E-Commerce Business Model of Amazon

This report discusses the e-commerce business model of Amazon, including revenue model, value proposition, and major aspects of the business model. Recommendations for improvement are also provided.

E-Commerce
[Name of the Student]
[Name of the University]
[Author note]

Executive Summary
Amazon is one of the biggest retailer company conducted its business online. Amazon has
become capable of developing its merited impression in order to own the internet shopping
market. This report would be discussing about the e-commerce business model of amazon. The
report provides a brief overview of the business model which includes the revenue model as well
as the value proposition. In addition to this the three of the major aspects of the E-Commerce
business model has also been discussed in this report. Lastly the report has discussed about
particular recommendation which can be used by the organization Amazon in order to improve
the E-Commerce business model.

Table of Contents
1. Introduction................................................................................................................................4
2. Discussion:...................................................................................................................................4
Business model affecting the Revenue model:..............................................................................5
Value proposition of Amazon:........................................................................................................6
Vision and mission of Amazons business model:...........................................................................6
3. Major contents of E-Commerce Business Model:......................................................................7
Online electronic market place and exchanges.............................................................................7
Web 2.0 usage by Amazon:............................................................................................................7
4. Conclusion...................................................................................................................................7
5. Recommendations......................................................................................................................8
6. References...................................................................................................................................9

1. Introduction
Amazon is an organization which is associated with providing a wide range of products along with
services to businesses as well as to other individuals as well. Being an online retailer and third-
party organization the products of Amazon ranges from the book, music, to products like
furniture and clothing’s. The E-Business of Amazon operates under numerous business models,
and all this service models are designed for eth purpose of capturing and retaining the customers
while keeping up with the evolving technological demands of the customers (aboutamazon.com,
2018). Amazon is frequently touted as one of the biggest retailers conducting business online and
it is having a business model that consists of several moving parts.
Amazon provides a wide range of products and all these products can be purchased by making
use of the business models online front store having a small markup and besides this the stocks
are kept within the extensive system of the stockrooms (DaSilva and Trkman 2014). It is seen that
most of the customers are customers are visiting the site of the organization and are accepting
their products as well which are affordable and are promptly accessible for buying and
dispatching.
2. Discussion:
Notwithstanding the direct deals the Business Model of Amazon is also associated with providing
stages for different retailers so as to sell their product to the customers. The products that are
sold through the accomplice retailers of Amazon are generally the frequently fewer regular
things or the things having higher price tags. This in turn is associated with enabling the Amazon
to withhold from holding the moderate moving stocks which are responsible for weakening of
the profit level (Ritala, Golnam and Wegmann 2014). Amazon is associated with retaining a
specific segment of the business cost as their commission but the organization is not associated
with charging an expense for the list of things that the retailer accomplices.
Amazon prime administration and a little gadget product offering are some of the some by which
the organization keeps up its membership-based business model (Foss and Saebi 2015). Under
this prime record the clients are capable of paying on a yearly basis so as to have a secure and
free two-day or same day dispatching on certain things and are also having the access to
streamline the media. The business model canvas of Amazon has been provided below:

The figure is associated with clarifying the major accomplices along with the key partners, key
activities, the value proposition, the customer relationship, the customer segments, cost
structure, and the revenue stream of the organization.
Business model affecting the Revenue model:
Accessing the potential business model is possible only if the entrepreneurs are uncovering the
nature of its “profit engine” which is often seen to be obscured by the ambitious financial and the
market projections. It is essential that the entrepreneurs are associated with asking themselves if
it is possible to translate their business concepts into a viable and profitable business venture and
what is the amount that is required for achieving the expected results (Bohnsack, Pinkse and Kolk
2014). The revenue model of Amazon is affected by three of eth factors and this includes the
following:
Factors Affect upon the revenue model
Investment The cost that is needed for lunching and sustaining a business is well
known to Amazon
Cost drivers Amazon has been associated with identifying the most important cost
components that are having a huge impact upon the structure of the
cost and this has initially made them disaggregate the data related to
cost so as to uncover the key drivers (Kavadias, Ladas and Loch 2016).
Revenue sources Amazon has also been capable of identifying the key revenue streams
as well along with the size and importance of the various kind of
revenue resources which has made them disaggregate the data related

to revenue so as to uncover the key revenue drivers (Aversa et al.
2015).
Along with this the business growth of Amazon seen at the beginning is generally based upon the
detailed approach to the SEO. The organization has also been associated with working upon the
test and learn strategy and besides this the try and error method acts as very beneficial for the
revenue model that they are having.
Value proposition of Amazon:
Convenience, Speed and Choice are some of the important benefits offered by Amazon. These
three components are considered to be the core benefits that helps in making up the unique
selling proposition of Amazon. Buying is amazon is very much easy just by few clicks. Besides this
there also exists other features like the payment saving option, free fast shipping option and
many more are the reason that makes the customers hesitate less (Trkman, Budler and Groznik
2015). All these features are maintained so as to provide convenience to the customers. In case if
the customer knows what exactly he or she needs to buy then it is possible to order that
particular product in just few minutes. One good example of speed is the fast delivery of the
products.
Vision and mission of Amazons business model:
The vision of Amazon was described in the year of 2008 and this is a “Relentlessly focus on
customer experience by offering our customers low prices, convenience, and a wide selection of
merchandise.” But now the vision of vision has been modified and this is becoming the earths
most customer centric company and is also associated with providing the biggest selection of
customers.
These are some of the visions of Amazon that is associated with providing a clear concept of the
business model. Whereas some of the key factors responsible for the success of Amazon includes
the repeat purchase and the customers loyalty (Kindström and Kowalkowski 2014). Amazon is
also associated with providing easy-to-use functionalities for eth users and along with this they
also listen to the customers by means of the feedback and the review section. This is done in
order to focus on the particular complaints and demands of the customers.

