Amazon: Its Expanding List of Business Growing Pains

It’s no secret by now that Amazon’s third-quarter profit was nonexistent. In fact, it lost $437 million in just three months. Its stock prices have since plummeted 94 cents per share. Investors and critics are still debating about its future earning potential.

Here are some of the main points in that discussion:

First, about the “Amazon ecosystem,” as the company tries to develop a suite of products to compete with Apple and other consumer products companies.

  • The Kindle was a risk at first, but it soon became the top choice for voracious readers who didn’t mind that the device was dedicated to only one purpose.
  • The Kindle Fire tablet quickly followed, complete with browsing capabilities and other applications.Fire HD 6-HD 7-Colors
  • Then came the Fire phone, which was a failure, with limited apps for download and dismal sales numbers.
  • Amazon’s Fire TV seems to be doing much better, both in the sense of actual device sales and adoption. The company’s first original series Alpha House has garnered positive reviews, and the number of apps on the Fire TV platform has increased to more than 600.
  • Finally, Amazon has released a Fire TV dongle, which plugs into your TV for streaming.

Amazon’s pouring money into… well, a lot of things.

One of them is hiring developers to improve platforms on Amazon Web Services. Its recent spending points to a plan to grow a new appendage, becoming a media and entertainment power.

  • It bought up Rooftop Media (for expansion of its original digital content offerings) in October.
  • It purchased gaming platform Twitch in August of this year for slightly more than $1 billion.
  • It also owns imbd (Internet Movie Database, an online information source on films, TV programs, video games, and celebrities)
  • It acquired Woot!, a ‘daily deals’ sales site, which it acquired in July.
  • And, of course, CEO Jeff Bezos owns The Washington Post.
credit flickr user Nic Taylor,
credit flickr user Nic Taylor,

All of this is over and above Amazon’s first ventures: e-book sales on its exclusive Kindle platform and online sales and delivery of a multitude of physical goods.

Amazon has opened massive fulfillment centers all over the globe to cut down on delivery times and customer satisfaction, even launching a same-day grocery delivery service called Amazon Fresh.

This is all in coordination with a marketing and rewards push with Amazon Prime, where members have access to streamed video and music content, 2-day shipping on select goods, first access to deals and sales, and a user-to-user lending service for Kindle books.

Amazon has been at the center of a conflict with publisher Hachette over its profit percentage on the company’s book sales. The disagreement led to increased wait times for delivery of Hachette titles, and widespread critique from Hachette authors and readers upset with Amazon’s heavy-handed tactics.

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But Amazon has also launched its own publishing wing, creating an entirely self-contained literary incubator that partners with authors, markets through the web store, and sells a majority of copies on the Kindle.

Similarly with The Washington Post, Amazon and developers at the paper are working on a content delivery system direct to the newest model of the Kindle Fire. The service will later expand to iOS and Android app stores, but for the time being, it’s exclusive.

So what?

Watching a worldwide company like Amazon flounder trying to be profitable in so many different directions begs the question of founder Jeff Bezos: what’s the plan here?

Bezos has talked in the past about a “flywheel” cycle of marketing, customer service, and price cuts that leads to extreme customer loyalty. The question now is whether Bezos can continue knitting together those services and maintaining a crucial level of patience and satisfaction from his overly-stressed employees.

What do you think of Amazon’s strategy so far? What kind of changes could they make in their digital devices to make them more appealing? Let us know here!

Hannah Warren

Hannah is a part-time student in the Information Management program. She has a lot of interests, and likes to tweet about them. Follow her @hkwarren.

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