Have you ever imagined that an online book retailer can become one of the most dominating companies in the e-commerce industry all over the globe? This 28-year-old company has proven how to become successful with the help of an effective business strategy. It has brought a revolution in the retail experience. There is no doubt that the sales of the company are going to reach nearly 746.22 billion USD along with a valuation of 2 trillion USD in 2023. The company started its journey at first as an online bookseller and the headquarters of the company was then located in a garage. But now the company has become the second most important brand all over the universe. Every business school asks the students to write a case study on the tale of a multinational company.
Amazon is supposed to be the largest online retailer all across the globe and it has over 1 trillion valuations.
Jezz Bezos set up Amazon. He is now the richest person in the universe. Only because of Amazon, he has been able to become the richest person in the entire globe.
But do you know the secret behind the incredible prosperity of Amazon? With the help of this article, we are going to give you a detailed case study of Amazon along with its effective business strategies. So, without wasting any more time, let’s start the case study of the largest online retail organization in the globe, Amazon.
A Short Overview of Amazon
Amazon is a giant in the e-commerce industry all over the world. This internet-based corporation is popular for selling apparel, electronic goods, movie books, and any kind of goods that are scalable online on its platform Amazon.com. Jezz Bezos set up this company in 1995.
There are over 7.5 lakh workers who are working under Amazon. This is the most esteemed retail shop in the United States by market capitalization. The business of Amazon is spread in various nations and parts.
There is a marketplace of Amazon that allows third parties to sell her products. Through the Kindle platform of Amazon, e-books are sold. Through Audible, the company sells Audiobooks. There is also another platform of Amazon known as Amazon Prime, a very popular OTT platform. Apart from the above-listed businesses the company also runs many more businesses. We will discuss them in the article.
Amazon started its journey with its marketplace in India in 2013. It came to India 17 years after its establishment. It is supposed to be the third-largest economy in the entire universe. There is an emerging e-commerce industry in India. That is why Amazon gets a lot of opportunities from India. India is a price-conscious market and that is why a lot of companies have failed to earn profits in India.
Hence Amazon is doing its business in India at a loss. There are only a few people in India who shopped online while it started its business in India. But after the revolution of Jio, a lot of internet users started online shopping. There are more than 150 million registered consumers of Amazon in India and nearly 100% million consumers have made a transaction with Amazon. Amazon sells its products at a lower margin but the volume of sales is very high. So, we are expecting that Amazon is going to be profitable in India very soon.
How did Amazon Start its Journey?
Jeff Bezos launched Amazon on 16th July 1995. The founder of the company selected the name Amazon for his business as the name begins with the first letter of the name Alphabet and the second is the name of the South American River.
The company at first started to sell only books on its platform. There was another organization named Computer Literacy that sold books online before Amazon. Amazon started its business to provide any kind of book to any reader.
By the end of December 1996, the company managed to reach nearly 160000 consumers. The company was able to reach so many consumers so fast as they have a user-friendly platform and inspired the consumers to put in their honest reviews.
As of 1996, Amazon managed to generate nearly $15.7 million and as of 1997, the company generated $148 million. The company introduced its IPO and lifted $54 million and enlisted its stock on Nasdaq.
Amazon started to sell CDs in 1998 on its platform. After that it included videos. The company develops its business at rocket speed in various sections. The company also began to sell books internationally in that very year by gaining global booksellers in the United Kingdom and Germany. The company began to sell video games, consumer electronics, home modification products, software, and many more in 1999.
The most important thing at that time was that Amazon provides customized product suggestions considering the previous purchase record of the consumers. The company also inspires its users to add reviews so that other users may find out about the proper products. By doing all these activities, the company has managed to gain the faith of consumers and in this way, it has created a reliable consumer base.
Amazon introduced Amazon Web Services in 2002 and also came to be an internet technology corporation. The organization also allowed small businesses to sell their products through Amazon in the very year and the company introduced Fulfillment by Amazon services in 2006 which handle the business stocks.
The company bought Kiva Systems which is currently called Amazon Robotics which produces robots and assists Amazon in handling the stock fulfillment responsibilities. Amazon is developing its business seamlessly and it has also acquired a lot of other organizations for diversifying its business. The company has also purchased a few trail organizations like Zapoos.com to decrease competition and grow its business more. The company introduced Amazon Kindle for selling e-books in 2007. The company introduced its business in India in 2013.
What is the Business Model of Amazon?
We all know that Amazon is a very prosperous company. Do you know the reason behind its success? It is the business model of Amazon that has helped the company to reach the top of success. In this online marketplace, a lot of people pay a visit and purchase the products. People believe that they can find any kind of product on Amazon. Amazon is such a kind of marketplace that allows sellers to register their businesses and sell their goods.
