The history of Amazon
Jeff Bezos, a former Wall Street investment firm executive and a visionary who saw the promise of the internet and e-commerce platforms, decided to start an online store in 1994. Indeed, he knew from the start that Amazon would be an online store. His first amazon business model thought was “Cadabra.” (from abracadabra). Todd Tarbert, his lawyer, told him it might be hard to remember. It sounded like “cadaver” when I heard it on the phone.
After deciding on a new name, the next step will be to decide what will be sold on the e-commerce site. Bezos’s best choice would have been to sell books. Even though financial journalists and experts didn’t see the growth of the internet the way Bezos did, Amazon.com had 180,000 customers in its first year. In May 1997, Amazon.com became a public company when it raised $54 million on NASDAQ.
By the end of the same year, there were 1 million accounts and $148 million in income, which grew to $610 million. As the business grew quickly, it started selling music, movies, electronics, video games, software, home goods, toys, and games. Customers were also drawn to its personalized advice tools and customer reviews, which helped build a community of customers. In 2000, both small businesses and people could sell their goods through Amazon.
Two years later, Amazon Web Services (AWS) came out. This proved what Bezos had said from the start: that Amazon wasn’t a store, but a technology company. Since that year, AWS has added Internet data for developers and marketers, the Elastic Compute Cloud, which rents out computer processing power, and the Simple Storage Service. When the Kindle e-reader came out in 2007, the market for e-books took off.
In 2009, the company came out with Amazon Encore, which lets people print their own e-books. It would change into Amazon Publishing, which would make its own books, in two years. Amazon started out as a shop, then became a “everything store,” and now it is the biggest online store in the world. There’s no question that the brand didn’t stop there, and it seems like it has a lot more to offer. Its low-profit margin, which is the same for all of its products and services, maybe what keeps its customers coming back.
A buyer can be sure that Amazon will always offer a fair price in every area and for every product. It’s convenient for sellers who use the multisided platform to be able to show their goods on the website and sell them on all continents. Amazon is now known as the biggest store in the world. Its name seems to have no limits.
Amazon is a multi-vendor eCommerce business. How does it work?
Amazon’s main way of making money is through its eCommerce site. Its other business activities are also linked directly to its eCommerce website. Amazon Prime awards customers who buy from Amazon again and again, which is good for the company as a whole. Amazon AWS services improve the company’s tech infrastructure.
Amazon aims its goods and services at a certain part of the people who buy them. The company also has Amazon Prime, AWS services, Audible, Kindle, Prime Video, Amazon music, and more.
What is the Amazon Business Model?
The way Amazon makes money is through a two-sided trade. It makes it easy for buyers and sellers to trade and talk to each other. The company has made a large operating plan so that it can meet the needs and wants of each customer. It handles the production, packaging, shipping, and delivery of a lot of goods so that customers can get everything they need at the best price. To run its business, Amazon needs a lot of things.
It has a lot of warehouses and fulfillment centers that help it package, ship, and send goods. Amazon’s platform needs the website, the app, and the coders for it to work. The leaders of the company’s different departments, such as customer relationship management, marketing, and content creation, are also useful. The sellers and merchants who use Amazon’s marketplace to find buyers are its most important partners. These third-party sellers can do business with Amazon’s regular customers and talk to them quickly.
The company works with a lot of third-party sellers who sell a wide range of goods, so customers have a lot of choices. Even though buyers are partners, Amazon treats them like customers because they can sell on Amazon or anywhere else. Customers can get Amazon’s services through three main ways: the website, an app that can be downloaded from the Play Store or app store, and real stores called Amazon Go where you can shop quickly and easily.
How Does Amazon Make money?
Amazon’s business plan is complicated because it has a lot of different value propositions and customers. But its marketplace and ecommerce shops, which are the basis of its other businesses, are where most of its money comes from. In 2019, the company made a net profit of $11 billion on sales of $280 billion. About half of the sales came from online shops. Amazon business models are followed by thousands of businesses worldwide.
Sources of Revenue:
Amazon’s marketplace makes money in many different ways, such as:
Through its ecommerce site, Amazon sells its goods. These goods bring in a large amount of money for Amazon. The company has to fight with third-party sellers and brands to get people to buy from it on the marketplace.
Amazon charges a listing fee to third-party sellers who want to sell their goods on the site. The fees start at 2% of the price of the product and change based on the type of product.
When a product is sold through Amazon, Amazon takes a cut from the sellers. The commission that merchants get relies on how much the product costs and which channel they use to ship it.
Customers can also sign up for Amazon Prime, which makes shopping at Amazon even better. It offers unlimited free, fast deliveries, ad-free watching of movies and TV shows, unlimited offline downloads of music, free in-game content for popular mobile games, unlimited 5% reward points, prime reading, and exclusive deals and coupons. Prime members can also get fast, free packages as many times as they want. The annual membership fee is $119, and the monthly fee is $12.99.
Through FBA, Amazon gives sellers different ways to fulfill orders. (Fulfilled by Amazon). Either they can use FBA, where Amazon stores, packs, and ships the product to the customer, or they can use easy shipment, where the merchant stores and ships the product while Amazon sends it. The company charges a different fee for each choice made by the seller.
To learn more about amazon fba (Fulfillment by amazon) check our amazon fba basic guide
Amazon lets both independent writers and publishers use its Kindle Direct Publishing service. The company not only publishes the book, but also puts it on the Kindle shop and gives the author 70% of the royalties.
Key partners of Amazon Business Model
Amazon’s key partners are:
Seller: The buyers on Amazon bring in the most money for the company, so they are the most important partners for the brand. More than half of the company’s income comes from the 8 million people who use it around the world;
Affiliates Program: Affiliates are bloggers who make money when their links lead to sales. They also try to get people to visit the platform;
AWS: Developers are AWS’s partners, or, as Amazon puts it, “thousands of systems integrators who specialize in AWS services and tens of thousands of independent software vendors who adapt their technology for AWS”;
Kindle Direct Publishing: Authors who want to get their books out there can use Kindle Direct Publishing;
These include companies that offer storage, stores, and systems, as well as brands and goods made by Amazon, like Amazon Essentials, Amazon Elements, Amazon Elements, Kindle, and Alexa.
Final Thoughts:
Amazon has become a multi-billionaire business empire. This platform is the earning source for millions of people around the globe. Amazon’s business model has become the most popular amazon ecommerce business model all around the world.
