Marketing strategy of Amazon – Amazon

marketing strategy
September 27, 2018 By Hitesh Bhasin

Table of Contents

Segmentation, targeting, positioning in the Marketing strategy of Amazon

E-commerce giants like Amazon uses demographic & psychographic segmentation to segment
the markets. Amazon’s segmentation is based on actual purchase behaviour: not what people
might have expressed interest in, but what they actually did. Amazon’s micro-level segmentation
targets each customer individually, allowing the company to convert visitors into long-term,
high-value customers.

E-commerce segmentation often involves creating personas who will buy in a certain way &
certain products. Similarly Amazon targets the middle class & upper class people who have got
hands on experience in the basic technology but don’t have time or prefer convenience over
shopping from the physical outlets.

Amazon has successfully positioned itself as a Glocal (Go global Act local) e-commerce giant
where one can buy anything & get it delivered at any remote locations. Using the catchphrase
#AurDikhao in its most recent campaign in India, it has further helped them carve a distinct
space in the consumer’s mind.

Marketing mix  – Click here to read the Marketing mix of Amazon

SWOT analysis – Click here to read the SWOT analysis of Amazon

Mission – “To be Earth’s most customer-centric company, where customers can find and
discover anything they might want to buy online, and endeavours to offer its customers the
lowest possible prices,”

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Vision- “To leverage technology and the expertise of our invaluable employees to provide our
customers with the best shopping experience on the internet”

Tagline – “#Aur Dikhao” in India. “From A to Z” globally.

Competitive advantage in the Marketing strategy of Amazon

In order to differentiate itself, company acquired many IT &  e-commerce start-ups like
pets.com, audible.com, Junglee.com, IMBD.com, Zappos.com, Woot etc. which helped them in 
providing high value to their customers using existing technology of the acquired partners at low
cost. Amazon has also achieved economies of scale through extensive product offerings which
include electronics, toys and games, apparels, DIY and many more.

These offerings help Amazon to keep its prices low thereon passing on the benefits to the
consumers. Amazon’s robust customer centric approach to analyse the customer buying
behaviour based upon preferences has helped them to have competitive edge over their
competitors. More than 50% of the consumers are the repeat buyers at Amazon.com. Further
more, Amazon is one of the longest players to be present in the online sector and has a solid hold
in European countries and US.  This bottom line is helping the company to expand in new
markets.

BCG Matrix in the Marketing strategy of Amazon –

On BCG matrix Amazon have certain businesses which are cash cows while others are stars &
question marks.

E-books, movies on demand & Amazon prime are practically cash cows giving the maximum
margins to Amazon. In fact, Amazon was a book store before it started electronics.

Kindle, VOD (Video on demand) & Amazon web services are question marks because with the
advent of technology these services have become obsolete & have low demand.

Electronics and other consumer durable products are stars for Amazon because these products
have high growth rate but the market share of Amazon is also high for these products.

Distribution strategy in the Marketing strategy of Amazon –

Amazon realizes that the most important thing that customers want is the quick delivery of
products they order.  This is where Amazon’s extensive distribution system has come into play. 
Amazon now has more than 55 fulfilment centres exceeding 43 million square feet.
This does not include Amazon’s new “under-the-tent” strategy of using existing vendor
warehouse space for consumer-packaged goods to more quickly serve customers.  Their
aggressive strategy of infiltrating warehouses and improving their distribution lines brings
Amazon to new areas and customers.

Amazon had created a deep & structured network in order to make the product available at
remote locations that too free of cost delivery charges up to certain limit. Amazon has developed
an extensive global distribution network that continues to grow at frenzied rate.

Brand equity in the Marketing strategy of Amazon

From being merely an e-book provider to emerging as the 2 ndlargest e-commerce company in the
world, Amazon.com has steadily increased its spending on advertising and promotion to make
its brand stronger and have a higher brand equity.

By April 2015, the brand of Amazon.com was worth US$ 176 billion. “A brand for a company is
like a reputation for a person. You earn reputation by trying to do hard things. With more than
55% repeat buyers, the numbers tells everything about the brand. It is among 13 world’s most
valuable brand” (Forbes list).

Competitive analysis in the Marketing strategy of Amazon

Short listing the competitors of Amazon depends on what business sector of Amazon is being
considered. Apple would be the largest competitor when considering book or content related
delivery such as books, movies, magazines, and audiobooks. The itunes store will always be a
threat to the amazon store because of Apples devices like the ipad, iphone, and Macbook.  When
considering web services Google would emerge as the largest competitor.

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Walmart is the biggest threat to Amazon in US as reports roll in of various attempts to compete
with the large online retailer. Reports of Walmart testing a locker system for consumers where
shoppers can order and pay online and pickup at their convenience are surfacing.

Walmart is also still testing same-day delivery in four cities and remains the fourth largest online
retailer.  Walmart rakes in about $9 billion in Internet sales, which Amazon more than doubles in
a quarter.  However, Amazon does not have the physical structure base that Walmart has to start
with.

In developing countries as well as in developed, there are many local portals which give tough
competition to Amazon. For example – Snapdeal, Flipkart are some of the competitors of
Amazon. Similarly, groupon, first cry (targeted towards moms) are specialised e-commerce
portals which take away traffic from Amazon. Thus, these local competitors of each country also
react strongly to Amazon’s presence.
Market analysis in the Marketing strategy of Amazon- The global E-commerce market is still in
the evolving phase. With the adaptation of technology in the developing economies customers
are now becoming more comfortable with online shopping. Fierce competition from Biggies like
Alibaba, Ebay, start-ups & local ecommerce players like Flipkart, Snapdeal is more of resulting
into overall growth of the industry which is good for the industry. 

Customer analysis in the Marketing strategy of Amazon 

Amazon customers consist of upper & middle class social groups who have inclination towards
using E-commerce portals and are comfortable with online shopping. Majority of the customers
are professionals or businessmen who are busy with their business/Job & find it convenient to
purchase anything online rather than visiting the physical outlet in order to save time & money.

Furthermore, the customers might also be the ones who are searching for deals. Due to this, the
portal is known to have specific days where they give massive discounts to their buyers.

is one of the world’s biggest online retailers, selling a vast array of goods such as books, music,
games, clothes and movies. As of 2013, Amazon employs 117, 300 members of staff, and has a
global net revenue of 74.45 billion US dollars.

Since its conception in 1995, Amazon has outgrown several competitors in its field, and has gone
on to become a market leader, and has around 240 million customer accounts worldwide.
Amazon has used careful investment and acquisition of other smaller companies to enable itself
to stay ahead in its field, and continues to expand its product range, whilst offering competitive
prices to customers, and faster deliveries to those who choose to sign up for its various account
packages.