Retailers have to pay a certain amount of money for utilizing their platform. Amazon is a ready platform that allows traders to easily sell their goods. The company also offers shipping services. The traders get two shipping options from Amazon: Amazon Easy Ship, a logistic service from Amazon and another one is Selfship.
By opting for the Amazon Easyship, the trader has to pay for shipping the goods that will be charged to the consumer. The company also earns money from its promotion services through which traders represent their goods on this platform.
The company also utilizes a subscription model through which it sells Amazon Prime Subscription which provides a lot of offers to the users like access to Amazon Prime video or Amazon Prime music, free shipping. We have discussed the business model of Amazon in detail below:
The primary business model of Amazon is Amazon Marketplace through which Amazon earns the major portion of its revenue. This marketplace allows traders to sell their products on the platform directly to the consumers.
The traders have to pay some charges for using their platform based on each transaction. There are two shipping options provided by Amazon: Amazon Easyship and Self Shipment. The traders have to pay some charges for using the Amazon easy ship option. The company also provides Fulfillment by Amazon which allows a user to stock their products in the goods of Amazon and as soon as the order comes, Amazon will ship their products.
Amazon Prime Subscription
Amazon Prime subscription is another revenue model of Amazon. This is a recurring business model of Amazon. Through Amazon Prime subscription, Amazon delivers products to the customers free of cost and allows the users to get access to the Amazon Prime Video platform where the users may watch web series and films, and also to Amazon Music which allows the users to listen to audio tracks.
Amazon sells ebooks through Amazon Kindle which is an online book store. Amazon is a type of marketplace that allows book publishers to publish their e-books and they have to pay some charges for using Amazon. Users may also buy subscription plans for using Amazon Kindle.
Audible, an online store of audiobooks, allows people to listen to audiobooks of magazines, books, and newspapers. Users may also buy subscription plans from Amazon to use Audible.
Amazon Gaming Studio is a subsidiary of Amazon that is popular for selling their games or third-party games.
There are a few patents owned by Amazon. A lot of companies use them. Amazon gets royalties from these patents. There are nearly 1263 patents of Amazon.
Amazon Web Services
Amazon Web Services or AWS is the best IT infrastructure corporation that offers its services to a lot of famous companies like Netflix.
We have mentioned the best income sources of Amazon. Amazon is also the owner of a lot of small corporations and has various business models like the Amazon app store, Zapoos.com, and so on.
What is the Marketing Strategy of Amazon?
Amazon is an enormous e-commerce platform. It has to always maintain a standard to prove itself the best in the market. The company uses the following marketing strategies to market its services:
Wide Range of Product
There are a wide array of products available on the website of the company which are stored in their inventory. Customers can get a lot of products at a reasonable rate by visiting the platform of Amazon.
Amazon is so massive that it has a search engine just like Google. The search engine of Amazon is known as A9 which runs in its way and comes up with its unexpected updates. It also has SEO.
Amazon Marketing Services
This service is just like Google Ads which allows the sellers to market their goods on Amazon. Interests, keywords, page visits, recommendations, etc are used by this service. It displays the product display ads.
The company understands the strength of consumer reviews. With the help of a feedback strategy, the consumers may give reviews of the product after using it. In this way, the company can improve its products or services.
With the help of affiliate marketing bloggers and influencers may promote a product on their online platforms and social media handles by using affiliate links of the e-commerce website. This affiliate link encourages the consumers to buy the product.
What is the Mission and Vision of Amazon?
The most important part of the strategic planning procedure is to set up the mission and vision statement. The long-term vision of Amazon is to make consumers completely happy. That is why it is constantly concentrating on the consumer experience by providing the consumers with low prices, convenience, and a wide area of products. Amazon has a consumer-oriented mission.
What is the Revenue of Amazon?
Amazon is an enormous corporation and there are a lot of income sources for the company. According to Quarter 3, 19, the company has managed to generate about $280.52 billion through its business. Their income hiked by 20.5% from the revenue of the previous year.
Amazon was able to generate about $232.89 billion in the previous year. The company earns $1230.86 every second. The net profit before interest and taxes is $37,365,000 as of 2019. As of 2019, the net worth of the founder of the company, Jeff Bezos, is nearly 110 billion. The founder has been earning a $81480 salary per year since 1998 from Amazon.
Jezz Bezos, the founder of Amazon outperformed the founder of Microsoft, Bill Gates in 2017 and became the richest person in the globe. According to the investigation, Jeff Bezos earns $78,500,000,000 per annum. Here is a short detail of the income of Amazon:
- Total income: 280,522,000
- Cost of income: 205,768,000
- Gross profit: 74,754,000
- Net income: 11,588,000
- EBITDA: 37,365,000
Who is There in the Management Team of Amazon?
