Amazon.com, Inc. is a global technology firm based in the United States specialising in e-commerce, cloud computing, digital streaming, and artificial intelligence. Along with Alphabet (Google), Apple, Meta (Facebook), and Microsoft, it is one of the Big Five corporations in the United States’ information technology sector. The corporation has been described as “one of the world’s most important economic and cultural forces,” as well as “the world’s most valuable brand.”
On July 5, 1994, Jeff Bezos launched Amazon from his garage in Bellevue, Washington. From a mere online bookstore, the portal has now evolved to include gadgets, software, video games, clothing, furniture, food, toys, and jewellery. Its rapid progress and competitive advantage were evident from the market capitalisation figures in 2015, which surpassed Walmart, one of the biggest, oldest and most valuable retailers in the country.
After that, in August 2017, Amazon purchased Whole Foods Market for a whopping $13.4 billion to significantly expand its physical retail reach. Amazon Prime, the company’s two-day delivery service, topped 100 million users globally in 2018.
The competitive retail landscape comprises Walmart, which accounts for a little more than 10% of all retail sales in the United States, primarily due to low costs and a wide selection. On the other hand, Amazon accounts for 40% or more of online retail sales in the country. So, what’s the secret to this competitive edge? Along with low pricing and a wide range of options, Amazon gave people convenience.
Competitive Advantage
Online Marketplace domination
For the last 15 years, Amazon has positioned itself as a market leader for retail products. According to Jeff Bezos’ annual shareholder letter from 2015, close to 50% of products on Amazon are sold by third-party merchants. The marketplace is excellent for customers due to its unique assortment of products. It is great for sellers because of the flexibility and popularity that the platform brings along with itself. More than 70,000 entrepreneurs with annual sales of more than $100,000 are on Amazon.This puts traditional brick-and-mortar businesses at a significant disadvantage over Amazon.
Focused Customer Services
In comparison to other websites, Amazon offers a more user-friendly experience to its clients. Major differentiators include improved search and query capabilities, suggestions based on prior purchases, one-click ordering at check-out, numerous user reviews and ratings, and dash buttons for automatic re-buying. In addition, when combined with Prime membership, Amazon has a 360-degree view of its consumers, including data on online transactions, purchase frequency, entertainment preferences, and regional demographics. All of this enables Amazon to tailor its online experience to its consumers’ needs and experiment with continuously improving its functioning.
Pricing Strategy
Amazon’s marketplace programme is driven by significantly low-cost products and the myriad supplier possibilities.
The company has always prioritised long-term growth and “customer value” over quick profits. It’s also assisted by economies of scale and investments in infrastructure and logistics, which have allowed it to launch Prime Now, offering one-hour delivery on a subset of 25,000 goods across 30 locations rather than merely two-day delivery. Its $10 billion AWS business might also help Amazon underwrite development in appealing but lower-margin sectors like online grocery shopping.
Concurring with technology and innovation
Perhaps Amazon’s most significant advantage is that it is a 27-year-old digital firm that has carefully avoided the outmoded technologies, which hinder today’s sellers. The company led the march to the cloud with Amazon Web Services (AWS), free of investments in mainframes, inflexible and costly relational technology, and enormous data centers.
Amazon focused on customer needs and created innovative technology solutions largely in-house and then marketed them. It also grew mostly organically, avoiding the exorbitant costs of M&A-induced technology integration or having an online business in Silicon Valley that operated completely separately from its retail section. Today, Amazon provides a bigger product selection, more convenience, and very competitive price, all supported by a versatile (and lucrative) technological stack.
Global purchase options
Users of Amazon’s browsers and applications may access this international shopping function (Android and iOS). Amazon launched it to encourage customers to buy items from markets other than their own, and it is presently accessible in English, Spanish, Brazilian Portuguese, Simplified Chinese, and German.
Amazon’s worldwide plan allows users to purchase in 25 different currencies. Furthermore, the company intends to expand this feature’s language and currency support while also providing shoppers with a selection from various shipping choices and delivery times.
Marketing to the Millennials
According to a recent comScore research, the Amazon app ranks first on the most popular applications among millennials. Packed with features, the app allows users to purchase, listen to music, view movies and much more, notwithstanding the inclusion of Alexa.
For the past two decades, Amazon has dominated the eCommerce market, which is expected to continue. As a result of the COVID-19 pandemic, more individuals began to purchase online, disrupting even the food shopping routine. Furthermore, because individuals are already accustomed to the convenience of acquiring goods online, this shopping tendency is likely to persist long after the epidemic.
Amazon emerged as a retail market leader by adopting innovation, disruptive thinking and more importantly, using technology and the digital space, intelligently.
