Amazon Business Model

Topics:, Online shopping, Electronic commerce Pages: 8 (2879 words) Published: February 20, 2013
Overview: was founded in 1994, it started by selling books online. As it grew, the company started offering various products and services. Some goods include: DVDs, videos, electronics, camera and photography, clothing apparels, shoes, and so forth. Other retailers have merged with to offer diverse quality of items based on different degrees of usage, such as new, refurbished, and used items. The company's headquarter is in Seattle, Washington. It has six global websites that serves customers that are based in the United States, the United Kingdom, Germany, France, Canada, and Japan. Their website features: e-mail order verification, customer review on products, and one-click shopping. Vision:

According to Jeff Bezos, the founder of, they want to build one of the most customer-centric company in the world. A place where people can find everything they want to buy online ( the Hidden Empire, 2011). Mission: "Work Hard, Have Fun, and Make History."

The company's core value is based upon customer obsession. With the help of innovation and technology, they want to take lead in customer care (Fast Moving Consumer Goods, 2009).

Business Model
A business model is a conceptual framework which expresses the underlying economic logic and system. It proves how a business can appropriate costs, make money, and deliver value to customers. As a result, this segment will introduce this company's model, and how over the course of several years, it has managed to adapt their model to keep itself ahead (Business Model Definition, N.D). Business Strategy:

Business Foundation:
The foundation of was built on the ability to transform. It has proved that when opportunities arise to serve new or existing customers, it manages to adapt new business models to exploit it. The company is able to launch and run new businesses while extracting value on existing ones. Accordingly, they will satisfy their customer's need no matter what, even if it is foreign to their current model. "You cannot stop at what you are good at." Jeff Bezos says, "You have to ask what your customers need and want, and then, no matter how hard it is, you better get good at those things." (Jeff Bezos Biography, 2001).

The leader of Amazon was always interested in building an online retailer. The business model was not uniquely customized to the peculiarity of the Internet, nor was it predominantly innovative as it was based upon an online catalog operation. He saw himself improving on the traditional brick-and-mortar stores saying, "Look at e-retailing. The key trade that we make is that we trade real estate for technology. Real estate is the key cost of physical retailers. That's why there's the old saw: location, location, location. Real estate gets more expensive every year, and technology gets cheaper every year. And it gets cheaper fast." (Online Extra: Q&A, 2001). However, it was an inexperienced observation when the company assumed that it could expand without making physical investments. Currently, Amazon has invested a large amount of funds into warehouses. Third Party Sellers:

After gaining a large amount of profit from their book industry, they began to expand into easily shippable consumer goods. This lead them into two new directions; the first initiative was to host small business as part of the Z-Shop project. The second was partnering with several e-retailers that sold goods that did not. These projects allowed merchants to list up to 3,000 items at cost of 9.99 USD a month ( Opens zShops, 1999). Even though this creates competition between and the third party sellers, it gains a percentage of each sale as commission from these merchants. The company obtains information on consumer's purchasing habits, and create one destination where purchasers enjoy a consistent experience (Chaffey, D., 2012).

Competitive Environment
As stated previously,...

Bibliography: A Tablet Buyers Guide. 2012. [ONLINE] Available at: buyers-guide. [Accessed 20 November 2012]. Opens zShops - Direct Marketing News. 1999. [ONLINE] Available at: [Accessed 14 November 2012]. the Hidden Empire. 2011. [ONLINE] Available at: [Accessed 14 November 2012].; online bookstore. 2008. [ONLINE] Available at: [Accessed 15 November 2012].
Analysing Macro Environment and Competitive Forces - Yahoo! Voices - 2006. [ONLINE] Available at: amazoncom-macro-environment-competitive-138171.html?cat=31. [Accessed 15 November 2012].
Chaffey, D. case study - Smart Insights Digital Marketing Advice. 2012. [ONLINE] Available at: revenue-models/amazon-case-study/. [Accessed 13 November 2012].
Dot-com bust definition in the Free Online Encyclopedia. 2012. [ONLINE] Available at: [Accessed 14 November 2012].
E Marketing Lecture, Part 1. 2009. [ONLINE] Available at: marketing-lecture-part-1-to-3. [Accessed 15 November 2012].
Fast Moving Consumer Goods: Amazon - Business Model. 2009. [ONLINE] Available at: [Accessed 18 November 2012].
Jeff Bezos Biography -- Academy of Achievement. 2001.[ONLINE] Available at: [Accessed 16 November 2012].
Kotelnikov, V. 'Cast Study: Amazon '. 1000 Ventures. N.D. [ONLINE] Available at: [Accessed 14 November 2012]
Marakas, O
Online Extra: Q&A with Amazon 's Jeff Bezos - Businessweek. 2001. [ONLINE] Available at: bezos. [Accessed 20 November 2012]. (AMZN). 2012. [ONLINE] Available at: [Accessed 20 November 2012].
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Amazon Smart Innovation Strategy Essay
  • Business Model Essay
  • Strategic Management and Business Model Essay
  • Amazon vs Wallmart Essay
  • Assignment on Business Strategy Essay
  • Essay on Ryanair's Business Level Strategy: A Cost-Leadership Strategy
  • Porter's Five Forces Model and Modern Applicability Essay
  • Ebay Business Model Essay

Become a StudyMode Member

Sign Up - It's Free