CEO Jeff Bezos once quipped that Amazon was “the best place in the world to fail.” Indeed, the billionaire entrepreneur has instilled a corporate culture where failure is not only acceptable but a necessary part of doing business. We’ll take a look at some of Amazon’s most spectacular failures, some of which cost the company billions in lost dollars.
The Fire Phone was released in July 2014 to compete with the smartphones offered by Apple and Samsung, among others. At first glance, the Fire Phone seemed a natural extension of Amazon’s highly successful Kindle, tablets, and streaming devices.
However, the Fire Phone failed to sell for $200 on a two-year contract. Dropping the price to 99 cents also failed to spark buyer interest.
The Fire Phone failed because Amazon was too late to the smartphone industry. The phone itself was overpriced and, aside from a revolutionary three-dimensional screen, did not offer anything novel or beneficial.
While the Fire Phone floundered, its voice recognition feature did lead to the development of the voice assistant Alexa.
Amazon Destinations was a service enabling consumers to book a last-minute vacation at a hotel within driving distance of their home.
The service was established to profit from the popularity of short strips in the United States, with more than 40% of all vacations comprising stays of one to three nights.
A few months after launch, Amazon Destinations was shut down, with the company providing no official reason for its demise. Industry representatives suggest increased competition from the likes to Expedia may have been to blame. Others posit that succeeding in the hotel reservation business would have required the full attention of the company.
Amazon’s investment in Pets.com is perhaps its most notable product investment failure.
In March 1999, the company acquired a 54% stake in Pets.com worth around $10.5 million.
However, Pets.com would become yet another victim of the dot-com bubble burst a year later.
Amazon Wallet debuted in 2014, allowing users to save vouchers and loyalty cards on their smartphones to pay for Amazon goods and services.
The service failed to gain significant traction and experienced a lukewarm response, especially when compared to Apple Pay which launched a few months later. The service also relied on QR codes to make purchases – consumers could not use a credit or debit card.
Amazon Restaurants was a service delivering freshly prepared food from local restaurants to consumers via the company’s same-day delivery network. Launched in 2015, the service was shut down four years later in June 2019.
Amazon Restaurants was successful initially, with free Prime delivery once food orders reached a certain threshold. However, the strategy was inevitably copied by established competitors which made Amazon’s offering less attractive.
Much like Amazon Destinations, the reason for the failure of Amazon Restaurants may be due to the company spreading itself too thin and diluting its focus. Many suggest Amazon’s acquisition of Whole Foods in 2017 also diverted resources away from its food delivery business.
- As successful as Amazon has been in the eCommerce space, the company is notorious for entering new markets and embracing the failure that may result.
- The Fire Phone is one of the company’s most significant failures. So poorly did it sell that Amazon resorted to dropping the price to 99 cents.
- Products such as Amazon Destinations and Amazon Restaurants were sound offerings, but many believe they failed because the company failed to develop them properly. Another product, Amazon Wallet, performed poorly because it was too restrictive and increased competition between Amazon and third-party merchants.
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