Why is HealthCare Expensive in the United States ?
The American healthcare system has become so expensive that it is now a make or break issue in national politics. It was a major bone of contention and regularly featured in Donald Trump vs. Hillary Clinton debates. Some people are for Obamacare whereas there are others vehemently against it. Healthcare has begun to arouse deep […]
Switching Over From Socialism to Capitalism
Socialism is a failed idea. Many nations in the world have now tried socialism. It is no surprise that all of them have failed. After the World War-2, the world was divided into two lobbies. There was the capitalist lobby led by the United States. Then, there was the socialist lobby which was led by […]
Managing the Millennials: Some Approaches
Who are the Millennials and Why are they so Important ? The Millennials or the generation of youngsters born between 1980 and 1995 and so called because of they came of age in the New Millennium is now either entering the workforce or are already part of it. This means that organizations, governments, and managers […]
The Case against Export Credit Agencies
Export credit agencies are quasi-government agencies. These agencies are usually backed by government institutions. This means that they are under the purview of government authorities and also have access to taxpayer funds. All developed countries in the world have created their own export credit agencies. Collectively these agencies wield a tremendous amount of influence on […]
Why a United States Recession Seems Imminent ?
Bank of America has issued a warning. The world’s second-largest bank by assets believes that the United States economy is staring at an imminent recession. Bank of America went as far as to say that the economic outlook was indeed scary and by the third quarter of 2017, the recession would have kicked in! The […]
Investors just can’t seem to get enough of Amazon. Even though Amazon is already the world’s fifth-largest company, investors believe that it is only just getting started! It already has revenues of $125 billion per annum. It is targeting revenues of more than $500 billion in the next few years. Startups have grown at this astounding pace earlier.
However, Amazon is no longer a startup. It is a fledgling company with a multi-billion dollar business. If Amazon can grow even at half the speed that it aims it, it will be the world’s most valuable company in no time! As students of good business practice, it, therefore, makes sense to study the business model being used by this very innovative company.
The value proposition provided by Amazon is simple. They offer the most convenience, widest range and the lowest prices. Their prices are so low that they have displaced Wal-Mart as being the leader is low price category! The amazing part about Amazon is that it provides goods and services at extremely low cost without compromising on quality by any means.
Amazon makes the lowest prices possible by leveraging technology. Firstly, it has leveraged technology in such a way that it does not have to stock inventory of any kind. While other stores are reeling under the massive cost burdens of stocking inventory, Amazon can afford to undercut the competition on this.
It is a mix of a retail company as well as a technology company. Unlike, retail companies, Amazon seldom hires stock clerks and floor managers. Their employees have high technological skills like data mining etc
Amazon has a diverse revenue model.
The revenue model of Amazon is therefore dynamic. It has been repeatedly venturing into newer areas. Also, technology is the backbone of these newer sources of revenue which many retailers had not thought about earlier.
The business model of Amazon is not very capital or human intensive. This makes it scalable. Amazon can easily enter another country and start selling products. Very little groundwork has to be done. This is the reason that Amazon went from being an American company to being a multinational very soon. This asset light business model is also preferred by investors who have pumped in billions of dollars for Amazon to beat its competition with its deep pockets.
Amazon faces a wide variety of competition from different types of companies. There are brick and mortar stores. Then there are other e-commerce sites and also video streaming sites like Netflix. However, none of these competitors seem to be formidable. Amazon is the aggressor is almost all lines of business and is snatching business away from others rather than defending its own turf.
Amazon has always been at the center of several technological advancements since its inception in 1994. In 2016, they have pioneered a new technology called contactless stores. These stores have been branded as “Amazon Go” stores. The unique selling point of these stores is that there are no humans involved. Amazon has achieved such high levels of automation, that they can run an entire departmental store without having any employees! It is technological advancements like these that will allow Amazon to reach its ambitious revenue targets. Although at first, the revenue targets seem ludicrous, Amazon seems to have a plan!
To sum it up, Amazon has a unique business model. The hybrid tech cum retail model was pioneered by Amazon in 1994. Ever since it has not let go of the first mover advantage. Even today, Jeff Bezos pays no dividends and reinvests all the extra profits back into the operations signaling that Amazon is still not a mature company and that it still preparing to grow rapidly.
Your email address will not be published. Required fields are marked *
What the Current Wave of Protectionism and Populism mean for the Future of Globalization and Free Trade
February 12, 2025