In July 2013, Amazon launched its services in India, choosing not to employ an advertising
campaign. The site is ranked as the 27 th most popular in India, with around 4.2% of all Amazon
customers coming from this country. The company is doing well here, and this Indian venture is
part of a bigger effort to offer its services to a wider range of people in Asia.
Marketing mix of Amazon

Product in the marketing mix of Amazon

Amazon is an international ecommerce company, using connections to the internet from various
gadgets such as phones and tablets, to allow its customers to browse and purchase products
immediately. These products are then delivered to the customer, using delivery service
companies. Amazon has built up a huge product base, and sells almost everything, including:

 Kindle
 Books
 DVDs
 Mobile phones/tablets
 Gaming consoles and games
 Clothes for men/women and children
 Jewellery
 Gardening equipment

Amazon initially started only with books and it is till date known as the highest book seller in the
world. This is why, Amazon also introduced Kindle. Kindly is an Ebook reader from Amazon
and it is the reason that the publishing market is having such a big revolution of converting hard
paper to digital ebooks because of he ease of reading by Kindle. Due to success of Kindle,
Amazon also introduced Kindly fire – its own tablet pc.

Type in a search entry into a search engine for a specific product, and the chances are that
Amazon will stock what you need, and will be on the search list. As they continue to grow, more
and more products are added to their inventory. Once established into books, AMazon quickly
expanded to other products to maintain its presence in the market. Where Ebay is know for
techie products, Amazon is known for knowledgeable products.

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Amazon continues to expand its product base, and in July 2014 it entered the smart phone
market, releasing its very own Fire Phone. The phone followed the release a month earlier of
Amazon’s very own set top box system – Amazon Fire TV- which allows streaming from
various channels, as well as supporting speech commands when searching.

Place in the marketing mix of Amazon

In the recent past, sites such as indiaplaza and allshcoolstuff were forced to close due to the lack
of trust when buying goods online. However, the brand image of Amazon enables it to have a far
and wide presence and the bottom line of the company is enough to enable massive R&D efforts
to secure the website. Amazon has customer service bases in many of the countries where it has
an online presence, with most bases being located in the different states of the USA. Amazon
employees are friendly and relaxed.

Promotion in the marketing mix of Amazon

While Amazon has broadcast television commercials, these are mostly in the American market.
Amazon uses mainly web based advertising, and they make some use of billboard and smaller
methods of advertising. Amazon also uses advertising networks online so that whenever you
check something on amazon, you will see an ad for the same thing somewhere else on some
other website. Search engine marketing and getting the company’s name high up the search
engine’s results is also a smart promotional strategy by Amazon. The founder of Amazon had
this in mind when creating the company, deciding that it should start with an ‘a’.

In India, Amazon can be seen to rely on the best source of promotion there is – word of mouth.
People telling others about the site, or mentioning it in a positive way is a sure way to have a
new future customer. However, there are several print media ads to make their presence felt to
the people. However, much more is needed in the promotions department from Amazon in India
because the traffic of Amazon is being taken over fast by Flipkart.

Price in the marketing mix of Amazon

Amazon is competitive with its prices, and has little ways of staying ahead of its market
contemporaries. For example, if you are looking to buy a book, Amazon offers you a new copy,
or a used copy as well, complete with pricing and condition. Another initiative is to pay to have a
premium account, ensuring faster deliveries. Amazon can also keep their prices competitive due
to their use of staff. Minimum numbers – but well trained – ensure that consumers benefit from
the lack of overheads, and the result is shown in the prices online.

As more and more people can access broadband connections in India and get online, the
competition for the likes of Amazon.com will toughen. Amazon’s quiet entry into India has seen
some growth so far due to its brand image, and it will be looking to keep its prices as low as
possible to capture a slice of the growing market place. It faces tough competition from the likes
of eBay, flipkart and snapdeal.

SWOT analysis of Amazon – Amazon SWOT

analysis
January 30, 2019 By Hitesh Bhasin

Amazon was one of the top online bookstores, which soon converted to the top online retailer
across the world, and currently, even though it has a lot of competition, Amazon has a strong
base of loyal customers who repeatedly buy from the online retailer. Here is the SWOT analysis
of Amazon.
Table of Contents

Strengths in the SWOT analysis of Amazon

1. Strong background and deep pockets – Built on its early successes with books, Amazon now has
product categories that include electronics, toys, games, home and kitchen, white goods, brown
goods and much more. Amazon has evolved as a global E-commerce giant in the last 2 decades.
2. Customer centric: Company’s robust CRM has created customer centric processes in order to
carefully record data on customer’s buying behavior. This enables them to offer individual items,
related items or bundle them as an offer, based upon preferences demonstrated through
purchases or items visited. Also, the company claims that 55% of their customers are repeat
buyers resulting in low cost of acquisition of new buyers.
3. Cost leadership: In order to differentiate itself, company has created several strategic alliances
with other companies to offer superior customer service. The most important strategic tie ups
are with logistics providers who control costs. This contributes in a strong Value chain. Because
of playing on economies of scale, Amazon is able to lower the inventory replenishment time.
4. Efficient delivery network: With its strategic partners & due to its Amazon fulfilment centers,
Amazon has created a deep & structured distribution network in order to make the product
available even at remote locations. It also has free of cost delivery charges in certain
geographies.
5. GLOCAL strategy: By using the strategy of “Go global & act local”, Amazon is able to fight with
domestic E-commerce companies through absorbing & by forming / partnering with supply
chain companies. The branding too is done as per local taste. For example – In India, Amazon is
currently using the “Aur Dikhao” campaign to encourage users to browse more of their
products.
6. Acquisitions: Acquiring companies like Zappos.com, Junglee.com, IMBD.com, woot.com etc. has
proven to be a successful and revenue generating step for the E commerce giant.

Weaknesses in the SWOT analysis of Amazon

1. Shrinking margins: Due to extensive delivery network & price wars Amazons margins are
shrinking, which is resulting in even losses. In India, Amazon had a loss of $359 crs in the year
2013-14.
2. Tax Avoidance issue: Amazon has attracted negative publicity on account of Tax Avoidance in
countries like U.S & UK. Most of its revenue is generated from these well established markets.
3. High Debt: In many developing nations Amazon is still struggling to make the business profitable
thereby affecting the overall profitability of the group resulting into High debt.
 4. Product flops – Amazon launched the fire phone in the US which was a big flop. At the same
time, Kindle fire did not pick up as strongly as Kindle did. Thus, there were several product flops
which caused a dent in Amazon’s deep pockets.

Opportunities in the SWOT analysis of Amazon

1. Backward Integration: Amazon can come up with its In-house brands in different product
categories. They can also differentiate their offering. This will help them make profits in highly
competitive E-commerce market.
2. Global Expansion: Expansion mainly in Asian & developing economies will help Amazon because
those are the markets with low competition in E-commerce industries & are not saturated like
developed economies.
3. Acquisitions: By acquiring E-commerce companies it can decrease the competition level & also
can use the specialized capacity of the other company.
4. Opening physical stores outside U.S: By doing this Amazon can help the customers to engage
with the brand, resulting in increase in repeat purchases & increase in loyal customer base.

