Amazon is a fortune 500 company based out of Seattle,Washington. Jeff Bezos founded the company on July 5th, 1994, but itdid not officially launch until 1995. A report Bezos read claimed that the webcommerce industry would grow at two thousand three hundred percent, so he feltlike his opportunity had passed him by. Not long after, a company was foundedbecause of Bezos’ regret of not getting involved in the internet business soonenough.
He left his job as vice president of D. E. Shaw and Co. and neverlooked back. The company name, Amazon, was chosen by Bezos after looking throughthe dictionary and seeing the word.
Thename was exotic and immediately fell in love with it. Amazon’s founder had hugegoals, which were finally starting to come to life. By2011, Amazon had 30,000 full-time employees in the USA, and by the end of 2016,it had 180,000 employees. The company currently employs more than 380,000people worldwide in full and part-time jobs. Amazon surpassedWalmart as the most valuable retailer in the world by market cap in 2015. Currentlyit has a market cap of around five hundred and forty-six billion dollars. Thecompany has made its fortune off e-commerce and is one of largest sellers overthe internet.
Amazon started out by selling books online. As time went onpeople’s needs evolved and the company did too. They had to add some diversity to their company, so they chose to alsosell books, DVDs, musicCDs, videotapes and software, apparel, baby products, consumer electronics, beauty products,gourmet food, groceries, health and personal-care items, industrial supplies, kitchen items, jewelry, watches,lawn and garden items, musical instruments, sporting goods, tools, automotive items, toys and games. Jeff Bezos’s globalization strategyallowed him to expand his business across the world, and it paid off. Amazonhas a different retail website for each country that utilizes its services. Thelist of countries includes Ireland, Canada, France, Germany, the United States,Japan, and India to name a few. Amazon’s successful sales model was actually sketchedon the back of a napkin by founder and CEO Jeff Bezos in 2001. He successfullylaid out the foundation for a winning marketplace strategy called the VirtuousCycle.
Amazon’s entire approach to success focuses on the concept of a”virtuous cycle.” This mindset has driven the company’s strategy since the verybeginning. According to Amazon’s founder, the cycle begins with a great customer experience,which drives a large volume of traffic. Happy,satisfied customers attract more customers and the cycle continues. This business model allows Amazon to makemoney by leveraging the power of its name, in addition to the efforts of athird-party seller.
As Amazon grew, it lowered its cost structure by leveragingpurchase, fulfillment infrastructure and logistics infrastructure, which subsequentlylowered the cost per unit of products. The decrease in cost then allowed Amazonto lower its prices to shoppers, continuing to satisfy the need to find the lowest price. This low price point, combinedwith an increased selection, was critical to improving and maintaining thecustomer experience that drives the virtuous cycle.Amazon started by focusing onbusiness-to-consumer relationships between itself and its customers andbusiness-to-business relationships between itself and its suppliers and thenmoved to facilitate customer-to-customer with the Amazon marketplace, acting asa go-between to facilitate transactions.
The company allows anyone to sellanything using its platform. Some other large e-commerce sellers use Amazon tosell their products, in addition to selling them through their own websites.The sales are processed through Amazon.com and end up at individual sellers forprocessing and filling orders, while Amazon leases space for these retailers.Small sellers of used and new goods go to Amazon Marketplace to offer goods ata fixed price. Amazon also employs drop shippers.
Drop shippers are members or entities that advertise goods on Amazon, butwho order these goods from other websites but usually from other Amazonmembers. These meta sellers may have millions of products listed, have largetransaction numbers and are grouped alongside other less high-volume membersgiving them credibility as just someone who has been in business for a longtime. Markup is anywhere from 50% to 100% and sometimes more.
These sellersmaintain that items are in stock when the opposite is true and they look toAmazon to fulfill the request on their behalf. As Amazon increases theirdominance in the marketplace, drop shippers have become more and more common.Amazon.
com considers itself a completely customer-focusedcompany. The company truly believes if they don’t listen to consumers, theywill fail. They want to take advantageof any opportunity that presents itself. Amazon believes in putting customers first, and also in ownership fromits team. They believe in empowering their employees, to a point, in decisionmaking, and giving their workers a stake in the success of the company. When Amazon acquired Zappos ($1.2B), Twitch ($970M), andKiva Systems ($775M), they were all critical to Amazon’s strategy, however, theprice paid for these companies was insignificant in comparison to the massive$13.
7 billion acquisition of Whole Foods Market, a high-end supermarket chain with over 400 stores. Whole Foods Market exclusively features foods withoutartificial preservatives, colors, flavors, sweeteners, and hydrogenated fats. The deal was completed on August28, 2017. This acquisition makes it clear that Amazon’s real interest is in two things: themassive amount of consumer data that will become available after theacquisition, and Whole Foods’ private brand product. Amazon’sgoal to be a superior brand that touches every aspect of daily life appears tobe coming to fruition. With massive amounts of data from Whole Foods shoppers,Amazon will ultimately be able to tailor the grocery shopping experience to theindividual. Amazon has already mastered the process of upselling, offeringadditional items that go with the items the consumer is looking to buy.
Now, withthe purchase of groceries, Amazon will know when you run out of cereal, or anyother item, allowing them to present you with the offer to buy more at exactlythe right time. Amazon will alsorecord data on customer buyer patterns, allowing them to offer or recommend a specificitem, based upon customer preferences identified through prior purchases. The customer data Amazon will have theability to capture will also allow them to build analytical models, used to predictwhat consumers will want, how much they will want, and when they will want it. While Amazon’s purchase of Whole Foods provides them with a tremendousamount of data, they will need to use that data to better understand theircustomer’s needs and predict shopping behaviors. If they cannot do that, thedata becomes useless. In September 2017, Amazon announcedplans for a second headquarters to be located in a metropolitan area with at leasta million people. By October 19, 2017, cities were to submit theirpresentations for the project called HQ2. The $5 billion second headquarters,starting with 500,000 square feet and eventually expanding to as much as 8million square feet, may have as many as 50,000 employees.
In 2020, Amazon willbuild a new downtown Seattle building with space for Mary’s Place, a localcharity. AsAmazon’s reach extends into other sectors, it’s anyone’s guess whatthey will do next.