Amazon out by selling books online. As time

            Amazon is a fortune 500 company based out of Seattle,
Washington. Jeff Bezos founded the company on July 5th, 1994, but it
did not officially launch until 1995. A report Bezos read claimed that the web
commerce industry would grow at two thousand three hundred percent, so he felt
like his opportunity had passed him by. Not long after, a company was founded
because of Bezos’ regret of not getting involved in the internet business soon
enough. He left his job as vice president of D. E. Shaw and Co. and never
looked back. The company name, Amazon, was chosen by Bezos after looking through
the dictionary and seeing the word.  The
name was exotic and immediately fell in love with it. Amazon’s founder had huge
goals, which were finally starting to come to life.  By
2011, 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 380,000
people worldwide in full and part-time jobs. 

Amazon surpassed
Walmart as the most valuable retailer in the world by market cap in 2015. Currently
it has a market cap of around five hundred and forty-six billion dollars. The
company has made its fortune off e-commerce and is one of largest sellers over
the internet. Amazon started out by selling books online. As time went on
people’s needs evolved and the company did too. 
They had to add some diversity to their company, so they chose to also
sell books, DVDs, music
CDs, videotapes and software, apparel, baby products, consumer electronics, beauty products,
gourmet food, groceries, health and personal-care items, industrial &
scientific supplies, kitchen items, jewelry, watches,
lawn and garden items, musical instruments, sporting goods, tools, automotive items, toys and games.  Jeff Bezos’s globalization strategy
allowed him to expand his business across the world, and it paid off. Amazon
has a different retail website for each country that utilizes its services. The
list of countries includes Ireland, Canada, France, Germany, the United States,
Japan, and India to name a few.  

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Amazon’s successful sales model was actually sketched
on the back of a napkin by founder and CEO Jeff Bezos in 2001. He successfully
laid out the foundation for a winning marketplace strategy called the Virtuous
Cycle. Amazon’s entire approach to success focuses on the concept of a
“virtuous cycle.” This mindset has driven the company’s strategy since the very
beginning. 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 make
money by leveraging the power of its name, in addition to the efforts of a
third-party seller. As Amazon grew, it lowered its cost structure by leveraging
purchase, fulfillment infrastructure and logistics infrastructure, which subsequently
lowered the cost per unit of products. The decrease in cost then allowed Amazon
to lower its prices to shoppers, continuing to satisfy the need to find the lowest price. This low price point, combined
with an increased selection, was critical to improving and maintaining the
customer experience that drives the virtuous cycle.

Amazon started by focusing on
business-to-consumer relationships between itself and its customers and
business-to-business relationships between itself and its suppliers and then
moved to facilitate customer-to-customer with the Amazon marketplace, acting as
a go-between to facilitate transactions. The company allows anyone to sell
anything using its platform. Some other large e-commerce sellers use Amazon to
sell their products, in addition to selling them through their own websites.
The sales are processed through and end up at individual sellers for
processing and filling orders, while Amazon leases space for these retailers.
Small sellers of used and new goods go to Amazon Marketplace to offer goods at
a fixed price. Amazon also employs drop shippers. Drop shippers are members or entities that advertise goods on Amazon, but
who order these goods from other websites but usually from other Amazon
members. These meta sellers may have millions of products listed, have large
transaction numbers and are grouped alongside other less high-volume members
giving them credibility as just someone who has been in business for a long
time. Markup is anywhere from 50% to 100% and sometimes more. These sellers
maintain that items are in stock when the opposite is true and they look to
Amazon to fulfill the request on their behalf. As Amazon increases their
dominance in the marketplace, drop shippers have become more and more common. considers itself a completely customer-focused
company. The company truly believes if they don’t listen to consumers, they
will fail.  They want to take advantage
of any opportunity that presents itself. 
Amazon believes in putting customers first, and also in ownership from
its team. They believe in empowering their employees, to a point, in decision
making, and giving their workers a stake in the success of the company. 

When Amazon acquired Zappos ($1.2B), Twitch ($970M), and
Kiva Systems ($775M), they were all critical to Amazon’s strategy, however, the
price 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 without
artificial preservatives, colors, flavors, sweeteners, and hydrogenated fats.
 The deal was completed on August
28, 2017.  This acquisition makes it clear that Amazon’s real interest is in two things: the
massive amount of consumer data that will become available after the
acquisition, and Whole Foods’ private brand product.  Amazon’s
goal to be a superior brand that touches every aspect of daily life appears to
be coming to fruition.  With massive amounts of data from Whole Foods shoppers,
Amazon will ultimately be able to tailor the grocery shopping experience to the
individual. Amazon has already mastered the process of upselling, offering
additional items that go with the items the consumer is looking to buy. Now, with
the purchase of groceries, Amazon will know when you run out of cereal, or any
other item, allowing them to present you with the offer to buy more at exactly
the right time. Amazon will also
record data on customer buyer patterns, allowing them to offer or recommend a specific
item, based upon customer preferences identified through prior purchases. The customer data Amazon will have the
ability to capture will also allow them to build analytical models, used to predict
what 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 tremendous
amount of data, they will need to use that data to better understand their
customer’s needs and predict shopping behaviors. If they cannot do that, the
data becomes useless.

In September 2017, Amazon announced
plans for a second headquarters to be located in a metropolitan area with at least
a million people. By October 19, 2017, cities were to submit their
presentations for the project called HQ2. The $5 billion second headquarters,
starting with 500,000 square feet and eventually expanding to as much as 8
million square feet, may have as many as 50,000 employees. In 2020, Amazon will
build a new downtown Seattle building with space for Mary’s Place, a local
charity. As
Amazon’s reach extends into other sectors, it’s anyone’s guess what
they will do next. 


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