Amazon dominates North America ’s online retail category with estimated gross merchandise volume (GMV) of approximately $275 billion in the region during 2019. With more than half of the world ’s internet users coming from developing markets, Amazon has ample international growth opportunities for its marketplaces, cloud services, advertising, and devices. Amazon’s device portfolio - including Kindle, Fire TV, Dash, Echo, and Alexa - enabled products - are intriguing customer acquisition/retention tools.
The combination of competitive pricing, unparalleled logistics capabilities and speed, and high- level customer service makes Amazon an increasingly vital distribution channel for consumer brands. Amazon maintains a consumer value proposition by expediting the Prime shipping and expanding digital content library, and new member benefits. As the traditional brick-and-mortar retail industry has undergone a period of rapid transformation over the past several years.
Amazon generates strong cash flow from seller services, which is reinvested in advertising, service, and website enhancements that keep its marketplace strong. Amazon’s brand has come to represent low prices, a wide selection, convenience, and superior customer service — a rare combination among retailers. Amazon ’s operational efficiency of the distribution network, which satisfies consumer demand for free and expedited shipping.
Amazon benefits from a network effect, as low prices, an expansive breadth of products, and a user-friendly interface attract millions of customers, which in return, attracts merchants of all kinds to amazon.com. Customer reviews, product recommendations, and wish lists increase in relevance as more consumers and products are added to the amazon platform, enhancing its network effect. The customer reviews and product recommendations are growing in presence as more retailers are adding to the site, enhancing the network effect.
Amazon has continued to develop into a formidable player in digital media, given its vast content offerings, into new verticals, and the ability to sell hardware. Amazon ’s cloud computing offerings possess more than 3 times the computing capacity in use than the next 10 largest providers combined. With investments in additional capacity and other innovations, AWS has become an increasingly positive gross margin contributor.