Damon Isaac's E-Portfolio

Critical Analysis: Amazon Price Check

Amazon released Amazon Price Check in 2011, a tool that allowed customers to scan and compare items in physical stores with prices online. When the application was released, there was major backlash from small business and brick and mortar retail spaces. Companies complained that Amazon was unfairly penetrating the physical store market with a market force that couldn’t be competed with. While some critics agree with businesses concerns, the mobile app entering into the retail space is a good opportunity for physical stores to compete strongly with Amazon and online retailers. Figure one presents the Force field analysis regarding the opportunities that mobile apps bring to physical store.

Figure 1.FFA: Opportunity: New sales tool for brick and mortar stores.

Propelling Forces

The proliferation of mobile applications provides a unique opportunity for physical stores. Physical stores have an advantage that online retailers will never have through enabling direct customer-product interaction. The ability to hold an item and make a purchase decision weighs heavily for some people (Clifford). This presents a unique opportunity to employ highly aggressive marketing campaigns that online stores are not positioned to participate in. Since customers are already accustomed to the idea of shopping around and finding the best price, and now using mobile apps, businesses can introduce their own mobile apps to compete using Amazons own method with high success rates.  Mobile –Apps can provide large amounts of valuable marketing data that will allow physical stores to be more aggressive in pricing towards both online stores and in their completion with other physical stores (Brust). With the ability to view near real time market trends, physical stores can aggressively price down items that are popular while still maintaining the margins on other products that are in lower demand to maximize profit. This will allow for more aggressive sales and more efficient inventory movement; a method previously reserved for E-Retailers. Having direct access to consumers provides a unique two-way avenue of beneficial information sharing. Businesses can alert customers to come empty their flooded inventory and customers get the best prices. Amazon introduced a potentially dangerous competition tool. The idea that customers can now effectively spy on competitors for companies who’s app they use is priceless. Now, when a customer walks into a store either online or off, the business is directly competing with potentially hundreds of business rather than the ones the customer is initially aware of.

Restraining Forces

While Mobile Apps provide numerous benefits to large and small brick-and-mortar retailers alike, there are hidden drawbacks to implementation. Aggressive price wars and targeted marketing are tactics that will be inevitably implemented by physical stores however; they will always be limited by the fixed costs of owning a location (Kane). The overhead cost of leasing store space, holding inventory, having insurance for the space, and payroll for hourly employees are just a few of the mounting costs facing physical stores. These costs create an artificial price floor for physical business, which E-retailers would exploit mercilessly. Additionally, the handicap of being required to collect sales tax further contributes to this artificial price floor (Loten). E-Retailers like Amazon do not have many of these overhead issues and most notably benefit from being able to use a combination of inventory control strategies such as drop shipping and outsourcing to lower overhead storage costs and capital tied up in sitting inventory. (Kumar).  Increased market competition will create growing pains for Brick-and-mortar businesses. Intensified market competition means more money must be spent on marketing and promotions in order to maintain a customer base. The ensuing price war would create a race to the bottom effect for physical retailers that will eventually end with E- Retailers winning due to always having lower fixed costs. With costs being a large driver in the debate of brick-and-mortar vs. E-Retailing, the costs of developing a mobile app will prove to be cost prohibitive in many cases (Chomko). Building an App will require physical retailers to pay and retain a programing team to provide support and provide the necessary updates to stay current with competitors.  Additionally, Mobile-Application implementation will create another avenue of competition for retailers who must now spend thousands of dollars trying to out do each other’s mobile application. Lastly, after outlaying the cash to finance the applications, brick-and-mortar businesses must contend with the market that they will be pushing these applications into. Frequent physical store goers by definition are not big Internet shoppers. Due to this technology reluctance of certain customers, physical retailers will have a hard time getting store goers who are already proving they prefer physical purchases to use a virtual tool.

Conclusion

In conclusion, Physical stores stand to gain a lot through implementing more E-Retailer tools and intensifying industry competition. However, due the simple business advantages of operating an E-retailer over a physical retailer, attempting to fight E-Retailers in a price war is a losing proposition. The physical businesses are correct in being upset by Amazons kill shot to their industry. There are very few ways that physical retailers are going to be able to keep up with E- Retailers on price. The only chance that these retailers have is to make the customer value the physical store experience so much that they choose to shop there (Kain). Simply competing on price is ill advise.

