Amazon is the market pioneer and leader in e-commerce. It was started as an online store selling books in 1994 by Jeff Bezos. The company continued to grow out of Seattle, Washington and into other states delivering books based on orders received online. Later on, the company expanded both product-wise and market-wise. The company started selling various other products such as consumer electronics, clothes, furniture, smartphones, shoes, and various other products. The company also expanded rapidly into various other markets such as Japan, India, Brazil, South Africa, UK, and many more. The company earned revenue of $232.887 billion in 2018 and had more than 750,000 across the globe (Craft, 2019).
Following are the four dimensions of the Ansoff Matrix for Amazon:
Market Penetration
In market penetration, a company attempts to sell existing products in its existing markets. Amazon does this by continuously marketing its products in the various markets it is already serving. The various products it sells online such as electronics, clothes, furniture, and so on are regularly marketed in its existing markets. The intention is to penetrate deeper into its existing markets. By creating new advertisements, promotions, offering discounts, and encouraging bulk purchases are often employed by Amazon. The company also has introduced Amazon Prime for its premium customers to further benefit from their loyalty (Dudovskiy, 2018). Members are motivated to make repurchases through discount promos. The company also introduces new facilities such as apps and other functions to further create ease of purchasing. The company also has acquired various smaller brands in different markets. The company continues to gain market share.
Market Development
During market development, Amazon launches its existing products in new markets. The company continues to expand into new geographical areas. These include different countries the country keeps expanding into. To create ease for these regional markets, the company introduces its website in the regional market it plans on entering. For example, in India, Amazon launched its website in Hindi to facilitate new customers. Many of the potential customers in India cannot read or understand English fluently. The company has done the same for various other regional markets as well. The website also lists various local products that are specific to the new market. This helps to develop a greater acceptance in the new market for the existing products the company is selling. The company has also introduced Amazon Prime same day and Amazon Prime one day delivery services in many of these new markets (Balachandrarajan, 2019). The various new delivery systems have helped the company develop its markets.
Product Development
This refers to launching new products in existing markets. Product development is one of the core strategies and is prominently reflected in the history of the company. The company started with a single product i.e. books. The company continued to expand its product portfolio over the years and now sells almost everything online through its website. This includes furniture, clothes, electronics, smartphones, and much more. The company continued to grow with respect to its product portfolio. Today the company has become the largest retailer based on the number of products it sells which have crossed 500 million. The company also allows third-party sellers to utilize its platform to sell their products. The product portfolio continues to grow as new products are launched by various brands making product development at Amazon progressive.
Diversification
Diversification refers to launching new products in new markets. This is a risky strategy for every organization. Amazon does diversification in a number of ways. These include the acquisition of various new businesses already operating in new marketing such as the acquisition of Whole Foods. The company also launched its cloud services for its clients to enter the software industry with its new products. The company also launched Amazon Go, a retail store that allows customers to select products from shelves and walk away. The store automatically scans the products as they are lifted from the shelves and cuts the payment from the Amazon account of the customers. The company continues to diversify in this manner and launch new products in new markets under the same or different brand names.
The company started with books. It then executed market development and entered new markets. It then worked on product development and launched various new markets in its existing markets. Both market development and product development were executed simultaneously. Diversification is the latest effort by the company.
References
Balachandrarajan, K., 2019. Ansoff Matrix and The Amazon Story. [Online] Available at: https://www.linkedin.com/pulse/ansoff-matrix-amazon-story-karthik-balachandrarajan/ [Accessed 21 Dec. 2019].
Craft, 2019. Amazon. [Online] Available at: https://craft.co/amazoncom [Accessed 21 Dec. 2019].
Dudovskiy, J., 2018. Amazon Ansoff Matrix. [Online] Available at: https://research-methodology.net/amazon-ansoff-matrix-2/ [Accessed 21 Dec. 2019].