Amazon’s business strategies have worked very well in the past years. Also, the current Amazon stock price is rising high. The share prices of Amazon are high as compared to others. Have you wondered why Forbes ranked Amazon in the top 4 companies? Why the business model for Amazon is becoming popular? Well, you’ll get your answers here. This article will guide you through the various business strategies of Amazon.
Over the past couple of years, Amazon has been taking over the world of online business. It started with their revolutionary Kindle and book services, but they have since moved into the cloud, their own line of hardware, and much more. You can bet that they are going to be a major player in the AI business revolution. Here are some business strategies that we can use when we look at Amazon.
Initial Years Of Amazon's Business Strategies
Amazon is an American multinational company in the world. They provide various services and products to people. The business model has proved to be very successful for Amazon. Amazon was founded by Jeff Bezos. Basically it was 1994 when Jeff Bezos was working on Wall Street. He used to see the growing route of the Internet and one fine day he just quit his job. And that’s how Amazon was born on July 5, 1994. Earlier Amazon was named “Cadabra” (originated from Abracadabra). But, the lawyer suggested changing it. After searching the dictionary, he ended up on the Amazon river. Just like Amazon is the largest river, Jeff Bezos also wanted his company to be the largest one. Before many domain names were given. It also includes Awake.com, Browse.com, Bookmall.com, and Relentless.com. Earlier if you typed Relentless.com, you would land on Amazon.com.
Jeff Bezos started his first garage of Amazon in Bellevue, Washington. In the early days, they didn’t know what to sell. The only idea he had was to be an online retailer. After research, he thought of creating an online bookstore. They started selling books online. And that’s how a platform was created. Slowly and steadily, they started dealing in a variety of products and services From all, this was one of first Amazon’s business strategies.
Core Principles Of Amazon's Business Strategies
The business model for Amazon works on its principles. The principles are the pillars of the company. Every company frames its own mission and vision. Even Amazon believes in some core principles. This also adds up to the business strategies of Amazon. Here is the list of principles given below.
The business model for Amazon always works on this principle. Offering cheap prices to people is what Amazon aims for. Whenever you want to buy things online, we often type Amazon. In fact, it’s in our heads. They also strive at providing products at cheaper prices. The lowest prices are the unique selling points of Amazon. This move attracts people a lot. Thus, we tend to buy their products and services.
Be customer obsessed
Amazon’s main focus is the customer. They see to it that the customers are treated like kings and queens. This also helps them to build trust among the buyers in the world. Eventually, they try to keep the demands of the buyers in the front. You can connect it to Amazon’s marketing flywheel move. Thus, this has created royalty among the customers. Thus, it adds efforts to Amazon’s business strategies.
Amazon thinks that the leaders to take the control of the situation. In other words, the leaders should also consider themselves as a large part of the company. They shouldn’t feel that it’s not their job. They are not just a part of a team, but also of the whole company. Rather think of themselves as a key part of Amazon. If you think of yourself as a key part, you will try to give your best to the company. This also adds a lot of value to Amazon’s business strategies.
Hire and create the best
An important principle of Amazon’s business strategies includes hiring people. Thus, Amazon expects its leaders to hire good people for the company. In other words, hire such people who would-be future leaders of Amazon. Hire such people who would take the company to new heights. Teach them skills and train them nicely. After all, a good team makes good company.
Keep High standards
Expectations are kept by everyone. Amazon wants the leaders to keep high standards. It will also bring people out of their comfort zone. For example, if your leader tells you to create a good design till evening you will give your best. He will keep a bar for you to pass. A standard that you need to surpass. Thus, you will strive hard to create a good one and eventually succeed. This will basically try to bring the creativity out of you.
Use resources wisely
Resources on earth are not unlimited. Not using them to their full potential will create a shortage in the future. Amazon’s business strategies want the leaders to use the resources wisely. Just think of it as your own home. If you were using your own money, you wouldn’t be just wasting it. You will plan a budget and use it accordingly. The same is with the company, try to also treat it like your own company. Leaders need to see to it that all their employees are growing, also create a healthy environment around them.
