Should Amazon launch a smartphone?

Yes, Amazon already launched Fire Phone which was not successful. Amazon should try another one due to the following reasons.

·         User Base: Amazon already has large and high-quality user base who has good online purchasing habit. By launching smartphone, we can easily tap into this market. Anything we offered on Smartphone, such as app or games, will be more valuable to developers due to large user base.

·         Advertisements: Amazon offer advertisements, and smartphone will add another place where we can show more ads (thus increasing revenue) and gather more data (which indirectly makes ad better).

·         Platform: Smartphone will provide another platform to Amazon’s user in addition to Website. New products can be easily launched and advertise them to smartphone users based on features such as location.

·         Inventory: Amazon has a good inventory of digital goods, like books, music, and movies which can be sold on smartphone exclusively thus adding more revenue.

But for this Amazon need to recruit a team capable of building smartphones like apple and Google. They would have to hire marketing, business development and customer service team for operating the smartphone because it is different from selling something on the internet.      

Clarifying Questions

Are we launching in specific market? USA

Is there any price range for Smartphone? No

Goal: increase customer engagement and grab market share as Smartphone market is already in growth stage with 82% penetration.

 User Segment

1.      Hitech Smartphones for tech savvy professionals

2.      Premium Smartphones for Civilian people of all ages

Strategy:

Amazon market penetration in USA is approx. 41 % after the Walmart in retail stores. The largest part of revenue of amazon come from USA. Amazon sell its product to customer at low margin due to that it has large userbase such as buyers due to product available at nominal rate and large group of sellers due to demand of product.

This userbase of amazon will help in launching the smartphone into the market. I have chosen

·         Hitech Smartphones for tech savvy professionals: Tech savvy people can help in improving the amazon features by giving feedback by using amazon app features. Any new updates or launch of an app related to amazon on Hitech smartphones will be first used by tech savvy professionals and they can give valuable feedback for improvement of phones.

·         Premium Smartphones for civilian phones of all ages: This smartphone will come with amazon specific features in addition to general features at average price. This will make it easy for amazon users to use amazon features such as shopping, Amazon prime etc. and thus generating revenue.

Competitors: Apple, Google, Samsung, Huawei etc.

Value proposition/USP

Amazon product has value proposition as following:

Kindle: Easy to read on the Go

Prime: Any thing you want, quickly delivered

Marketplace: Sell better, sell more

So, Amazon focuses on grabbing market share in easy and efficient way.

As per Smartphone, it has already 82% penetration in USA, so Amazon has to face tough competition from other smartphone companies.

Its USP of Hitech smartphones will be:

1.      Hitech smartphones will have amazon features such as Amazon prime, Amazon Alexa, Music, Amazon kids, Amazon marketplace which will make users to use amazon features frequently.

2.      It will have latest technology such as 5G, 3D views, AI tools, Security, location, wearable technology, IOT etc. to compete with other Smartphones.

3.      It will have long battery life, compact size, durability, easy setup, good functionality and display.    

Premium smartphones will have all the amazon features similar to Hitech smartphones by compromising with latest technology and features.

Competitive landscape: Apple, Google, Samsung smartphones lack the Amazon Features which will be available in Amazon Smartphones. Amazon Alexa is very popular which is far better than Google Assistant and Cortona. Large user base of Amazon will give valuable feedback about amazon smartphones, app and products which will help in updating the products and grabbing market share.    

Launching

Pre-launch

·         Partnership: I will partner with Wireless Carrier such as T-Mobile, AT&T or other popular carrier to take advantage of their website and store traffic to announce the upcoming launch of Smartphone.

·         Marketing:

1.      Organize demo to make people aware on the benefits and usage of the product

2.      Advertise it with promotional video on Kindle, Amazon Prime video and Amazon website

3.      Use press events to make publicity and organize meetings to show the workable piece through PR agencies

4.      Arrange events in Trade shows/Fair to make people aware of product

5.      Use social media campaigns with promotional video for making publicity among Hitech people and young crowd.

·         KPI

1.      No. of smartphone sold

2.      No. of hours the smartphones used by people

3.      No. of replacements from exchanging old smartphones to new

4.      No. of Amazon users doing shopping through Smartphone

5.      Average time taken by Smartphone users in doing shopping on Amazon

6.      Average value of Shopping done by smartphone users on Amazon

7.      Average time spent on Smartphone in doing other activities such as listening music, using Alexa, Amazon prime videos etc.

Launch

·         Marketing: Endorsement with famous celebrity with good content/promotional video on social media, Bill boards etc. will create value for smartphone and users.

·         Partnership: Partner with debit/credit companies to offer cashback on Purchase of Smartphone to attract the userbase of debit/credit card company.

·         Distributions: Partner with retail shops and other affiliate company of amazon to make awareness of product among Non-amazon Users and to sell it out.

·         Public relations: Announcing the launch of Smartphones on Amazon e-commerce website, Amazon prime, social media platform, Newspapers etc. will make curiosity among users to use it.  

·         Pricing: offer discounted pricing for Amazon users, reward for referral, free Amazon prime subscription for one year etc. will encourage users to purchase the smartphone will help in grabbing market share.

Post-Launch

I will measure the following

Acquisition

1.      No. of Amazon Smartphone sold

2.      No. of users doing shopping through Amazon Smartphone

Customer Experience

1.      No. of hours the Amazon smartphone used by people

2.      Average time taken by Amazon Smartphone user doing shopping on Amazon

3.      Average time spent by users on Amazon Smartphone using other Amazon related activities such as Music, Alexa, Amazon prime videos etc.

Revenue

1.      Average value of shopping done by users on Amazon through Amazon Smartphones

Retention

1.      Average no. of shopping done by users on Amazon through Amazon Smartphones * weeks after purchasing Smartphone.

I will take feedback from Tech-savvy people about functionality and performance of Hi-tech phones and amazon product functionality on Hi-tech phones. I will also take feedback from retailer and smartphone users about premium Smartphones for Civil people of all ages.

These will help to understand about Amazon smartphones and other Amazon related experience on Smartphones if there is any improvement needed.    

Summary

I would suggest we should launch Amazon smartphone in the USA market due to our large userbase and revenue opportunities through Amazon Inventory and Advertisement. We will launch Hitech smartphones for Tech-savvy professionals which will compete with Apple and Google Smartphones and Tech-savvy user will give valuable feedback about Amazon products including Smartphone. Premium Smartphones for Civil people of all ages will Compete with Premium Smartphones and it will have all Amazon Features which will attract the people to use Amazon products such as shopping, Amazon Prime etc. to increase engagement. Before launching, we will do partnership with Wireless career, organise demo, use press events, social media campaign and advertisement to increase awareness of product in the market. For launching we will do endorsement with celebrities to add value, partnership with debit/credit card companies to attract user, partner with distributor to show availability of product in market, announcement on Online social media and amazon Platform, discount and referral bonus in pricing to encourage user to purchase smartphones. Post-launch we will monitor Acquisition, Customer experience, revenue and retention to determine area for optimization. We will also take feedback from Smartphone from users regarding its functionality and features for Improvement.