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.

Visual Concepts Related To Amazon Business Model

jeff-bezos-companies
Jeff Bezos was best known for founding eCommerce giant Amazon in 1994. However, the entrepreneur owns companies in several industries, including health care, retail, robotics, real estate, and media. Many of these companies have been acquired by Amazon over the years, but some have been the result of direct investment from Bezos himself (through his investment arm is called Bezos Expeditions).
amazon-business-model
Amazon has a diversified business model. In 2018 Amazon posted over $232 billion in revenues and over $10 billion in net profits. Online stores contributed to nearly 52% of Amazon revenues, followed by Physical Stores, Third-party Seller Services, Amazon AWS, Subscription Services, and Advertising revenues.
amazon-organizational-structure
The Amazon organizational structure is predominantly hierarchical with elements of function-based structure and geographic divisions. While Amazon started as a lean, flat organization in its early years, it transitioned into a hierarchical organization with its jobs and functions clearly defined as it scaled.
virtuous-cycle
The virtuous cycle is a positive loop or a set of positive loops that trigger a non-linear growth. Indeed, in the context of digital platforms, virtuous cycles – also defined as flywheel models – help companies capture more market shares by accelerating growth. The classic example is Amazon’s lower prices driving more consumers, driving more sellers, thus improving variety and convenience, thus accelerating growth.
working-backwards
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.”

All you have to know about Amazon: 

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