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Amazon.pptxAmazon
Tracell Smith ECON220-2104A-07 Alexander Lancaster 09/22/2021
Introduction
Amazon.com, Inc., based in Seattle, Washington, is a global e-commerce, cloud computing, digital entertainment, and artificial intelligence business. (Amazon, 2020)
With Google, Apple, Microsoft, and Facebook, it is one of the Big Five firms in the United States' information technology field.
The company was founded by Jeff Bezos in 1994.
Products and Services
Amazon is the largest ecommerce company in the world with many products and services divided over different divisions. These include:
Retail goods, Amazon Prime, Consumer electronics, Digital content, Amazon Video, Delivery, Groceries, Amazon Business, Amazon Drive, Private labels and exclusive marketing arrangements, Amazon Web Services, Amazon Publishing, Amazon Smile, Amazon Local, Retail stores, Amazon Home Services and Amazon Cash/Top Up (Amazon, 2020).
Amazon sells both directly and as a go-between for other businesses/retailers and Amazon's millions of consumers.
Retail is Amazon's principal source of income, with the majority of sales coming from both online and physical shops. The company's primary source of operational income, Amazon Web Services (AWS), is rapidly expanding.
Annual Sales
Amazon's revenue for the year ended June 30, 2021 was $443.298 billion, up 37.76 percent from the previous year. (Chevalier, 2021)
Amazon's yearly revenue in 2020 was $386.064 billion, up 37.62 percent from the previous year.
Amazon's yearly revenue in 2019 was $280.522 billion, up 20.45% from 2018. (Chevalier, 2021)
Amazon's yearly income in 2018 was $232.887 billion dollars, up 30.93 percent from 2017.
In contrast, Amazon had annual revenue of 6.92 billion dollars in 2004. This indicates that the company has had serious growth every year.
Chart Showing Amazon Sales from 2004 -2021
Source: Statistica.com https://www.statista.com/statistics/266282/annual-net-revenue-of-amazoncom/
Amazon: Market Share
Amazon's market capitalization was $1.49 trillion as of July 2020. (Forbes, 2020)
Amazon is predicted to have a 47 percent share of retail e-commerce marketplaces in the United States in 2020, and a 50 percent share in 2021. (Fortune, 2017)
With 38.7% of the market share in retail online sales in the United States in 2020, Amazon was at the top.
By 2021, Amazon is expected to have a 39.7% share of retail e-commerce sales in the United States, totalling $302.36 billion.
Market Structure
Amazon is an Oligopoly.
Because Amazon has its own brand value, it may set its own price for a variety of different brands based on demand for specific goods and services.
In an oligopoly, a few sellers control the entire industry. Instead of a market where many companies compete for a small piece of the pie, Amazon and eBay dominate e-commerce sales. Amazon and eBay are oligopolies due to high entry barriers and market domination by a few companies. (Economics Online, 2020)
Because of Amazon's market dominance and technical expertise, individuals may be able to sell goods online. There is a distinction in that it attracts a greater number of corporate employees and fewer private individuals. It's an excellent illustration of how technology advances have heightened competitiveness in some sectors.
Amazon: National or International?
Amazon is an international/multinational company.
A multinational company (MNC) operates in at least one country other than its home country and has facilities and other assets there. Multinational companies often have offices and/or factories throughout several countries, as well as a centralized headquarters where worldwide management is handled.
It operated in the United States, Canada, Italy, Germany, Spain, and the United Kingdom by December 2020, (Amazon, 2020).
Amazon also had 13 country-specific sites before debuting in India, with Amazon Prime accessible in nine of them. The United States, the United Kingdom, Spain, Japan, Italy, Germany, France, Canada, and Austria are among the Prime-eligible nations.
Competitors
Amazon is the biggest online retailer in the world, and it's quickly expanding into new sectors including physical shopping, subscription services, and web services.
Since Amazon has several departments; it has several competitors in every Category
Target, Walmart, Best Buy, and Costco are among Amazon's retail store competitors.
