Amazon's Competitive Edge
By David Dorf on Jan 30, 2009
While commenting on a story over at RetailWire, I started thinking about the story of Amazon. Its no secret their competitive edge is innovation. When I think of innovation in retail, Amazon is always high on the list. They constantly make shopping more convenient, combining the right mix of products, technology, customer service, and marketing. Here's a mini-timeline of Amazon's retail innovations:
1994 Company incorporated.
1996 Launches Associates Program, allowing third-parties to market products on Amazon.com
1997 1-Click Shopping. Its amazing they got a patent on that.
1998 Begins selling music and movies, which was pretty new at the time
1999 Adds auctions
2000 Super Saving Shipping, always gets to me add one more item.
2001 Look Inside The Book
2002 Launches Amazon Web Services, exposing some of their features to the Web.
2003 A9.com, a powerful search engine used within the site.
2004 Exposes product data to developers on the Web.
2005 Amazon Prime, a club that offers fast, cheap shipping.
2006 Amazon Unbox, streaming movies.
2007 Amazon MP3, music downloads without DRM.
These innovations marked the mainstream acceptance of what might seem commonplace today. Certainly not everything was "invented" by Amazon, as many ideas came from acquisitions. But Amazon smoothed out the rough edges and put the entire package together.
Some of the more interesting advances aren't really related to retail at all. The Mechanical Turk, released in 2005. allows simple human tasks to be outsourced. For example, if you use the Amazon iPhone application to take a picture of a product (as described here), a job is submitted to the Mechanical Turk to match the picture to the product in Amazon's catalog, a task better suited to human than computers.
In order to keep up with demand at peak times, Amazon had to invest in a huge computer infrastructure that was underutilized most of the year. So they decided to sell excess computing resources to the public. Thus the Simple Queue Service (SQS), Simple Storage Service (S3), and Elastic Compute Cloud (EC2) were offered in 2006 as hosted technology. This has become very popular with start-ups that can't afford huge capital investments.
Oracle has partnered with Amazon to offer Oracle technology in Amazon's cloud. See Oracle's Cloud Computing Center for more information. Need a high-powered database, but can't afford the server and the DBA? -- just put your data in the cloud.
The next disruptive release from Amazon will be the Kindle2, expected to be announced next week. And watch for Amazon to take market share away from Apple in the area of digital downloads.