References

Brust, Andrew. “Big Data in the Physical World: Will It Trump Online Analytics?” ZDNet. N.p., 11 May 2012. Web. 03 Oct. 2012. <http://www.zdnet.com/blog/big-data/big-data-in-the-physical-world-will-it-trump-online-analytics/441>.

Chomko, Roy. “Maintaining an App Is Critical to Its Overall Success.” FierceDeveloper. N.p., 25 May 2012. Web. 05 Oct. 2012. <http://www.fiercedeveloper.com/story/maintaining-app-critical-its-overall-success/2012-05-25>.

Clifford, Stephanie. “Luring Online Shoppers Offline.” The New York Times. The New York Times, 05 July 2012. Web. 3 Oct. 2012. <http://www.nytimes.com/2012/07/05/business/retailers-lure-online-shoppers-offline.html?_r=0>.

Kain, Erik. “Amazon Price Check May Be Evil But It’s the Future.” Forbes. Forbes Magazine, 14 Dec. 2011. Web. 03 Oct. 2012. <http://www.forbes.com/sites/erikkain/2011/12/14/amazon-price-check-may-be-evil-but-its-the-future/>.

Kane, Libby. “Amazon’s ‘Evil’ Price-Check App Spurs Backlash.” LearnVest. N.p., 13 Dec. 2011. Web. 03 Oct. 2012. <http://www.learnvest.com/2011/12/small-businesses-balk-at-amazons-price-comparison-app-316/>.

Loten, Angus. “Why Amazon.com’s New App Is Creating a Stir.” The WallStret Journal. N.p., 21 Dec. 2011. Web. 3 Oct. 2012. <http://online.wsj.com/article/SB10001424052970204026804577101032430362056.html>.

Kumar, Rupesh. “Case Study Report on Inventory Management at Amazon.com.” Scribd. DSBS Bangalor, 10 June 2009. Web. 03 Oct. 2012. <http://www.scribd.com/doc/20695369/case-study-report-on-inventory-management-at-Amazon-com>.

Critical Analysis: Facebook

Facebook, the highly popular social media tool has an uncertain future. Investors question if it can maintain sufficient growth, AD partners are losing faith, and stock prices keep falling despite an aggressive acquisition strategy. Figure 1. Presents the SWOT analysis regarding Facebook’s chosen business model.

Fig.1:SWOT Analysis

Strengths

With over 900 Million users and aggressive social integrations imbedded within most web pages, Facebook is setup to be a market leader. The” like” button and comment sections that control the bottoms of many webpages allow more people than ever before to gather and discuss on a multitude of topics with friends. What MySpace attempted during the 90s, Facebook perfected becoming the dominant force. Aside from Facebook’s exceptional web presence, its business structure is setup for success. Facebook has multiple revenue streams, capitalizing on AD space, micro-transactions, and vender fees (Liedtke). This diverse revenue model has the potential to be successful for Facebook. Diversity and proliferation is one strategy that Facebook utilizes. This expansion is supported by presence on multiple platforms including phones, tablets, TVs and computers of many types. Many consumer electronics sold today have integration whether it be photo sharing or simply chatting. This multiple platform position allows Facebook to reach its users with precision and with an experience catered to the users chosen way of access. Facebook’s availability is one of its greatest strengths. By perfecting life integration Facebook is positioned to compete for a long time. While this business plan seems infallible, Facebook still struggles to impress investors and users alike.

