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In December 2016, Amazon.com, Inc. (Amazon), the largest online retailer, entered the offline retailing industry by launching its first Amazon Go store in Seattle. Previously, the company had entered the food, diaper, and housekeeping product manufacturing industries with its Amazon Elements brand. The company had not been profitable until 2001 and was still facing some financial difficulties, but it was named the fourth most valuable public company in the United States in 2016. In 2015, it surpassed Wal-Mart Stores, Inc. (Walmart) as the most valuable online retailer in the country. Given its current competitive advantages in the online retail business, could Amazon reproduce this success in offline markets? Did Amazon’s diversification into offline retailing make sense considering its existing resources and capabilities, the presence of established traditional retailers such as Walmart, and a market trend that was increasingly moving toward online stores?
This case is intended for senior undergraduate and graduate-level business school students in courses on competitive strategy, Internet marketing, new market entry, and supply chain management. After completing the case, students should be able to do the following: ·Understand the competitive strategies of an online retail company that tries to diversify to compete with brick-and-mortar retailers in the global market. ·Evaluate the extent to which a company can diversify, given its resource and capability constraints. ·Analyze what it means to be a first mover and how such a company can sustain its first-mover advantages. ·Assess the use of standardization and localization strategy in a new international market entry. ·Understand the critical role of efficient supply chain management.