Amazon Tactics: Amazon Tactics Explained in Fewer than 140 Characters

Blog Overview

Amazon is a well-known company for buying and selling retail items online. As of 2021, there are 5 million active businesses registered on the Amazon Business, which includes private and public sectors. Today, these businesses would not be successful if the Amazon tactics did not work.

Many people prefer to buy online due to convenience, budget-friendly, time-efficiency, and overall safety than going outside. Many business owners also sell online, especially if they do not have a physical shop. It costs them less than renting a space, it’s easier to find, and sometimes less hard work when partnered with FBA Amazon.

How did Amazon start?

Almost everyone around the world knows what Amazon is. The company was built by Jeff Bezos, who worked at Wall Street as a hedge fund executive. Initially, it was called Cadabra, short for Abracadabra, but his lawyers advised him to change the name as people misheard it as ‘cadaver.’ 

He read at the directory, looked for inspiration, and came up with Amazon. The place was exotic and different, which he wanted his company to become. He also wanted the name to start with the letter A to appear instantly in an alphabetical list. 

What is Amazon?

Amazon claims to be the largest online retailer website in the world. Before they got huge, they started as an online bookstore and continued selling electronic books while also having other merchandise to sell on the market. They made the advancement of technology to their benefit, which made them more successful.

Because of the Amazon tactics, they had more than 350,000 sites in just 3 years with a booming revenue of $610 million, named Jeff Bezos as Person of the Year by Time magazine. And so, they had expanded their market from different states of America to global. And can now export to many places around the world.

What are Amazon Tactics?

At first, many people were skeptical of the online bookshop, but the company had proved them wrong. As of the year 2020, the revenue of Amazon hit $386 billion. And so far, with the three quarters of 2021, the company’s revenue is already above $332 billion. The revenue for 2021 was expected to exceed $450 billion with the added 4th quarter. 

This revenue and success make people wonder what Amazon tactics made them who they are right now. 

1. Cost Leadership Strategy

One of the Amazon tactics focuses not only on the costs of the company but also on their valued customers. They want to give the lowest price possible, which may get these customers’ loyalty and buy more. They follow the Ansoff matrix to help them understand the resulting costs.

The matrix comprises Competitive Advantage (low and high cost) on the x-axis and Competitive Scope (Broad and Narrow) on the y-axis. They aim to have Overall Cost Leadership, which needs to have low cost and broad scope.

2. Competitive Advantage

One of Amazon’s tactics that they take advantage of is developing technologies. Some of their well-known technologies are drones and robots used for fulfillment and delivery. This strategy includes the machinery and the software they are using, such as the Big Data Analytics tool.

Big Data helps Amazon to determine the behavior of their customers. This analytical tool explains why every time a customer goes on Amazon, the website shows recommended products that they might like based on their previous searches and purchases. However, this is used by many online shopping apps as well.

3. Convenience 

This tactic is a common strategy for online shopping apps. One of Amazon’s tactics is to provide convenience to the customers, meaning that when they go on Amazon, everything they need is already there. Of course, one of the convenient parts of buying online is bringing the item to your doorstep.

They started as an online bookstore but grew into an online retail shop, which gave more success to the company. This strategy shows that having it all in a shop can make the business more extensive and flourishing instead of focusing on one product.

4. Loyal customers

If a business provides good deals and quality to their customers, they will come back more and might even consider using a loyalty card. According to a survey conducted by Consumer Intelligence Research Partners of CIRP, approximately 100 million people around America availed themselves of Amazon Prime accounts.

Furthermore, 58% of these Amazon Prime Members pay the yearly fee of $199, 36% pay the membership fee per month, and only 6% use it on a free trial. Interestingly, these Prime Members also spend around $1,400 on Amazon. It is twice the amount of those who did not avail of the membership.

5. Open for small and big businesses

The Amazon products are not just their products but also merchandise of other businesses, whether they are big or small. Many people sell their products on this online platform to reach more customers. With the help of FBA or Fulfillment by Amazon, it gained more businesses that wanted to sell their products through Amazon.

The FBA program is beneficial since it provides storage, packing, and shipment orders for business owners. The owners only have to send the products they want to sell to the Amazon warehouse, and the company will do the rest. However, this comes with fees that the businesses are willing to pay.

For more Amazon tips, you can read here: Top-10 Secrets to Selling on Amazon

Frequently Asked Questions

Conclusion

Amazon started as an online bookstore in 1994 but later opened for other products, which made them successful in only three years and keeps getting more successful until today. If you plan to have your own business or company, the Amazon tactics that made the top of the retail world will guide you.