Weakness

While Facebook appears to be a stable, it has many debilitating weaknesses that make the company less attractive to an investor. Facebook’s revenue stream, while diverse, is heavily reliant on ads. Advertising proved to be at first almost 99% of its total revenue (Raice). While diversification has reduced this figure to 85% overtime by perusing alternative revenue streams such as micro-transaction feature pricing, Facebook’s reliance on ads is reflected in its site design (Liedtke). The ads are placed strategically in the interface to force the user to see or click them due to their proximity to key functions. In fact, the obtrusiveness of ads in addition to the information Facebook sells to advertisers has proven to be topics of great concern for users (Chunka). This privacy concern may prove disastrous for Facebook due to reliance on a “user as a commodity” strategy. Facebook sees users as the product being sold. The service is free because the information and attention of users is almost priceless for marketing proposes. This marketability is what makes Facebook viable. If Facebook does not address the privacy concern, Facebook may find itself being deserted for more private networks. In an attempt to stay competitive, Facebook peruses an aggressive acquisition strategy by implementing new features by acquiring companies such as Zynga the game maker and Instagram for its picture sharing (Raice). Acquisition appears to be a sound strategy but it weakens Facebook’s overall cohesiveness. By relying on acquiring good ideas, Facebook may become stagnate due to lack of internal innovation. Once Facebook can no longer buy new ideas, they risk no longer having the internal capacity to create innovative ideas and miss key opportunities.

Opportunities

While Facebook’s outlook appears grim it is possible for Facebook to flourish. Emerging markets in countries such as China provide one avenue for expansion. Facebook already pulls in 44% of its revenue from overseas (Liedtke). With China being one of the largest markets in the world it holds untold potential for Facebook. However,this expansion is hindered by international law and will prove to be a tough market to enter. Additionally, Facebook’s aggressive acquisition strategy could be its saving grace. Depending on what technologies they invest in and how they deal with developer community backlash due to talent poaching (Raice), Facebook may have a winning combination. By inspiring companies to come up with improvements so Facebook can buy them, Facebook saves on development costs. Facebook’s behavior regarding making large acquisitions marks this as Facebook’s intention. Lastly, Facebook stands to gain a lot by refocusing its mobile presence (Taylor). More importantly, Facebook must improve the delivery of ads over its mobile, as it is their largest revenue stream.

Threats

Facebook has an uncertain feature complicated by its many strengths and weaknesses. Revenue numbers are down and this concerns investors about an already volatile stock value. Mobile presence being nearly devoid of ads is particularly damaging to Facebook’s exposure as more users are choosing to view Facebook in mobile or over mobile app. Both of these delivery systems are near free of Facebook’s number one monetizing agent and this stands to hurt Facebook in the long run with increasing mobile popularity. In addition to poor exposure, Facebook is seeing a decline in the number of people logging in at any particular time. While enrollment numbers do impress investors, the reality is slightly grimmer. Other services like Google plus and even Twitter are competing with Facebook in the same market segment and this competition is particularly disastrous when each user lost is a large revenue hit to their current model. These systemic issues feed into Facebook’s more pressing issue regarding ad partner confidence. The analytics do not support Facebook as a viable advertising market as evinced by General motors retracting their advertising from Facebook’s site (Hanlon). Current analytics tools used at Facebook track clicks, but do not adequately gauge how a user reacts to an ad they don’t click. Facebook is trying to persuade its advertisers to stay, but doing so is not easy without the analytics to back upon their effectiveness. In the long run Facebook’s ability to hold adverting will prove pivotal to their success or failure.

Conclusion

In conclusion, I believe that Facebook’s tendency to be ad dependent is one if its greatest weaknesses. The weak mobile platform that fails to support their revenue stream along with ad blocking which directly attacks the companies’ bottom line will be two challenges that will most heavily restrain Facebook from improving advertiser relations. Without ironing out the issues with the ad delivery experience, the analytics will continue to show negative trends. It is imperative that Facebook repair these weaknesses as the exit of marketers who failed to see a return would be the warning sign for Facebook’s demise. Figure 2. Presents a force field analysis regarding poor Marketer return

Dear CEO,

Currently there are dozens of application in the iTunes store that are fitness-related. However, all of these applications do the same few things: calorie counting, step counting, and a calorie-burning guide. All of these applications fall short because they are impersonal apps made for personal devices. I propose that we introduce an application where medical records are integrated with the workout and nutrition planning stages.

