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Business Model -Amazon

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Amazon’s business model components can be characterized on the basis of customer value proposition, profit model, critical processes and critical resources. Amazon has three different businesses – Amazon retail, Amazon marketplace and Amazon web services. Its customers include the consumers (global market) – who want to buy the products, the sellers (company and individuals) – who want to sell products on Amazon and the developers – who want to use Amazon developing services. Its customers are more concerned with products and services that have been tailored to meet their needs and are willing to pay a premium for effective tailoring (pg. 109). Hence, Amazon uses customer intimacy value discipline. Amazon as a customer-obsessed company provides a unique customer experience through competitive pricing, integrated offerings, convenience, ease of purchase, personalization through collaborative filtering and wide selection in order to gain customer loyalty. Amazon focuses on long-term profitability. Its main revenue streams include sales, the fees and sales commission from third party and the fees from the developers. Due to competitive pricing, Amazon has low profit margin. As we can see from exhibit 3 (pg. 172), Amazon isn’t that profitable in relation to its revenue. Also, its cost structure includes fulfillment, marketing, technology and content, general and administrative operating expenses. However, Amazon has been expanding the product categories and across various countries. As we can see from exhibit 1(pg. 171), Amazon’s worldwide active customers have also been increasing. So, Amazon’s strategy to produce profit though insignificant is increasing the number of customers and pleasing them as much as possible, retaining them, increasing the frequency of purchase by the customers and letting the virtuous circle continue.
Critical business process activities

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