After a long and hard run for 6 years, Amazon has begun initiating a brand new value proposition to the company’s grocery sector that will revolutionize its gateway into expansion. Originally, the online company used means of direct delivery to bring purchased produce and orders directly to the customers’ homes. With their profit margin growing, Amazon sought ways to not only keep the growth of profit consistent, but to also maximize customer satisfaction.
A revised BMC is crucial in analyzing the effective adjustments made by the company to better their profit margins. The value proposition; the golden heart that connects all of the other segments in the BMC. Amazon’s new approach was to keep their original mission, by using new and improved technical advances to maximize customer satisfaction even further. Amazon hopes to increase their key activities sector by establishing physical convenience stores, curbside pick-up, cell-phone ordering and drive-in locations, where pre-ordered foods are brought to the customers, to save time for the consumer whilst increasing their satisfaction. Another risky approach to gain more customers is that Amazon dropped their membership prices from a whopping $299/month to 99$/month, hoping to increase the amount of users and it worked! Due to Amazon’s unlimited customer segment, this opens up a variety of partnerships that appeal to a wide range of age groups, for example, Aldi, Lidl, dollar stores, Walmart and Viacom (a streaming service that ties to Nickelodeon, promoting the Amazon image to younger children).
This is effective in not only captivating the world with its new proposition and future advancements but it also leads to partnerships. The owner of A La Mode Pies in Seattle, Chris Porter, describes the efficient partnership he has with Amazon, “Amazon keeps about $2 of every $9 pie…And… the percentage can be as high 40% of the sales price.” (Bensinger, 2013). Personally, I fancy the growth of Amazon and their motive to do so is, in my eyes, very effective. They have added “speedy” and “convenient” into their revised value proposition which captivates more customers among many and due to this revision, Amazon may stand out more appealing than its strong competitors. Amazon planned to expand into warehouses which were scheduled to be built in California, San Francisco and Dallas-Fort Worth which is a rather risky moves. Although this is an expansion motive, it is important to keep in mind that there are major competitions out there, Walmart and Safeway, that could just push Amazon off its tracks, especially if Amazon is adding the cost of building warehouses onto its cost structure; a huge bill on the tab. Similar to Michelle Ng’s blog about Amazon’s expansion, “Amazon can greatly achieve an advantage through the economies of scale for production and distribution, customer loyalty programs, and creative problem-solving of customer problems.” I agree with Michelle in that Amazon’s compelling new proposition is stealing the hearts of many by targeting values of convenience, loyalty and fast delivery.
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