Amazon, the profit power house

Amazon, the profit power house 

The founder of Amazon, Jeff Bezos’s net worth is around $90 billion and is expected to grow with estimated revenue increasing to 275 billion dollars in 2019. Amazon on 5th of July 1994 and has made revenues of $136 billion in 2016. I personal believe that Amazons success is dependent on they customers service they provide and the accessibility to their products. They are described as ecommerce giant, as they dominate the internet with their marketing and brand image. In this blog I’m going to

Why has Amazon been so successful?

In 2106 Amazon was reporting to have 310 million active customers and Amazon held 38 percent market share with $149 billion in sales in 2016. I am a regularly Amazon user and I personally feel like the success in down to the focus on customer service and usability of the site. Their website site is so easy to use and has such a big range of product available to buy, it just makes them stand out from competitors. I have recently been a part of one of Amazons marketing ideas and this was when I was upgrading to a student account, HSBC offered me student prime account for a year and 60 pounds amazon gift voucher. This marketing idea is a really good way of getting new customers to visit the site and see how usable it is. This increase flow of traffic to the site is important to Amazon, as they use internet search engines like Google and they need to be at the stop of search list to get the most traffic. The 60 pounds voucher has also encouraged me to spend more on their site as they use advertisement to interest me with other products. I have also bought products off Amazon and they have missed out part of the order and I have emailed them, and they have sent a free replacement. This shows good customer service as if they didn’t investigate into the problem it would have caused me to change service and they would lost an active customer. This give amazon a good public image as people like to shop with combines that they can trust. There 38 percent market share has come from them out competing competition, this is because they have invested into service that other eCommerce companies don’t include. Amazon invest in creating their own delivery service that is “increasing the speed of our delivery so we can get any product to any customer, anywhere, anytime”. They employee people from the public in towns and city to drive to warehouses and pick parcel to deliver. This further build on their customer service because the customer has even less time to wait for their parcel. I think that this is a similar idea to what Uber and Deliveroo do, but Amazon have a much more reliable job for employees.   

Amazon’s future expansions ideas 

Amazon’s are an eCommerce base retail service that is looking to expand in the creating their own shop. They have released idea to be preparing to open checkout-free grocery stores in Britain called Amazon Go. This idea was built around removing the need to queue or pay at check outs, this creates a huge gap in the market as it more time efficient for customers. So, all they have to do is to walk around pick up the item they want and sensor them record them and charge them to their Amazon prime account. I personal fell like this is a great idea as the most annoying aspect of shopping at retail store in the queuing and paying, so they really have found a gap in the market. This will be much needed for amazon as they are joining a new market and competing against companies like Tesco and Argos. I also noticed how Amazon have used the expansions idea to market their Amazon prime product, as if customers want to use the shop then they will need to own an account and this further increases profits for Amazon. In evolution of this idea, the good point would be that it removes queuing improving customer service; it removes employees’ wages cost as there will be no need for people on the check outs and this means that Amazon are entering a new market with something to separate them from competition. However, I feel like they will lose out on the older generation customers as they will prefer the traditional method as they will be more confused around the technology. There will also be problems if Amazon has IT problems, as they will no longer be able to record the product on the system and will have to close the shop till they have sorted the problem. This loses them customer opportunities and create bad publicity to the brand name. If I was in Jeff Bezos’ position, then I would go ahead with this idea because I feel like even if this doesn’t increase profits massively they will still build on the brand image of have customers service at the top of their priority. This also give Amazon a good public image as they are seen to be constantly investing into new ways to make purchasing easier for customers.  

Amazon games?

In August 2014, Amazon brought Twitch TV the video-game streaming site. They brought the site for £585 million and this was a surprise move for a lot of the public. However, I think that it is a very clever move. The site has over 55 million unique monthly users and the site has already been set up to have adverts played periodically through the game stream. This is where I feel like Amazon have been really clever because I use Twitch TV and I have noticed that a lot of the advert are on products that can be brought at Amazon. This means that advert increase the traffic to Amazon, causing an increase in sales. They are also very smart with their advertising as the mainly show products that relate to games or their Amazon video streaming product. This is because the people that use Twitch TV will be interested in these products and this will cause the most traffic to the website. With the investment of buying Twitch TV, they used it to market Amazon prime even more by adding twitch prime to the list of items that come with the promotion. However, there will be some bad point in this investment as managing a game streaming site will new skill set and can be quite time consuming for the company. I personally feel like that the move by amazon was a good idea as this allows them to focus marketing on target markets easier and the site will also bring in more profits that can be used in other investments like the Amazon Go project. If I was in control of what amazon did with this investment in the future I would try and makes deals with game designers like EA or Ubisoft that means the game can only be purchased at amazon. This could be done by investing in the development of the game or creating contracts with the companies. This will cause them to have all profit from sales of that game and they can use Twitch TV to advertise this product.

Another aspect to amazons marketing strategy is the new in craze Amazon echo which is an electric assistant, which can be used to search for music and answer every day questions. I have recently purchased the amazon echo dot, which a smaller version of the echo and I have noticed that the product is very clever at convincing customers to invest into other amazon products. When using the product, the recommended music app was Amazon music and the product it most friendly and gains bonus perks if you use the Amazon music. I feel like this is very clever as this marketing is built into the product and doesn’t cost them anymore money to introduce. This is further seen when trying to buy a product using the device search and it always checks the Amazon website before others and this further increases the flow of the traffic. This technology has proven to be so powerful and I feel like Amazon can use this is so many different way, like using it to monitor the activity of the customers and using this information to suggest product that’s they would be interested in, through adverts. This would not surprise me if its already in place as I already get adverts based off recent product I have purchased or viewed.

Overall, I have learnt that Amazon research into creating improved customer environment, has led to the success of an estimated revenue of 275 billion dollars in 2019. Amazon also have a growing interest in joining new markets with Amazon Go and Twitch TV and I have learnt that an easy way to do this is by combining or taking over a company that has already built a reputation for itself. I believe that at some point Amazon will have some share in every market if they keep on developing, as no matter what market they are in their key focus is customer service and this is what the public like.