Do you know how big is Amazon?
Amazon is the World’s largest online retailer and has more than one trillion valuations.
Amazon is founded by Jeff Bezos who is now the richest person in the world.
Its Amazon who had made him World’s Richest Person.
So let’s start Amazon case study of the World’s largest online retail company.
What’s In It for Me.
Amazon Case Study- Company Overview
Amazon is a Global E-Commerce Giant. It is an Internet-based company that sells electronic goods, apparel, movie books and every good that can be sold online on its Platform Amazon.com. Amazon was founded by Jeff Bezos in 1994.
Amazon has more than 7.5 lakh employees. Amazon is the most valued retail store in the United States by market capitalization. Amazon runs its business in several countries and segments.
Amazon has its marketplace where third parties can sell her products, Amazon has Kindle Platform where he sells E-Books, Amazon also has Audible where he sells Audiobooks, Amazon also has Amazon Prime platform which is an OTT Platform. Amazon has several more Business That we will cover later in this Blog.
Amazon launches its Marketplace in India in 2012 after 17 years of Its existence. India’s third-largest economy in the world and has an emerging e-commerce Industry Thus India provides amazon a great Opportunity. India is a price-sensitive market and thus it’s become difficult for companies to become Profitable in India.
That’s why Amazon Operating its business in a loss in India. When Amazon launched its business in India there were fewer people in India who do shopping Online But after Jio Revolution Now There is a lot of internet user who does online shopping. Amazon has 150 million registered customers in India and 100 Million customers who have made a transaction with Amazon.Amazon’s margin is low but sales volume is high. We can hope soon Amazon Will become profitable in India.
|United Arab Emirates||amazon.ae|
How Amazon Started
Amazon started on July 16, 1995, by Jeff Bezos. Jeff Bezos chose Amazon as the name of His Business because the name is Started with the first letter of Alphabet and the second is the name of South American River.
Initially, he sells only books on his platform. There is another company too who sells books online before Amazon It is Computer Literacy. Amazon runs his business with the sole aim to provide any book to any reader.
Amazon reached 160000 Customers by the end of December 1996. The reason behind reaching this customer fast because their site was user friendly and encourage the user to add their honest review. Amazon generates $15.7 million in 1996 and $148 million in 1997. To grow its business with much growth Amazon launched its IPO and raised $54 Million and listed his stock on Nasdaq.
In 1998, Amazon began to sell CDs on its platform and later he added videos. The company expands its business rapidly in other segments. The company also started his international bookselling in the same year by acquiring international booksellers in the united kingdom and Germany. By the year 1999, Amazon started selling consumer electronics, video games, software, home improvement items and much more.
The biggest thing of that time was that Amazon offers personalized product recommendations based on their previous history of purchase. Amazon also encourages its users to post reviews that help other customers to find the right products. All this type of activity gained the trust of Customers and Amazon made a loyal customer base.
In 2002 Amazon launched Amazon Web Services and became an Internet Technology company, too. The company also enables small businesses to sell their products through Amazon in the same year and By 2006 Amazon launched Fulfillment by Amazon services who manage the Inventory of Business.
Amazon Purchases Kiva Systems are now known as Amazon Robotics That made Robots and helps Amazon in inventory fulfillment duties. Amazon continuously grows his business and acquires many other companies to diversify his business. Amazon also acquired Some Trails companies such as Zapoos.com to reduce competition and expand his business furthermore. In 2007 Amazon Launched Amazon Kindle that sells e-books. Amazon Launches Its Business In India in 2013.
Business Model of Ecommerce
Till now you have heard Amazon is a big successful company. Now I will tell you what is the business model of Mazon that’s made him so successful. Amazon is an Online Marketplace where a lot of people come and buy the products and think that all products are on Amazon. Amazon is a marketplace where sellers can register their businesses and sell their products.
Amazon charges Some commissions from these retailers to use their Platform. Amazon Provides a Ready platform where a merchant can easily sell their products. Amazon also provides shipping services. Merchants on its platforms have two options for shipping: one Amazon Easy ship which is a logistic service from Amazon and another is Selfship.
If Merchant uses Amazon Easyship he has to pay to ship for it that he will charge from its Customer. Amazon Also made revenue from Its Advertising services in which merchants can feature their products on this marketplace.
Amazon also uses a subscription model in which it sells Amazon Prime Subscription that gives users Free shipping, access to its Amazon Prime Video or Amazon Prime Music. So lets deep dive into Business Model of Amazon
1. Amazon Marketplace
Amazon Marketplace is its primary business model and Amazon makes most of the revenue from this. In this Marketplace, merchants can sell their goods on this platform to direct customers.