Threats in the SWOT analysis of Amazon

1. Low entry barriers of the industry: Low entry barriers affect the current player’s business as
more & more company means tough competition, price wars, shrinking margins & losses
resulting into questioning the sustainability of the players.
2. Government regulations: Not having clarity on the issues related to FDI in multi brand retail, has
been a big hurdle in the success of the E-commerce players in many developing nations.
3. Local competition – India has snapdeal and Flipkart who are local E commerce retailers and are
taking away majority of the market. Similarly, there are many local players who take bites from
the market share thereby making it hard for a big player like Amazon to make profits.

What You Can Learn From Amazon’s

Marketing Strategy

Amazon is considered an online retailing powerhouse, holding its own when up against
platforms such as eBay and Walmart. Amazon has developed a sturdy and reliable marketing
strategy to ensure that they get the best results out of the online market.
Amazon, like many other ecommerce powerhouses, relies on both demographic and
psychographic segmentation of the markets. They focus directly on the behavior of customers
with regards to purchasing: this is not specifically what customers show interest in rather, what
the customers did (buying or not buying).

This approach to segmentation (micro-level segmentation) is aimed at individual buyers, giving

Amazon the opportunity to turn casual buyers into loyal, big money buyers.

To further explain segmentation in ecommerce: this is when online retailers invent profiles of
people who purchase products in a certain manner and target specific products.

In the case of Amazon, they focus on catering to middle and upper-class customers who possess
a basic understanding of technology but lack the time and are not fans of physical shopping.

The Amazon team has proved themselves as an online retail giant that allows people to order any
goods of their choice and have it delivered from any location not matter how far or remote. The
Amazon tracker app also allows customers to keep track on their purchase until it reaches them.
In this article, we are going to break down Amazon’s marketing strategy in detail:

They possess a competitive edge

Amazon took care to set themselves apart from other online retail companies by investing in
several IT and ecommerce start-up platforms such as Junglee.com, Zappos.com, IMDB.com, and
audible.com. This has been useful in providing greater value to their buyers while relying on the
technology of their start-ups at a much lower price.

In addition to this, Amazon has expanded the list of products they offer to include things like
eBooks, electronics, DIY products, toys and many other products. Such additions are key to
ensuring that Amazon maintains low costs while giving its customers added benefits.

Amazon has been around in the world of online retailing for many years, and it has since
expanded to foreign markets such as Asia and Europe in addition to being a powerhouse in the
USA. Their marketing strategy has really helped them cement themselves as a step above the rest
in global markets.

Branching into entertainment and tech world

In recent years, Amazon has expanded its services, making their mark in the entertainment and
tech world. With the introduction of Amazon Prime, movie streaming services and e-books,
Amazon has been raking in millions of dollars in annual revenue creating bigger profit margins
for the company.

They have even decided to reach out to freelance filmmakers to create profiles and upload scripts
or film samples to be analyzed by award-winning producers, writers, and filmmakers. If they are
interested, they can invest in the project, a perfect platform for struggling and upcoming
filmmakers. In recent years, Amazon movies and series have even been nominated for Emmy,
Oscar, and Golden Globe Awards. This has cemented Amazon as a force to be reckoned with in
the entertainment industry.

Although some services such as Kindle and Amazon web have become fairly obsolete, there are
still some other features like the e-book that are growing in popularity as time goes by. Products
such as electronics and other related products are working in the online retail giant’s favor with
their high rates of growth but, Amazon’s market share for said goods is also quite high.

Their strategy for distribution

If there’s one thing buyers are not a fan of, it’s waiting around on the delivery of an ordered
product. Amazon recognizes this and has developed a platform for efficient distribution, creating
over 55+ centers for delivery that cover over 43 million square feet.

They are quite determined in their approach, targeting warehouses and using them to store
consumer-packed products to better their delivery process. This has brought Amazon to new
locations and more buyers.

Amazon has developed an in-depth and carefully planned platform to ensure that products are
delivered to remote areas, doing it free of charge up to certain product limits. Globally, their
delivery network has grown quite rapidly as a result.

Amazon’s Brand Equity

Amazon was once a humble e-book platform, but today, it is the second largest online retail
company in the world. Paying greater attention to advertisements and promoting its product has
helped Amazon develop a bigger brand equity. In 2015, Amazon.com was estimated to be worth
US $176 billion, complete with over 55% repeat customers. It is also counted as one of 13 of the
“world’s most valuable brands” by the Forbes list.

A closer look at its competitors

Comparing Amazon to other online providers is not a one step process as the brand covers
different sectors from books to retail products. It’s important to break the sectors out and analyze
them individually:

 Books and related content: Apple is its biggest rival in this department, also delivering audio
books and magazines. Amazon has had trouble shaking off the iTunes store due to its delivery of
incredibly popular products such as the MacBook and iPhone.
 Web related services: Google has grown to be its biggest rival when it comes to web services
with many preferring it as a reliable search engine.
 Retail market: With over $9 billion being made through internet sales, Walmart is slowly flexing
its retail muscles as a contender to Amazon’s global dominance. So far Amazon has managed to
beat its rival out, making over double the amount that Walmart makes annually.
Amazon keeps a close eye on its competitors and makes a note of adding in extra features that its
rivals don’t offer like, personalized shopping experiences. They are constantly testing out new
ideas in a bid to stay ahead of the competition, and it cannot be denied that for now, they are
definitely a cut above their rivals. With solid, determined, marketing strategies and a finger on
the consumer’s pulse, Amazon is only going to continue to grow as an online retailing company.
Here’s a really cool infographic on their history over 20 years.

We wish to thank Mari Jasmine Smith a digital marketing writer for SEO consultants for this article.

What Amazon’s Marketing Strategy Can

Teach SMB Owners
Joydeep Bhattacharya

As a small- and medium-sized business owner, you are always looking for ways to reach your
ideal customers.

There are several strategies that you can apply to market your business, but it is always
recommended that you follow industry leaders to understand the marketing strategies that have
worked for them, rather than reinvent the wheel.

And if there is one industry leader that can teach you many strategies about effective marketing
and business expansion, it is undoubtedly Amazon.

As the world’s largest e-commerce marketplace and largest Internet company in terms of
revenue, Amazon’s business success is a lesson for all companies, not just e-commerce or online
companies. Their annual revenue for 2018 was $232 billion, which was a 30.93% increase from
2017.

Have a look at the below chart from Statista that displays Amazon’s impressive long-term
growth from 1997 through 2018:
The company’s revenue really took off around 2004 and it continues to improve with every
passing year. So what was so special about Amazon’s marketing strategy that made the company
such a huge a success?

Let's take a look at what SMB owners or entrepreneurs can learn about the tactics employed by
the Internet giant in order to improve their own marketing strategy.

Ready? Let’s start!

1) Amazon Follows an Extremely Refined Email Strategy

Amazon is one of the first companies in this world that adopted a highly personalized approach
to email marketing.

