Amazon - Kindle Fire

The companies are creating virtual shopping malls that have made it very easy for customers to shop online. There are pros and cons to businesses operating on the web, however, the GenY consumer has already indicated their comfort in technology enabled solutions. One company that has revolutionized this concept is Amazon.com. A company that has been respected as one of the most innovative companies, the birthplace of Kindle, and many such concepts. They have been a leader in E-commerce and shopping online.

I recently read an article about their new Kindle Fire. According to the article, Amazon is entering the tablet industry by launching the Kindle Fire in direct competition with the Apple’s iPad at a price of $199, much lower than the Apple iPad of $499.

Amazon, a big online retailer has offered the Fire with fewer features than the iPad at a very low price, with an additional advantage of providing the customer access to its digital store of movies, music and easy access to online retail products. Expert’s opinions vary on the new move. Some pessimists worry that Apple has too big or a market share and that others like HP and Blackberry have failed. Conversely, others make the assumption that it will increase content sales by having a closer customer touch point.

Economies of scale will also give an additional advantage assuming Amazon is able to gain market share. If manufacturing costs remain stable and if Amazon gains customer recognition due to its promotion efforts and low cost it can take Apple’s market share. It all depends on the volume of sales.

We also need to look at them cannibalizing their e-readers. I think this is one limitation of the research in the article. If the white and black Kindles have a better contribution margin than the Kindle Fire, their sales mix will hurt their overall profits. I assume they will be replacing profitable products with others that are less profitable. They should conduct an analysis, assuming a certain percentage decides to purchase the Kindle Fire versus the older versions to see how it will affect Gross Margin.

Conversely, there are other revenues, besides the Kindle Fire purchase price, that Amazon will receive as a result of the sale. They will benefit from additional content purchases made on the Fire such as music, videos, games and books. However, iPad users are already able to make these purchases from Amazon on their iPad, so the questions is, how much will the incremental purchases be? I’m assuming, Amazon can market this product for a segment that wants a product like the iPad but is not willing to pay the $499 minimum price. However, the problem when you compete on price is that all your competitor has to do is lower their price. I anticipate a new product launch next year by Apple to compete for this same segment with a cheaper iPad. Amazon.com is focusing on the low cost strategy, which only works with a good market share. In this fast paced, technologically changing environment, Amazon.com will need to keep on differentiating their product by providing additional features, which will negatively affect cost directly. Therefore, the low-cost strategy will not be a strength in the long run. In conclusion, the statement that Amazon.com will not be making much money is realistic.. The only hope for Amazon, is their advantage of large base of online retail customers and access to online data sources. Amazon’s focus on extra features should be more than the low cost strategy. Low cost will give an additional benefit but differentiation is necessary in the high tech industry.

http://online.wsj.com/article/SB10001424052970204138204576598670632549928.html#ixzz1aawcmn5f

Zynga

There are many ways a company can use traditional methods of marketing and develop the market and scope of their product. However, the trends have changed and in this era of technological advancements, social media usage has become an incredible distribution channel for selling products. It has suddenly proved to be a great mode of marketing and sales strategy for companies. E-Marketing companies have come up with innovative ways of selling their unique services and products by using the world wide web to its limitless possibilities. A great example is Zynga. They were ranked the 2nd most favored tech start ups. The games are used in over 166 countries with 60 million daily users playing over two billion minutes a day! The company is an online gaming company that changed and utilized users spending time online on social networking sites to its benefit by giving them interactive and interesting games that allowed them to compete with their friends. Two of their most popular games are Farmville and Cityville, which are offered through the Facebook platform and labeled as social games. They are very addicting games that encourage the player to bring their friends to the game. Most users do not spend any money on the game but there are those players that are willing to pay money to zynga in exchange for tokens needed to get them ahead in the game. One major concern for investors is that there is a major reliance on Facebook. They wonder if Zynga would remain successful if Facebook one day decides to drop the application.

Links:

http://knowledge.wharton.upenn.edu/article.cfm?articleid=2822

10/15 Class- Business Model Ideas

What business model ideas from the 10/15 class can you apply to your business plan project?