Our application will focus on three things that are missing from all current apps: personal medical history, actively tailored workout guidelines, and life integration. Medical history is an important set of information that will both differentiate us and make our product better. We will make the application have a direct link to user provided medical documents. This will be easily implementable because in today’s world, more medical records are being digitized in order to improve quality of care. We are leveraging this innovation to provide the best service. By having access to patient history we can for example design an exercise for a user that has bad knees by creating an exercise routine that moves more of the wear and tear away from their knees and provides more upper body workouts to avoid damaging the knees further. For example we could design a workout for an asthma sufferer that is high on weight training but low on cardio to avoid exercise induced asthma attacks. The tailored workouts will be done by gym nutritionists that subscribe to our application in return we will provide them with private access to our end users. We can provide targeted ads and promotions for their organizations that will prove to be lucrative and effective. The life integration will be accomplished by simply integrating into the IOS device calendar; updating it with the suggested workout schedule. This will be a simple and easy to implement idea and will provide an easier and more seamless integration of the workout into the users life. Programed reminders and timed instruction delivery for preforming exercises will simulate having a trainer.

This application provides countless money making opportunities. Revenue generation will be through suggesting supplements, personal trainers, gyms, and other health related products. The revenue will come in the form of both the initial $5 payment, the corresponding companies paying to be in the app, and the referral bonuses we receive from their business. We will have a highly targeted and captive audience. The only unusual requirements are the medical records, and the nutritionists. Our app heavily relies on having both the nutritionists being interested, and the users being comfortable with providing us with this data. Additionally, doctors will need to certify workouts for safety, which includes keeping a lawyer on retainer, and having a board of doctors willing to certify these workouts. Because of these peculiar requirements, our costs will be relatively high, but the revenue streams should offset the cost.

Dear CEO,

The XBL ecosystem gives us access to millions of gamers all with similar interests and dislikes. Gamming over the years has formed somewhat of a community and because of that Microsoft’s offerings up to this point have been bullet proof out of necessity. Failed products reflect heavily on Microsoft and any developer who decided to make their content available. In order to have good content; you need to make something gamers want. This is why I am suggesting that we utilize the power of the Kinect tool and provide a game coaching service.

This game coaching service will train gamers on either how to improve or become competitive in the first person shooter (FPS) of their choice. Many FPS’S these days are nationally recognized and in some case played in tournaments when real money is on the line. Gamers organize themselves into clans or groups of gamers who work to gather to improve their team play. By offering a way of giving gamers actual tips and feedback based off their game play, I feel we will be offering a unique and practical experience. In order to do this, we will use Kinect to monitor the gamers posture, eye tracking, and pull game data for reaction times to targets. We will also pull data from the game itself to determine map positioning and map habits such as favorite pathing, and reload times. All of this data is required and when complied and analyzed correctly, our application will allows gamers of all skill types to improve on their game regardless of how good they actually are. To make this application particularly attractive, we will leverage the fact that there are professionals out there currently who already possess immense levels of skill and compete for money in tournaments. By reaching out to these gamers to tap into their skills to provide feedback to real players, we will be attracting gamers because of the allure of getting advice from top players while also providing the best coaching possible. Each professional gamer will be given a random top ranked player each week who uses our service and based on how they preform that week in the games multiplayer, the gamer will then receive an actual one on one with a professional gamer in a session to improve their skill. Since not all subscribers will get to access playing with the professionals, the session that the gamer receives will then be available exclusively to all subscribers to watch so that even if they didn’t get to play with a pro that week, they can still learn the lessons and get meaningful feedback.

Monetizing this product posses an interesting challenge. While a standard $15 a month fee will be the first step of monetization, I want to explore the idea of moving merchandise and more exclusive single player game guides to players to attract those who do not like multi-player as much.  Single player guide subscriptions will be cheaper and priced around 5-6 dollars a month. One of the issues that may arise with this idea is getting the professional gamers on board. While potentially lucrative to the professionals, many already have their own live streams now and have their own monetized way of sharing their skill.

Dear CEO,

The unique pricing of the Amazon Kindle at $200 for a 7 inch tablet creates a niche market in which the hardware is subsidized and the content is the money maker. Because of this, it presents a unique opportunity.  I propose delivering a home cooking application to the kindle to take advantage of the generally older market segment that the kindle is marketed towards.

