CEO Jeff Bezos once quipped that Amazon was “the best place in the world to fail.” Indeed, the billionaire entrepreneur has instilled a corporate culture where failure is not only acceptable but a necessary part of doing business.
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Fire Phone
The Fire Phone was released in July 2014 to compete with the smartphones offered by Apple and Samsung, among others. At first glance, the Fire Phone seemed a natural extension of Amazon’s highly successful Kindle, tablets, and streaming devices.
However, the Fire Phone failed to sell for $200 on a two-year contract. Dropping the price to 99 cents also failed to spark buyer interest.
The Fire Phone failed because Amazon was too late to the smartphone industry. The phone itself was overpriced and, aside from a revolutionary three-dimensional screen, did not offer anything novel or beneficial.
A few months after launch, Amazon Destinations was shut down, with the company providing no official reason for its demise. Industry representatives suggest increased competition from the likes to Expedia may have been to blame. Others posit that succeeding in the hotel reservation business would have required the full attention of the company.
Pets.com
Amazon’s investment in Pets.com is perhaps its most notable product investment failure.
In March 1999, the company acquired a 54% stake in Pets.com worth around $10.5 million.
However, Pets.com would become yet another victim of the dot-com bubble burst a year later.
Amazon Wallet
Amazon Wallet debuted in 2014, allowing users to save vouchers and loyalty cards on their smartphones to pay for Amazon goods and services.
The service failed to gain significant traction and experienced a lukewarm response, especially when compared to Apple Pay which launched a few months later. The service also relied on QR codes to make purchases – consumers could not use a credit or debit card.
What’s more, many retailers chose not to accept Amazon Wallet as a form of payment since the eCommerce giant was a major competitor.
Amazon Restaurants
Amazon Restaurants was a service delivering freshly prepared food from local restaurants to consumers via the company’s same-day delivery network. Launched in 2015, the service was shut down four years later in June 2019.
Amazon Restaurants was successful initially, with free Prime delivery once food orders reached a certain threshold. However, the strategy was inevitably copied by established competitors which made Amazon’s offering less attractive.
Much like Amazon Destinations, the reason for the failure of Amazon Restaurants may be due to the company spreading itself too thin and diluting its focus. Many suggest Amazon’s acquisition of Whole Foods in 2017 also diverted resources away from its food delivery business.
Key takeaways:
As successful as Amazon has been in the eCommerce space, the company is notorious for entering new markets and embracing the failure that may result.
The Fire Phone is one of the company’s most significant failures. So poorly did it sell that Amazon resorted to dropping the price to 99 cents.
Products such as Amazon Destinations and Amazon Restaurants were sound offerings, but many believe they failed because the company failed to develop them properly. Another product, Amazon Wallet, performed poorly because it was too restrictive and increased competition between Amazon and third-party merchants.
Related to Amazon Business Model
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Amazon Revenues
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Amazon Advertising Revenue
Amazon Cash Conversion
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Amazon Flywheel
Jeff Bezos Day One
Regret Minimization Framework
Network Effects
Platform Business Model
Jeff Bezos Empire
Amazon Subsidiaries
Amazon Organizational Structure
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Another key insight that crystallized only after the dot-com crash was the idea that Amazon could be a platform to support others businesses. Marketplace, Amazon's platform for third parties to sell used books (and later lots of other stuff), launched in November 2000.
Amazon makes money through its retail, subscriptions, and web services, among other channels. Retail remains Amazon's primary source of revenue, with online and physical stores together accounting for the biggest share.
In addition to selling consumer products, Amazon added information technology products and services, such as the Kindle e-reader family and Web Services (cloud technologies). Amazon's business model also shifted towards becoming a provider of cloud computing services and a publisher.
Amazon's many flops include: (1) The Fire Phone (a waste of $170 million); (2) Crucible (multiplayer game); (3) Haven (massive joint healthcare venture); (4) Amazon Spark (an Instagram-like feature for shopping); (5) Amazon Restaurants; (6) Amazon Storywriter for TV and movie scripts; (7) Pop-up Stores; (8) Dash ...
On July 5, 1994, Bezos initially incorporated the company in Washington state with the name Cadabra, Inc.After a few months, he changed the name to Amazon.com, Inc, because a lawyer misheard its original name as "cadaver".
Twenty years after Amazon.com's initial public stock offering, the once-shaky company has locked in its role as one of the technology world's dominant giants. The impacts have transformed everything from local streets to the national economy.
And Amazon's remarkable growth in 2010 was not limited to North America. In fact, Amazon's 40% overall revenue growth rate in 2010 was the e-retailer's highest since 2000, company officials say. International net sales totaled $15.5 billion, up 32.5% from $11.7 billion in 2009.
Launched in 2006, AWS is the largest player in the enterprise cloud infrastructure services market, earning 32% of market share worldwide in Q4 2022, according to Canalys. It's also Amazon's most profitable business by far, according to EMARKETER's The Power of Amazon in 2023 report.
Amazon's retail store rivals include Target, Walmart, Best Buy, and Costco. For subscription services, Amazon competes with Netflix, Apple, and Google. In the web services category, Amazon has several rivals such as Oracle, Microsoft, and IBM.
Failures included Auctions, A9 Search Engine, Endless, and the Fire Phone. Identifying commonalities and differences among them, the case shows the causes and consequences of Amazon's at-once stellar performance and severe setbacks.
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Understanding Amazon's success can't be done by pinpointing just one aspect of their business model; the platform's success comes from a blend of strategic foresight, relentless customer focus, technological innovation, and the ability to adapt and evolve.
In the early days of Amazon's growth, the company faced a dilemma of whether to show products from third-party sellers that competed with their products. Conventional wisdom would guide to not show competitor products along with your products. But Jeff decided to show the competitor products along with Amazon's.
Many have accused Amazon of using illegal tactics to discourage workers from supporting unions — more than 240 such charges have been filed with the labor board, workers said.
Successful strategic moves are Marketplace, Prime, Amazon Web Services, and Kindle; failed strategic moves are Auctions, A9 Search Engine, Endless, and Fire Phone. It analyzes commonalities and differences among them; to thereby understand the roots of the company's high and poor performance.
But as the stories of all big companies go, Amazon did not do great in the beginning. In fact, it never saw any major profits for a very long time. Despite all this, what really made Amazon the Behemoth it is today?
Introduction: My name is Patricia Veum II, I am a vast, combative, smiling, famous, inexpensive, zealous, sparkling person who loves writing and wants to share my knowledge and understanding with you.
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