They send 9 different kinds of emails to every customer based on their purchase history,
location, age, on-site browsing, etc. Right from the on-boarding of a new customer to upselling
and review solicitation, Amazon has got you covered.

Why is Amazon’s email marketing one of the best in the world? The answer lies in tracking data.

Amazon tracks a lot of data related to their customers, like:

 which products a customer browses

 which products a customer orders frequently
 which promotional emails a customer clicks on the most
 which products a customer keeps in their cart without purchasing, and so on

In addition, Amazon keeps their email template consistent and regularly sends out cart
abandonment reminders, product recommendations or membership upgrades for Prime:
Amazon is not afraid to send a lot of emails. They send about one daily email to customers just
to remind them about any deals they had been browsing:

By keeping the customer updated regarding their past purchase behavior and by sending the
latest offers related to their interests, Amazon is able to drive a lot of traffic to its website that
eventually helps in maximizing conversions.

Dive Deeper:

 How to Use Personalization to Increase the Impact of Email Marketing

 How to Collect and Use Emails Without Breaking Amazon’s Terms of Service

2) Amazon Is a Master at Innovative Product Delivery

There are three big reasons behind the success of Amazon:

 They put the customer first

 They come out with new products
 They remain patient
As per the Prophet Brand Relevance Index of 2018, Amazon was the second-most-loved
company in the U.S.:
Why does Amazon beat Google, Disney, Uber, etc.? They have always delivered on their
promise of being the earth’s most customer-centric company. If you've ever had an issue with a
product and needed to return or replace it, or speak to a customer service rep, you've experienced
this firsthand. Their customer service is outstanding.
And they are constantly upgrading their product delivery method to align with the world around
them. With the help of Alexa, you can shop millions of products from Amazon. Yesterday’s
science fiction of ordering a bottle of cooking oil using voice commands while you are in the
kitchen cutting vegetables has become a reality.

At your (voice) command, Alexa will get the cooking oil delivered to you on a Sunday, within
the hour and will even deposit it inside your house. How is this possible? With Amazon’s
customer-first and inventive approach.

This is a great lesson for SMBs: Always think about the customer and don’t be afraid to
innovate.

Dive Deeper: 

 How to Use Amazon Reviews for Content and Product Development

 How to Improve Your Amazon Ads to Increase Sales
 Beginner’s Guide to Amazon PPC Ad Campaigns

3) Amazon's Customers Help Out with Marketing

The best marketing strategy in this world is word-of-mouth marketing. It is better than any
other advertising strategy, including TV ads which have been around for almost a century.

How does Amazon generate word-of-mouth referrals from their customers? As mentioned in #2,
the answer lies in exceptional customer service.

Fifteen years ago, Jeff Bezos, founder of Amazon, said:

“We don't do any television advertising, and we take all of the money that we would put into
television advertising, and instead put it into things like free SuperSaver shipping [free shipping
on most orders over $25], lower product prices, category expansion, and invention of new
features. Absolutely. The thing that we did early on is that we made it very easy for people to
find very obscure products. That was something people remarked on. If you're not doing
something that people will remark on, then it's going to be hard to generate word of mouth. The
only way to do this consistently over time is through invention.”

And it's still true today, as any marketer will tell you.
 Source

Hence, the key to generating referrals from your existing customers is to invest in exceptional
customer service that makes buying easier and hassle free.

There is no point in bringing in more customers by spending huge amounts of money in

advertising if the customer doesn’t stay for long. Instead, first invest in customer service and
then increase the customer retention rate in order to improve your bottom line.

Dive Deeper: Word-of-Mouth Marketing — What Is It and How Do You Do It?

4) Amazon Understands Every Detail of Its Business

As an SMB owner or entrepreneur, you need to understand every aspect of your business if you
want to excel in it. Take your time and write down the answers to the following questions:

 What do you sell?

 Why do you sell this?
 What is your USP?
 What are your long-term and short-term goals?
 What kind of people do you need to run your business?
 Who are your competitors?
 How did your competitors reach the position they are now?
 Do you understand your customer journey?
 What are the obstacles that your customers face during the purchase journey?
 Do you have a customer feedback mechanism in place?
 What are your most popular products?
 Why are they popular?
 Why do customers abandon their cart?
 How long does the customer takes to purchase?
 What is the average cart value?
 What is the retention rate?
 What is customer lifetime value?
 How much was your profit for the last year?
 How much is your profit assumption for the next 3 years?
  What are the steps you need to take to make your customers happier than before?
 Where do you want to see your business 5 years from now?
 What is your strategy for innovation? etc.

Source

As you can see, there are so many questions that you need to answer if you really want to
dominate your niche market. Amazon has always taken a step ahead in order to understand its
business model and this is one of the biggest reasons for its success.
Learn the secrets to success from entrepreneurs who have grown multi-million or -billion
dollar companies on our Growth Everywhere podcast! 

5) Amazon Has an Excellent Review System in Place

Ratings and reviews play a very important role in the purchase decision of customers. Can you
imagine browsing an e-commerce site today without a review system in place? You'd probably
leave the website!

This is because Amazon has helped e-retailers widely adopt the practice of adding reviews to
their website.

Amazon was the first company to allow customers to post reviews of products way back in 1995
when I was just a kid – and in 2010, Amazon was the largest single source of Internet consumer
reviews. At that time, many thought that asking customers to review products would give the
people a public platform to say negative things about the product or the company.

Critics termed this practice a recipe for “retail suicide“. But Bezos' response was that Amazon
was “taking a different approach…we want to make every book available — the good, the bad
and the ugly…to let truth loose.”

By the way, here's what Amazon looked like in 1995 (who'd've thought they'd ever become a
business that would reach a market cap of $1 trillion??):
After 24 years, it is impossible to think of a retail website that does not have a review system in
place. This is the power of “future thinking” by Amazon. When leaders lead, others just follow.

Why is the Amazon review system so helpful and what unique features does it have that makes it
better than its competitors? Here are a few reasons:

 Amazon sends individual review emails for every single product that is purchased. Most other e-
commerce companies send a single email asking the customer to post a review, but Amazon
sends different review emails for different products:
 Amazon has special customer review creation guidelines which the customer has to follow in
order to publish their review on the site. Excessively promotional reviews are automatically
deleted. Moreover, people can directly report a review that they find inappropriate:
 Reviews are automatically sorted on the basis of “most helpful customer reviews“, but you can
click on a link to see all reviews, good and bad:

 Amazon always ask the question “Was this review helpful?” This is a regular user feedback
mechanism that allows Amazon to keep quality and popular products in stock and discard the
ones that don't sell well. Amazon has been able to increase revenue by $2,700,000,000 every
year just by asking this simple question.
In the words of Amazon:

“We've worked over the years to make our millions of customer reviews as useful as possible –
we’ve added features like Amazon Verified Purchase, helpful votes, and review comments in the
pursuit of a system that’s open and flexible and yet structured and helpful for anyone who wants
to learn more from other customers about anything we sell.”

