What is the Amazon Business Model?

Amazon has an exceptionally powerful business model. In this post, using the business model canvas, I describe the different parts of the Amazon business model and how it all works together to create an e-commerce behemoth.

The Amazon Business Model Canvas

Customers

Amazon can be described as a two-sided marketplace where buyers and sellers come together. I think that for a variety of reasons it isn’t really one and I’ll explain that in detail later in the article.

Amazon targets the mass-market consumer. With a focus on cost and low margins to drive market share Amazon cannot focus on a narrow niche. It is the everyman, as well as the everything store. However whilst a significant part of the US population, and populations in the other markets it operates in, uses Amazon customers can be segmented on a behavioural basis.

Demographically usage of Amazon broadly mirrors technological adoption trends. Where people are wired and connected they tend to use it more, especially in the bugs cities.

Behaviourally Amazon has increasingly focused on people who are not only comfortable shopping online but also prepared to replace many of their traditional shopping habits with one click one hour delivery satisfaction. These are people who are price-sensitive and time-poor. Typically urbanites.

Value Proposition

Amazon offers its customers a strong value proposition based around 4 key ideas

• Price
• Convenience
• Selection
• Fulfillment

The Amazon Business Model Canvas