Topic Description APU NEW I ALL 4. Amazon.com started as an Internet retailer se

Question

Topic Description APU NEW I ALL 4. Amazon.com started as an Internet retailer selling books. Then it expanded to groceries, DVDs, apparel software, travel services, and basically everything under the sun. Evaluate these growth opportunities in terms of the probability that they will be profitable businesses for Amazon.com. W advantages does Amazon.com bring to each of these businesses? hat competitive 5. Neiman Marcus (a chain of high-service department stores) and Wal-Mart target different customer segments. Which retailer would you expect to have a higher gross margin? Higher expense to sales ratio? Higher inventory turnover? Higher asset turnover? Net profit margin percentage? Why? Rubric Instructions: Your initial post should be at least 250 words. Please respond to at least 2 other students Responses should be a minimum of 100 words and include direct questions.

Explanation / Answer

Amazon.com which started as an Internet retailer selling only one category – books. Based on that, it has built and grown covering multiple categories – electronics, home electronics, household items, apparel, groceries, DVDs, software, travel services, Toys which shows how it has grown from single category into covering all shopping needs. The advantages amazon.com brings in is the expertise it builds for successful electronic commerce and retail –

Adding each new category increases chances of meeting customer shopping needs further and increases stickiness factor. Categories must be looked as a whole rather than at individual level, because customers will not prefer using one portal for books, one portal for music and another portal for electronics and so. By adding new and new categories, Amazon.com is increasing stickiness factor higher and grabbing higher share of wallet. Individually few of the categories might not contribute profits, but will help Amazon.com maintain or grow its customer base. For example, groceries is typically a low margin category, but this is category where customers will keep regularly purchasing and thus keeps them hooked to portal. And customers who come to purchase groceries will make their other purchases like apparel (high margin category) which will balance the overall profitability of Amazon.com.

5. Neiman Marcus operates in high-service department stores, where as Walmart targets price sensitive with Low prices as its unique service proposition.

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