Posted: Sunday, November 15, 2020. 7:38 am CST.
As the world continues to struggle with a COVID-19 virus it doesn’t yet fully understand, stock markets continue to leap and drop, and millions of people change their way of life, one thing remains constant: Amazon’s success.
The global retailer reported soaring profits in the third quarter of 2020, triple those earned during the same period in 2019. Their incredible revenue figure of $96.15 billion exceeded the expectations of many business analysts and points to an even more buoyant final quarter with Black Friday and Christmas sales still to come.
While the pandemic is a key reason behind the sales boom of the world’s top home-delivery company, there are many other factors to consider. Here are some of them.
Amazon’s presence seems to be universal. While some businesses are struggling to get hold of online customers, the likes of Amazon are growing their base at an unprecedented rate through some smart marketing tactics.
The key to this is a razor-sharp marketing strategy that goes way beyond what the typical online business is capable of. Consider the average Amazon account page: once logged in, the buyer can see what’s in their basket, what they recently viewed and a host of related items that they can buy with just one click.
This serves two fundamental purposes: first, it triggers reminders in the buyer’s mind of what they want to buy (and also suggests attractive accessories) and secondly it allows Amazon to collect crucial customer data at the same time.
The result? A pinpointed email campaign pulled together from this data. So not only does the user complete their original purchase, they’re also targeted for future shopping by receiving suggestions based on their tastes.
The sheer simplicity of this, meaning customers barely have to think for themselves, is an increasingly popular tactic in retail, but the sheer size of Amazon allows them to encompass virtually any type of product. It’s a process that thrives in today’s convenience-based society, and almost does people’s weekly shopping for them.
The range of products on Amazon is overwhelming. A simple search for ‘coffee machine’ on the US site brings up more than 1,000 results, with prices ranging from $8 to nearly $10,o00.
It’s an example of just how expansive the internet is, compared to being in a bricks-and-mortar shop. So much so, that users now have sites to help them choose from hundreds of flight deals and online casinos, to name just two things, and Amazon attempts to do the same with its range of filters. Buyers can sort options by brand, price and even material, so that the incredible array of products become a little easier to think about. This way, Amazon is harnessing the power of the web for its customers.
When customers can buy virtually anything from the same place then they tend to do all of their shopping at the same time, much like how supermarkets offer a more convenient alternative to visiting several different smaller shops.
Multiple business arms/subsidiaries
Remember the days when Amazon was just a simple online marketplace competing with the likes of eBay?
One of the major reasons for its success has been its ability to spot market opportunities and make the most out of them. In 2002, Amazon Web Services (AWS) was launched, a computing platform and API provider to businesses and individuals. It was the first major move away from online retail and sparked a chain of Amazon subsidiaries.
Its presence in markets, such as streaming services (Prime Video), publishing (Amazon Publishing) and even a film studio (Amazon Studios), has propelled it to the top of the retailer charts. In 2015, it became the United States’ most valuable retailer, surpassing Walmart whose product range looked small in comparison.
Having an all-encompassing market reach is a big factor in such astronomical profits, and the concerning thing for Amazon’s competition is that they’re not done yet.
Underhand business tactics
There are also concerns that not all of Amazon’s business strategies have been above board.
Some reports have revealed a Wall Street Journal enquiry into complaints from several start-ups who claimed they had held meetings with Amazon on the promise of investment, only for the retail giant to launch competing products a short while later. The natural result is that these small entities are forced out of business, unable to compete with Amazon’s might.
On top of this, Amazon has received a lot of media coverage over alleged employee mistreatment. Many workers have complained of unsafe working conditions and inadequate breaks where they barely have time to reach the break room before heading back to work.
These accusations of anti-competitive practices and mistreatment leave a question mark hanging over the company, but it’s also true that many large businesses face similar accusations. Sometimes it’s down to smart business skills, but there’s a fine line between that and underhand tactics that reflect negatively on the company’s image.
With Amazon’s already dominant market stance, we should hope that they make ethical corporate behaviour a central part of their plans.
Will it last?
Many predict Amazon to be the most important company of the 2020s and, with the latest figures, it’s difficult to argue. Its highly effective Amazon Prime service acts as a vehicle for users to take advantage of the benefits mentioned in this article, such as multiple features and a huge product range. There’s simply no easier way to shop online at the moment, and with many people forced to stay at home during the pandemic, its sales should continue to grow.
However, there are also concerns that Amazon is simply too powerful and edging dangerously close to a monopoly in the online retail market. This has caused a backlash from many people who simply refuse to use Amazon, opting to use local retailers instead.
If the company doesn’t address these concerns, and continues to employ dishonest business practices, then they may have significant challenges on the horizon.
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