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Expansion Strategy: Amazon Deepens Digital Reach

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Expansion Strategy: Amazon Deepens Digital Reach


Expansion Strategy: Amazon Deepens Digital Reach

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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This week, Amazon announced a cloud-based music service. It beat Google and Apple in the race to become the first major company to offer what's essentially a digital storage locker for music.

NPR's Wendy Kaufman reports that it's just one more example of Amazon moving into products and services far beyond its roots.

WENDY KAUFMAN: If you ask people about Amazon CEO Jeff Bezos, one of the first things they'll tell you is he's smart, very smart.

Mr. ROBERT SPECTOR (Author, " Get Big Fast"): Jeff Bezos, he understands several moves ahead. And you can see that in Amazon's growth.

KAUFMAN: Robert Spector is the author of�a book called " Get Big Fast."�He says, while Bezos began by selling books back in the mid-1990s, he already had plans to sell just about anything and everything on the internet. Bezos himself put it this way in a 1999 interview with NPR.

Mr. JEFF BEZOS (CEO, Our number one mission is to be Earth's most customer-centric company. And we mean that across any industry and across any time. Listening to customers, figuring out what they want, and giving it to them, exceeding their expectations. And then in the totally new sense, which is to put each individual customer at the center of our universe.

KAUFMAN: Remember, that's back in 1999. Today, Amazon's universe includes retail with a selection rivaling�Wal-Mart. And there's the Kindle book reader and e-books, an Android app store, video streaming and now, says company vice president Bill Carr, cloud-based music.

Mr. BILL CARR (Vice President, This just will make our digital music service so much more appealing, and people are going to want to buy a whole lot more music.

KAUFMAN: It's the Amazon way - make it easier to find and buy things, and customers will spend more.

Dan Rayburn, an analyst with the consulting firm Frost and Sullivan, says Amazon has created a strong brand and loyal customers.

Mr. DAN RAYBURN (Analyst, Frost and Sullivan): They've branched out into so many different things, and typically when a company does that, they lose sight and they lose focus because they're trying to be everything to everybody. But, you know, it's very hard to find something that Amazon is not good at in terms of what they've branched off into.

KAUFMAN: But not everyone is quite so laudatory. For example, some former workers complain that Amazon treats its employees like commodities, while other observers wonder why the company is so secretive.

At the company's gleaming new office complex north of downtown Seattle, there's no name on the main door - no hint at all of what's beyond the sterile lobby with its badge-protected entry. The company is famously stingy about giving out sales and financial figures. So, while we know how many iPads Apple has sold, we can only guess at the number of Kindle sales. What we do know is Jeff Bezos is worth an estimated $18 billion. His company makes more than a billion a year.

Wharton marketing professor Peter Fader has watched as Amazon has moved beyond the sale of physical goods and into digital content and services, where the competition will be fierce.

Professor PETER FADER (Marketing, University of Pennsylvania Wharton School): They're competing much more directly with a Google, a Facebook and an Apple. I think Jeff Bezos goes to sleep at night thinking, how can I get people to be thinking about our company more often - not just spending with us, but being a part of their minute-to-minute lives?

KAUFMAN: But right now Bezos may also be thinking about a possible threat to his retail strategy. Amazon doesn't collect sales tax in most states, so its customers pay less for stuff they buy. But now, says author and retail expert Robert Spector, the states want Amazon to pony up.

Mr. SPECTOR: States need the money, so it's going to be interesting to see how that plays out.

KAUFMAN: Amazon is fighting back aggressively, fearing a loss of customers and revenue. One more potential drag on retail profits: gas prices are rising, so shipping costs are going up. All of this may be adding just a touch of urgency to Amazon's latest expansion efforts.

Wendy Kaufman, NPR News, Seattle.

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