerings to fit consumer demands.

Because Amazon was not a typical retailer prior to the collapse of the brick-and-mortar retail
business, the diversifications were hazardous choices. In addition to this, the infrastructure required
to operate the automated checkout was risky considering the costs. Although, due to Amazon's
tremendous brand awareness and consumers' trust in Amazon's ability to do things properly,
information about these new items spread quickly. Furthermore, the Amazon Go market is limited
to Amazon Prime users, reducing the amount of their consumer base right once.
Q2. Can Amazon reproduce its online retail success in offline retail segments? Will it be able to
become one of the biggest offline retail players?

ANSWER
From the case facts, we can analyse that during the initial years in the business, achieving success
can lead to be challenging for Amazon due to the obvious reason of intensive competition in the
same space which is added with the capital expenditure. Capital expenditure is a must requirement
for the organisation to create the offline impact and presence which is at par with the competition.
Amazon, as we know has an existing brand loyalist and shoppers on the online platform. This will be
used as an opportunity to influence customers into shopping from Amazon offline stores and ensure
an edge over its competitors. This when added with technological innovations introduced in the
offline counters of Amazon with features like faster checkouts and digital mode of transactions give
an ease of use to the customers, and lure technologically advanced customers into buying from the
offline stores. Amazon should ensure that the offline stores they plan to launch, should perform at a
large scale which is more than enough to ensure profits for them as an organization. This is keeping
in mind their philosophy as a company to provide products and services at the most competitive
prices which will eventually be very challenging for the organisation.

Amazon shops will not be any other in-store retailer. Instead, Amazon is focusing on all the friction
areas in the customer shopping journey and eventually plans to eliminate them as much as possible
in their own stores. They want to move to the physical retail market because they can see that
Amazon can challenge the status quo. Amazon, with their years of experience in online domain, has
understood what shoppers love the most, and that is to have plenty of choices for themselves while
shopping. They have realised that in the future, only online or only offline is not possible, hence they
have resorted to a multichannel. They do not want to miss out any ways a customer might want to
shop. Hence, by entering the world of bricks-and-mortar, the company is ensuring an additional
revenue stream for themselves.

Amazon is also looking forward to making eco-friendly boxes for its retail outlets. Hence, in an offline
store, they can showcase additional products to the customers to boost awareness of the product
and sell varieties of products and services to the customers who would walk in. Due to an increase in
shipping cost being double over the years, an offline retail store can act as a pick -up point for
customers for their products. Return of orders can also be easy as the customers can return their
orders by dropping it off at the store nearby.

Since the time Amazon was founded, online shopping gave the company an edge and agility over
others, but there are certain restrictions which can be opened with an entry into the bricks -and-
mortar retail market. This will provide Amazon a mission to continue relentlessly and innovate and
challenge itself to deliver the best customer experience.
Q3. As the first mover in its shopping technology, will Amazon Go be able to succeed in the long
term?

ANSWER
"No queues, No Checkout, Just Grab and Go" is the tagline for Amazon Go. This concept is unique
and is based on technology that has never been given before. It is largely focused on giving its most
loyal customers the option of simply picking up what they want from the store without having to
bother about check-out, lines, or invoices. It also gives an option for customers who require a product
immediately and do not wish to wait for it to be delivered. Amazon Go was a technologically
revolutionary store that allowed customers to make purchases without having to deal with a cashier.
The debut marked Amazon's first foray into the traditional retail industry. It changed the way people
bought things and established itself as a reliable source of product information for potential
purchasers. As Amazon was the first to enter this technology-driven retail space, it has created a
niche market for itself which offers it a competitive advantage. The introduction of Amazon Go and
Amazon Elements, as well as other private labels, signalled Amazon's aim to transition from an online -
only retailer to a hybrid offline-online retailer and manufacturer. Given the project's benefits and
scope, as well as consumers' shifting attitudes toward increased convenience in offline purchasing,
Amazon Go is likely to succeed in the long run. What sets Amazon apart from the competition is its
mindset and flexibility in responding to setbacks swiftly.

Q4. Being the first mover in the “checkout-free” convenience store, how can amazon avoid failures
such as the diaper brand it introduced in 2014 and make amazon elements successful? How should
Amazon differentiate the product it offers via Amazon Elements from the products of other
suppliers and its platform?
ANSWER

• Being the first to open a convenience shop without a checkout line Amazon Go can keep its
competitive edge since it has a time advantage, which it can exploit to attract more
consumers and even keep them. Amazon is based on customer loyalty, so if it can effectively
use this time advantage to strategically innovate and manage current scenarios to provide
improved customer shopping experiences by constantly working on feedback, it will help to
generate greater customer equity and become a leading player e ven in the offline market.

• Amazon can avoid disasters like the diaper brand it launched in 2014 by doing beta testing on
Amazon Elements, which entails providing free samples of Amazon Elements items to
customers and soliciting input in order to improve the product. The product might then be
released into the market once it has been entirely updated to meet client needs. This will aid
not only in the success of Amazon Elements, but also in the creation of a favourable brand
image for Amazon, drawing consumers and developing loyalty.

• Amazon should separate its Amazon Elements items from those offered by other vendors on
its marketplace by developing a separate and exclusive area for Amazon Elements products.
Furthermore, it should develop an emotive backstory for each of the goods and share it on
social media in order to raise brand awareness for Amazon Elements. Furthermore, various
systems, such as special discounts or brand loyalty points, might assist buyers in selecting
Amazon Elements over items from other companies.