What is the business model of Amazon?

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Introduction –

The business model of Amazon revolves the e-commerce, cloud computing, digital streaming, AI, emphasizing customer convenience & satisfaction. AMAZON company is the world’s biggest retail online platform for the people, started from an online book selling company to great retail market online store. Now entering into various tech businesses where now they are the world’s largest MNC company.

Jeff Bezos started his carrier from stock market where he realizes the importance of digital platform and website future at that period. Computer and internet were just growing and America was the first country who transforms itself to a digital platform vary rapidly. So he saw the opportunity of internet business and started their first online book selling business.

Here we can see the journey of an Amazon company from the smaller online book store to world’s biggest retail online company. Here we can see the business strategies of Amazon Company and how they could able to succeed so rapidly. We can try to analyze its business model through the details of it. We can see that how they developed their website so successful and how they decided give the name of Amazon to the company.

Who is Jeff Bezos?  –

Jeff Bezos, the world’s first cent billionaire, the richest first  person in the world to cross the hundred billion mark. The founder and chief executive of Amazon.com, founder of the space company “Blue Origin”, a successful businessman, owner of “The Washington Post”.  Born in New Mexico, Jeff Bezos himself was a computer science student and an electrical engineer. In 1990, he worked in the Wall Street company “De Shaw”, at an early age started working as Senior Vice President.

At that time he was working on a project in which he saw that which sector was growing so much in the last few years. Then he found that the growth of dot com companies will be growing  much faster than other sectors. Being a tech engineer himself, he didn’t mind finding out much about dot com and the internet sector, and that’s when he got the idea to start his own online bookstore.

It did not take them long to select a book store to first think about which product would be right for the business. In 1994, he left the job and started the first online book store. The name of the new bookstore was cadabra.com, but a customer later mispronounced the name, meaning “grave”, so Jeff Bezos decided to change the name. The biggest reason for the success of his company was Jeff Bezos’s ability to collect “data” which is very important for running any company.

married life of jeff bezosMarried Life of Jeff Bezos

Jeff and Mackenzie’s married life lasted for 25 years, during their early days working at the Dee Shaw Company, the two became close to each other, and they married with whom they had four children. Their split has been controversial because at the time the National Enquirer of America published some photos of Jeff Bezos by this magazine, in which Bezos believed that he was politically motivated.

During the 2016 presidential election, Donald Trump was heavily criticized by Bezos’ magazine The Washington Post and reports were run against him, which was being avenged by Trump, alleging that Jeff Bezos was indirectly accusing him. He believed that attempts were being made to tarnish his personal image in public and he was being blackmailed.

His separation was done as an agreement between the two, in which he said that he would continue to be like a friend and it is said that the amount given to his wife in exchange for this divorce was the biggest amount of separation in the world. There was an agreement to be had. Whatever may have happened in the personal life of Jeff Bezos, it has never reflected in his business.

Journey of Amazon Company –

Amazon’s journey in America started in 1994 but Amazon came to India in 2013, before Amazon tried to establish its business in China in 2003. But due to policy under China and competitive company like Alibaba, Amazon did not succeed in China as they were expected.

After changing the name of the first book store company, he had good knowledge about the search engine’s algorithm, so the name should start with an A alphabet, so he started searching for words starting with the word “A”, then he found Amazon The name of the river is very common in America, everyone knows. The specially of the Amazon River is that it is the largest river in the world, after which the largest river is much smaller than the Amazon River.

With this concept, he named his company www.amazon.com, which had very deep thinking and like that deep thinking, he made Amazon the largest company in that sector in the world. The number two company is much smaller than the Amazon company. Amazon was founded on July 16, 1995, in a garage, the first investment, of which was made by his parents for their life income invested in the company. Amazon started with the first book store and gradually after that computer parts, CDs, electronic items, children’s toys etc.

Business Model of Amazon Company in India  –

The reason for entering India so late because that the number of people using the Internet had started increasing for a long time and the online shopping market had started developing in India after 2010. So Amazon did not come to India before China. After 2013, Amazon started focusing on the Indian market because India’s market is the largest market after China and the number of people using the Internet was increasing very fast.

