Amazon Online Shopping and Market Opportunity

­Concept and Vision

The idea of a new way to shop comes from the current internet retailing opportunity available to consumers and the proliferation of social media. Consumers are connected all the time to companies and other consumers. They can compare prices, ask for additional help from manufacturers and other businesses as well as give feedback about the products and services they are getting. The shopping trend is changing, and the consumer is getting accustomed to instant engagement. Thus, the idea of instant shopping options comes about as a way to fulfill a continuing consumer demand trend.

The potential market opportunity for this idea is that retailers can tap into the consumer intelligence and provide goods immediately a consumer thinks about the purchase (Evans, O’Malley and Patterson 168). Rather than wait for consumers to get to the retail store, the retailer anticipates the demand, and then when the consumer is ready to purchase, the retailer arranges shipment to the consumer. The idea will work well with the growing market for home deliveries. Currently, many people go to online stores and then wait for shipment. Already, there are various options for shopping that allow consumers to get their shipments within a day. However, they are for a limited number of products that are available in their localities.

The solution of instant shipment and continuous collection of consumption customer intelligence is compelling because it takes the idea of loyalty cards to a new level. Currently, sellers use loyalty cards to collect data about goods that a customer prefers to buy, and then they can anticipate the demand. When this proposed idea is actualized, the seller will monitor the usage of a good purchased by a customer and know when a replacement is ready. Therefore, they will be able to transform their brand reputation in the market by responding to customer intentions for replacement instantly. Customers will no longer have to worry about their shopping. They will break down the shopping exercise and, instead, have buying actions.

This market is yet to be set up, but there are indications that it will soon become a must-have competency for online retailers. The companies that will provide customers with tools to make orders of specific products as soon as they are due for replacement or refilling will need to set up a few features in their shopping infrastructure for the system to work well. The collection of customer information must have consented. Besides, any consumer privacy laws should be analyzed and covered in the provision (Boone and Kurtz 330). After coming up with the re-ordering system, the company will need to register it as intellectual property so that it becomes a source of unique competitive advantage. Besides that, there is a need for significant market awareness campaigns to shift consumer preferences for shopping and improve the uptake of the instant re-order solution.

Currently, one company is practicing with the solution. Amazon has set up the “dash button” as a business innovation that allows customers to have access to the “buy-it-now” button that is popular in an e-commerce site. However, this is an actual button that is at home or whenever the consumer wishes to have deliveries made. The button is equipped with unique identifiers and is tied to the consumer’s account at Amazon. When the consumer presses the button, instant order is placed on Amazon for a product needed by the consumer. Since all other details are already captured, the consumer then waits for the delivery without any other action required. Dash Button has just launched, and it is yet to receive full support from the market (Adamczyk par. 2-4). It targets premium shoppers who already pay an annual fee for exclusive services from the retailer, such as same-day deliveries. It is likely to succeed because it is capturing a need that already exists, the notion of same-day deliveries for physical goods and instant deliveries for digital goods.

Market Analysis

The instant re-ordering business innovation targets the online retailing industry. The number of new retailing platforms emerging online continues to increase while consumers across the world embrace online shopping options. In developed countries, e-commerce serves are the fastest-growing retail market regarding consumer spending. The online sales category of retailing is expected to increase by more than 50% in the coming decade. This increase will be accompanied by changes in consumer behavior towards shopping, with an increase in the demand for convenience. Retailers will continue offering solutions for convenience as a way to differentiate their services from competing retailers.

The instant re-order solution will be a point of difference for online retailers. It can also be used by offline retailers that are servicing their online customer shopping needs in partnership with existing online retailers. Data that can be gathered to describe this market need includes the number of times consumers use their internet-enabled devices to shop on impulse, and when they specifically need a product. Additional data collected will be about shopping lists and the way consumers manage them. This includes their delay of purchase until they go shopping and their intentions to make instant shopping options whenever they have an opportunity to do so. The data will also tell why consumers opt to wait rather than immediately buy more goods whenever their purchased stock ends, especially for groceries. It will also capture the cost that consumers are willing to pay for improved convenience in handling their groceries and their willingness to buy groceries online.

