investment

Amazon Earnings, Technology and Social Media Investment

by Bradley Jobling on April 26, 2011

Amazon recently announced that earnings would be slightly lower due to increases in investment spending even with revenues growing last year by 30% to 40%. Amazon long ago outgrew the ability to purchase 3rd party software for their systems. They are one of the largest e-commerce retailers and must constantly be inventing and reinvesting in their technologies to maintain that position.

These reaffirms the long ago broken notion that e-commerce is not the low cost businesses that strategists were touting 10 years ago. Yes, Internet retailers have be slightly easier to start up than a new bricks and mortar chain. But behind the Web site resides many leading edge concepts and systems that made Amazon the success it is today.

Add to Amazon Wish List Button

Add to Amazon Wish List Button

Online product reviews are a great asset to the Amazon site. Amazon was the first to offer these and therefore had to invest the time and resources to develop the concept and software. Wish lists, advanced fulfillment systems, and service-oriented computer architecture were other firsts for the company. The Kindle ushered in the e-book industry. None of this was cheap. Being the first to market has advantages, but is not always the easiest or least expensive way to go.

Social media is traveling this same path. Right now, the strategists say it’s free, but as the expectations rise, so will the costs. The content development process, human resources, and the infrastructure and structural changes to the organization will end up following the same investment curve as e-commerce. There must be people, great service, and leading-edge technology behind a highly functional digital process.

Social media is the next digital advancement in business, services and technology. Yet it’s not going to be free and cheap. Those who try to do it without the proper investment will become the next failed sock puppet pet retailer who doesn’t make it through the next downturn.

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