Business communication: Netflix and Amazon.com

Résumé du document

Amazon is company which has been experiencing strong expansion. They moved from book distribution to, tools, auto, industrial, sports, health & beauty, grocery, electronics & computers and other products and services. Amazon is constantly scrutiny new market for new growth opportunities. The latest market entering was the video rental services over the internet. This market contains high margins, enormous potential growth but a slow speed. So in the meanwhile Amazon wants to build brand awareness the home video rental market. This enables Amazon to gain brand awareness in the video rental market and ride the increasing demand wave of the home video rental business. To do this 2 options occur. One is to directly enter the market and build the business from ground up. Second to buy our way in through a market leader. The Netflix stands out as the choice of excellence.

Extraits

[...] The Netflix stands out as the choice of excellence. They have dominant market share and have build great brand awareness. This M&A would have good prospect because both companies have similar cultures. Having a look of the competitive landscape, Blockbuster is the biggest threat. Netflix and Blockbuster have been in competition for a while. This has escalated into a price war to lure customers from each other. The key to Netflix's success was when they changed their subscription plan for no late fees. [...]

[...] During the year 2000, the company continued to expand, with more than 7,000 titles available by year's end to a customer base of 250,000. An important aspect of Netflix's business is the availability of titles that were not found in mainstream video stores like Blockbuster, and the company had great success tapping into the under served markets for independent and foreign films. One particular area of success was in renting "Hollywood" films from India. The firm offered about a thousand titles in this category, and these circulated frequently. [...]

[...] It was priced at $ undercutting Netflix by just over a dollar. Wal-Mart claimed it had 12,000 titles available, comparable to what Netflix then offered. But Wal- Mart lattes stepped out of the rental business. Another major player, Columbia House, was reportedly eyeing a similar plan as well. With these threats, and with Netflix's subscriber cancellation rate, or "churn," inching upward, the company's stock price dropped by more than half. Responding to these challenges, Netflix announced it would open a dozen more distribution facilities by the end of 2003, servicing major metro areas like Chicago, Dallas, and Portland, Oregon, with overnight delivery. [...]

[...] These elements provide substantial competitive advantages to Netflix. Because Netflix is such a innovative and experienced company, they would be of great benefit for Amazon. By acquiring Netflix Amazon would have the rights to legally use Netflix patented technology to optimize its retail distribution systems. In the home video business Amazon would start of as a leader and reinforce its position in the retail market by integrating Netflix's knowhow and user database, to create a unique database of impressively accurate consumer profiles and rent and sell complementary and additional merchandises to both businesses Introduction Amazon's product range has been expanding as consumer as the appetite for greater variety of goods and services. [...]

[...] Later Amazon expanded into other fields, to become a big exchange platform, offering book, electronic devices, music and the latter Video . etc . Lately Amazon introduced their new video on demand platform, Amazon Inbox. This service is only available for us citizen for the moment. This business segment has a much future potential because of its potential future growth. Amazon's strengths, which are great distribution power, because it's wide customer database and various partnerships. But most importantly Amazon is equipped with technology to exploit the long tail. [...]