Amazon.com Inc, or Amazon as it is commonly known, was founded in Seattle, United States in 1994 by Jeff Bezos, later the richest person in the world, with a fortune of $129.9 billion. The site is the largest in the world in terms of sales volume and market capitalization.
It started life as an e-commerce site selling books. Currently, it is possible to find almost everything that comes to mind on the site. Amazon is also the world’s largest provider of cloud infrastructure services (IaaS). The site currently operates in the UK, Ireland, France, Canada, Canada, Germany, Italy, Spain, the Netherlands, Australia, Brazil, Japan, China, India, Mexico, Singapore, Singapore, Turkey and the United Arab Emirates. The site’s best-selling product is the Kindle, an electronic book also designed by Amazon. As of 2019, Amazon has 150 6 mobile users.
One of the points that distinguishes Amazon from its competitors is that it is the pioneer of the e-commerce sector and operates in many areas. Amazon.com includes startups such as Alexa.com, Goodreads, ImDb, which are themselves very popular. As a result of all these strategic steps, the platform reached a value of 1 trillion dollars as of 2018.
Number of Amazon Users and Product Variety
In 2020, Amazon will have completed 25 years in the industry. Although Amazon’s profitability has already peaked and the company’s value is allegedly in decline, the company grew by 50% between 2016 and 2020. The company manages to stand out from its competitors with the strategies it implements according to changing market conditions and demands. Amazon is changing its brand strategy and by 2020 will utilize sponsored and targeted ads as well as original ads displayed on the site. This strategy is likely to be successful in terms of sales, as the platform recently overtook Google in product research. This means that the company has a very large user data in its database and the platform is more successful in meeting the needs of customers. Thanks to Amazon’s product diversity, when we search for a product, we use Amazon instead of Google because we think it is most likely available on Amazon. As of 2019, Amazon’s product assortment stands at 119,928,851, the largest digital assortment in the world.
Another indicator that personalized ads will be successful is the 105 million Amazon Prime users. These users pay special fees to receive a personalized service from Amazon.com. This service was launched in 2015 on the platform’s 20th anniversary. and was developed as part of Amazon’s strategy to deliver a tailored experience for the customer. This service, which provides high profitability and customer service, especially on days of big discounts and campaigns such as Black Friday, includes delivering orders to customers within a day or two at most, and providing them with access to music and video. The service is currently active in Canada, the United Kingdom, Spain, Mexico, Japan, Italy, India, Germany, France, China, Belgium, Austria, Australia, Singapore, the Netherlands, Luxembourg, Luxembourg and the United Arab Emirates, but the service’s portfolio is expanding. The biggest proof of Amazon’s overall business strategy and the success of its Prime service is that Prime users are already more active than general users.
Amazon’s Strategy : Personalized Service
Amazon’s core business strategy is to continuously improve the platform based on customer-specific functions, customer experience and customer feedback. In this way, Amazon has managed to stand out among its competitors and become the world’s most preferred e-commerce platform. At the same time, according to a customer satisfaction survey conducted in the US, 89% of customers prefer Amazon when they shop online (Feedvisor, 2019). Customers say this is because Amazon does not cause any unexpected problems during the shopping process and takes care of them one-on-one. This can be seen in the advertising strategies used by the platform and the consistency of the brown cardboard box with the Amazon logo that has been used to deliver orders since day one. It would be a surprise if Amazon did not dominate the market with this approach, especially in businesses such as online shopping, where success is based entirely on seller and buyer trust.
Amazon continues to win the appreciation of sellers and customers for its innovation in detecting and predicting user behavior. Especially with personalized ads and smart keyword usage, Amazon is playing a leading role in digital marketing. In addition to being the world’s largest e-commerce platform, Amazon is the third largest digital advertising platform in the US as of 2020 and continues to grow in this area. In 2019, Amazon’s advertising revenue reached 10 billion dollars. The secret to Amazon’s success in digital advertising is its ability to create ads based on customer demand.
As for products, many companies and sellers also use Amazon to track sales trends. As of 2019, the most trending products on Amazon, at 44%, were mostly in the electronics category, especially smart home devices, voice assistants, computers and phones, and gaming devices. Especially in the American market, health products were as popular as electronics. Globally, the clothing and footwear category followed electronics with 43%.
Advertising growth forecasts and strategies point to the growing popularity of sponsored and customized ads. Advertising campaigns with high budgets and high profit margins have a higher success rate than other campaigns. Amazon also aims to prevent direct customer contact with third parties. The main reason for this goal is to measure customers’ general orientation and complaints more clearly.
This personalized customer service approach allows Amazon to reach and work directly with medium and small businesses, despite being one of the largest businesses in the world. These platforms are partnering with Amazon because they sell up to 4000 products per minute on the platform and Amazon’s personalized product promotions support the marketing costs of these relatively small businesses. Amazon also offers the opportunity to train sellers on this platform, increasing brand loyalty worldwide.
Amazon is home to more than 2.5 million sellers active on the platform (Marketplacepulse, 2019). That’s a total turnover of more than 100,000 for these vendors. While Amazon’s total revenue comes from the large partners it works with, the profits that small businesses and individual sellers are able to make make make for a win-win model. 23% of online sellers also regularly visit Amazon to determine their working models and marketing strategies, a clear indication that the brand is already a phenomenon in e-commerce (Episerver, 2019).
Amazon Selling Models : FBA and FBM
Another opportunity that Amazon provides for online sellers is that it allows them to increase their sales by allowing them to choose between FBA and FBM models according to the scale and purpose of the seller. Since shipping and storage are also provided by Amazon in the FBA model, it is frequently preferred by users who sell internationally, especially online. Another advantage of the FBA model is that it supports the budgets of small businesses as shipping costs are covered at very low rates. The reason why this model is less preferred by big businesses is that they cannot capture Amazon Prime customers with this model because Amazon’s shipping service cannot be completed in a day or two.
In FBM, users are responsible for their own transportation. Sellers are therefore responsible for meeting Amazon’s standards for shipping. This gives sellers responsibility for warehousing and transportation, as well as the opportunity to directly manage these operations and product quality. Amazon FBM charges these sellers a very low fee as storage and transportation are the seller’s responsibility. Therefore, more professional sellers who want to build their own brand often choose the FBM model.