Blue Ocean Strategy - Amazon Prime Delivery, Air & Content

Amazon Prime, or One Hour Delivery are all examples of Amazon creating uncontested space (ie. Blue Oceans) in which to compete far away from anything their competitors can do. Amazon was able to reduce the delivery time and now you can purchase a product and get it delivered to your house in 2 days with no additional cost. This was achieved by Amazon Prime, which is a premium subscription service, it started in 2005 and charges U$119 of yearly subscription from its members. According to Jeff Bezos, on the yearly investor letter of 2018, they had more than 100 million members. This is almost 12 billion dollars of inflows that Amazon can invest in the supply chain. Amazon rose customer satisfaction to a new standard, pioneered with one-click shopping, customer reviews, and fast receipt verification on email.

Prime Day is about leveraging a flywheel of subscribers and recurring revenue. Prime Day is a designed as a massive sale exercise to  attract consumers who aren't Prime subscribers to experience what prime is all about and become members.  Amazon primarily looks ate Prime days as a weapon to penetrate the amazon customer households to convert them as prime subscribers. Amazon intends to have more  Prime subscribers because they buy more stuff, consume more content, provide more data, and have more lifetime value. Cowen & Co. estimates that Amazon had 63 million Prime subscribers and 44% of them planned to buy something on Prime Day with another 42% undecided. Cowen & Co. estimates that about 10% of non-Prime households will sign up on Prime Day.

Prime Day also advertises the Amazon logistics capabilities of fast and free delivery. Free one-day Prime delivery is now available on more than 10 million products, and many of them will be on sale on Prime Day. Many of the amazon customers jump on to this bandwagon and make that delivery speed an expectation for Black Friday and the holiday season. Amazon's competitive advantage in terms of logistics vs. other retailers is classically evident on prime day delivery. According to estimates from Consumer Intelligence Research, the number of Prime subscribers recently topped 100 million, and on average those customers spend about $1,400 per year, compared with about $600 per year for shoppers who aren’t members.

Through Prime Video Amazon is playing in red ocean media where competitors like Netflix, Apple and other content providers dominate. For example, Prime users can add Showtime or Starz for $8.99 a month. Amazon takes a cut of the revenue, typically about 25 percent for the largest companies, when a customer signs up. Amazon’s strategy is  Create the world’s largest online shopping mall and then invite smaller businesses to pay a toll in exchange for using the site to reach many millions of new customers and also provide media content.

Amazon has one other weapon that gives it a distinct advantage over Netflix and its other media peers: the Echo. As more of the Alexa-powered devices populate consumers’ homes, it’s not hard to imagine tighter integrations with smart TVs. That opens Amazon up to all sorts of untapped opportunities with advertising and cross-selling products.

Blue Ocean Strategy – Amazon blue oceans - Drone Delivery Prime Air

Blue Ocean strategy delivers unique products or assortment of services which a customer cannot acquire anywhere else that may due to the unique design & functionality, leveraging digital and physical store footprints in some fashion, leveraging the Internet of Things (IoT), or having some creative systems capability. Amazon has shifted from an online retailer to a digital platform that sells practically anything. It started as a book store but built an digital enterprise that not only radicalised the way books are sold or accessed and also was able to add many unrelated products and services to their core books. Amazon has been successful in most of the businesses it ventured but also saw failures such as fire phone, Zappos, etc. 

Amazon continually looks to create and implement Blue Ocean Strategies.  Strategies such as their Kindle E-Reading solution that eliminated the need to buy books physically, carry multiple hard copy books, raised the quality of reading experience on a hand held device which is very light and comfortable for reading in various environments, reduced to pay heavy prices for the books as eversions are cheap, reduced the need to buy storage furniture for books and created an unique experience that not only equips reading books but also do host of digital activities on the go.

Amazon Drone Delivery radicalised the last mile delivery of the goods to customer door step that eliminated the need for delivery trucks, drivers that have negative impact on environment, raised the efficiency of the delivery process and reduced the traffic congestion and other associated problems and created an unique experience that entices the consumers. plans to launch its drone delivery service, Prime Air, "in a matter of months." Amazon plans to deliver customers' orders within 30 minutes through its Prime Air delivery program, which would blow away its two-day Prime shipping and two-hour Prime Now deliveries. The Prime Air delivery program uses autonomous drones guided by GPS systems. With last mile delivery being the most expensive and time consuming part of the shipping process, drone delivery has the potential to give Amazon a leg up on other logistics companies. 

Amazon's cloud service is its most profitable unit. By tapping into the power of these cloud computing systems, companies can serve many more customers for much less expense with much less downtime and much greater performance than they could through their own data centres. And as an additional benefit, they don't have to worry about maintaining their own servers. "AWS invented this market," said Dave Bartoletti, a principal analyst at Forrester Research. "They had a five-year head start before anyone else got their act together." When AWS first launched, it only offered a basic set of infrastructure services. Customers could get access to virtual servers through a service Amazon called the Elastic Compute Cloud, or EC2. They could also use AWS for file storage, through Amazon Simple Storage Service or S3.