Dive Deeper:

 Cracking  Amazon’s A9 Algorithm: Increase Your Amazon Ranking to Sell More

 Amazon Advertising 101: How to Get Started
 Amazon Basics: Why You Need Automatic and Manual Campaigns

6) Amazon's Loyalty Program Is One of the Best

One of the inventive ways that Amazon has been growing tremendously is by leveraging the
power of Amazon Prime, which is one of the best customer loyalty programs in the market
today.

In his annual shareholders letter of 2018, Jeff Bezos wrote:

“13 years post-launch, we have exceeded 100 million paid Prime members globally. In 2017
Amazon shipped more than five billion items with Prime worldwide, and more new members
joined Prime than in any previous year – both worldwide and in the U.S. Members in the U.S.
now receive unlimited free two-day shipping on over 100 million different items.

We expanded Prime to Mexico, Singapore, the Netherlands, and Luxembourg, and introduced
Business Prime Shipping in the U.S. and Germany. We keep making Prime shipping faster as
well, with Prime Free Same-Day and Prime Free One-Day delivery now in more than 8,000
cities and towns. Prime Now is available in more than 50 cities worldwide across nine countries.
Prime Day 2017 was our biggest global shopping event ever (until surpassed by Cyber
Monday), with more new Prime members joining Prime than any other day in our history.”

A business' need for loyalty has been changing. Nowadays, businesses have to rely on a
customer's experience to remain loyal to a brand. Sending discount offers alone won’t do any
good.

Amazon Prime has been a game changer because it provides so many benefits to the customers,
such as:

 Same day shipping

 Unlimited photo storage
 Ad-free video streaming
 Ad-free music streaming
 Flat fee grocery delivery
 Special deals on Prime Day
 Source

When there are so many benefits to becoming a loyal customer, then you definitely want to
become one.

7) Amazon Acquires Smaller E-commerce Startups

One of the vital aspects of the Amazon marketing strategy is its acquisition of smaller
companies, which helps them provide high value to their customers.
Almost every one of us has played the classic game “Snake” as a child in which a snake feeds on
apples to grow bigger and bigger:

The same holds true with business. If you want to expand your business, the best way is to
acquire small businesses, depending on your niche, target location and budget. The more you
acquire, the more you are able to expand your business.

Here are the top companies that were acquired by Amazon in order to expand its market and
reach:

 On April 27, 1998, Amazon acquired Internet Movie Database for $55 million.
 On August 19, 2004, Amazon acquired Joyo, an online bookstore in China for $75 million.
 On July 22, 2009, Amazon bought Zappos, an online shoe and clothing company for $850 million.
 In January 2011, Amazon acquired Lovefilm, a DVD rental service for $317 million.
 On August 28, 2017, Amazon acquired the organic grocery chain Whole Foods Market for $13.7
billion.

These are just some examples of company acquisitions by Amazon. There are several other
companies that Amazon acquired or is in the process of acquiring as of now. The idea behind
company acquisition is simple: you get new customers, you get employees to continue looking
after them, you enable the product of the smaller business to expand its reach, and you don't need
to start all this from scratch.
8) With Amazon, It’s all About the Long-Term

Amazon does not invest for the short-term; instead it always invests for the long-term. In fact, in
1997, Jeff Bezos issued a manifesto called “It’s all about the long-term.” As Inc.com noted,
“Amazon's famous founder didn't just predict the future. He helped shape it.”

In his manifesto – which he has published and sent to all shareholders every year for the last 20
years – Bezos explained his plans for business expansion, keeping only their long-term success
in mind:

As an SMB owner, it's important to see the bigger picture, to continue innovating and investing,
and to never stop learning and thinking about the future. For instance, when the light bulb was
invented in 1879, the candlemaking industry was about to go belly-up. Rather than try to hold
back progress, they eventually turned to decorative candles, which continue to increase in
popularity even today.

The vision for the long-term is what keeps Amazon profitable with every passing year.

9) Amazon Applies 3 Rules When Conducting Meetings

If you are a business owner, you need a team to excel, and if you have a team, there are meetings
and meetings and meetings.

Almost every one of us has faced boring and unproductive meetings at the workplace, so how
can you make your business meetings more productive? Follow Amazon's three rules when
conducting meetings:

 Two-Pizza Teams – Keep your teams small enough that they can be fed with just two pizzas.
More members only add to the chaos, making it difficult to reach conclusions.
 No PowerPoints – Bezos promoted the use of memos instead of PowerPoints presentations. In
one of the letters to shareholders, Bezos wrote, “The great memos are written and rewritten,
shared with colleagues who are asked to improve the work, set aside for a couple of days, and
then edited again with a fresh mind. They simply can't be done in a day or two.”
 Source

 Start with Silence – Bezos says, “We read those memos, silently, during the meeting. It's like a
study hall. Everybody sits around the table, and we read silently, for usually about half an hour,
however long it takes us to read the document. And then we discuss it.”
 Source

Get your meetings right and stop wasting time by following the 3 rules as suggested by
Amazon's successful founder.

If the people on your marketing team can convey their message in a better manner, discuss it in a
comfortable environment, and are then able to make fruitful decisions, then you will definitely be
able to drive maximum conversions from your marketing campaigns.

10) Amazon Uses Social Media to Promote Products and Help Customers

Amazon is not afraid to promote products across its various social platforms.

With around 2,92,74,382 likes and 2,84,50,645  followers on their Facebook page, Amazon has
reached this massive figure by using social media as a platform to help its customers. Amazon
always responds to user comments in a timely fashion and polite manner.

Have a look at the below screenshots where Amazon employees reply to customers by name
(and give their own name). It adds a human touch to each of a brand's posts, which is definitely
appreciated by customers:
Amazon uses the Facebook platform to educate customers about its new product offerings and
also to respond to negative feedback in a prompt manner.

When someone asks a question, Amazon representatives answer it quickly, and whenever a
customer is frustrated, the retail giant not only responds, but always tries to help the customer.

Amazon uses Twitter to promote its blog and also to get more customers to its other product
offerings like Prime and Amazon Music. They have over 3.1 million followers on Twitter. In
many cases, their Facebook posts are also shared on Twitter in order to gain more exposure.

The Pinterest page of Amazon is an extension of its main store. Amazon is extremely careful
regarding what it promotes on the image-based platform. Only unique, image-friendly products
are selected to be promoted on their Pinterest page as well as their “Handmade at Amazon” (for
artisan crafts) page:
Amazon also uses Snapchat in the best manner. Messages disappear rather fast on platforms like
Snapchat, hence time-based offers are shared to gain more publicity and persuade users to take
action. Amazon shares deal codes on Snapchat which can be redeemed during checkout.

