Case study Amazon
Amazon.com continues to diversity at a relentless pace. Besides offering same-day delivery of
groceries in some metropolitan areas and testing drones for even faster distribution, Amazon
now plans to capture a large piece of the over $10 billion college bookstore market. In a pilot
project, Amazon initiated a student-centered program at three large universities: Purdue
University, the University of California, Davis, and the University of Massachusetts of
California, Amherst. The goal of Amazon Campus is co-branded university-specific websites
that offer textbooks, paraphernalia such as the ubiquitous logo sweaters and baseball hats, as
well as ramen noodles!
As a part of this new campus initiative, Amazon offers its Prime membership to students at a
50 percent discount ($49 a year) and guarantees unlimited next-day delivery of any goods
ordered online, besides all the other Prime membership benefits (free streaming of media
content, discounts on hardware, etc.) To accomplish next-day delivery, Amazon is building
fashionable delivery centers on campus, university co-branded such as „amazon@purdue“.
Once a package arrives, students receive a text message and cant hen retrieve it via codeactivated
lockers or from Amazon employees directly. The on-campus delivery facilities also
serve as student return centers.
Amazon`s new campus initiative allows it to bind a younger generation of shoppers ever
closer into its web of products, services, and content. Next-day delivery makes students less
likely to shop at traditional campus bookstores. Amazon also has a history of selling
textbooks at a discount in comparison to old-line campus bookstores. All course materials
automatically qualify for next-day delivery and do not require a Prime membership. The
Amazon Campus initiative is predicted to save students $200 to $400 a year on textbooks and
other supplies.
1. Amazon.com continues to spend billions on seemingly unrelated diversification
efforts. Do you believe these efforts contribute to Amazon gaining and sustaining a
competitive advantage? Why or why not?
2. Amazon.com is now over 20 years old and makes some $100 billion in annual
revenues. As an investor, would it concern you that Amazon.com has yet to deliver
any profits? Why or why not?
3. What is Amazon`s core business?