Amazon Retail Services- Changing the dynamics of e-commerce

Amazon Retail Services

Amazon.com started as an electronic commerce and cloud computing company, changed the whole world in 22 years. Amazon’s Retail Services are available for different countries. American online shopping company amazon.com shocked everyone in 2015. The firm outshined the most cherished retailer Walmart by market capitalization in the United States. Amazon now becomes an e-commerce platform for each and every product (A to Z). Even arrow in the company’s logo starting from “A” and ending at “Z” articulates the same. Moreover, the company also offers international shipment of many products. To compete with Flipkart in the Indian market, the enterprise increased the investment in India to $5Billion.

Amazon revenue source

amazon_revenue

Large popularity and worldwide presence made Amazon the first choice for online shopping. Amazon.com revenue in the year 2015 was $107 Billion and has encountered the rise of 8.6% every year. It is expected that revenue of the firm will reach to $497 Billion in 2020. Electronics & General Merchandise (EGM), media and Amazon Web services are the major revenue source. EGM contribute around 70% of revenue share which is followed by media with 21%. Rising demand for smartphones, tablets, ultra High definition TV, laptops and computing accessories is continuously increasing the EGM share. Furthermore, the company is all set to announce their first smartphone after successful launches of Kindle e-readers and Kindle Fire tablets.

Amazon Prime

19million new prime members in a year (June 2015 to June 2016) grabbed the attention of Amazon.com. Prime members are much important for the company. An average prime member spends $1200 in a year while non-prime member spends only $500 in a year on the company’s website. Products costing more than $100 are bought more by prime subscribers compared to non-prime subscribers. Purchases made by non-prime members are mostly less than $100. It is a great move by the company to bind the high spending customers. The firm offer perks like 2-day/ faster delivery of products to prime members. Subscription of prime services made customers to buy products from Amazon than any other retailer. Figures of prime and non-prime members in the United States confirms that buyers who are above 40 years of age are mostly prime members. 25% of prime members were 40 to 49 year of age.

Amazon popularity

The company was ranked 5th in most popular web property with 171.83million unique visitors in February 2016. Furthermore, the company had an amazing reach to the audience with 72% internet users in Germany followed by India (71%), US (69%), UK (68%) and many more. The rise in popularity made the firm to launch new service amazon fresh for grocery delivery. For grocery delivery enterprise partnered with Tyson Foods. In spite of only $33B online grocery sales out of $795B, the firm had its hand on more than 25% online market share. The online grocery market is expected to grow many times in future. Even the online grocery market has single digit share but still, it is a wide and profitable market.

Business model

In fact, there is no direct competitor of amazon.com, but Alibaba and eBay are the ones to compete with. Amazon and Alibaba both are e-commerce retailers but differ widely. Amazon in most cases stores the products in company’s large warehouse network and sells directly. In addition, sellers are allowed to list their products on company’s website free of cost but charges as a commission on every sale. Most seller’s price of the same product is higher than the price offered by the company. Unlike amazon.com, Alibaba and eBay make a bridge between seller and buyer. Restricting the buyers to buy less quantity of products most of the time. Prime services are further addition in amazon.com services, guarantees to 2-day free and safe delivery with many discounts and offers. Offers like Black Friday sale were given only to prime users on occasions like company’s completing 15 years and many more.

Conclusion

There is no doubt that Amazon is the king of e-commerce with an amazing business model. Binding the customers through prime subscription helped the company to grow further. the company is not only offering services of e-commerce. In addition, the company also offer services or facilities like cloud storage, video streaming etc. American e-commerce company stands out from the crowd as the most innovative company. The company knows perfectly to capture the buyer’s interest in any age-group. Prime subscription helped the company to capture the interest of older generation. The company announced to launch its own smartphone to make the shopping experience better and to target the young buyers perfectly.

figures source:statista

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