What Are the Advantages That Amazon Has Compared To the Competitors?

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Amazon that was founded by Jeff Bezos is a very successful e-commerce website where people can buy anything they want and also gives more than they need. What are the advantages that Amazon has compared to the competitors?

Amazon focuses more on customers than its competitors. Amazon provides excellent service and fast delivery. For instance, Amazon offers free delivery within two days or even same-day delivery for Amazon Prime members. Additionally, Amazon focuses on value-adding for customers, such as user-contributed reviews system, similar suggestions, automated communication system. Amazon also makes it more convenient for customers to navigate. Amazon not only has a massive selection for all customers, but more importantly, Amazon always keeps the price low. The goal is building loyalty, even if it means sacrificing profit today1.

Most importantly, data is one of the reasons that Amazon has such an advantage. The power of the data is giving information and insights. There are enormous numbers of sales made with Amazon, and almost all web shoppers will go to Amazon to search for a product. When customers purchase items from Amazon, the customers are giving more than money, such as their address, their payment method, their needs, etc. With that, Amazon doesn’t just know what products the customers buy but what device they use, what they search for and what reviews they have on products. They can see the trend of or even make predictions on customers’ behavior, which would help with product inventories and shipping. The more Amazon knows about the customers, the better they can predict what the customers want to buy, then the more sales Amazon makes. Amazon bought Whole Food in 2017, which is the largest acquisition at $13.7 billion. With massive amounts of data from Whole Foods shoppers, Amazon will ultimately be able to tailor the grocery shopping experience to the individual. Amazon has already mastered the process of upselling, i.e. offering additional items that go with the items the consumer is looking to buy2. Finally, Amazon focuses on long-term growth rather than short-term profit. A good example is Amazon Web Services. Amazon Web Services was launched in 2006 and started to generate the net revenue of Amazon since 2016. In 2019, AWS brought in 9.2 billion in operating income, which is accounted for 63% of the company’s operating income3. When there is a new product or service comes up, Amazon would analyse whether the product or service makes sense in a long-term period, such as five year or ten years.

Which company you think is Amazon’s biggest competitor? Please leave your comments below.

Reference:

1Levy, A. (2018, March 21). Amazon's Focus on Customer Loyalty Is Paying Off. The Motley Fool. Retrieve from: https://www.fool.com/investing/2018/03/21/amazon-is-showing-strength-in-shopper-loyalty.aspx

2Petro,G. (2017, August 2). Amazon's Acquisition Of Whole Foods Is About Two Things: Data And Product. Forbes. Retrieved from https://www.forbes.com/sites/gregpetro/2017/08/02/amazons-acquisition-of-whole-foods-is-about-two-things-data-and-product/#4b105105a808

32019 Annual Report. Amazon. Retrieved from https://s2.q4cdn.com/299287126/files/doc_financials/2020/ar/2019-Annual-Report.pdf


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