When Amazon entered in India for the first time in 2013, it had faced a lot of difficulties as its biggest problem was that their setup was a very difficult task to install in India. There were already indigenous competitors like Reliance company in India which could acquired the Indian market & knew well. The important reason for Amazon’s success in India is their data and technology, on which Amazon has established itself in India.

The most important reason for Amazon’s success at the international level has been its collection of information, on the strength of which,  what should be the price of the product as per the country and their market, so that they keep accurate information about it so that their goods are available to the customers at a lower price than the competing company. It has been their specialty to reach that item to their customers in a short time possible and secondly in good condition.

Amazon Company and affiliate Program –

Although the model of affiliate marketing was there even before the advent of the Internet, but after the arrival of the Internet, you get its data, we can know that  where did our customer comes from. Earlier such data was not available and its value was not understood. After the advent of the Internet, it has become the strategy of every company to sell. Affiliate marketing is patented by William J. Tobin, which he secured in 1989.

Amazon is the first big company that started affiliate marketing as a strategy for the first time in 1996, which was run under the name “associate program” and was a very successful model for the company. After this many companies used this model.

Business Strategies of Amazon Company-

Amazon has become a 27-year-old company in the month of July, in these years a good company went bankrupt in the recession of 2000, but Amazon has also been able to get out of that crisis. The main reason for Amazon’s success is its strategy that sets it apart from its competitors.

1) REACH-

When Amazon came to the Internet, they kept the beep sound of every order in the early days, when orders started increasing so much that it had to stop beeping. In the early days, two programmers were hired who worked on SEO, in those days most of the companies that worked on the Internet did not work as closely as the Amazon company did.

Amazon played an important role in expanding the scope of Amazon in the early days by studying the algorithm of the search engine thoroughly. Millions of “key words” were used to increase Amazon’s reach, which was a fairly new concept at that time.

2) DATA –

Even today, Amazon collects and analyzes customer data so closely that it acts as an entry barrier for other companies. Jeff Bezos also got the inspiration to start an Amazon Internet because of the data collected. In which area, which product runs more, Amazon has been keeping this thing in mind till date.

3) ACTION –

Creating an action plan by getting a simple experience of what should be the strategy ahead of testing and learning, this technique is followed by many companies today. The Secret to Amazon’s Success Action Plan with Testing and Learning was a huge success.

4) ENGAGE –

For how long a customer stays on the internet, what he searches, what products he wants, how many good services can we provide for this, Amazon has created a customer centric culture for the customer. Before big companies wouldn’t give so much to small customers. Didn’t treat well. Customers liked this culture very much and more customers kept on joining Amazon.

Amazon started the “delivery in two days” campaign all over the US, after that it was further developed and delivered in one day to any corner of America, this campaign went very well. Meaning the company started giving more and more good services to stay connected with itself.

5) CONVERT –

Relevant recommendation of customers and clear check out process This strategy differentiates Amazon from other companies. Providing a personalized experience to the customer It acts as an entry barrier for the company while delivering the service or item. It is Amazon’s priority to pay more attention to what the customer wants.

AMAZON Company’s Products & Services –

1) RETAIL GOODS
2) AMAZON PRIME
3) CONSUMER ELETRONICS
4) AMAZON STUDEO
5) AMAZON GAMES STUDIO
6) AMAZON VIDEO
7) DELIVERY (GROCERIES)
8) AMAZON BUSINESS
9) AMAZON DRIVE
10) AMAZON WEB SERVICES
11) AMAZON PUBLISHING
12) AMAZON SMILE
13) AMAZON LOCAL
14) RETAIL STORES
15) AMAZON HOME SERVICES
16) AMAZON CASH/TO-PUP

Business Acquisitions of Amazon Company –

Amazon has made 77 acquisitions so far and made 51 investments, out of which important acquisitions are ahead –

  • 1998 – PLANET ALL ,JUNGLEE ,BOOKPAGES
  • 1999 – INTERNET MOVIE DATABASE ,ALEXA , ACCEPT.COM, EXCHANGE.COM
  • 2003 CD NOW
  • 2004 JOYO.COM
  • 2005 BOOK SURGE , MOBIPACKET.COM, CREATESPACE.COM
  • 2006 SHOPBOP
  • 2007 DPREVIEW.COM, BRILLIANCE.COM
  • 2008 AUDIBLE.COM,FABRIC.COM,BOX OFFICE MOJO, ABE BOOK ,SHELFARI, REFLEXIVE ENTERTAINMENT
  • 2009 ZAPPOS, LEXCYCLE, SNAP TELL
  • 2010 TOUCHCO. WOOT, QUIDSI, BUYVIP, AMIE STREET
  • 2010 TOBY PRESS
  • 2011 LOVEFILM, THE BOOK DEPOSITORY, PUSH BUTTON AND YAP
  • 2012 KIVA SYSTEMS, TECHSTREET, AND EVI
  • 2014 IVONA SOFTWARE, GOODREADS, LIQUAVISTA.