Amazon charges some commission from Merchants to use their Platform on a per transaction basis. Amazon offers two Shipping options to its Merchants One Amazon Easyship and Another is Self shipment.
Amazon charges some charges for Amazon Easyship. Amazon Also Offers Fulfillment by Amazon in which a user can stock their goods in Amazon’s good and whenever order will come Amazon will ship their order.
2. Amazon Prime Subscription
The other Revenue model of Amazon is Amazon Prime subscription that is a recurring business model of Amazon. In Amazon Prime Subscription amazon gives customer free Delivery to its customer and gives access to Its Amazon Prime Video Platform where users can watch web series and Movies and also to Amazon Music where users can listen to audio tracks.
3. Amazon Kindle
Amazon Kindle is an online book store where Amazon sells ebooks. Amazon is also a type of marketplace where book publishers can publish their e-book and Amazon charges some commission from the Publisher. Amazon also sells subscriptions for Amazon Kindle.
Audible is an Online store of audiobooks where people can listen to audiobooks of books, magazines, and newspapers. Amazon also sells audiobooks and subscriptions to Audible.
5. Amazon gaming
Amazon Gaming Studio is Amazon’s subsidiary that sells their games or third-party games.
6. Amazon Patents
Amazon also owns several patents that are used by many companies. Amazon earns royalty from these patents. Amazon owns 1263 patents.
7. Amazon Web Services
Amazon Web Service is also known as AWS is a world-class IT Infrastructure company that provides its service to many renowned companies one of them is Netflix.
Above are the top source of revenue of Amazon. Amazon owns many other small companies and has different business models Amazon app Store and Zapoos.com etc.
How Much Amazon Earns
Amazon is a big company and generates revenue from different business segments. As per Quarter 3, 19 Amazon generates $280.52 Billions from it’s all business. This revenue was 20.5% from its previous year.
In the previous year, Amazon made $232.89 Billion. Amazon makes $1230.86 per second. Net Profit of Amazon before Interest and Taxes is $37,365,000 for the 2019 year. As per 2019, Jeff Bezos’ net worth is 110 Billion. Jeff Bezos earns $81480 salary per annum since 1998 from Amazon.
In 2017, Jeff Bezos surpassed the Bill gates Founder of Microsoft to becomes the richest person in the world. As per a survey Jeff Bezos makes $78,500,000,000 per year.
|Cost of Revenue||205,768,000|
Management Team of Amazon
Management Team is an important part of every successful business. Jeff Bezos is CEO and Founder of Amazon who has credit for Amazon’s Success. His Successful venture made him the Richest people in the world.
Jeff Bezos is the first centi billionaire. Jeff Bezos was born in New Mexico on January 12, 1964. He had studied computer science and electrical engineering at Princeton University.
After Graduation from Princeton University, he worked as a Vice President of Investment DE Shaw. Jeff Bezos quit her Job in 1994 to open an Online Books Store. Jeff Bezos saw that the internet has a lot of potentials and the online book store market is untapped. He named her to venture Amazon.com based on the South American River.
Jeff Bezos Worked several months to build his online store and after creating it he asked 300 people to test his website. Amazon has had great Success in Its Year Without any press Promotion. We have already discussed the story of Amazon. Now Jeff Bezos’s venture becomes the Second company in the world who has surpassed the valuation 1 Trillion dollars. Jeff Bezos also founded many other Successful companies like IMDB, Amazon, Blue Origin And Washington Post.
Management Team of Amazon
|Andrew Jassy||SVP Web Service|
|Shelley Reynolds||Vice President|
|Garett Gentry||Head HR|
|Michael Stover||Product Management|
|Akersh Srivastava||Technology Evangelist|
|Grant McAlister||Senior Principal Manager|
|Karthikeyan Ravi||Senior Software Development Engineer|
|Bing Gordon||Board Observer|
|Alain Monie||Board Member|
Digital Links of Amazon
|View on Facebook|
|View on LinkedIn|
|View on Twitter|
|Phone Number||(888) 533-5659|
Fun & Facts of Amazon
|CEO & Founder||Jeff Bezos|
|Founded Date||Jul 5, 1994|
|Legal Name||Amazon Inc.|
|No. of Employees||10000+|
Popular Companies Owned By Amazon
Zappos is one of the largest online stores and was acquired by Amazon in 2020. Amazon paid $1.2 Billion to acquire this venture. Amazon did not merge Zappos with his Venture Amazon. Both entities are run separately.
