Amazon Failures: The Top Amazon Failed Products

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.

Fire Phone

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

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.

Pets.com

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

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.

What’s more, many retailers chose not to accept Amazon Wallet as a form of payment since the eCommerce giant was a major competitor.

Amazon Restaurants

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.

Key takeaways:

  • 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.

Connected to Amazon Business Model

Amazon Business Model

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Amazon has a diversified business model. In 2021 Amazon posted over $469 billion in revenues and over $33 billion in net profits. Online stores contributed to over 47% of Amazon revenues, Third-party Seller Services,  Amazon AWS, Subscription Services, Advertising revenues, and Physical Stores.

Amazon Mission Statement

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Amazon’s mission statement is to “serve consumers through online and physical stores and focus on selection, price, and convenience.” Amazon’s vision statement is “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices.” 

Customer Obsession

customer-obsession
In the Amazon Shareholders’ Letter for 2018, Jeff Bezos analyzed the Amazon business model, and it also focused on a few key lessons that Amazon as a company has learned over the years. These lessons are fundamental for any entrepreneur, of small or large organization to understand the pitfalls to avoid to run a successful company!

Amazon Revenues

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Amazon has a business model with many moving parts. With the e-commerce platform which generated over $222 billion in 2021, followed by third-party stores services which generated over $103 billion, Amazon AWS, which generated over $62 billion, Amazon advertising which generated over $31 billion and Amazon Prime which also generated over $31 billion, and physical stores which generated over $17 billion.

Amazon Cash Conversion

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Working Backwards

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The Amazon Working Backwards Method is a product development methodology that advocates building a product based on customer needs. The Amazon Working Backwards Method gained traction after notable Amazon employee Ian McAllister shared the company’s product development approach on Quora. McAllister noted that the method seeks “to work backwards from the customer, rather than starting with an idea for a product and trying to bolt customers onto it.”

Amazon Flywheel

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The Amazon Flywheel or Amazon Virtuous Cycle is a strategy that leverages on customer experience to drive traffic to the platform and third-party sellers. That improves the selections of goods, and Amazon further improves its cost structure so it can decrease prices which spins the flywheel.

Jeff Bezos Day One

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In the letter to shareholders in 2016, Jeff Bezos addressed a topic he had been thinking quite profoundly in the last decades as he led Amazon: Day 1. As Jeff Bezos put it “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”

All you have to know about Amazon: 

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