Determine the new markets for Amazon.
Welcome everyone, this is the 13th article of the #30daysofproduct series, today I would be focusing on a strategy question. Although Amazon is already present in all fields you could think of like E-commerce, AWS, Ads, and everything, but do you think still there are a few places where Amazon could emerge as a new player? Let’s see what are those areas & how I tackle this problem.
This is an interesting question, first I would like to understand Amazon’s core competencies. Usually, ideas that support a company’s strength are more sustainable in the long term. If we can build something on existing products, the cost of building and other operations would be drastically reduced.
- Amazon.com - Heavy E-commerce side with a lot of customers around the globe, has good infrastructure and service quality. (Fresh + Shopping Complexes)
- Prime Video - A lot of new TV shows and movies are available with the capacity to produce originals as well.
- Web Services - Have a good server infrastructure and lots of company-wide relationships.
- Advertising - Helps sell products/ads of different companies via their E-commerce listing.
- Twitch - Amazon acquired Twitch which is a game streaming platform with a larger user base.
- Kindle - Have a physical product for reading books, music, etc.
- Alexa - A virtual assistant technology used in Echo Speakers & various products.
Now, I would like to focus on Amazon’s strength, this way building new products become easier as we got to know what areas are we good at and what are the gaps that are still not filled by competitors, and where we can build our new market share. Listing the Amazon’s strength here first -
- Vast customers - Amazon is a customer-focused company and has a large number of customers from all of its products, targeting & acquiring the right people would be easy for Amazon in the initial stage.
- Cost efficiency - Since amazon already had a lot of its own products, establishing a new business would cost less. For ex. - It already had AWS to bear major costs.
- Enough resources - As Amazon had the vast infrastructure, capital & resources so calling business would be easy for them.
- Risk embracing culture - Since its inception Amazon was known for its customer-centric habit and the power of leaders, internally they had the culture of experimenting a lot.
Now after understanding all these strengths few markets Amazon could dive into are -
- E-Learning - This is one of the marketplaces where Amazon’s contribution is not much, and there are opportunities and threats at the same time. If I would talk about the biggest weakness is that Amazon lacks comprehensive course content. They don’t have the right curriculum to build something. But if they emerge in this segment, then there are many opportunities like even Amazon own needs Engineers & other workers yearly to recruit & build products, and that would help them solve the problem of outsourcing.
- Gaming - Nowadays the game industry is already booming and new players are emerging every day, amazon could make use of Twitch to promote & stream. With more immersive VR games, in the future, these could even be considered the same as professional physical athlete games.
- Amazon Capital - This is something new & different but had a lot of potentials to capture multiple market shares. Amazon could invest in new startups either by giving loans or holding some equities. Amazon had a risk-taking culture and maybe investing in companies could help capture more market shares.
Now, if I had to choose & prioritize one, then for the same I would evaluate it on the following criteria -
- Time to Market
- Profit Generated (Impact)
- Operations complexity
From the above analysis, we can say Amazon Capital could be the next big thing, where we want to invest. There are risks & opportunities both at the same time. The biggest risk I could see is “What if the startup fails?” Definitely, then Amazon would lose all the invested money, but here’s an interesting fact that as Amazon owns AWS, so amazon can audit a startup’s AWS services data to verify whether a startup is performing as
advertised. Thus, this is one way to mitigate the risk. Thus I would recommend going with Amazon Capital. Thanks!