Business Strategy Of Amazon
The business model for Amazon is quite successful. The current Amazon stock price is also rising high. According to VisualCapitalist, Amazon tops the market by 49.1%. As per RepricerExpress, Amazon has more than 12 million products. Now that you have learned about the core principles, let’s discuss the business strategies of Amazon. Here’s the list that’s given below.
Diversifying in many areas
Amazon has created its presence everywhere in the world. If you want to understand Amazon’s business strategies you need to look into what they deal in. Initially, they started with an online bookstore in 1994. Later on, they also spread into various fields and areas. They now offer products & services, cloud computing services, games, audiobooks, etc. Also, they deal in various products like Amazon Prime, Kindle, AmazonFresh, etc. Amazon also allows people to sell their products on their platform. People can get products at a cheaper price.
Amazon offers Prime services to the people. It is a combination of various services. Basically, it gives people extra benefits. You have to pay a subscription fee to access this benefit. For example, if you have an Amazon Prime account, you can access early delivery of products. Also, you can read some books for free on Kindle and much more. It also ventured into television production with the launch of Amazon Studios in 2010.
Mergers & Acquisitions
Amazon has also acquired many companies and businesses in the past few years. Amazon has acquired 22 companies in the last 5 years. In total, there are 74 companies. The largest acquisition was in 2017, when it took over Whole Foods Market for $13.7B. It has also acquired tech companies like Audible, IMDB, Twitch, and Goodreads till now. This diversification has allowed Amazon to create a presence all over the world. This has also lifted Amazon’s business strategies a lot. Recently, it had bought Kiva systems. Now, it is called Amazon Robotics. Thus, it helps in the manufacturing process. The company also bought Elemental Technologies in 2015. This has also added a lot of value to Amazon Web services.
Creating global presence
The first shop of Amazon was started in Bellevue, Washington. Slowly, they also started operating in many countries. The marketplace of Amazon is growing fast. But, the competition is also high. In the Asian countries, they face a threat from Alibaba, eBay, and Flipkart. According to an Insider report of 2020, Amazon ships products to more than 100 countries outside the U.S. No doubt, the roots of Amazon are growing everywhere. The company also bought Souq.com in 2017. This helped them to establish their presence in the Middle East. Eventually, this business model of Amazon has also helped a lot to create a global presence in the world.
Research and Development
Amazon is putting a lot of hard work into Research and development. This has allowed them a competitive advantage. The company not only sells products but also provides services to people. Alexa is one of them. It works on AI technology. For example, if you want to play a song, you can tell Alexa to play it. As per Adobe, 69% of people in the U.S use Alexa as a voice search. Ever since Amazon introduced the Echo speakers, the growth of Alexa has been on high. Amazon also launched Firestick in 2014. Thus, this allowed people to attach firesticks to TV. Through this, you could also stream apps on your Tv. This has also affected Amazon’s business strategies in a good way.
Products & Services Included In Amazon Business Strategies
Amazon provides a lot of products and services to people. They also deal in a wide variety of products. Some include product lines and others are brands of Amazon. Some are listed below:
- music CDs, DVDs
- Baby products
- Beauty products
- Industrial & scientific supplies
- Kitchen items
- Jewelry, watches
- Musical instruments
- Sporting goods
- Gourmet food
- Automotive items, toys & games
- Health and personal care items
There are many sub-brands of Amazon. They deal in various areas.
- Amazon Digital Game Store
- Amazon Pay
- Fire tablets
- Amazon Studios
- Fire TV
- Amazon Prime
- Amazon Web Services
Subsidiaries Included In Business Model For Amazon
The number of subsidiaries of Amazon is just huge. Amazon is trying to acquire and buy many companies, as they could. According to Quartz, it stated that Amazon has either been awarded or applied for 800 trademarks. Because of their growth, the current Amazon stock price is also rising high. Here is the list of some subsidiaries of Amazon given below.
