{"id":46657,"date":"2025-11-19T14:01:33","date_gmt":"2025-11-19T14:01:33","guid":{"rendered":"https:\/\/certifeka-edu.com\/programs\/strategic-planning-professional-certificate-4\/lessons\/lesson-3-combination-strategy-case-study-amazon-prime-3\/"},"modified":"2025-11-19T14:01:33","modified_gmt":"2025-11-19T14:01:33","slug":"lesson-3-combination-strategy-case-study-amazon-prime-3","status":"publish","type":"lesson","link":"https:\/\/certifeka-edu.com\/ar\/programs\/strategic-planning-module\/lessons\/lesson-3-combination-strategy-case-study-amazon-prime-3\/","title":{"rendered":"Lesson 3: Combination Strategy case study – Amazon Prime"},"content":{"rendered":"

\"\"\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/p>\n

Lesson 3: Corporate Strategy – Part Two<\/h2>\n

Case Study – Amazon Prime<\/h3>\n

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If you look at Amazon’s portfolio, you’d observe that Amazon is not only a dominant e-commerce player, but is also making movies and TV shows through its own studio.<\/h5>\n
Why does it make sense for an e-commerce player, an online retailer to compete with Hollywood? Walmart & Macy’s doesn’t make movies, so why does it make sense for Amazon to make movies?<\/h5>\n
Once you dig into it, you’ll discover that the purpose of these services is to keep and grow the Prime customers. Two-day free shipping is fine.<\/h5>\n
However, if I ask you to pay $99 or $119 for two-day free shipping, you might start calculating the number of packages you expect to receive next year and whether the Prime membership worth it or not.<\/h5>\n
But, once you add some shows and movies that can only be found on Amazon, you can’t do this math. Because Prime customers are more loyal, buy 3 — 4 times more than the non-Prime customers, and less price sensitive.<\/h5>\n
Hence, it makes absolute sense for Amazon to manage a portfolio of businesses to deliver more customer value.<\/h5>\n
Furthermore, by connecting products and customers through the marketplace, Amazon achieves network effects.<\/h5>\n
The more buyers Amazon attracts, the more sellers want to sell through Amazon.<\/h5>\n
The more sellers it has, the more buyers it gets because the buyers can find all the items at a single location.<\/h5>\n
This becomes a flywheel effect, which raises the entry barriers for new players to complete with Amazon.<\/h5>\n

Case — Amazon’s acquisition strategy<\/h3>\n

Amazon has a structured approach to acquiring companies as opposed to growing businesses organically. Amazon’s goal is to be:<\/h5>\n
to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices.<\/h5>\n
Amazon’s acquisition strategy clearly reflects this goal. Though there are many other prominent acquisitions, Amazon’s acquiring Whole Foods is, in my opinion, among the brilliant corporate strategies of all time.<\/h5>\n

Kiva Systems<\/h3>\n

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Some acquisitions are areas where the acquisition can actually benefit and accelerate Amazon’s vision.<\/h5>\n
for example, the acquisition of Kiva Systems was to improve the efficiency and effectiveness of the systems it already had in place in its warehouses.<\/h5>\n
Logistics and warehouse are key areas of Amazon’s business.<\/h5>\n
Amazon saw that Kiva was already ahead of the curve in technology.<\/h5>\n
So, the Kiva acquisition was obvious because that fit in Amazon’s existing business.<\/h5>\n
Some acquisitions are areas where the acquisition can actually benefit and accelerate Amazon’s vision.<\/h5>\n
for example, the acquisition of Kiva Systems was to improve the efficiency and effectiveness of the systems it already had in place in its warehouses.<\/h5>\n
Logistics and warehouse are key areas of Amazon’s business.<\/h5>\n
Amazon saw that Kiva was already ahead of the curve in technology.<\/h5>\n
So, the Kiva acquisition was obvious because that fit in Amazon’s existing business.<\/h5>\n

Whole Foods<\/h3>\n

\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\"\"\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/p>\n

Whole Foods acquisition is different story. As a dominant online player, Amazon acquired Whole Foods — an offline retail store. The acquisition was at 27% premium.<\/h5>\n
It may appear that it doesn’t make sense for an online retailer commerce to acquire offline channels.<\/h5>\n
However, for Amazon, the acquisition was not so much about Whole Foods, but rather about the food business,<\/h5>\n
Amazon had been trying to enter the food and online food delivery business for a long period of time without much success.<\/h5>\n
The Whole Foods acquisition was another attempt to try and enter that particular business segment.<\/h5>\n
Though food is a low margin business, Amazon’s logic makes perfect sense.<\/h5>\n
Part of that logic is that food is something that you buy every week.<\/h5>\n
Amazon can convince you to buy grocery online from Amazon, then it is creating a habit for you to come onto Amazon at least once every week.<\/h5>\n
Once you are on Amazon, you may end up purchasing other high-margin products on Amazon.<\/h5>\n
On the other hand, if you are buying electronics, you may not come to Amazon every day. So, this is a habit creation activity.<\/h5>\n
Even though food may not be a very high margin activity, by creating a habit, just like Prime, Amazon creates loyal customers that think of nothing else but Amazon for their daily needs.<\/h5>\n
Therefore, as a loyal Amazon customer, you end up buying other things, which indirectly increases Amazon’s share of your waller.<\/h5>","protected":false},"comment_status":"open","ping_status":"closed","template":"","class_list":["post-46657","lesson","type-lesson","status-publish","hentry"],"yoast_head":"\nLesson 3: Combination Strategy case study - Amazon Prime - Certifeka-edu<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/certifeka-edu.com\/ar\/programs\/strategic-planning-module\/lessons\/lesson-3-combination-strategy-case-study-amazon-prime-3\/\" \/>\n<meta property=\"og:locale\" content=\"ar_AR\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Lesson 3: Combination Strategy case study - Amazon Prime - Certifeka-edu\" \/>\n<meta property=\"og:description\" content=\"Lesson 3: Corporate Strategy – Part Two Case Study – Amazon Prime If you look at Amazon’s portfolio, you’d observe that Amazon is not only a dominant e-commerce player, but is also making movies and TV shows through its own studio. 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