Behind every successful company, there is a powerful management team. Jeff Bezos the founder and well as the CEO of the company has a great contribution to the success of Amazon. Due to his successful venture, he can become the richest person in the globe.
Jeff Bezos, the first cent billionaire, was born on 12th January 1964. He pursued computer science and electrical engineering at Princeton University.
Becoming a graduate of Princeton University, he became the Vice President of Investment DE Shaw. He left his job in 1994 to open an online books store. Jeff understood that there are huge opportunities on the internet and the online book store marketplace became very successful. He gave a name to his new venture that is Amazon.com which was based on the South American River.
Jeff Bezos has to work hard for a few months to set up his online store and after building it he requested 300 people to test his website. Without doing any press promotion, Amazon gained huge success that year. Apart from Amazon, Jeff Bezos has also set up a lot of prosperous corporations like Blue Origin, IMDB, and Washington Post.
The people who are in the management team of Amazon are as follows:
- Founder of the company: Jeff Bezos
- SVP web service: Andrew Jassy
- Vice President: Shelley Reynolds
- Head HR: Garett Gentry
- Product Management: Michael Stover
- Technology Evangelist: Akersh Srivastava
- Senior Principal Manager: Grant McAlister
- Senior Software Development Engineer: Karthikeyan Ravi
- Board Observer: Bing Gordon
- Board Member: Alain Monie
SWOT Analysis of Amazon
- Amazon is a multinational e-commerce platform with a strong brand name.
- The company has a strong brand valuation of $124 B.
- The pricing structure of Amazon is very reasonable for the customers. That is why it has become a customer-oriented brand.
- The company is constantly trying to innovate its venture and introducing new concepts that help to stand out from the crowd.
- The company generates 562.3 million from its marketplace Amazon.com which prices that the company has the best product selection.
- The company is a multinational platform but applies distinct policies in specific nations.
- The company also acquires a lot of other companies that assist in the operation of Amazon.
- The company has an independent distribution and logistic system that is very essential for any e-commerce platform.
- It has now become very easy to start an online business and there are a lot of competitors on Amazon like Flipkart, eBay, and Myntra.
- Amazon is a multinational company that has expanded its business in various nations. It is making losses in a few nations.
- The margin of Amazon is decreasing day by day because of huge price competition.
- The company has to spend a huge amount of money for acquiring new consumers and works on consumer lifetime value which does not always work out. A few people are conscious of online prices. They always purchase products from those places which sell products at cheaper rates.
- The company has a great scope of expanding its business to a lot of developing nations where the e-commerce industry is just growing.
- The company may buy other e-commerce corporations to decrease its competition.
- The company may launch physical stores in different nations.
- There is a huge scope of Anazon for horizontal growth which implies that Amazon may purchase other small or big corporations that will assist Amazon in its operation such as logistics.
- There is not any entry restriction in the e-commerce industry. So, anyone may start a business like Amazon.
- The company has to encounter a lot of government rules in growing nations concerning multi-brand e-commerce subordination.
- The company has encountered huge competition in various countries like India. Regional players like eBay, Flipkart, and Myntra are giving hard competition to Myntra.
What are the Plans of Amazon for the future?
- The company is now planning to launch cashier-free stores.
- The company is also planning to start drone delivery.
- The company is making human robots that will help in house cleaning and other work.
- The company is making a big plan for its product Alexa which is a cloud-oriented voice assistant.
- The company is going to enter the healthcare industry.
- The company is funding a lot of money in Amazon Prime for adding more shows.
- The company purchases its vehicles for delivering products to the doorstep of the customers. By 2030, the company is planning to purchase 100000 electric vehicles.
- The company is providing jobs in various developing nations. Amazon has declared that it will make 1 million jobs in India by 2025.
Amazon is supposed to be the second most important company in the universe which took nearly three decades the making. We have highlighted the history, business model, and business strategies of Amazon through this case study of Amazon. So, if you are finding it difficult to write a case study of Amazon independently you may feel free to ask My Assignment Writing Help to help you.
FREQUENTLY ASKED QUESTIONS
- What is the Position of Jeff Bezos now at Amazon?
Jeff Bezos, the founder of Amazon is also the CEO of the company. But he resigned from the position of CEO of the company in 2021. After that, he is serving as the Executive Chairman of Amazon.
- When did Amazon Start its Journey in India?
Amazon started its journey in India in June 2013. At first, it only introduced books, TV shows, films, and subscription-based services for the Indians. After that, it expanded itself and has become one of the most famous shipping platforms for the people of India.
- What is the Concentration of the Business Strategy of Amazon?
The business strategy of Amazon mainly focuses on its consumers and creating a customer-oriented organization.