Is Amazon Overreaching?

Set aside the frightful articles about the Dickensian culture, employees responding to urgent texts in the wee hours or weeping at their desks from the workload. Forget for the moment the stark comparisons to Charlie Chaplin’s Modern Times, his masterpiece on socioeconomic utopianism, in which he once explained, “humanity is weighed down with duty.”

Focus, rather, on Amazon’s Amazonian ambitions. The company is a provider of video on demand, a television producer, a device manufacturer, a streaming music service, a B2B seller of software services, a developer and distributor of video games, an auction house, an online, fine-art marketplace, an operator of websites for other retailers and a deliverer of fresh groceries. It also plans to produce feature films.

“Analysts are increasingly concerned that Amazon is straying beyond its core competencies.”

Can Amazon continue to plow revenue back into new businesses and maintain its current track record of success? Surely. The stock has been stellar and consumers love the shopping experience. In fact, I am among the more than 50 million Amazon Prime users who find Amazon.com a reliable, simple to use, one-click deliverer of all sorts of stuff that makes my family happy. I own a Kindle, I watch “Transparent” from Amazon Studios on TV and I’m eager for a drone to buzz outside my home office window with a ham and cheese sandwich for lunch.

Analysts, however, see things differently. They’re increasingly concerned that Amazon is straying beyond core competencies, burdening its vaunted distribution system with too many products and stretching Wall Street’s patience thin. Although Amazon recently declared a profit that exceeded analysts’ expectations, the challenge has been to consistently report profits.

Despite their concerns, Amazon watchers nonetheless praise the company’s bravery in experimenting with new businesses like the successful Kindle reader and the failed Cell Fire smartphone. They marvel at its ability to develop new businesses like Amazon Web Services, Amazon Prime Music and Amazon Pantry.

They extol its historic rise from a mere online bookseller into the undisputed Queen of Online Retail. And they laud the company’s ability to be extraordinarily convenient and, therefore, indispensible to consumers, bestowing upon Amazon an enviably trustworthy brand.

How trustworthy? According to a May 2015 survey by the Conference Board, 52.9 percent of consumers say they trust Amazon most as a provider of online information. Next on the list is Google at a distant 13.9 percent, followed by Apple at 10.8 percent. We love Amazon. Still, there are chinks in its armor.

WHAT IS AMAZON?
To describe Amazon a decade ago was pretty easy—an e-commerce company that sells books, CDs and a few other items online for delivery to one’s home. Today, it is that and so much more.  Yet, do these varied enterprises have something in common?

“Bezos is pushing the boundaries of what we think Amazon is into something that is quite different,” says Kai Clarke, president and COO of American Retail Consultants. “It’s a risky strategy.”

Finish reading the article at ChiefExecutive.com.

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