The name of the application I propose is “1 tap chef.” The purpose of this application is to make it easier and in some cases cheaper to cook meals at home. The main issues with cooking are collecting the ingredients for the dish and putting it together. Doing this at a reasonable price is even more challenging. This new application will scan any recipe you take a picture of or view on the Internet, pull out the ingredients, and point you to the nearest store with the cheapest ingredients for your dish. Where possible and cheaper, the application will also suggest buying some ingredients from Amazon shopping and ask if you want them delivered to your door. Another key feature is the “help me cook” feature. “Help me cook” will let you organize your cooking instructions in a way that is simpler for you to follow. Because the instructions have been scanned into the Kindle using OCR, the application will let you create your own ordered list with any notes on how to complete certain steps that you found particularly challenging in the original instructions. Small details like simmer times, string frequency and other things would be examples of notes people can add to their personal instructions. Our cookbook app is unique because it takes care of the entire cooking process from viewing a recipe to gathering the ingredients down to preparing and cooking them. The cloud functionality of the Amazon ecosystem will be utilized to enable users to share their notes with other users indirectly by having the cloud recognize what recipe you are using off the net and offer you preparation suggestions based on what other users have noted while they made the dish.

Monetizing 1 tap chef will be accomplished through asking users to pay for the service of seeing other peoples recipe notes at 99 cents per note. This added service will be called “digital cooking partner” and it will be on a recipe-by-recipe basis. If a customer wants notes for the recipe they simple click a button and they get charged through micro transactions for access to the notes. Further monetization can be accomplished through offering classes through Amazons’ video on demand service that will allow users to get the ingredients and annotated instructions from a real chef who also has an accompanying video where they walk the users through making more complex dishes at a cost of $5 per recipe. Through this avenue, chefs can get their name out by advertising directly to people who like their food and further add to both our and their own revenue stream by paying for the service. One issue that may arise with this service is the reliance on the community to make the digital cooking partner work. Additionally, the costs of getting the rights to famous chefs will be high as many already have existing exclusivity deals.

                  NOSQL is a database management system that differs from MYSQL because it does not use SQL based query language. NOSQL is considered the next step in database management where scalability, dealing with large amounts of data, and fault tolerance are becoming a necessity. While SQL works well for retrieving data on the same server or even other servers in the same data center, it falters when you need to access data on other servers stored in different parts of the world. Another issue that arises is schema changes. Currently with SQL, in order to change schema, you need to bring down your entire system. For companies like Netflix, this impairs your ability to provide service to millions of people. Ten minutes of down time a week gets expensive when you are taking down whole rooms of servers at once.

                   Netflix leverages NOSQL technology in order to solve the issues that arise when  “big data “ moves from the data center into the cloud. Netflix utilized cloud technology to provide reasonable quality of service to its users and meet the constantly scaling demand for bandwidth and increasing customer expectations on up time. Netflix currently uses Cassandra DB management software that allows them to manage data across different server clusters easily. By using this toolset Netflix has enabled its developers to create a robust cluster based infrastructure that provides unparalleled flexibility for expanding its services and implementing new ways of handling its data.

                    NOSQL relates to our Data analytics class by giving an answer to “ What happens when my database gets really big?” In class we learned why SQL was powerful for handling customer data and handling queries that websites and company systems need to use on relatively small scale. We talked about how SQL was first used to take records that were used in file cabinets and folders and place them in a location where we can run analytics and other tools on them to gain more value from our data. NOSQL fits into our class by addressing the issue of having a set of DB requirements that are outside the reach of SQL. Since NOSQL is a type of data store, it fits into our overall discussion on data stores. The only difference between NOSQL and MYSQL is the capability. The end goal remains the same. NOSQL focusses on accessibility and speed and this is why it provides increased functionality over MYSQL.

Works Cited

Netflix Inc. “The Netflix Tech Blog: NoSQL at Netflix.” The Netflix Tech Blog.

Netflix.com, 28 Jan. 2011. Web. 30 Apr. 2012.

<http://techblog.netflix.com/2011/01/nosql-at-netflix.html>.

Datastax. Netflix Case Study. Http://www.datastax.com/. Web. 30 Apr. 2012.

<http://www.datastax.com/wp-content/uploads/2011/09/CS-Netflix.pdf>.