Business Model of Amazon

History of Amazon:

The company was created as a result of what Jeff Bezos called his “regret minimization framework”, which described his efforts to fend off any regrets for not participating sooner in the Internet business boom during that time. In 1994, Bezos left his employment as vice-president of D. E. Shaw & Co., a Wall Street firm, and moved to Seattle, Washington, where he began to work on a business plan for what would become Amazon.com.

On July 5, 1994, Bezos initially incorporated the company in Washington state with the name Cadabra, Inc. After a few months he changed the name to Amazon.com, Inc, because a lawyer misheard its original name as “cadaver”. In its early days, the company was operated out of the garage of Bezos’s house on Northeast 28th Street in Bellevue, Washington. In September 1994, Bezos purchased the domain name relentless.com and briefly considered naming his online store Relentless, but friends told him the name sounded a bit weird. The domain is still owned by Bezos and still redirects to the retailer.

Introduction:

Amazon  is an  American  international  e-commerce  company.  It  was started by Jeffrey P. Bezos  in the  year 1994. And  it was  launched in

India in June 2013. Three years back, Amazon had no infrastructure in

India, and now it dominates the Indian markets. At the very start it was

perception of investors that in India It will not go long like China as   in

the    2004  when  Amazon  entered  in  China  it  hasn’t  seen  much

success there with Alibaba, its Chinese competitor, dominating the e-

commerce market. After its bad run in China, Bezos is going all in for

India. 

Fact  behind formation of  Amazon  in  India was  its huge  number  of headcounts i.e.  1.25 billion four  times as  big  as the  U.S.’s  and  more.

than  doubles  . Of these  500 million around  35  are

Internet users. As per researches the yearly growth rate of internet users is  highest  in  India  around  six  million  users  join  every  month. Researchers expect  the online shopping  market  in India  to reach $15 billion by 2016 up from only $35 million in 2014.

Objectives Of Business Model:

  • To look into the strategy of Amazon to assess and be prepared for  the foreseen challenges of running Am
  • To understand Amazons expansion strategy in detail.

  Amazon India Business model:

 Amazon targets the middle class & upper class people who  have hands on experience in technology but don’t have much  time  to  do  shopping  from  the  physical  outlets.  Taking  this  into  consideration  Amazon  has successfully positioned itself as a Glocal (Go global Act local) e-commerce giant where one can buy anything & get it delivered at any remote locations. Using the catchphrase Aur Dikhao its most recent campaign in India, it has further helped them carve a distinct space in the consumer’s mind.

 Company  acquired  many  IT  &   e-commerce  start-ups  like  pets.com,  audible.com,  Junglee.com,  IMBD.com,

Zappos.com,  Woot  etc. for    providing  high value  to their customers  using existing  technology of the  acquired

partners at low cost.

Company’s  CRM  records  data  on  customer’s  buying  behavior.  It enables them to  offer individual items,  relaconsumers or bundle them as an offer, based upon preferences demonstrated through purchases or items visited. Revenue model defines how a firm aims to generate higher return on investment and profits. Important e-commerce

revenue models include advertising, subscription, transaction fee, sales, and affiliate revenue models (Laudon and

Traver, 2009). Market opportunity gives description of possible revenue a company is likely to generate from its

proposed marketspace. 

 .

In the U.S., by contrast, Amazon holds and sells its own inventory of toys, books, and more in addition to selling

goods from third-party sellers. The Indian Government, however, plans to allow foreign companies that manufacture their products in the country to sell them directly to consumers over the Internet. But Amazon would have to start making its products in India to take advantage of the change in the  law. Amazon’s model in India differs slightly .

As we discussed earlier that major foreign ownership to operate retail locations having their own inventory . Because of which amazon serves with warehousing and shipping goods

Amazon is an American international e-commerce company. It was started by Jeffrey P.  Bezos in the year 1994.

And it was launched in India in June 2013. Three  years back, Amazon had no  infrastructure in India, and now it dominates the  Indian markets.  So main objective of the case is  to study the  challenges  faced  by Amazon India during initial years and what strategy it followed to overcome the challenges. This case will also study the business model of amazon in India

Amazon entered in China it hasn’t seen much success there with Alibaba its Chinese   the

commerce market. After its bad run in China, Bezos is going all in for India. 

Fact behind formation of Amazon in India was its huge number of headcounts i.e. 1.25 billions.

Researchers expected the online shopping market in India to have reached 15 million by 2016.

Amazon is known for knowledgeable products

Note: References taken from different websites as the data was number based.

-Medha Singh

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