The model for Shipit2me is pretty simple :

1. A buyer goes online to their favorite brand which is say a European one

2. Selects the product and makes a purchase.

3. Key in your Shipit2me mailbox address (European Warehouse)

4. The parcel is then sent to the European Warehouse

5. Once it reaches the warehouse, Shipit2me forwards the package to the customer’s USA address

Now, the business model can be improved based on other ideas shared during the 10/15 class, by providing some extra services and features that the customer can benefit from. The structure is offering the customers a huge amount of savings in terms of shipping costs. In addition to that it’s also allowing a buyer to make a purchase of a product that might not be available for shipment to their country through the online store. In this way we see that there are four definite benefits that can be offered:

· Package Forwarding to our destination

· Personal Shopping on my behalf by Shipit2me

· Package Consolidation of many to one

· Cost saving on discounts and offer on shipping.

To get the best of these features if the traffic can be increased by using social media marketing it will definitely add value to the website. Also as we know on the different types of forces that that are going to drive the business, I would focus on the controllable factors, like the supply chain, and the product differentiators. I might not be able to control the bargaining power of the customers however I would definitely be able to influence them by providing innovative offers and cost savings.

Hulu

Have you ever gotten home late from work only to realize you missed your favorite show? It’s happened to me. I think of myself as being quite resourceful but sometimes it’s nearly impossible to find it online. I usually would go to Youtube first and see if anyone has posted the show. The problem here is that there is a limit to the length of each clip, so the episode is usually divided into four videos. Another issue with Youtube is that the content quality is sometimes below par. I’ve even seen videos where the person posting the video sat in front of the TV and recorded it manually. You can imagine how poor the video and sound quality were. My next step is usually to Google the show to find websites that let you watch the show. The problem here is that they usually stop the show to force you into watching their advertisements. I remember watching a show on my computer while I was in Portugal this summer. This website was soooo bad, that it would stop every ten minutes with the same exact advertisement. Towards then of the video it was interrupting the show every 5, then 2 minutes.

Well, apparently I wasn’t the only one frustrated with the current options. Jason Kilar , the CEO of Hulu, took the idea of online video sharing and provided a platform where one could see their TV shows, clips and movies. The estimated value of the company is $1.6 billion and is based out of LA, California. They didn’t invent only video sharing but they took the service offered by Youtube and other alternatives and made it better.

The investors have also shown interest and have been funding regularly. Hulu, despite planning an IPO, might actually be taken over by some big companies. If it comes at a good price, it could be a win-win for everyone.

For further information please click the links below:

www.youtube.com

www.hulu.com

Dropbox

There have been many startups and among them the ones that have been successful have shown promise by mixing the concepts of necessity and demand for technology in the future. I wanted to talk about DropBox, one of my favorite cloud services, I’ve been using for a few years now. Estimated at a value of $4 billion, it’s a unique concept. It’s a free service and allows the user to bring their personal photos and files anywhere and share them easily. It's available on the web or through their smartphone application.

The DropBox team comes from SanFrancisco, CA. The concept isn’t new, as sites like Box.net, sharefile, hotfile and rapidshare have been working on similar concepts. However, I believe the driving force here is the cloud computing concept. The investment has been a great force in driving the company where it’s going now.

The company basically saves a folder to your desktop, where you can file away any files that you would want to access while you’re away from your computer. I’ve used it to link my files from the non-profit I’m involved with. When I’m in the office, I can save the files to the dropbox folder and later access them from my home computer if I need to work on them. I'm also able to pull it up on my smartphone if I just need to quickly see a file. I’ve also used it for school when working in teams. We will set up a file for our group project and store all our files and research along the way. Any of us can make changes to these files, which can be immediately viewed by the other owners of the file. Another great use of the website is for file storage. If you don’t want to store large files on your computer, with the worry that it will slow your computer speed, you have the option to store it on their website. This can also be done to backup files so that they are in two locations. There is a free service that offers a certain amount of storage. Extra storage can be purchased for a monthly fee, or you can earn extra space if you get your friends to try the service.

The business model is sustainable as it tries to focus on the basic necessity of files and sharing for any office. If you don’t already use DropBox, I highly recommend it.

To get started, click the link below:

www.dropbox.com

20 Innovative Tech Startups

This article provides good insight to the different approaches that companies have taken to use the Internet. An interesting mix of people and technology can do wonders. There is a lot of great information in the article and provides the perspective of a technology dependent world. The website “Kaggle” is one of the entrepreneurial ventures that really made me think, “Ah why didn’t I think of that?”. Inspired by the article, I did some research to see what other innovative tech startups were out there across the globe. Developing countries like China, India and most of the Asia Pacific countries have also shown great support and drive for innovation. I happened to find one such startup called “Kwench”.