2. Whole Foods
Whole Food is one of the biggest grocery chains. Amazon acquired Whole Food for $13.7 Billion and it is one of the biggest acquisitions by Amazon. Whole Foods runs its business in its brand name and did not merge its operation with Amazon.
|Industry||Consumer Goods, E-commerce|
|Founded Date||Jan 1, 1978|
The Internet Movie Database Known as IMDB is a popular movie rating website. Amazon bought IMDB in 1998. Companies make money with the IMDB Pro service. IMDB has a database of 1.8 million movies and 100 million users per month. Amazon uses IMDB to promote its Movies Related Products.
|Industry||Media & Entertainment, Content|
|Founded Date||Oct 28, 1990|
4. The Washington Post
The Washington Post is a popular and 140-year-old newspaper. Jeff Bezos bought The Washington Post for $250 Million. The Washington Post also owns a website. The website features articles in categories such as politics, opinion, local, sports, national, world, business, tech, lifestyle, entertainment, and more.
|Industry||Content, Digital Media|
|Legal Name||WP Company LLC|
|Founded Date||Jan 1, 1877|
|Legal Name||WP Company LLC|
5. Alexa: Web ranking & Analytics
Alexa offers website analytics and ranks. The Company founded in 1996 and Amazon Acquired Alexa in 1999. ITs Provides insights of digital behavior that marketers use to win their audience and accelerate growth
|Founded Date||Apr 1, 1996|
|Founders||Brewster Kahle, Bruce Gilliat|
Goodreads is one of the world’s largest websites of book reviews and recommendations. Goodreads have more than 65 million members. The company was founded in 2007 and Acquired By Amazon in 2013.
|Industries||E-learning, Social Media|
|Founded Date||Jan 15, 2007|
|Founders||Elizabeth Khuri, Otis Chandler|
7. Kiva Systems
Kiva Systems was founded in 2003 who develops and manufactures robotics systems for different uses. Kiva Systems is now rebranded as Amazon robotics. Amazon Purchases Kiva Systems in March 2012 for $775 Million. Amazon did not sell kiva’s products on its e-commerce platform.
|Founders||Mick Mountz, Pete Wurman|
Pillpack is an online Pharmacy Company founded in 2013. Amazon Purchased it for $753 Million in June 2018. By using Amazon’s extensive delivery network, PillPack ships prescription medications overnight to locations across the country.
|Founded Date||Jan 31, 2013|
|Founders||Brian Hoffer, Elliot Cohen|
9. Twitch Interactive
Twitch Interactive is an Online Video Platform that was founded in 2011. In 2013 It had 55 million unique visitors per month. The Platform is very popular among video games by acquiring it. Amazon expands its business in the Gaming Industry. Amazon purchased Twitch Interactive in 2014 for $970 Million.
|Industry||Video Game, Video Streaming|
|Founders||Emmett Shear, Justin Kan, Kevin Lin|
Audible is the largest producer and seller of audiobooks in the United States. Audible provides premium spoken content such as audiobook versions of books, magazines and radio programs. Audible Was founded in 1995 and acquired by Amazon in 2008.
|Industries||Audio, Digital Entertainment|
|Founded Date||Jul 21, 1995|
|Founders||Bing Gordon, Don Katz,|
Every venture needs funds to grow and run a business. Amazon makes his venture successful by bootstrapping. Amazon has raised $108 Million Funding in a total of 2 rounds. Amazon also launched its IPO in 1997. Amazon raised $54 Million in its IPO. Amazon launches its share at the Price of $16M and Valued at $458.
|IPO Launch Date||15 May 1997|
Amazon’s Debt on 31 December 2019
|Short Term Liabilities||$87,812,000|
Company Acquired By Amazon
Amazon has acquired Many companies. Some of them are Many popular companies. There are 2 types of expansion Horizontal expansion or vertical expansion. The horizontal expansion means when companies acquire other companies to reduce their competition or diversify their business. Vertical Expansion means when a company buys another to help in its operation. Amazon has made both types of acquisitions to Make his venture Successful venture of The Globe.
List of Recent Companies Acquired By Amazon
|Company Name||Acquisition Name|
|Health Navigator||Oct 24, 2019|
|INLT||Sep 25, 2019|
|E8 Storage||Jul 31, 2019|
|Canvas Technology||Apr 10, 2019|
|eero||Feb 11, 2019|
|Dispatch||Feb 11, 2019|
|CloudEndure||Jan 8, 2019|
|Ring||Jun 28, 2018|
|Blink||Dec 22, 2017|
SWOT Analysis of Amazon
- Amazon is a Global E-Commerce Giant and It has a Strong Brand name.
- Amazon also has a strong Brand Valuation Worth $125 B.
- Amazon’s Prices are very affordable to consumers that make Amazon Customer Oriented brands.
- Amazon is continuously innovating his venture and comes up with new ideas that make Amazon a Different from others.
- Amazon 562.3 Million in its Marketplace Amazon .com That shows amazon has largest merchandise selection
- Amazon is a global giant but uses different strategies according to particular countries.
