Amazon has expanded its online store to allow customers to order food to their homes, under the designation Fresh. While the food delivery business is not exactly ground breaking, Amazon already has considerable power as an online retailer and experience in the product delivery scene that will hopefully translate to efficient and effective food delivery. In terms of business strategy Amazon can likely utilize two of Porter’s generic strategies to leverage its strengths: industry wide product differentiation and also cost leadership.
In regards to product differentiation, Amazons Fresh offers grocery delivery to homes, and while this is something that has been done before, it is still not the primary way in which consumers get their groceries. In addition to this, Amazon brags that it can deliver orders in an hour, effectively simulating the convenience of going on a quick grocery run without the simultaneous inconvenience of having to leave home. This differentiates Amazon from other online grocery delivery firms who are unable to offer such quick delivery speeds.
Given that Amazon already has assets in the delivery business, they can easily reallocate and utilize their experience in delivery to keep costs low and ensure efficiency. This lends itself well to Porter’s other generic strategy, cost leadership.
In summary, Amazon is demonstrating good business strategy in its expansion into the grocery delivery industry by leveraging their strengths to keep costs low while also distinguishing their product.
Article Referenced: http://www.forbes.com/sites/rogeraitken/2015/10/01/amazon-dashes-in-with-fresh-uk-launch-dealing-blow-to-supermarket-sector/
paulcubbon
October 17, 2015 — 9:24 am
Porter’s not Porters or porters.
Otherwise, a good post.
TomFarran
October 17, 2015 — 5:16 pm
Silly mistake! Should be fixed now.