Amazon posted its first quarter earnings yesterday, and they topped analysts predictions. Investments the company has made in digital content and its new tablet, the Kindle Fire, paid off in a big way for the internet retailer. Sales of the companies stock surged 15% after the earnings news broke.
Amazon is viewed by many as the only real competition left to face off against Walmart. The largest online retailer is blamed for Best Buy’s recent decline as more and more shoppers have begun to buy their electronics online. Some Best Buy executives believe shoppers use their store as a show room to buy products online. The fact that Amazon does not have to pay for an expensive store front like a traditional retailer gives the company a huge advantage.
The work Amazon has done lately is the perfect example of how a company can stay relative in a rapidly changing economy. After seeing the rise of the iPad and tablet computers, Amazon quickly jumped into the field itself with the Kindle Fire. They already had the most popular eReader on the market in the Kindle, but recognized that the iPad would be a legitimate challenge to that market dominance.
The Kindle Fire also provided an opportunity to expand their sales in other departments. While the Kindle is only used for eBooks, the Kindle Fire could be used to watch movies or listen to music. Online video streaming is turning into a colossal market.
The company was taking a big chance with the Kindle Fire. It is believed that they are still selling the tablet either at a microscopic profit or perhaps even at a small loss. They had to bank on big digital sales to make it worth the investment. That appears to have happened. In the first quarter, 9 out of the 10 ten products sold on Amazon were digital products.
Other big companies across the country should be taking note. This is how you stay relevant in the internet age. You can not expect a business model to last decades as they once did. The market is changing very quickly. You have to be able to adapt on the fly if you want to survive in the digital age. Those that do not will not last long.