Rick and Vivian Pura, and Keith and Cathy Waters started AbeBooks in 1995. Abebooks is a platform where they sell ebooks and audiobooks to people. Amazon brought it in the year 2008.
Audible is a platform where audiobooks are available. It allows you to listen to books anywhere. The app was founded by Shiri Lazar in 2001. Later, Amazon bought it in 2008.
Comixology is a cloud-based comic platform. It allows people to read comics anywhere in this world. You can read manga, comics, and various books online. In 2014, Amazon bought it.
Fabric.com sells fabrics across the world. They sell different types of fabrics to people. In 2008, Amazon bought Fabric.com.
IMDB gives ratings to the movies and shows. Also, it offers various movies and shows online. It was started by Col Needham in 1990. Later it was acquired by Amazon in 1998.
Whole Foods Market
The Whole Foods market basically sells various grocery and organic items. It has more than 500 stores in North America and 7 in the UK. On June 15, 2017, Amazon acquired the Whole foods market.
How Does Amazon Make Money?
You might be thinking how does Amazon make money when it sells us at a cheaper price? Well, keep on reading further. Amazon’s business strategies are made in such a way that company earns money out of it. As per Forbes 2021, Amazon saw a boost in revenue of 35% in the first three quarters of 2020. Let’s have look over the various money streams of Amazon.
Amazon earns huge revenue from its main platform. Most of the income arises from the marketplace. They also earn the majority of income from third-party selling. When sellers sell items and people buy products, Amazon gets a benefit. Sometimes, Amazon tries to reproduce an existing item, add a brand and logo and then sell it to people. This is also called as Private Label method.
Amazon Music and videos
Amazon Prime is the best example to put forth. It offers shows and music videos at a subscription fee. So if you want to access some special shows, you need to pay this fee. Eventually, this will give you access to various benefits. It includes free delivery, early delivery, prime membership, and a lot more. Through this fee, Amazon earns a huge income.
Selling books was the first business model for Amazon. They used to sell books online on its platform. Later on, they created Kindle in 2007. It is an ebook reader. It has various functions like a dictionary, highlights, etc. Amazon sells books at a cheaper price than the original price. Therefore, people prefer Kindle over any other app. Because of this, it created a good source of income for Amazon.
Patent technology allows owners to hold some special rights. Amazon has more than 1000 patents on its name. This allows Amazon to earn money through its patents.
There are many other streams like Amazon fire products, Advertising, Amazon Web services, etc. Through fire products, it earns a huge of income. Advertising has helped a lot to earn money through display ads, sponsored ads, etc.
Financial Figures Of Amazon
According to Amazon’s financial reports, the company did well in the quarter ending September 30, 2021. The revenue stands at $457.96 B. This has increased at a rate of 18.62%. The MarketCap stands at $1.460 trillion. The MarketCap is the value of a public listed company. The company’s earnings are $32.72 B. It has also increased by 26.71%. Free cash flow decreased to $2.6 billion as compared to September 2020. Net sales increased to $110.8 billion in the third quarter. Net income also decreased to $3.2 billion, while in the third quarter of last year it was $6.3 billion. Because of the covid 19 pandemic, the figures have also slightly moved up and down. But slowly and steadily, they will be able to catch the race.
Current Amazon Stock Price
The stock prices are increasing every day. The current Amazon stock price as per the New york stock exchange is $2,879.56. You might be thinking, why is the current Amazon stock price so high? Well, let’s know the reason. Basically, the share count of Amazon is low. This makes the stock price of amazon go high. If the company tries to split the shares, then the current Amazon stock price will drop down. In the early days, the stock price of Amazon was low. But in 2016, the share price started rising high. And now, it is keep on rising.
Amazon is an e-commerce company that sells a wide variety of products at low prices. Amazon began as an online bookstore but now sells just about everything. Because Amazon was able to offer lower prices than its competitors, it quickly became the most popular place to shop on the Internet. Amazon has other business ventures, but its e-commerce site remains its most important business. This article tells about the mission of Amazon. All this has created a huge impact on Amazon’s business strategies.