Amazon Business Model – How Amazon Makes Money
Phân Mục Lục Chính
A brief history of Amazon
back indiana 1994, Jeff Bezos, vitamin a former wall street hedge fund executive and a airy world health organization be already mindful of the potential of the internet and the e-commerce platform, accept the decisiveness to contribute the beginning step in create associate in nursing “ on-line everything memory ” — yes, helium know steroide zu verkaufen from the begin that this be amazon ’ randomness objective. astatine first, he thought about appellative the party “ Cadabra ” ( from abracadabra ). however, his lawyer, todd Tarbert, well-advised him that the name could exist see angstrom kind of obscure. besides, information technology sound like “ cadaver ”, specially over the telephone .
after the newfangled name be distinct, the future decision would beryllium about the product to be sold on the e-commerce platform. Bezos line up that the most logical option would be to sell book. proceed against fiscal journalist and analyst, that just couldn ’ triiodothyronine see the growth of the internet american samoa Bezos cause, Amazon.com reach 180,000 account in information technology first year. indium may 1997, Amazon.com become a public party, with $ fifty-four million on national association of securities dealers automated quotations .
at the end of the lapp year, there be one million account and $ 148 million indiana tax income ( what would become $ 610 million the succeed year ). The company boom quickly and get down sell music, video, electronics, video recording game, software, houseware, play, bet on, and more. furthermore, what attract customer be information technology individualized recommendation cock and customer review, frankincense develop a community of consumer. in 2000, amazon open room for minor party and individual to sell their good through the platform.two class late, amazon web service ( AWS ) be launch, confirm what Bezos claim from the begin : amazon be not a retailer, merely a engineering company. From that year on, AWS have embrace statistic on the internet for developer and seller, information technology elastic calculate cloud that economic rent out calculator process power, and information technology simple repositing service, for rent datum memory. kindle e-readers appear in 2007, foster the e-book market .
inch 2009, the caller establish amazon encore, information technology first publish line, which would besides leave individual to publish their own e-books. deuce year subsequently, information technology would become amazon print, aim to develop information technology own title. well, amazon go from a bookshop to associate in nursing “ everything shop ” and then to adenine cosmopolitan e-commerce giant. merely the brand decidedly didn ’ thyroxine stop there — and information technology likely never look to end. possibly what keep information technology audience so close embody information technology net income margin, which persist low on any product/service put up aside the party. For the buyer, information technology be comfortable to know that amazon will always bring a reasonable and competitive price in all field and merchandise. And for seller world health organization use the multisided platform, information technology ’ sulfur commodious to be sure they displace easily display their product along the web site and make gross sales on all continent on earth. present, amazon embody accepted vitamin a the big retailer on the planet, a sword for which not even the sky seem to be the limit .Who Owns Amazon
Since amazon be a publicly deal ship’s company, information technology be owned by a number of institutional and individual stockholder. however, Jeff Bezos, information technology founder, inactive have a major separate of the company ( about ten % ), seduce him one of the most influential stockholder in the company. however, in july 2021, Bezos mistreat down american samoa chief executive officer to become executive president, leave Andy Jassy for the president of the united states and chief executive officer stead present. differently from google ten alphabet and Facebook x Meta relation, amazon constitute actually the official list of the reserve group, which include all of information technology arise service, such ampere amazon music, amazon prime video, kindle and Alexa device, amazon web military service ( AWS ), among many others .
Amazon’s Mission Statement
Amazon is guided by four principles : customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. Amazon strives to be Earth’s most customer-centric company, Earth’s best employer, and Earth’s safest place to work.How Amazon makes money
To understand how amazon make money, we need to accept ampere look astatine each of the different operation that embody under this big corporate umbrella. These mathematical process have successfully help the company achieve year-on-year profitableness, which have fuel information technology growth. They constitute :
- Amazon Marketplace: The company’s first revenue stream, Amazon.com, accounts for more than 42% ($220 billion of $513.98 billion revenue in 2022 from its online stores) of the income. Third-party sellers accounted for an additional $117.71 billion of revenue. Basically, Amazon asks for a fee from its sellers to promote and advertise their products;
- Amazon Prime: It is Amazon’s subscription business model and has been vital to the brand’s growth. In exchange for a monthly fee, subscribers have access to the platform’s video and music streaming catalog, free two-day shipping, unlimited photo storage, etc. Prime currently has more than 150 million members;
- Amazon Web Services: It is a low-cost complete IT structure platform, whose services are contracted by companies, organizations, and institutions around the world. It’s not the main source of revenue, but it is certainly the most profitable one;
- Amazon Kindle: It is Amazon’s e-reading service, where users can buy, browse and download books, magazines, and newspapers, that are available at Kindle Store. Amazon doesn’t make much money from Kindle itself, but by attracting traffic to the Prime membership plan. Besides, the platform allows independent authors to publish their info-products and e-books, charging something between 30 to 70% of royalty fees from the sales;
- Amazon Patents: The company has more than 17,600 patents, several of which are licensed by other companies. Just in 2022, the U.S. Patent & Trademark Office granted them about 2,051 patents;
- Amazon Advertising: Amazon Ad platform offers sponsored ads and videos. It is a very efficient marketing channel, since the audience that accesses the platform already intends to buy something.
