News Update :

Amazon in the grocery business: I was almost right

Friday, July 9, 2010

My 2005 article "Strategies for surviving the Internet meltdown: the case of two Internet incumbents" (Management Decision, vol. 42 no. 1 ) is one of my favorites. Not only because it won the 2005 Best Article EMERALD Award  but also because some of my findings about the growth strategies of web firms have been confirmed time and again in practice ever since. For those who do not know the article, it was an analysis of the growth strategies of two successful Web firms of the first generation: Amazon and the online financial firm E*Trade during the 90s. My conclusion was that the secret of the success of both firms was that they chose for a continuous transformation and expansion to new markets, new products or both. As to the question what the future of these firms will be and what are the growth directions for these firms I wrote  "One of the possible strategic options will be to attempt a new round of conglomerate diversification in totally new, unfamiliar commercial fields. This would mean for example opening online bookstores, music shops or online grocery outlets for E *Trade and entering the mortgages market or the ISP services for Amazon"
My prediction about the groceries was correct only it seems that AMAZON was faster than E*Trade: According to a BizReport post of today AMAZON has launched online grocery stores in Germany and UK. The fast growing online groceries market was the next logical step of expansion of the online giant. The question is still whether we will see in the future online banks like E*Trade to follow the example and whether AMAZON will enter the banking sector. I will keep you informed about such developments
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