3. Major contents of E-Commerce Business Model:
Online electronic market place and exchanges
The Online retail service of Amazon is associated with allowing the businesses to sell their
products in a same platform as the Amazon retailer in the site “Amazon.com”. Amazon provides
an online market place where the third-party sellers are capable of selling their new and used
products at a price which is fixed assisted by online regular offerings of amazon. The third-party
sellers are capable of gaining an access to the customer base of amazon and besides this the
organization also expands its offerings on its site without any kind of investments in the
additional inventory (Zott and Amit 2015). The items that are purchased by the customers on
Amazon from the third-party sellers are generally fulfilled by Amazon (FBA) or by the merchant
(FBM). The goods of the FBM are generally stored in the inventory of the third-party seller where
the third-party merchants are associated with handling the customer services and the shipping
process. Whereas the goods of FBA are stored in the fulfilment center of Amazon and in this the
shipping along with the customer service are handled by Amazon.
Web 2.0 usage by Amazon:
Web 2.0 is defined as the second generation of service that is available in the WWW or World
Wide Web which is associated with letting the people collaborate and sharing the information
online. The Web 2.0 is used by amazon so as to leverage the social commerce on their site along
with blogging or podcasting along with taking active part in the social network like the Twitter,
YouTube, and Facebook (De Jong and van Dijk 2015). Few of the reasons for which the web 2.0 is
used by Amazon includes the following:
 Collection of customer reviews.
 Providing shopping widgets that is it consist of portable contents which can be displayed anywhere
in the web and this allows amazon to push an interactive experience to the sites which are affiliated,
sites for the customers, social networks and many more.
 Interacting with the customers
 Collection of users generated and photos and this includes the Amazon Listmania which helps the
customers in discovering new items.
 Providing social widget on the site which generally refers to anything that is social and this is
associated with making sense for Amazon.
4. Conclusion
Amazon is one of the well-known online retail company which is associated with selling of goods
of different type. The organization is associated with the usage of an effective business model
which helps a lot it achieving success. Amazon has not been associated with uncovering much of
its advertising approach. They have been attracting their customers to their site fundamentally by

making use of different kind of focused advertisements on the internet. There exist many
competitors however due to the usage of the effective e-commerce business model it has stayed
in top of the list of online retailers. The report provided above has been associated with analyzing
the business model of Amazon. The Amazon market place is similar to other marketplace models
which is run by the sellers and buyers. The products which are generally sold by the third-party
sellers in amazon are either fulfilled by Amazon or are fulfilled by the merchant. Amazon also
charges a particular commission from the third-party sellers of amazon, and this commission vary
in accordance to the good sold.
5. Recommendations
One of the recommendations for the e-commerce business model is about outsourcing. It is
possible for amazon to outsource a lot of functions which would be conducted in house and
besides this the fact that is Amazon conducts its business virtually so various added advantages
are provided to the ability of outsourcing in different countries. There exist numerous
opportunities for amazon to outsource the services that they are having along with the numerous
benefits. Effective outsourcing would be lowering the positions in Amazon and this would be
associated with cutting down the cost for amazon and this would be allowing the organization to
focus upon the different innovative aspects of the business practice.

6. References
aboutamazon.com. (2018). About Amazon. Retrieved from https://www.aboutamazon.com/
Aversa, P., Haefliger, S., Rossi, A. and Baden-Fuller, C., 2015. From business model to business
modelling: Modularity and manipulation. In Business models and modelling (pp. 151-185).
Emerald Group Publishing Limited.
Bohnsack, R., Pinkse, J. and Kolk, A., 2014. Business models for sustainable technologies:
Exploring business model evolution in the case of electric vehicles. Research Policy, 43(2), pp.284-
300.
DaSilva, C.M. and Trkman, P., 2014. Business model: What it is and what it is not. Long range
planning, 47(6), pp.379-389.
De Jong, M. and van Dijk, M., 2015. Disrupting beliefs: A new approach to business-model
innovation. McKinsey Quarterly, 3, pp.66-75.
Foss, N.J. and Saebi, T. eds., 2015. Business model innovation: The organizational dimension. OUP
Oxford.
Kavadias, S., Ladas, K. and Loch, C., 2016. The transformative business model. Harvard business
review, 94(10), pp.91-98.
Kindström, D. and Kowalkowski, C., 2014. Service innovation in product-centric firms: A
multidimensional business model perspective. Journal of Business & Industrial Marketing, 29(2),
pp.96-111.
Ritala, P., Golnam, A. and Wegmann, A., 2014. Coopetition-based business models: The case of
Amazon. com. Industrial Marketing Management, 43(2), pp.236-249.
Trkman, P., Budler, M. and Groznik, A., 2015. A business model approach to supply chain
management. Supply Chain Management: An International Journal, 20(6), pp.587-602.
Zott, C. and Amit, R., 2015. Business model innovation: Toward a process perspective. The Oxford
handbook of creativity, innovation, and entrepreneurship, pp.395-405.