Amazon - Global Monopoly
Jeff Bezos is the second richest man on the planet after Elon Musk, with an estimated net worth of 153 billion dollars, he is certainly an inspiration in terms of running a business for most founders and directors.
Bezos made his fortunes from Amazon, which is an American multinational technology company which focuses on e-commerce, cloud computing, digital streaming, and artificial intelligence. It has been referred to as ‘one of the most influential economic and cultural forces in the world’ and is one of the world’s most valuable brands, so it is only right we do a deep dive into the business's activities.
In terms of market share, in 2017, Amazon had a 37% share of the USA’s e-commerce retail market, thanks to a graph from Statista. In 2021, this hit an all-time high of 56.7% (Source; PYMNTS), which shows that whatever they are doing is working, and they certainly have a monopoly in the US. In the UK, Amazon holds 30% of the market share as of right now, and in 2019, it was calculated (based on gross merchandise volume) that they held 13% of the global e-commerce market share. Although this figure seems relatively small, it makes the company the third-largest e-commerce retailer in the world. And in terms of reputation etc, it is the most popular in the western world.
Their business ethos and aims are captured quintessentially with the design of their logo. The arrow underneath the main body text that spans from the A to the Z in the logo represents how they sell everything from ‘A to Z’ and they have a global catalogue of nearly anything that someone would want, and they should have no need to shop anywhere else.
Their website and app are largely old-fashioned and very ‘Web 1 / 2.0’ rather than up-to-date and ‘Web 3.0’ alike with integrated systems and sleek designs. But Amazon does not feel the need to change this because their brand is so recognisable, they do not want to damage any brand perceptions or make the user experience harder for say some of their older customers, as this could harm their revenue streams from an entire demographic who struggle to use the complexities of their current site already. It also feels no need to upmarket the brand because they are so popular as it stands.
Amazon’s USP mainly comes from their ‘Prime’ service. This is a subscription-based service for £7.99 a month, or £4.49 for students, customers can receive a whole host of benefits. The main benefit is that customers get free delivery on all products delivered by Amazon on the site, with next-day delivery being an option for free too. Along with named day delivery and priority delivery options available too. This is where they benefit from psychological pricing over their competitors as customers are still paying for delivery services, however, they don’t do it every time so feel that they are getting a better deal and are incentivised to keep shopping at Amazon to ‘get their money’s worth.
As well as delivery benefits, customers also get access to Amazon Prime Video. This is their version of a video streaming service to rival that of Netflix, Disney Plus and co. There are a whole host of films and shows available for free, and also to rent or buy which will add yet another revenue stream to their arsenal, and they have recently signed a deal with the English Premier League so that they can exclusively broadcast live football matches in the Premier League for a couple of matchdays a season, which meant that they enticed a whole new audience into their product who will have seen the other benefits and had to choose whether to remain a member or cancel.
Customers will also receive access to Amazon Music, which is their music streaming service that is set to rival that of Spotify and Apple Music etc. This also has millions of songs to stream at the push of a button. This links extremely well to their ‘Alexa’ range, which is a voice-controlled home control system which lets you ask questions, stream music, control lights in your home and much more with just your voice and a Wi-Fi connection. The interconnectivity of their products and services is extremely impressive and can take inspiration from Apple and their ecosystem.
Although Amazon’s TV and music streaming services are not as popular as their main competitors, this may change, as customers can now access benefits from two different streaming industries and extra benefits for the same cost as just one of either Netflix or Spotify, the leaders of their respective streaming industries.
In terms of PR, Amazon has received a whole host of negative PR surrounding the poor working conditions in their warehouses. Couple this with an extremely high turnover and you have a potentially bad and harmful situation for any business. However, this could easily be fought back with the fact they pay good wages, most warehouse jobs of that grade are high turnover due to students taking up many of the roles, and not a counter-argument be proud of, but lots of warehouse jobs also receive the same feedback.
To combat this, Amazon has created ‘Amazon Smile’ which is, once activated, a way for customers to contribute to a charity of their choice when they buy off Amazon. The contribution comes out of Amazon’s back pocket rather than the customers and will add extra incentive for people to shop with them rather than competitors, it certainly works for people like myself.
Do you shop with Amazon?
