How Amazon makes money? Amazon business model

 As we all know, Amazon is one the most popular online business site. So, how does Amazon makes money? Does this question strikes in your mind? What is their strategy? Let's see it- 

Amazon makes money through its retail, subscriptions, and web services, among other channels. Retail remains Amazon's primary source of revenue, with online and physical stores accounting for the biggest share. 

If we Amazon's worth than its market value is at present $427 million. That means the current value of $1 in Indian currency is Rs.74.85 than obviously it's business is how large you can figure it out yourself. Amazon makes money in millions. 

As Amazon's main head quarter is at US than let's see what's the market value of US's traditional retailers market:-

•Sears: $1.2 billion

•JC Penney: $1.8 billion

•Kohl’s: $6.8 billion

•Nordstrom: $7.4 billion

•Macy’s: $8.9 billion

•Best Buy: $14.9 billion

•Target: $29.4 billion

•Wal-Mart: $221.1 billion

     Combined: $291.5 billion

But in 2016, Amazon accounted for 43% of all online retail sales in the U.S.

Amazon grows rapidly. As because Amazon accounts for 34% of US e-commerce.

And the domination of e-commerce grows in the following way:-

•2016: 34%

•2017: 37%

•2018: 41%

•2019: 45%

•2020: 47%

•2021: 50%

Amazon has already made the future aspect.

 Now, the question is why Amazon is so successful? How? 

The answer is, Amazon constantly innovates itself and adapts new technology.

Amazon first started its business as online bookseller on 1994.

Since than Amazon has expanded to become cloud computing giant, tablet and smart home device manufacturer, ebook publisher, movie studio, and more. 

The main advantage it gets because the main focus of Amazon is costumer. As we already know, customers are the king of market. So, Amazon serves its customer and satisfies. Because of this Amazon was ranked as #1 American Customer Satisfaction Index on 2017.

And also #1 Corporate Reputation Harris Poll on 2017.

Amazon knows about their customers needs. They will provide you all the variety with each and everything included in any particular category.  about 35% of Amazon’s revenue comes from ““Frequently Bought Together” and “Customers Who Bought This Item Also Bought” features.

Amazon is mainly focused  in its growth instead of its profits.  The CEO of Amazon, Jeff Bezos looks to the future, not the present. The operating income on 2016 was $4.2 billion. That's only the 4% of its total sales.

What Amazon revered and feared:-

•Sellers concerned about punishment/competition from Amazon

    Top concerns:-

•61% Amazon taking away other seller privileges

•44% Amazon selling other items

•43% Negative customer feedback

    What do sellers owe from  Amazon?

•Professional sellers (sell more than 40 items per month): $39.99/month + 10-15% of transaction

•Individual sellers (sell fewer than 40 items per month): $0.99/sale

•79% of sellers use Fulfillment by Amazon (FBA) services

•Amazon stores, packages, and ships your products for you.

The last point that says above, as shipping of product, even if you have your own online site and customers buys products from you but you don't have access on delivering it to the whole around the world. The only thing Amazon will do in this case is, it will deliver it the customers. You don't even need to sell your product on Amazon , it will only deliver it the doors of the customers. 

Amazon fulfills it's tagline ," work hard. Have fun. Make history."