Library Redefined

/’kwench is India’s first corporate library solutions provider, bringing a paradigm shift to the concept of conventional corporate libraries.

It offers convenient access to a wide range of books, meeting both professional and personal needs. It is an unfulfilled need for most book readers. This is particularly true for the customer who spends most of their time at work. From a corporation’s standpoint, setting up a good quality library requires management effort, capital expenditures on books, administrative effort and costly real estate. I remember when I worked as an Auditor right out of school for my undergraduate degree; we used to have a whole room dedicated to storing all the Audit and Tax publications and guidelines. We would receive updates to specific sections periodically and as industry guidelines and rules were modified, which could be quite frequent. We would have to remove the outdated sheets and add in the replacements. It was very tedious and there was little value added.

The launch of /’kwench/ library services enables employees to conveniently access books across 40 plus categories that cater to the professional and personal reading needs of the individuals. Customers can search for titles on the website and place an order to borrow the material. The collection is accessed online while the physical book is shipped to the customer’s workplace within 24 hours. This eliminates the administrative task up updating physical references, like I once did and saves precious space that can be better utilized.

To read the article or for further information about /’kwench/ please see the links below:

www.kwench.in

http://www.businessinsider.com/20-innovative-startups-2011-11?utm_source=%23frankguillen&utm_medium=twitter&utm_campaign=FrankGuillen+Buzz

SnapDeal - Groupon Competitor in India

After working on the NetTools Assignment and presentation for Groupon, I wanted to research their competition overseas. I found that the company Snapdeal is now their leading competitor in India.

What’s their business model?

Snapdeal offers discounts up to 90% off in cities of India on Dining, Travel, Entertainment, Movies, Spa, Healthcare services and much more. Their focus is on India but they are planning to expand to the USA.

How do they do it?

Step 1: Subscription- Subscribe with them online to get daily deal alerts in your email and mobile device.

Step 2: To buy any deal, click on 'Buy' and make a payment using various payment methods: credit card, debit card, online banking, cash card and more.

Step 3: Deal confirmation- Receive your deal vouchers on SMS and Email.

Step 4: Redeem your deal- Show your voucher at the merchant location and redeem the deal. Its that simple!

Value and funding due to eBusiness:

Group buying portal Snapdeal.com has raised $40 million in series B funding, led by Bessemer Venture Partners, along with existing investors Nexus Venture Partners and Indo-US Venture Partners. The investment comes barely six months after it has announced a $12 million series A round in January this year from Nexus and Indo-US Venture Partners.

Snapdeal has been rapidly expanding its group buying business and currently has a member base of over eight million. Besides offering deals for services like restaurants and spas, the company has also started offering various products such as luxury goods (sunglasses, watches) and gadgets (mobile phones, storage devices). Snapdeal's co-founder and CEO Kunal Bahl has told VCCircle that its products business has started to scale up really well, this is an area that Groupon is just getting into. For instance, the company sold 500 branded wallets within 45 minutes only a few weeks ago and also sold over 2,500 branded sunglasses in a single deal in one day.

For further information about Snapdeal or Groupon please click the links below:

http://www.penn-olson.com/2011/05/20/india-snapdeal-surpasses-livingsocial-threatens-groupon/

http://www.snapdeal.com/

www.groupon.com

Online sales for a click-&-mortar firm

Should online sales be an independent unit in a click-&-mortar firm?

Ideally the question here is if their click & Mortar firm should have online sales as a new business unit. I would say, using the World Wide Web definitely makes sense today and it will put the company on a global footprint. However the things that we need to ensure would be the brand and its loyalty from the customers and vice a versa. Today, I cannot imagine a company without a website of its own, because that is how you immediately reach out to millions and across continents unlike the brick and mortar firm which is more likely to be visible to only the city or the town.

In addition, the online sales team plays a vital role in creating a product reach to even the remotest of the town irrespective of the age and education. Everyone likes to spend time on the Internet in search of products. If the company has invested in creating the brand, then customer trust comes naturally to increase sales. Online sales can be thought of as an independent unit, however the decision completely would depend on the efficiency the company is trying to drive and how big they want to become. The online sales can be invested and spun off to be a separate unit only if they have done well in creating value for the brand and invested money in marketing to create a well-known company and its product line. These are some basic things to be considered. Furthermore, instead of creating it as a separate unit why not outsource it? That will add value and will be a source of income for another company and not just a department, hence is liable to bring better results.