It has also partnered with Snapchat to create a visual search tool. Users only need to take a photo
of the object with Snapchat's camera and Snapchat will show a card that displays the product
name, price, reviews and Prime availability. In short, users can directly order a product from
Amazon simply my clicking the Snapchat camera. Amazing, isn’t it?
With an impressive social strategy, Amazon is constantly looking for ways to drive more
exposure, gain more followers, enhance engagement and generate direct sales from social media.

Dive Deeper: 
  The Beginner’s Guide to Crafting a Highly Effective Social Media Strategy in 2019
 7 Dead Simple Social Media Marketing Tactics That Still Work Today
 How to Increase Website Traffic through Social Media
 30 Winning Facebook Ads and Why They’re so Effective

11) Amazon Has One of the World’s Best Influencer Programs

Amazon always think ahead of their competitors and one of the best examples to prove this point
is the Amazon Influencer Program:

People who have a qualifying YouTube, Instagram, Twitter or Facebook account are invited to
create their own storefront on Amazon with a custom URL to house all their recommended
products.

Influencers can use the custom URL to guide shoppers to buy products from Amazon and in
return they will receive a commission from the e-commerce giant.

In the words of Amazon:

“The Amazon Influencer Program allows you to get your own page on Amazon with an exclusive
vanity URL to showcase the products you recommend to your followers. Promote your URL,
make it easier for your followers to shop your recommendations and earn money on qualifying
purchases while doing it!”

The way that Amazon handles their influencers is simply remarkable. As a small- to medium-
business owner, you need to learn how to use affiliate marketing in the best possible manner in
order to grow your business.

Learn More:

 Why Affiliate Marketing Is a Great Option for Startups

 7 Steps to Getting Started With Affiliate Marketing for Your Business
 How to Get Started With Paid Performance Marketing
 How to Grow Your Business With Influencer Marketing and Brand Partnerships

Final Thoughts

Now that you have a good understanding of Amazon’s marketing strategy, you can replicate it to
win more customers for your own business! Just as Amazon used Prime to reach new customers,
you need to think about new ways to expand your business. Keep the customer happy, never stop
inventing, think ahead into the future, make the best use of technology and always have patience.
Happy marketing!
Amazon delivers lesson on powers of market
segmentation By Leo MacLeod
To understand the power of customer segmentation, shop at Amazon.com. When you register as
a new customer, you are not asked any demographic or lifestyle questions. Amazon doesn't
profile you by attitudes or psychographics or profiles of how you think. Amazon only wants to
know what you want to buy.

Once you provide a clue, say you are interested in "books" and one of your favorite authors is
"Malcolm Gladwell," you are directed to titles that other customers have purchased.

If you were to gather information on every customer who purchased "Tipping Point," you might
find buyer commonality in age, income and education.

But just as likely, you would find variance: soccer moms with three kids, retired professors,
twentysomethings and middle-aged males in marketing.

What makes Amazon's marketing engine so powerful is its ability to both sort and segment and
ignore differences that other marketers commonly use to categorize customers. Amazon's
segmentation is based squarely on actual purchase behavior: not what people might have
expressed interest in, but what they actually did. What's more, that segmentation is wholly
dependent on the dynamic evolution of how customers spend their money, today, yesterday and
tomorrow.

The choices are based in reality rather than a supposition or a prediction. Each new purchase
slightly alters what recommendations the next shopper will see. Great publicity may result in
high exposure for a new CD, but if it doesn't result in purchases among Amazon customers,
you'll never know about it through Amazon.

Contrast Amazon's dynamic segmentation strategy with what marketers too often employ:
segmentation by dated, limited research and educated guesses.

Segmentation, tailoring your approach to customer types, is the foundation of targeted

marketing.

But segmentation that categorizes customers incorrectly or capriciously is busy work without the
payoff of increased sales.

Herb Sorensen, who consults leading retailers and consumer goods brands on shopper behavior
and customer research, says, "Segmenting is just a fancy word for sorting. Oftentimes, the
criteria for segmenting are arbitrary. We don't understand the consequences of putting people
into particular groups."
Sorensen goes on to say that how we group our target markets, and even what we call them,
changes our approach to them. We become invested in our own terminology and locked into how
we market to the segments. There are inherent problems in the traditional model of segmentation
and some critical things to keep in mind.

Behavior over attitudes

Marketers play the game of predicting how someone will react, based on how they think. It's
logical to follow that thinking, but look at our own behaviors to discover glaring inconsistencies
and unpredictability. I tend to be brand-loyal with cars and mayonnaise, but not with sneakers or
bottled water. If you profiled me, you might come up with something like "Educated Traditional
Skeptic." I am not an early adopter and tend to be traditional, though not really conservative. I
am highly skeptical of marketing and question and research many of my purchases.

From that, you can develop a segment, but for what purpose? It feels good to make sense of the
world, to line up the boxes and feel satisfied that some order can be brought to the chaos of the
marketplace. Market segmentation looks impressive in marketing plans and on creative briefs,
but how useful is it in the core business of marketing -- influencing purchase behavior?
Segmentation schemes that are based on behavior are going to be more reflective of the
marketplace than those based on demographics or psychographics. Acquiring dynamic
information on purchase behavior, however, can be difficult. That doesn't mean it's not essential.

Focus on fewer segments

Coke, one of the greatest brands in the world, recently published a consumer segmentation study
called "The World According to Shoppers." Widely hailed as a breakthrough in shopper insights,
it describes nine different shopper segments, such as "Efficient Stock Up," "Grab n' Go,"
"Immediate Consumption" and "Specific Item." The study neatly found a label for the major
shopper types, but what's not clear is how that exercise will help anyone at the company sell
more Coke.

It makes intuitive sense to focus marketing, but it's not practical to market to nine shopper types.
Alternatively, Sorensen has tracked millions of shopping trips and has observed that most
customers can be segmented into Short-Slow Trippers, Medium-Slow Trippers and Long-Fast
Trippers. By tracking actual purchases, he knows which products most generally fit within those
shopping patterns. What's the utility? Category managers can literally map out the store into
buying zones based on the behavior of real customers. Essentially, it's taking the Amazon online
model -- grouping by purchase behavior -- to bricks and mortar.

Simplifying your segmentation to what is practical to track, communicate and act upon is the
difference between what gets presented at an academic conference to colleagues and what drives
revenue. To put this in the terms small businesses can understand, start with a simple
segmentation between customers and prospects. This may seem overly simplistic, but look at
how you could, but probably don't, market to these two distinct segments. Strategies and tactical
approaches to these different segments are manageable and actionable.
Amazon’s Approach to Audience
Segmentation
iotechnologies

Everyone on planet Earth knows Amazon is one of the largest e-commerce market players. Not
surprisingly, they have segmented their immense audience. The article I’m linking to tells us
about what criteria they used to find specific patterns for precise targeting. Under each
segmentation category you will find the criteria and the specific Amazon target segment.

In general, this illustrates how a huge marketplace sees you as a customer and adapts its offers to
your unique needs.

1. Geographic audience segmentation

o Region: Amazon covers over 100 countries.

o Density: both urban and rural areas.