Seven ways to earn from AMAZON Platform –

1) MERCH BY AMAZON –

This is the facility that Amazon has created for those who are designers of clothes and want to sell their products, so this platform has been created. Whatever be it T-shirts, sweaters, woolen products, you can sell here, Amazon gives commission to the designer for that.

2) AMAZON DROPSHIPPING –

Amazon has made this facility, people who want to sell their product with zero investment, many customers get confused that Amazon FBA option is different from dropshipping, where you have to deliver your product in bulk to Amazon and here in bulk you Do not want to buy the product.

3) AMAZON HANDMADE –

This is the easiest and biggest platform for the handmade industry to create artistic and used items by hand made.

4) MECHANICAL TURK –

This is an outsourcing job that Amazon provides where people can do this work part time. Because a lot of Amazon work is done through outsourcing, so if you want detailed information, then you can search.

5) WORK FROM HOME / VIRTUAL LOCATION –

This is an important platform found by Amazon in India, through which the company gets its work done through freelancing, such as customer support, technical support, business development officers get such work done by the company.

6) AMAZON FLEX –

You can also do services like Ola Uber with Amazon. Whatever other things seem like driving license, car, anroid mobile, no money is to be paid to the rest of Amazon, initially zero investment.

Many of these services are found in America and Europe, some of these services are yet to come completely in India, but Amazon has provided many earning options through this as well as customer services.

Negative Points of AMAZON Company –

1) Amazon has created dominance in the market with its investment ability, so small industries are on the verge of losing their existence.

2) In whichever sector Amazon entered, it gave good returns in the beginning, but once Monopoly introduces it starts imposing its own rules, such allegations say many companies working with them.

3) Amazon’s ambition to make it bigger than the beginning has led thousands of its employees to sometimes be accused of working like a machine, the company gives its explanation on this.

4) Jeff Bezos became the world’s richest person, with this political and personal enemy of him and the company started attacking him. Jeff Bezos has experienced this recently. There is a competition in government contract or his personal relation disputes competitors always attack on him..

5) Law should be made against the dominance of the company, such voice has started rising in many countries.

Profile of amazon –

  • Company Type – Public Limited
  • legal name – amazon
  • Established – 5 July 1994
  • Founder – Jeff Bezos
  • HQ – Seattle Washington USA
  • Company’s Scope of Business – World Wide
  • Industry – Cloud computing, e commerce, artificial intelligence, consumer, electronics, entertainment, digital distribution, self driving cars
  • Services – amazon .com , amazon Alexa , amazon app store , amazon music , Amazon Prime , Amazon Prime video ,web services
  • Products – Echo, Fire Tablet, Fire TV, Fire OS, Kindle
  • Gross Income – USD 386 Billion (2020)
  • Net Income – USD 21 Billion (2020)
  • Net worth – USD 321 billion (2020)

Conclusion –

Jeff Bezos is the richest person in the world today, this can be gauged from the success of Amazon. Starting from a book seller and making all kinds of things available on the world’s largest online platform in a short time, this is Amazon’s entry barrier. Technology and Innovation This is the biggest reason for the success of Amazon.

Today here we have seen how Amazon expanded its business and how Amazon’s business model works, we get to learn a lot from it. In the coming days, we are going to see a lot of competition between Jeff Bezos and Elon Musk in terms of technology because both of these companies are spending a lot of money for the modification of Artificial Intelligence.

Jeff Bezos’ aggressive strategy and his practice of getting what the people want is what sets him apart from the rest of the entrepreneur. He has got a lot of support from the employees to establish Amazon’s online network across the world which shows his leadership qualities. This should be considered as a source of inspiration to start any new business and this is also our aim.

ADANI GROUP-CASE STUDY

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