Lift Group | Amazon and its business model and growth

“To be the most consumer-focused company in the world, where people can find and discover anything they want to buy.” This is how they describe their vision and mission. And we are all aware that Amazon has not only changed the way we consume, but also the way we live.

But, what are the beginnings of Amazon? It all started with the help of Jeff Bezos in 1994, who began distributing books at home under the name cadabra.com, created under the myth of the great technology companies that we have all seen in the movies, in a garage. What its founder has achieved is to turn Amazon into a universal megastore, promoting a strong purchasing policy from other companies, while at the same time spreading the business in all directions.

Last year, the American multinational, based in Seattle, obtained sales of 469,822 million dollars, 21.7% more compared to the 386,064 million registered in 2020. Currently, Amazon is the third US company with the largest share of the online advertising market, only behind the two big sharks in the sector, Alphabet (Google) and Meta (Facebook).

What is Amazon’s business model based on?

Amazon’s business is based on the Internet and e-commerce, totally focused on the customer with its own logistics system, and in which any person or company, however small or large, can sell their products through a platform 100% optimized and easy to use where you can manage everything related to your account, brand and product. Its evolution as a company has a lot to do with the application of the Long Tail economic model; have an almost infinite supply, long tail, to meet high demand and provide each consumer with the product they are looking for, no matter how minority it may be.

Additionally, to the online world in which Amazon plays a fundamental role, it should be said that this Marketplace has opted for an omnichannel strategy which includes the opening of a network of large physical establishments such as Whole Foods. The intention of this new strategy is to be able to reach a type of customer (high %) that is not interested in buying products online, in addition to creating a loyalty strategy with those who are customers so that they are able to be more close to the company, touching and seeing the products.

Also keep in mind that Amazon now also makes Amazon Web Services available to customers who offer cloud web hosting solutions, providing businesses, non-profit organizations and government agencies with ways to deliver their Low cost web sites and applications.

Finally, and as we all know, since we enjoy them almost daily, Amazon has one of the best streaming services (Amazon Prime Video), and Amazon Music as a music streaming platform.

The great opportunity to sell on Amazon

The growth of Amazon allows all retailers to sell in the world’s main Marketplace, which represents a great opportunity, since it allows them the possibility of expanding and internationalizing their businesses in a simple way, connecting with new clients, in addition to generating a strong visibility.

Those SMEs that decide to enter electronic commerce must choose between doing so with their own online store and adapting to the conditions that this entails (languages, currencies, currency, legislation, etc.) or in the Amazon Marketplaces. Once decided, you must choose what to sell, for example Long Tail niche products to avoid the massive competition that exists in the most popular products.

Although it represents a great advantage for both sellers and buyers, we are facing two great challenges: excessive competition and a drop in prices, which forces us to adapt quickly.

Why sell through Amazon?

Currently, Amazon is visited more than 150 million times a month, has more than 300 million registered buyer accounts and generates more than 100 billion dollars, so it is a good opportunity and way to improve performance. of any electronic commerce. Choosing to sell on Amazon can mean:

• Ability to reach many more potential customers.
• Possibility of international sale.
• Increased brand and/or product visibility.
• Simplicity in opening the account and product management.
• There is no need to have your own e-commerce.
• Possibility of using the Amazon logistics system.
• Advertising inside and outside of Amazon.

Are there any drawbacks?

As in any business, all that glitters is not gold, so Amazon is not perfect and there are some drawbacks to consider:

• High economic cost.
• Great competition.
• Great penalty of negative opinions.
• Rigor in the products for sale.

In which markets is Amazon present?

Currently, Amazon has been experiencing strong growth globally, especially during the pandemic in the 13 countries where it operates, strongly driven by its native country, the United States, where it obtained a rate of over 40%.

Being so, we can currently find it in:

• North America

• • • Canada

    • USA

    • Mexico

• • Europe:

• • • UK

    • Germany

    • France

    • Spain

    • Italy

    • Netherlands

• Asia: 

• • • China

    • Japan

    • India

• Oceania: 

• • Australia