2. Demographic segmentation

o Age: people aged from 18 y.o.

o Gender: both males and females.
o Life cycle stage: single, full-nest, empty-nest or solitary survivor people segmented by classic
family life cycle.
o Occupation: students, specialists and professionals.

3. Behavioral segmentation

o Loyalty: ‘Hardcore’, ‘softcore ‘switchers’.

o Benefit: products assortment, convenience competitive prices.
o Personality: easy-going, determined, ambitious.
o User status: non-users, potential, first-time, regular or ex-users.

4. Psychographic audience segmentation

o Social class: working, middle, upper.

o Lifestyle: resigned, mainstreamer, explorer, struggler, aspirer, reformer.
All in all, they segmented all their customers into the following categories, sorted by conversion
simplicity.

Examine this infographics to see their market size, purchasing power and other vital attributes:

Another, more specific example of Amazon consumer segmentation is finding common groups
using classical approach. We described it in our ‘Audience Segmentation: Basics, Examples,
Cases’ article.

Amazon AWS

Besides segmenting their own worldwide audience, Amazon Web Services recommends getting
acquainted with audiences to anyone who starts a business and wants to know their potential
customers. After Amazon got extensive experience in working with different audience segments,
it’s team started teaching newbies how to do that. Still, the approach differs slightly from the one
they use for defining their own customers groups.

AWS segmentation example for a random Sports app:

1. Demographic audience segmentation

o Males between 20 and 35 years old.

o They speak English.
o They use tablets running iOS 10 and newer.

2. Interest based segmentation

o Football fans.
o They often watch live score updates.
o They prefer to be notified about available events & tickets.

So, if you manage to learn what your clients are interested in, you can create strong audience
segments.

Combining interest based data with demographic data opens up new horizons in the audience
segmentation process. Amazon gives this example on the AWS website:

o Male Seattle Seahawks fans between 20 and 35 y.o.

o Spanish-speakers, football fans living in the US.
o iPhone users who would like to receive score updates.
3. Engagement based segmentation

You can also keep an eye on how actively customers use your product. Every business should
focus on loyal and revenue-generating clients. Finding weak points where customers abandon
your product without taking any active actions can boost your success.

This can be tracked with ordinary engagement metrics including:

o Clients who registered the previous week.

o Clients who had several sessions per day.
o Clients who logged in and made a purchase during the last month.

Amazon recommends interacting with dynamic segments and comparing the cohorts of users
from week to week. People’s behavior may change for different reasons and it’s vital that you
make changes to move with the times.

What can we learn?

Amazon uses in-depth audience segmentation in all its commercial activities. Everyone has
experienced how it works while shopping on their website. At least, getting suggestions for
books on Audience segmentation, while researching this topic, is handy.

Anyway, what looked simple at first glance, appeared to be more complex and tangled. The huge
amount of data they process to offer you a couple of suggestions makes these recommendations
data-driven, and consequently, accurate.

This is another example of how services can target their audiences and make profit.

Find out more:

o Read more about amazon merchants tools

o Good product for searching products on Amazon
Pestle Analysis of Amazon
Umar Farooq May 18, 2019

In this Amazon Pestle Analysis we will discuss the opportunities and threats of external
environment of this e-retail business.

Amazon is an e-commerce industry leader founded by Jeff Bezos in 1994. Started as bookstore
and diversified its business model to everything you can imagine. E-commerce platform has
simplified the shopping experience of consumers. If a consumer is not willing to go outside for
shopping he can still get what he wants. He tries to find a product and analyze the reviews and
rating and takes the final decision.

Amazon has become the top ecommerce retailer but it is not sticking to it any more. Amazon is
now investing in stores to increase its customer base and market share. Let us discuss the pestle
analysis of Amazon to identify the external factors in its macro environment. If you are
interested please check Swot Analysis of Amazon.

How Political Factors Affect Amazon

Amazon is an e-tailing platform which is serving millions of customer worldwide. The company
has to face political influences and government activities that can affect Amazon success.

Political stability can affect Amazon e-commerce business. For example the political stability
of developed countries like Australia gave Amazon.com an opportunity to expand its business in
the region. Even a stable political governments can create threats for a company. The European
Union is investigating Amazon.com regarding the use of retailers’ data who sell on Amazon
Marketplace. If the regulators found Amazon guilty it can face severe consequences. Such
political issues are affect Amazon brand image and profitability at the same time.

Another political factor that is worth mention is the government laws for e-commerce businesses.
For example, few months back the Indian government stopped Amazon and Flipkart for selling
products of those companies they have equity stakes. Government supports companies like
Amazon due to their huge investments but it still have to comply with government laws and
regulations which is sometimes very difficult. However this political factor becomes a threat
when its supports other companies in the industry. For example, in China government support
Chinese e-commerce companies to flourish their businesses.

Other external environment factors that can affect Amazon Inc. is cybercrime. If any
government what to improve the e-tailing business environment it must fight against cybercrime.
This can create an opportunity for the businesses.
How Economic Factors Affect Amazon

Amazon will grow fast if the economic conditions are positive in the areas where it is operating.
Retailing is a medium how producers offer their products and services to consumers. Consumer
buy from retailers in any economic condition and sometimes the retail business survive even in
the worst economic conditions.

Consumers’ disposable income is increasing which is a great opportunity for Amazon.com.

Higher disposable income means consumer will shop products of their choice.  This will provide
companies like Amazon, Walmart, Ebay an opportunity to expand its business to increase their
market share and brand presence. According to the National Retail Federation, the U.S retail
sales is expected to reach $3.8 Trillion in 2019.

No doubt Amazon is advanced Technology Company and facing criticism for offering fewer job
opportunities and prefer to use technology where it is possible.  The company denied the news
and replied the Amazon is looking forward to hire highly skilled staff in the UK. But in May
2019 the company announced a program for those employees who want to quite. It will offer
$10,000 plus three months gross salary for those who want to quit jobs and start their own
delivery services for Amazon Packages.

Economic recession is another key macro environment indicator that can affect Amazon. For
example Chinese economy is slowing these days and this Chinese recession is considered a
threat to Amazon business expansion. Chinese market is one of the key markets where Amazon
want to penetrate.    

Flourishing retail industry creates opportunities but not only for Amazon. It means more
competition for Amazon. Like retailer industry retailers are also flourishing their business and
create more competition in the market. For example Walmart is increasing its online presence to
not only compete with Amazon but also to improve their thin profit margins.

How Social Factors Affect Amazon

Social factors, trends and behaviors can affect the performance of Amazon negatively and
positively. Amazon made people lazy, allow them to stay at home and Amazon delivery system
will take care of everything like streaming movies, food itmes and groceries. Staying at home
and eating junk food affected the health of American adults and children. The government is
under immense pressure to take necessity measure to improve the lifestyle of every citizen.