Amazon competes with Netflix, Apple, and Google in terms of subscription services.
Amazon competes against Oracle, Microsoft, and IBM in the internet services sector.
In terms of marketplaces, eBay is Amazon’s main competitor.
Economic Concepts
Product Differentiation - Product differentiation is a marketing technique for setting a company's goods or services apart from its competitors‘, (Piana, 2003)
Amazon has unique business offerings and models leading to a high level of differentiation. Its business approach has differentiated itself via the utilization of technology and talented human resources. Customers may use the company's services via its website and mobile applications. The internet business strategy does not need the use of physical stores.
Economies of Scale: Companies benefit from economies of scale as production gets more efficient. By expanding output while reducing costs, economies of scale may be achieved. When expenses are spread out across a greater number of products, this occurs.
Amazon has a large storage and processing infrastructure that allows it to benefit from physical economics of scale. As a result, it is more affordable.
Recent Events: Coronavirus Pandemic
The global demand for internet purchasing increased as a result of the coronavirus pandemic.
In March 2020, Amazon announced that it would be recruiting an extra 75,000 employees at its facilities, on top of the 100,000 new jobs it had announced the previous month, (CNBC, 2020)
During the coronavirus pandemic, the business said in March 2020 that it would employ more warehousing and delivery personnel throughout the nation. Since then, Amazon said that it had recruited over 100,000 additional workers and was still hiring thousands more to assist fulfill orders.
How Amazon Might Better Respond to the Challenges it Faces
A Balanced Approach to Profits and Investments
Amazon is known for reinvesting profits back into the company. With new efforts like as healthcare, payments, and logistics making headlines, investors may be concerned that the next rapid investment inflection may harm them. Although investing in new technologies and lines of business may pay off in the long run, Amazon's profit growth narrative may be harmed by a rapid investment ramp-up. The importance of maintaining a good balance cannot be overstated.
Dealing with more stringent government inspections
The business may face problems as a result of increasing regulatory scrutiny of internet giants. The EU and other nations, including France, have also increased their attempts to regulate and tax big internet businesses like Amazon. Even if this has an impact on consumer pricing and service delivery, Amazon's best course of action going ahead is to follow the rules.
Conclusion
Amazon is a great example of an all round company employing great strategies of doing business. As a result, the company can be an effective benchmark and case study for both macro and micro economics.
Students can gain valuable knowledge by studying the different economics with Amazon as the focus.
References
Amazon. (2020, September 17). About amazon. US About Amazon. Retrieved September 14, 2021, from https://www.aboutamazon.com/.
Chevalier, S. (2021, July 7). Amazon: Annual REVENUE 2018. Statista. Retrieved September 14, 2021, from https://www.statista.com/statistics/266282/annual-net-revenue-of-amazoncom/.
Klebnikov, S. (2021, June 28). 5 big numbers that SHOW amazon's explosive growth during The Coronavirus Pandemic. Forbes. Retrieved September 14, 2021, from https://www.forbes.com/sites/sergeiklebnikov/2020/07/23/5-big-numbers-that-show-amazons-explosive-growth-during-the-coronavirus-pandemic/?sh=6b8e5d6b4137.
Wahba, P. (2021, June 9). Amazon will make up 50% of All u.s. e-commerce by 2021. Fortune. Retrieved September 14, 2021, from https://fortune.com/2017/04/10/amazon-retail/.
Economics Online. (2020, January 25). Oligopoly - characteristics: Economics online: Economics online. Economics Online | Economics Online. Retrieved September 14, 2021, from https://www.economicsonline.co.uk/Business_economics/Oligopoly.html.
Piana, V. (2003). Product differentiation. Economics Web Institute.
CNBC. (2020, April 13). Amazon to Hire 75,000 more workers as demand rises due to coronavirus. CNBC. Retrieved September 14, 2021, from https://www.cnbc.com/2020/04/13/amazon-hiring-75000-more-workers-as-demand-rises-due-to-coronavirus.html.
