Is Amazon.com Still a Dot-com Company? Amir Syafrudin - 1306346771 Considering that Amazon.com puts up all of its stores online, it is quite surprising to see that the company is speeding up in building new warehouses. It has spent a huge amount of money to build its warehouses. During its warehouse building spree, Amazon.com has “invested roughly $13.9 billion since 2010 to build 50 new warehouses, more than it had cumulatively spent on storage facilities since its 1994 founding, bringing the total to 89 at the end of 2012.” This “push” towards building a higher capacity is a move made by Amazon.com to further enable two-day delivery or same-day delivery for its customers; especially its Prime customers. It is a move made by Amazon.com to keep rivals such as EBay and Wal-Mart Stores “from peeling off customers.” (Kucera, 2013) Putting delivery capabilities aside, can Amazon.com still be considered a dot-com company when its physical presence (provided by its warehouses) continue to grow? The answer to this question depends on how we define the word “dot-com” itself. InvestorWords defines dot-com as follows: A company whose operations are entirely or primarily internet-based, or more specifically a company whose business model would not be possible if the Internet did not exist. Dotcoms often deliver all their services over an Internet interface, but products might be delivered through traditional channels as well. (“dot-com”, n.d.) Based on the above definition, we can easily say that Amazon.com will still be a dot-com company no matter how many warehouses it builds. No matter how much or how big its warehouses to date, the core business process of Amazon.com still runs on top of the Internet. Amazon.com still sells its goods directly to consumers through its online stores. Even though Amazon.com was reported to open pop-up stores, kiosk, vending machines, or even “lockers” in public places, there’s still no solid proof to claim that the e-commerce giant are interested in opening up “physical” retail stores (Bishop & Soper, 2014; Casey, 2012). The warehouse building spree was not about physical presence. The reason Amazon.com build so many warehouses was to make sure that they are able to commit to their words regarding speed of deliveries. With the product stored in its own warehouses, Amazon.com has more control over distribution and deliveries. At the end, it was all about alleviating shopping experience, improving customers’ trust, getting new customers, and last but not least, retaining existing customers from switching to rivals. The warehouses was simply an expansion of its capability to create a stronger foundation for an existing business model, which is online retail stores. That being said, one might argue that Amazon.com is aiming for a brick-and-click business 1 model, which “includes both online and offline operations” ("Click and mortar definition", n.d.). Unfortunately, the same argument applies. Warehouses meant for attaining a certain service level of deliveries doesn’t qualify for “offline” operations. Amazon.com still does its business on the Internet. It is not a brick-and-click because it still maintains a pure Internet business model. Thus, Amazon.com is still a dot-com company. 1 Also known as “click-and-brick” or “click-and-mortar” among several others.
An essay answering the question "Is Amazon still a Dot-com company?" Written as part of an assignment for Corporate Information Management course.
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Is Amazon.com Still a Dot-com Company? Amir Syafrudin -
1306346771 Considering that Amazon.com puts up all of its stores
online, it is quite surprising to see that the company is speeding
up in building new warehouses. It has spent a huge amount of money
to build its warehouses. During its warehouse building spree,
Amazon.com has invested roughly $13.9 billion since 2010 to build
50 new warehouses, more than it had cumulatively spent on storage
facilities since its 1994 founding, bringing the total to 89 at the
end of 2012. This push towards building a higher capacity is a move
made by Amazon.com to further enable two-day delivery or same-day
delivery for its customers; especially its Prime customers. It is a
move made by Amazon.com to keep rivals such as EBay and Wal-Mart
Stores from peeling off customers. (Kucera, 2013) Putting delivery
capabilities aside, can Amazon.com still be considered a dot-com
company when its physical presence (provided by its warehouses)
continue to grow? The answer to this question depends on how we
define the word dot-com itself. InvestorWords defines dot-com as
follows:
A company whose operations are entirely or primarily
internet-based, or more specifically a company whose business model
would not be possible if the Internet did not exist. Dotcoms often
deliver all their services over an Internet interface, but products
might be delivered through traditional channels as well. (dot-com,
n.d.)
Based on the above definition, we can easily say that Amazon.com
will still be a dot-com company no matter how many warehouses it
builds. No matter how much or how big its warehouses to date, the
core business process of Amazon.com still runs on top of the
Internet. Amazon.com still sells its goods directly to consumers
through its online stores. Even though Amazon.com was reported to
open pop-up stores, kiosk, vending machines, or even lockers in
public places, theres still no solid proof to claim that the
e-commerce giant are interested in opening up physical retail
stores (Bishop & Soper, 2014; Casey, 2012). The warehouse
building spree was not about physical presence. The reason
Amazon.com build so many warehouses was to make sure that they are
able to commit to their words regarding speed of deliveries. With
the product stored in its own warehouses, Amazon.com has more
control over distribution and deliveries. At the end, it was all
about alleviating shopping experience, improving customers trust,
getting new customers, and last but not least, retaining existing
customers from switching to rivals. The warehouses was simply an
expansion of its capability to create a stronger foundation for an
existing business model, which is online retail stores. That being
said, one might argue that Amazon.com is aiming for a
brick-and-click business 1model, which includes both online and
offline operations ("Click and mortar definition", n.d.).
Unfortunately, the same argument applies. Warehouses meant for
attaining a certain service level of deliveries doesnt qualify for
offline operations. Amazon.com still does its business on the
Internet. It is not a brick-and-click because it still maintains a
pure Internet business model. Thus, Amazon.com is still a dot-com
company.
1 Also known as click-and-brick or click-and-mortar among
several others.
REFERENCES Bishop, T., & Soper, T. (2014, January 9).
Surprise: Amazon tests physical retail with 'Kindle
Kiosk' vending machines. Retrieved March 11, 2014, from
http://www.geekwire.com/2014/hands-amazon-tests-physical-retail-kindle-kiosk-vending-machines/
Casey, K. P. (2012, August 21). Is Amazon going
bricks-and-mortar? Retrieved March 11, 2014, from
http://www.cnbc.com/id/48741338
Click and mortar definition. (n.d.). In Investopedia. Retrieved
March 11, 2014, from
http://www.investopedia.com/terms/c/click_and_mortar.asp
dot-com. (n.d.). In InvestorWords. Retrieved March 11, 2014,
from http://www.investorwords.com/1549/dot_com.html
Hoffelder, N. (2013, November 30). Amazons first retail store is
here today, gone tomorrow. Retrieved March 11, 2014, from
http://www.the-digital-reader.com/2013/11/30/amazons-first-retail-store-today-gone-tomorrow/#.Ux5iq_mSxCg
Kucera, D. (2013, April 29). Why Amazon is on a warehouse
building spree. Retrieved March 10, 2014, from
http://www.businessweek.com/articles/2013-08-29/why-amazon-is-on-a-warehouse-building-spree