Young generation is enthusiast and crazy for online shopping. The easy internet access and
mobile devices increased this ratio. The senior citizens who don’t walk or don’t like to go
outside can also use Amazon online shopping facility. Online shopping is becoming a hobby
these day. Amazon can capitalize this opportunity to reach more and more people around the
globe.
According to SurveyMonkey/Recode Poll, 20 percent Americans believe that Amazon have a
positive impact on society as compared to any other Tech company like Google, Apple,
Facebook or Microsoft.

How Technological factors Affect Amazon.com

Technology is the backbone of Amazon. Technology made amazon one of the most profitable
company in the globe. Amazon is focusing on technology in terms of cloud computing (amazon
web service) anvery system to satisfy its customers.

Amazon is looking to use technology to the fullest for the delivery systems. Amazon Prime Air
is a new future delivery system to deliver packages to consumers using Unnamed Aerial
Vehicles also known as drones. Amazon is working with different regulatory authorities to
comply their requirements and design a sound air traffic management system.

Cybercrime is a threat to Amazon. The whole business model is on stacks. Amazon consumers
and third party sellers have concerns about their sensitive data like credit card and debit card and
any personal / confidential information stored on Amazon website. In this amazon pestle analysis
cybercrime is a real threat to Amazon. According to CJ Rosenbaum, A Lawyer who is working
for Amazon sellers, said that his several clients informed him that they were hacked and lost
their monthly sales.

Technology obsoletes with the passage of time and amazon is facing the same issues which
pressurize it to regularly work on technological assets. All the investments in information
technology creates a competitive advantage for amazon.

How Environmental Factors Affect Amazon

Amazon Inc. has resisted pressure from investors and other stockholders to disclose information
relevant to environmental impact. Recently Amazon.com committed that it will disclose all
such information later this year. Another challenge for Amazon is reducing organizational
emissions. It is quite complicated to estimate the emission form e-commerce business. Ordering
online requires less energy than driving to physical stores and buy or pick up groceries.

Amazon is also looking for half of its shipment emission free by 2030. Amazon has more than
100 million prime members who are eligible for two days delivery. As a result “When
customers want to receive a product in one or two days, the carbon emissions increase
substantially,” he said. “If you are willing to wait a week, it’s like killing just 20 trees instead of
100 trees.”

How Legal Factors Affect Amazon Inc.

Amazon business operations must comply with different laws and regulation. There are many
legal factors that can affect Amazon for example anti-trust laws, discrimination laws,
consumer protection laws for ecommerce businesses, data protection laws.
Counterfeit product regulations are necessary and demand of the consumers. This can be
considered as an opportunity for amazon to increase its efforts to minimize the counterfeit sales
on e-commerce platform. Amazon has already an Anti-counterfeit policy in placed. Every
product offered by sellers on amazon platform must be authentic. The sale of such type of
products is strictly prohibited.

There are different Consumer Privacy Acts that could create a threat in the macro environment of
Amazon. California Consumer Privacy Act 2018 is one of them and will take effect from 2020.
Giant Tech Companies like Amazon, Apple and Facebook will be required to inform users what
type of data they collect and how they share or use this data.

Another legal factor is EU GDPR (General Data Protection Regulations) affects Amazon and all
those companies who collect customer data like name, emails and bank information. All the
consumer data must be protected. The European Union launched an investigation and fined
Google and Facebook. This is considered a huge threat to Amazon.

Who Are Amazon's (AMZN) Main

Competitors?
By Troy Segal
Updated Feb 4, 2020

Amazon (AMZN) competes head-to-head for market share with some of the largest corporations
in the world. While Amazon started out as an online retailer of books, it has grown over the
decades to become the largest e-commerce company by revenue in the United States.

In its quarterly and annual financial statements, Amazon breaks down where it receives its
revenue into five major categories:

 Online stores
 Physical stores
 Third-party seller services
 Subscription services
 Amazon Web Services (AWS)

Below, we'll describe each of these revenue streams and list which companies are Amazon's
biggest rivals per category.

Key Takeaways

 Amazon is the world's largest online retailer and is rapidly growing its footprint in other areas
such as physical retail stores, subscription services, and web services.
 Amazon's retail store rivals include Target, Walmart, Best Buy, and Costco.
 For subscription services, Amazon competes with Netflix, Apple, and Google.
  In the web services category, Amazon has several rivals such as Oracle, Microsoft, and IBM.

Online Stores

This category includes product and digital media sales from Amazon's e-commerce website. The
company offers its customers a wide selection of durable and consumer goods along with digital-
format products, such as e-books, videos, software, music, and games.

Amazon's competition in this segment includes LightInTheBox Holding Co. (LITB),

Overstock.com (OSTK), Vipshop Holdings Ltd. (VIPS), JD.com (JD), Wayfair Inc. (W), and
Etsy (ETSY).

Physical Stores

Although sales from online purchases represent the bulk of the company's revenue, Amazon
greatly expanded its presence in the physical retail space with its 2017 acquisition of grocery
retailer Whole Foods Market.1 Amazon also operates four other types of physical stores:
Amazon Books, Amazon 4-Star, Amazon Go, and Amazon Pop Up.

In the physical stores category, Amazon competes with Best Buy (BBY), Costco (COST), Target
(TGT), Walmart Inc. (WMT), and Big Lots (BIG).

2,000+

The number of U.S. cities and towns where Amazon Prime members have access to two-hour
grocery delivery via Amazon Fresh and Whole Foods Market (as of Jan 2020).

Third-Party Seller Services

Third-party vendors sell their products using Amazon's online marketplace platform. Amazon's
popularity as an e-commerce site enables many third-party sellers to reach a wider customer base
and grow their businesses. For this service, Amazon charges commission fees, shipping fees, and
related fulfillment costs.

In the third-party marketplace business, CEO Jeff Bezos has stated Amazon's main competitor is
auction site eBay.

Subscription Services

Amazon sells a variety of subscription services. Its most popular paid subscription service is
Amazon Prime, which has 150 million members around the world as of Jan. 2020.2 The
company also sells subscriptions for e-books, audiobooks, digital video, and digital music.

Amazon's main competitors in the subscription services sector are media game-changer Netflix
(NFLX); Apple (AAPL) with iTunes; and Google (GOOG) with its Play Store.
Amazon Web Services (AWS)

Amazon Web Services (AWS) is the company's cloud platform, offering 175 services such as
machine learning, artificial intelligence, storage, and analytics. AWS customers include startups,
enterprises, and government agencies.3

Amazon's main competitors in the web services sector are Alibaba Group (BABA), Oracle
(ORCL), Microsoft (MSFT), International Business Machines Corporation (IBM), and Google
(GOOG).

The Bottom Line

Amazon is a well-diversified company that benefits from several profitable revenue streams. The
company specializes in disruptive innovation and can afford to fund forays into new industries in
order to take market share away from its competitors. Amazon ended the fourth quarter of 2019
with sales up 21% to $87.4 billion.4

The company reached a market capitalization of $1 trillion for the first time ever in September
2018.5