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Amazon Platform Envelopment Strategies
Amazon is Uniquely Positioned to Deploy Platform Envelopment Strategies in Healthcare: 7 Leverage Points (Part I)
by Vince Kuraitis, JD/MBA and Randy Williams, MD
Last week Amazon announced that “Amazon Care’s virtual health services are now available nationwide—and in-person services will be rolled out in more than 20 new cities this year.” We observe Amazon methodically developing services initially for its own employees and other employers, and potentially positioning itself to serve mass consumer markets.
How is Amazon doing this? Platform “envelopment” is one of the most powerful tactics in the platform strategy playbook. In Part I of this series, we define the term, briefly describe Amazon’s expansion into healthcare, and describe seven of Amazon’s leverage points for employing envelopment strategies. In Part II, we’ll compare Amazon’s ability to leverage these envelopment strategies with companies in five other healthcare sectors.
We’re not privy to Amazon’s long-term healthcare strategy. We want to be clear that what we’re describing is our view of Amazon potential, based on our understanding of what we read and hear.
What is Platform “Envelopment”
The term “envelopment” derives from military strategy. It’s a flanking maneuver — an attack to the side or rear that avoids the enemy’s frontal strengths.
The term “platform envelopment” describes how one digital platform attacks an adjacent market. In plain English, platform companies can leverage an existing user base and existing capabilities into new markets.
Amazon is Uniquely Positioned to Deploy Platform Envelopment Strategies in Healthcare: 7 Leverage Points (Part II)
In Part I of this series, we defined platform “envelopment” strategies. In short, platform companies can leverage an existing user base and existing capabilities into new markets. We then documented seven of Amazon’s leverage points in potentially deploying envelopment strategies in healthcare:
- A Huge User Base
- A Loyal User Base
- Provision of Hybrid Clinical Care
- Deep Pockets
- A National and International Footprint
- One-Stop-Shopping for Employers?
- Digital Front Door for Healthcare?
In Part II of this series, we take these seven leverage points and compare Amazon’s ability to deploy envelopment strategies with companies in five other sectors of healthcare:
- Virtual care platforms
- Other Big Tech
- Retail Pharmacy
- Other Big Retail
- Regional health systems
As we noted in Part I, “envelopment” originally refers to a military flanking maneuver — an attack to the side or rear that avoids the enemy’s frontal strengths. Our intent is to illustrate the power of platform envelopment strategies and to specify some of Amazon’s potent options. We’re not forecasting Amazon’s success, and we’re not suggesting competitors are defenseless — they have many other strategic options.
Amazon’s Leverage Points to Deploy Envelopment Strategies: A Comparison
The graphic below summarizes our perspectives of Amazon’s leverage points and how these leverage points line up against major competitors. We set a 5 year time horizon.
