September 06, 2011 at 12:23 PM EDT
Amazon Redesign: A Risky New Face
This fall, Amazon is set to slowly roll out a brand-new design and new features on its home website. But the overhaul might be coming at the wrong time.

Amazon redesignIt’s a testament to how well-made Amazon‘s (NASDAQ:AMZN) flagship website is that it barely has changed during the past decade. It has been built upon, of course. In the past two years alone, Amazon.com has grown to incorporate cloud-based music service Cloud Player, and Amazon Prime has brought streaming video to the site. There have been cosmetic upgrades, security updates and improvements to once-revolutionary features like product recommendations. But despite those many shifts, Amazon.com looks and operates very similarly today as it did in 2001.

This fall, though, Amazon finally will change. And while change is necessary, the company is taking a real risk in altering its main stage.

According to a Monday report in The Wall Street Journal, Amazon is deep in the testing process of a new version of its Web home that will bring the store’s design in line with more contemporary design. The text-heavy and dense layout of current Amazon pages, littered with tiny print and links to other parts of the site, will be replaced by a more open design with more white space, a larger search window for finding products, and revamped shopping cart and “wishlist” tools. While there’s no specific opening date for the new Amazon yet, it will come this fall as the company introduces new features and changes gradually.

The cosmetic shift is a welcome one, but it’s secondary to the redesign’s true purpose: rebuilding Amazon for the tablet age. The new layout is intended to make all of Amazon’s services — from buying shampoo to reading e-books through the Kindle store — easier to access on a 7- to 10-inch touchscreen. Now that Amazon is preparing to take on Apple‘s (NASDAQ:AAPL) iPad with a tablet of its own, it’s more important than ever that the company’s retail operation is the best around.

That is precisely why it is so risky for Amazon to redesign its website this fall. Amazon might be a $94 billion company with more than 30,000 employees and a stellar customer service record, but it still could be doing too much at once. It’s a given that almost all technology releases are hampered with glitches and mistakes — new websites crash under the strain of too much traffic, new services suffer unforeseen errors. Even if it is only incorporating one new feature at a time, rather than introducing a full-featured overhaul all at once, Amazon could experience gaps in time when customers’ orders are completed. Access to paid services like the aforementioned Amazon Prime and Cloud Player could go down, resulting in frustrated customers.

Amazon is no stranger to technical troubles. The company’s Elastic Compute Cloud (EC2) service and Relation Database Service suffered performance issues at Amazon’s data centers in April. Beyond the technical jargon, that meant other websites and business like Reddit and Foursquare that use Amazon’s hosting services were offline for a significant period of time. The incident didn’t affect Amazon’s website or retail operation, but it demonstrates that even a company as big and reliable as Amazon isn’t safe from the inherent failings of technology.

Amazon has a lot going for it heading into the holiday season and 2012. It has spent heavily throughout the year to expand and develop new services. At a rumored $250, Amazon’s Google (NASDAQ:GOOG) Android-powered tablet is priced perfectly to take on Apple’s iPad. But the company’s retail business and its smooth operation is more important than any of its other initiatives. Change is good, but Amazon needs to tread carefully.

As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello and become a fan of InvestorPlace on Facebook.


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