Retail e-commerce sales in the United States amounted to 80.451 billion dollars in the first quarter of 2015 and 83.863 billion dollars in the second quarter of 2015 (U. S. Department of Commerce 1-4). In 2017, the total e-commerce retail sales were expected to reach 440.4 billion dollars (Statista par. 1). The market for instant re-order solutions such as Amazon’s Dash Button is not new, and the current e-commerce sales volume illustrates the opportunity available. The important thing needed is for retailers to differentiate their offers, such that they become preferred choices for their customers. Being convenient to the customer and being instrumental in influencing the customer decision-making process about the capacity to delivery will be a key differentiating factor for retailers.

Amazon is achieving this objective by presenting solutions that seem far-fetched, but also expand the consumer thinking to view the retailer as innovative and serious about its tagline of “being the largest retailer.” Nevertheless, the success of its Dash Button depends on effective sensitization and product promotion campaigns for the growing e-commerce segment of the retail market. The instant re-order innovation can help incumbent retailers grow their market share to more than double their current value. If each current consumer gets the solution, then reordering volumes should double, which leads to doubling of revenues as offline retail purchases are redirected to the online solutions.

Customers and Customer Development

The target customer is the current online e-commerce shopper who is paying a premium price for gaining convenience features such as same-day deliveries, instant downloads, holiday shopping discounts and instant return options. This customer segment has already demonstrated through its purchase patterns that it is ready for the instant re-order solution. Amazon’s Dash Button, which is the only current market offering, has targeted customers enrolled in the company’s Amazon Prime service.

The customer invested in a company to pay a monthly or annual fee for convenience and to qualify for great deals is serious about his or her shopping experience and wants premium privileged treatment. The customer expects the company to go out of its way to fulfilling his desires. The customer also wants to be among the first for consideration whenever there is a new offer on the market and does not want the shopping experience to become a burden in his or her daily chores. Currently, such a customer is enrolling to premium shopper offers that are available from different retailers. The customer expects that by paying a single subscription fee, access to unlimited options will be the norm in his or her shopping experience for physical and digital goods. Currently, such a customer is likely to have enrolled in Amazon Prime and available alternatives provided by Walmart and Costco and that are using a member’s only feature as their differentiating strategy (Tuttle par. 1).

Reaching the customer will happen through advertising on television and on the internet as well as on the e-commerce site. A primary research finding shows that many people become aware of premium e-commerce retailing options by clicking on banners that they see online when they are shopping. They are prompted to join the service because of the promises of convenience and instant access to exclusive products and digital content. The responses were received after asking various shoppers online and offline about their intentions to use premium-membership shopping offers and the benefits they seek in such offers.

­Competition and Positioning

As highlighted, Amazon has already launched a solution named Dash Button to serve the identified customer need. No other retailer has set up a rival product. All other e-commerce retailers will attempt to serve the market in future when consumers change their behavior in shopping. Offline retailers may also adopt the innovation. The advantages the competitors have are the reduced need for customer research as the incumbent service provider will have absorbed most of the cost. They will just be copying a solution already existing. Their disadvantage is their late arrival to the lucrative market, which limits their ability to get customers as the incumbent can make switching costs very high. Currently, Amazon enjoys complete market share for the Dash Button since there is no rival product. Overall, the e-commerce sales for all retailers have been growing as the market continues to expand in size at a steady rate.

The biggest barriers to entry are the time taken to develop a shoppers’ community, the technology needed to run the system, the high cost of an advertisement in traditional media channels like television and newspapers and existing intellectual property protection by incumbent operators. Additional competitors in the market will face the same barriers to entry. Besides, they will face a challenge of getting experienced staffs for growing their strategy given that existing rivals will have picked up most of the available talent in the market. In addition, competitors entering the market from other countries will face brand association with a foreign culture as a point of difference, which will hinder market penetration.

