Test Case

On the one hand, he identified book retailing as an industry segment that could exploit the power of emerging Internet technologies and found the Amazon.com, which enjoyed several years of tremendous growth, from an online bookstore into an online superstore, expanding the online business from retailing to auctions and marketplaces. He propelled the company through the dot com crash by partnering with traditional retailers and on to being a highly profitable online retailer.

On the other hand, in order to support its rapidly growing and increasingly complex business, he invested heavily to develop state-of-art digital business infrastructure and operations which could provide the best-in-class retailing, fulfillment, and customer service capabilities, but built with rapid growth in mind, the distribution infrastructure provided roughly 70% to 80% overcapacity in late 1999. In early 2001, the company faced tremendous pressures from Wall Street and the company's shareholders to achieve profitability. From 1997 to 2000, the Gross margin increased from 29 million to 655 million. However, the operating expenses also increased rapidly, from 61 million to 1519 million! The company simply could not make profit!

2.Trace the evolution of the Amazon.com business from the company's launch in 1995 to the dotcom collapse in 2000. How did the company's strategy change over time? How did capabilities evolve? What value did it deliver to all stakeholders?

From its online bookstore launched in July 1995 till it went public in May 1997, the company located itself as an online retail bookstore, focused on redefining and enhancing the online shopping experience, including browsing, searching, personalized store layout and recommendations, shipping carts, 1-Click shopping, wish lists and greeting cards.