Amazon Business Model

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The world of electronic commerce or e-commerce as it is popularly called has been growing continuously.

 This is due to the fact that so many consumers choose to purchase their goods online from the comfort of their homes than was present at the marketplace.

Be it small or large; most companies have gone further to accept the intriguing pros of merging brick and mortar locations as well as supplemental storefronts based on the internet to meet the satisfaction of most of their customers.

Meanwhile, e-commerce mega Giants like Amazon are recognized players in the market. This is because they function via an online presence alone.

Basically, Amazon is a tremendously huge retailer for not only new but used goods as well. However, before going further into Amazon’s business, we should be what a business model is.

What Exactly Is A Business Model?

The business model is a critical element of a company interested in thriving for an extended period of time.

In most cases, the only thing that differentiates a failing business from a successful one aside for the services and products they provide is simply how their value gets unlocked. Business models are the major drivers of value.

The Amazon Business Model

While people rate them as the biggest online retailer in the globe, Amazon practically operates a business model that has diverse parts which are actually more.

Meanwhile, from advertising, prime, AWS and cash machine, Amazon has actually created a highly diversified business model.

While the company trades goods directly, a percentage of its products are provided to buyers via its online storefront. Its inventory is placed in its massive network of warehouses.

Majority of Amazon’s consumers visit their website in assumptions that the products available there are easily affordable and available for buying and shipping.

Additionally, for its direct sales, Amazon offers a platform for retailers to trade their products to prospective buyers.

The products that are sold via the company?s partner retailers are frequently items that are not common or even those with an increased purchase price.

With this, Amazon avoids holding back inventory that is moving slowly and a likely dilute the profit.

Also, fees for retailer partners to lose their items up for sale are not assessed by Amazon. However, Amazon only retains a part of the sales price. This is their commission.

There is a subscription business model maintained by Amazon via its Amazon Prime service. Added to it is a little product line for electronics.

With a prime account, the Amazon customers pay a yearly fee to protect free same day or two-day shipping on items that are eligible for such a purchase.

Furthermore, the customers have free access to streaming media like computerized movies or digit music.

The company also provides profit from trading its e-reader; Kindle. It also sells the e-book and mobile app purchases that are provided for Kindle owners.

To Wrap It Up

Amazon is a huge technological giant that was established as far back as the 1990s. It actually started as a bookstore online. However, it currently sells everything imaginable.

Nevertheless, Amazon is compelling because of its business model which produces value for diverse players.

On Amazon, consumers can discover products at a reduced price and get it delivered swiftly. The sellers can decide to find market opportunities or choose not to carry out further inventory.