Amazon is not just the world’s largest online book retailer – it is the also the world’s largest online retailer. And lest you think that Amazon only runs its operations on one ecommerce site, consider the variety of companies and sites owned and operated by Amazon: diapers.com, audible.com, zappos.com, soap.com, wag.com, and casa.com. What do all these sites have in common? They can easily supply all of our household needs through online shopping and home delivery. This breadth and depth of products and services presents new dilemmas for brick-and-mortar retailers.
One retailer, Minneapolis Minn. based Target, is taking the Amazon threat seriously enough that it will stop selling Kindle e-reader devices in its stores. With roughly 1,800 stores across the nation, Target has been one of the biggest carriers of Kindles in its stores and was actively courted by Amazon to carry its products when the e-readers were first launched several years ago.
Selling Kindles is not the problem for Target – the problem is that once customers get used to Amazon Prime’s free shipping, and the ability to shop online from the Kindle Fire tablet-like device, customers are more likely to compare prices online and eventually shift their buying to Amazon, and other online retailers. Retailers have also seen an increase in consumer “showrooming” habits – where consumers examine the products in the stores, then surf online to find better prices, sometimes while physically standing in the store aisles. At Christmas, Amazon launched a mobile promotion on its Price Check app that gave shoppers a five percent discount on items scanned into smartphones while at a store.
Target has taken note of the changes at Amazon and is now taking steps to distance it from the online retailer and build a stronger presence of its own both online and in the store. It will be interesting to see if other retailers follow Target’s lead on this topic.
Group Activities and Discussion Questions:
- Why are Target and Amazon now competitors?
- Take a poll of students – ask them what companies/sites are owned by Amazon. Com.
- Then, show the presentation about Amazon-owned companies located on http://www.labnol.org/tech/amazon-owed-companies/19605/
- Divide students into teams and have each team examine an Amazon company. What are the similarities, messages, and target markets for these sites?
- Have students discuss the ramifications of Target dropping Kindle products. Will this hurt either company? Should other retailers who carry the Kindle follow Target’s lead?
- Discuss Amazon’s strategy with the Kindle products and Amazon Prime.
- How does this strategy impact consumers and change shopping habits?
Source: New York Times, Ad Age, Brandchannel.com, Minneapolis Star Tribune, other news sources, 5/2/12