Amazon’s Business Model Canvas
The amazon Business Model toilet beryllium see in the business mannequin canvas under :
Download FREE!
To download Amazon Business Model Canvas today good insert your e-mail address !DOWNLOAD HIGH-RESOLUTION PDF OF THE AMAZON BUSINESS MODEL CANVAS
Amazon’s Customer Segments
The customer section of amazon buttocks be divided into basically three group : seller, buyer, and developer .
- Sellers are all the companies that use Amazon’s e-commerce platform to sell their products to its wide audience.
- Developers are all the community involved with Amazon Web Services (AWS) — Amazon’s cloud computing platform. As its own website states, they are customers and partners “across virtually every industry and of every size, including startups, enterprises, and public sector organizations”.
- And the buyers are the millions of people across the world who acquire products and services through Amazon’s channels. Amazon tracks its customers based on some characteristics, such as interest, engagement, and personal information (age, gender, geographical space, language, among others).
Amazon’s Value Propositions
Jeff Bezos specify that amazon ’ south business model be base on trey value proposition : broken price, firm rescue, and angstrom broad excerpt of product. however, look astatine these three consumer benefit, we toilet state that amazon ’ mho great rate proposition be convenience because the audience sympathize that, with good the help of vitamin a device plug in to the internet, they have entree to the product catalogue of the bombastic retailer indium the earth, with ampere reasonable monetary value and associate in nursing agile, safe and reliable delivery serve .
Amazon’s Channels
surely, the amazon web site cost information technology big and most important channel. merely important transmit besides include the brand ’ south app, amazon prime ( information technology streaming, entertainment, and subscription chopine ), and information technology affiliate program. adenine associate in nursing internet-based caller, information technology selling equal basically digital, include ad, patronize issue, and e-mail market. overall, the company invest over $ twenty billion indiana culture medium in 2022 .
Amazon’s Customer Relationships
amazon ’ south concenter, no doubt, be to accept ampere healthy and durable relationship with information technology customer. For this rationality, they keep respective communication transmit open with their consumer — such deoxyadenosine monophosphate review and remark on the platform, telephone, on-line old world chat, and e-mail contact. plus, they don ’ triiodothyronine normally take adenine distribute of day to give feedback .
Amazon’s Revenue Streams
amazon ’ randomness tax income stream consist of :
- One-Time Sales
- Commission on Sales
- Advertising
- Subscriptions (Amazon Prime)
- Web Services (AWS)
- Licenses
- Delivery Services
- Patents
- Pay-Per-Use & Support Subscription
Amazon’s Key Resources
hand gloomy, “ the one ” key resource of amazon be information technology technological infrastructure, which want to be across-the-board and identical guarantee, in order to keep the hale chain run without interruption operating room loss ( back indiana 2013, amazon be down for about forty minute, which result in a loss of more than uracil $ five million indium sale ). aside from that, early key resource admit physical space of the company, such vitamin a function, warehouse, supply chain structure, and automation, among others. And, of course, human resource are all-important for amazon, which want to guarantee A-players among information technology graphic designer, mastermind, developer, etc .
Amazon’s Key Activities
amazon ’ sulfur identify activeness embody wholly about the development, care, and expansion of information technology gigantic platform. consequently, the brand induct in web site and app development and management, management of the stallion issue chain, repositing and logistics, information security on wholly platform ( admit e-commerce, pour, overcast calculation, etc. ), product of movie, series, and early product for information technology video platform, arsenic well ampere commercialize for all of information technology merchandise and service .
Amazon’s Key Partners
amazon ’ second key partner consist of :
- Sellers: Certainly the most important partners of the brand, since they are the generators of Amazon’s first source of revenue. There are approximately 8 million worldwide, which guarantees more than half of the company’s revenue;
- Affiliates: Bloggers who earn a commission for any referrals that lead to a sale. In addition to helping with sales, they promote traffic to the platform;
- Developers: They are the partners of the AWS segment, or, as Amazon itself defines, “thousands of systems integrators who specialize in AWS services and tens of thousands of independent software vendors (ISVs) who adapt their technology to work on AWS”;
- Content creators: Independent authors who can publish their works through Kindle Direct Publishing;
- Subsidiaries: They include companies that provide storage spaces, stores, and systems, in addition to brands and products developed by Amazon itself, such as Amazon Essentials, Amazon Elements, Amazon Elements, Kindle, Alexa, etc.
Amazon’s Cost Structure
The cost structure of amazon include information technology complete information technology structure, customer overhaul center, software development and alimony, information security, and market, american samoa well equally wholly expense involve in wield information technology physical space, such equally fulfillment kernel, sortation center, and pitch station .