- Amazon Also owns many other companies that help Amazon in its operation.
- Amazon has its own distribution and logistic system which is very important for Every E-Commerce Giant
- Online Business is now becoming so easy to start and there are a lot of other companies like eBay, Flipkart and Myntra giving tough Competition to Amazon
- Amazon is Global Giant and operates its business in several countries. In Somes Countries Its making Loss.
- Due to extensive Price wars, Amazon’s margin is shrinking day by day.
- Amazon spends a lot of money to acquire new customers and works on customer lifetime value but this does not work all time some people are online Price sensitive, They only buy from where they find cheap.
- Amazon has an opportunity to expand in many other developing countries where the e-commerce industry is in a growth phase.
- Amazon can acquire other e-commerce companies to reduce its competition.
- Amazon can open Physical stores in many countries.
- Amazon also has an opportunity for horizontal expansion means Amazon can buy other small and big companies that help Amazon in its operation like logistics.
- The Ecommerce Industry has low entry barriers which mean anyone can open Business like Amazon.
- Amazon has to Face many government regulations in developing countries related to Multi-Brand Ecommerce compliance.
- The other threat amazon has to face is competition in countries like India some local players Flipkart, eBay, and Myntra, etc are giving tough competition.
Investment Made By Amazon
Amazon is a big company that has made a lot of investments in many companies. Some of them will help in its operation and rest will be the purpose of Investment. Now Amazon has Made a Total of 89 Investments. Following is the list of Most Recent Investments made by Amazon.
|Organization Name||Funding Round||Amount|
|Bank Bazaar.com||Series D||$3.8 M|
|Capital Float||Venture Round||$15 M|
|Amazon Pay||Corporate Round||Rs 13.5 B|
|Rivian||Private Equity Round||$1.3B|
|Cargojet||POST IPO Equity||–|
|Qdigi||Corporate Round||$7.4 M|
|Deliveroo||Series G||$575 M|
Future Plan of Amazon
- Amazon is focusing on launching cashier-free stores.
- Amazon is also working on drone delivery.
- Amazon is also constructing human robots that help in house cleaning etc works
- Amazon also has big plans for Its Product Alexa which is a cloud-based voice assistant.
- Amazon is also getting into the healthcare industry.
- Amazon is investing more money in Amazon Prime to add more shows.
- Amazon bought his vehicles to deliver products to your doorstep. Amazon plans to buy 100000 electrical vehicles by 2030.
- In many developing countries amazon Provides Jobs. In India, Amazon announced it will create 1 Million Jobs in India By 2025.
Marketing Strategies of Amazon
Amazon is a giant e-commerce brand. It always has to set up a benchmark to be the best in the market.
Let’s discuss some marketing strategies this company uses to market its services.
Wide range of product
It has a wider range of products on its website which they store in its inventory. Customers whoever visits their platform will get a wider range of products at affordable prices.
Amazon is so huge that it has its own search engine like Google. Amazon’s search engine is called A9. It operates on its own algorithm and comes with its own unpredictable updates. By having a search engine, it also has its own SEO.
Amazon Marketing Services
It is a similar service like Google Ads. In this service, sellers market their products on Amazon. This service uses keywords, interests, page visits, recommendations, etc. It shows the product display ads.
Amazon knows the power of customer reviews. A feedback strategy allows the customer to review the product after using it. It helps to improve the product and services.
Affiliate marketing is a process where bloggers and influencers advertise a product on their online platform and social media handles by affiliate links of the e-commerce website. By using that affiliate link influenced customers to purchase the product.
Amazon Fire Stick is a streaming device. It connects with your television and converts it to a Smart TV. You can stream video, install apps, play music, etc on your tv.
Amazon Prime is a membership program in which Members receive benefits which include FREE fast shipping for eligible purchases, streaming of movies, TV shows, and music, exclusive shopping deals and selection, unlimited reading, etc.
There are two things which would be done with your phone
1. If your phone is not brand new but is in good working condition, e-commerce company would resell the phone under a deal, showing the phone as ‘Used/Refurbished’.
2. If your phone is not in a usable condition, it would be returned to the manufacturer to be used in R&D or its parts would be used in other devices that need repairing.
It is a digital payment platform or digital wallet which is launched by amazon. Amazon Pay is an online payment service that works with the site. Amazon Pay is optimized for mobile, shoppers can check out from their device.
There are three scenarios which can be done by Amazon
If your item is still brand new, it returns to its regular inventory.
If the product is used than Amazon often sells the item under the name “Amazon Warehouse deals”. This item is usually sold as used.
If Amazon does neither of the two, they return the item to the manufacturer that they get it from. The manufacturer either refurbishes it, recycles it for parts, or throw it if it is beyond repair.