In setting up and overcoming competition, allies can offer access to their customer intelligence and allow access to their customers for direct marketing of the innovation. Other enterprises can provide exclusive content and products such that the innovation appears unique and valuable in the market to create a positive market reaction. Exclusive deals and access and discounts will help to lower cost of operation and allow the business to offer the instant re-order solution with cheaper prices than the competition. The exclusive deals will make it worthy for customers to pay for membership.

Business Model and Go­to­Market Philosophy

The business will be competing based on cost and value. It will seek to offer the lowest prices for the commodities sold to members of the premium club. It will be targeting the wealthy segment of the retail market that can afford the membership fee and is willing to pay for convenience and exclusivity on new and existing offers. It will also entice members of rival shopping services to sign up and provide market intelligence about their satisfaction with rival company services. The business will not seek to make money on any product sold through its exclusive membership channel. Therefore, it will be able to offer the lowest prices in retail and will use this as a point of difference with other companies.

Customers can expect to have the first months of membership free, and they can also expect to have the instant re-order solution, as a smartphone or tablet app and as integration to their other gadgets at home such as their TV’s and the Internet enabled kitchen appliances. Thus, they will be able to re-order items at home using different means and expect delivery with their arranged times. The membership options will vary according to the convenience that a customer is willing to pay. For example, a customer just allows for only one account to be linked to the instant re-order solution or have multiple accounts and payment options and delivery addresses included and then specify the order of use.

The Dash Button from Amazon is an innovation that integrated well with existing infrastructure for serving customer orders. This will be the threshold to defeat with any new product launched in the same market. The biggest opportunity for the new product is in getting new membership subscriptions for the service, which transforms shopping into a membership business. The business can grow by having more people sign up as members to the service. The perks of being a member are the instant deliveries whenever a customer re-orders or makes a fresh order for a home/business delivery.

From data collected from members of the public who are aware of online shopping service memberships, this is a business offer that they will be willing to try. Polls on social media connecting different groups of shoppers have also shown that there is a business opportunity worth exploiting as customers cite work and other duties as their biggest hindrance to effective shopping and that they would be willing to pay for another membership services to ease their shopping button. This applies to everyday items like groceries where customers do not have to do a lot of market research before making their purchase choice.

Collected primary data from customers using interviews and poll surveys online shows that many of them are willing to pay for membership in an e-commerce solution as long as they are guaranteed low prices. Additional features are attractive, but low prices are considered the standard reward for paying for membership as many customers see this as an exchange for their loyalty to the e-commerce brand that they are adopting. The proposed business model takes care of this concern and will rely on gaining a substantial number of members for its service using the instant re-order solution as addition value option.

The biggest risk for addressing is technical. Interview results about this product show that most potential customers want a solution that is always on and responsive. They would be disappointed if the solution, such as the Dash Button, does not work because of broken connection and any other reason such as lack of power. Therefore, making the solution rugged to withstand any interruptions of power or connection to the retailer is necessary. Therefore, the usability of the innovative shopping solution has to be tested right away. Without it, there will be no basis for setting up the membership service and getting exclusive product partners and shipment service providers to support the business strategy.

Works Cited

Adamczyk, Alicia. “Amazon Dash Buttons Let You Order Products With The Push of a Button“. Forbes. 2015. Web.

Boone, Louis, and David Kurtz. Contemporary Marketing Update 2015 Edition. Stamford, CT: Cengage Learning, 2015. Print.

Evans, Martin J., Lisa O’Malley, and Maurice A. Patterson. Exploring Direct and Relationship Marketing. London: Thomson, 2004. Print.

Statista. “U.S. Retail E-commerce Sales From 2010 to 2018 (in Billion U.S. dollars).” Statista. 2015. Web.

Tuttle, Brad. “Everything You Need to Know About Amazon’s New Rival” Time. 2015. Web.

U. S. Department of Commerce. “Quarterly Retail E-Comerce Sales 2nd Quarter 2015.” U.S. Census Bureau News, 2015. Web.

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