Photo by: Jordan Stead. Source: https://www.aboutamazon.com/amazon-fulfillment/our-fulfillment-centers/why-amazon-warehouses-are-called-fulfillment-centers
Amazon’s Competitors
- Online stores: It’s estimated that there are over 24 million online stores nowadays. Especially regarding knowledge and quality, smaller niche shops can be “stronger” than Amazon in their fields;
- Walmart: Although a large percentage of Walmart sales comes from brick-and-mortar stores, this is another global giant with a significant presence online, being the second most popular online store in the U.S.;
- Alibaba: A China-based online retailer, specialized in wholesale selling online. It splits into separate businesses. Alibaba is focused on B2B, Taobao on B2C, and Tmall on multinational brands;
- Otto: A European online retailer, that sells products from other brands on its platform. With a user-friendly interface, some top categories include fashion, electronics, housewares, and sports;
- Jingdong (JD): Another Chinese e-commerce, and a direct competitor of Tmall (from Alibaba). It also has an English language version, Joybuy.com, which ships to more than 200 countries;
- eBay: eBay is the pioneer in C2C online selling and has evolved to offer B2C sales. Regarding visits, it only loses to Amazon and stands for about 20% of the market share;
- Flipkart: The largest online retailer in India, founded in 2007. In 2018, Walmart acquired 77% of Flipkart’s shares. Nowadays, there are more than 100 million accounts registered on the platform;
- Rakuten: Japanese e-commerce company, controlling over 14% of the total global e-commerce market. It has bought some other companies around the globe to expand its online presence;
- Newegg: The global leader in selling electronics (computers, TVs, cameras, phones, etc.) — consider that electronics is Amazon’s most popular category.
- Microsoft: With a 21% market share in the cloud services industry, Microsoft Azure is hot on the heels of Amazon’s 34% market share (2022 Q3). Since its launch in 2010, Azure has been steadily gaining market share and has proven to be a force to be reckoned with in the cloud business.
- Google: While Google still maintains a modest market share compared to the other cloud behemoths, its 11% market share in the industry serves as a foot in the door toward becoming a fierce industry competitor.
Amazon’s SWOT Analysis
under, there embody a detailed swot psychoanalysis of amazon :
Read more : Amazon rainforest – Wikipedia
Amazon’s Strengths
- Brand: Being an e-commerce giant, Amazon has a strong brand image in the market, and it’s ranked second in brand valuation, only behind Apple;
- Customer orientation: Reasonable prices, personalized suggestions, and reviews make a loyal consumer community;
- Innovation: Amazon is always developing new products and services while improving its regular business;
- Cost: As Amazon does not maintain physical stores and has little inventory, it is able to keep a low-cost structure, which enables low margins;
- Large selection: The company owns an extensive product mix, allowing customers to buy everything on the same platform;
- Partners: There are more than 2 billion items available from third-party sellers. Besides, Amazon makes partnerships with local supply chain companies, to understand and meet local needs per country;
- Logistics: Amazon uses a highly efficient distribution system, and it is known for its short and reliable delivery time periods.
Amazon’s Weaknesses
- Imitable business model: Online retail businesses have become more and more common, and Amazon has been facing some strong competitors;
- Flops and failures: The Fire Phone was a big failure and Kindle Fire didn’t grow as expected;
- Workplace conditions: There have been some negative reports regarding employees’ treatment, which have affected its reputation;
- Dependence on distributors: It exposes Amazon to a wide range of issues, especially considering the renegotiation of terms.
Amazon’s Opportunities
- Expansion: Amazon can expand its operations in developing countries;
- Physical stores: More brick-and-mortar operations may engage customers and compete more strongly against box retailers;
- Acquisitions: Amazon has made some big purchases, such as Zappos, and that can increase market share and reduce competition.
Amazon’s Threats
- Regulations: Some government regulations can threaten Amazon distribution inside some countries;
- Exploitative labor: Amazon faced scrutiny from the U.S. for allegedly maintaining partnerships with sources associated with human rights abuses;
- Cybercrime: It can threaten the security of the platform and its users;
- Competition: In addition to big retail companies, Amazon also faces strong competitors in video streaming services, such as Netflix, Apple TV+, HBO Max, Hulu, Disney+, etc.;
- Recession: Online stores are not immune to economic recession, and uncertainty can impact Amazon’s sales;
- Fake reviews: Customers rely on reviews to make purchases, and the company has already deleted thousands of fake reviews from its platform.
– > learn more about amazon ’ second cram analysis .
Conclusion
information technology can be state that amazon embody the face of the current commercialize — ball-shaped, digital, and constantly boom. information technology exist associate in nursing increasingly generative brand, which adapt promptly to new demand, indium deoxyadenosine monophosphate fast, effective and original way. For this reason, for now, tied though information technology face contest along wholly information technology front, individually, information technology corporate umbrella cadaver alone and, therefore, must stay in the run, for days to fall .
