Amazon refers to a multinational technology corporation specializing in online retail purchasing. Amazon makes money through various distinct ways that include, Amazon prime, Amazon web services, online stores, and physical stores. Third-party commissions or direct purchases on Amazon’s main site generate the majority of revenue to Amazon. International, Amazon Web Services (AWS), and North America are the three key segments of the company. The International sector sells consumer items and subscriptions through the internet to people worldwide. AWS sells databases, computation, storage, and AWS offerings to academic institutions, companies, start-ups, and government organizations worldwide. Additionally, Amazon.com is a massive Internet-based company that sells electronics, movies, books, music, toys, housewares, and as an intermediate between other shops and millions of consumers of Amazon.com. The company was founded in July 1994 by Jeffrey Preston Bezos and is headquartered in Seattle, Washington (Gradinaru et al., 2020). This paper illustrates how Amazon utilizes various building blocks that include partnership, key activities, and value proposition to ensure its daily operations.
A firm’s relationships with other companies to establish a successful business model are considered vital partners in the business world. Partnerships are becoming a pillar of several business models, and companies form them for various reasons. Businesses create alliances to improve their business models, acquire resources, or decrease risk. Amazon’s key partners include publishers, digital content creators, logistics companies, sellers, and authors (Aćimović et al., 2020). Sellers are the most significant of Amazon’s essential partners, as they are the ones that earn the most profits for the company. Other publishers, logistic partners, and authors provide value to the book by assisting in the conversion of a large number of individuals into potential customers. Amazon appreciates such partners and has complimented them several times for their cooperation.
Partners to Amazon provide several services to the company, such as point sale systems, manufacturing facilities, buildings, and distribution networks. Amazon has adopted a new type of point sales system that can be sold and become accessible to third-party sellers. The new point sale system can handle transactions carried out offline and online and links to other services such as Flex and Prime. Amazon also owns delivery stations that form an integral part of its distribution networks that aid in the easy movement of its high volume of orders.
Any business strategy requires several key activities, these are the most critical steps that a business must take to succeed. To establish and deliver a Value Proposition maintain Customer Relationships, access markets, and generate revenues, essential tasks are necessary. Key Activities vary based on the kind of company strategy. At Amazon, key activities include securing and building partnerships, managing supply chain, and logistics, merchandising, optimization, designing, and development. Amazon has got the 4-star merchandising effect; with its newest retail idea, Amazon uses data to rely on a highly sophisticated and curated merchandising plan instead of a beautiful and Instagrammable store design (Sadq et al., 2018). Amazon has also considered going cashless with Amazon Go; this happened after the company carried out its first test in Seattle. Lastly, the company has also powered shoppable showrooms with one click using the Amazon app to make orders, and the products are delivered to the customers’ destination.
Customers choose one firm over another because of the value proposition. It meets a customer’s demand or addresses the need of the customer. Every value proposition comprises a carefully selected set of services and products that are tailored to the needs of a specific Customer Segment. The value proposition is a collection of advantages that a business provides to its consumers. The value proposition of Amazon company includes convenience or usability, competitive pricing, fast delivery of its services, newness, and a wide selection of products. Customers benefit from Amazon’s convenient products and services. Convenience is usually the essential factor for everyday purchases at Amazon stores. Customers are prepared to pay extra when it comes to food, personal care products, and pet supplies. Parents, once again, are far more ready to pay more for convenience in these regions.
The three-building blocks, key activities, value proposition, and key partnership play significant roles to Amazon company. The company’s consistency in its proper utilization is likely to lead to its success. According to the products that Amazon avails to its customers, the company’s key partners are specialized in their sector. With continued relationships, these partners significantly contribute to the company’s success. For instance, the Incorporation of point sales by the company has enabled convenient delivery and accessibility of the Amazon outlet stores by several customers after making an order. Key activities are also another significant building block that has allowed the company to modify its products, services, and stores for the customer’s benefit (Osterwalder & Pigneur, 2010). Lastly, Amazon has always outdone other companies due to its unique services and products that meet customers’ demands. Even though the company should consider adding more value propositions such as an imitable business model to its list, in my opinion, the three building blocks are best for the company’s success.
Business Model Canvas
|KEY PARTNERS |
Who are your key partners/suppliers?
Which key resources are we acquiring from partners?
Which key activities do partners perform?
|KEY ACTIVITIES |
What key activities does your value proposition require?
What activities are the most important for your distribution channels, customer relationships, revenue streams, etc?
What key activities do you need to deliver your customer experience?
|VALUE PROPOSITION |
What core value do you deliver to your audience?
What bundles of product/services are we offering to each customer segment?
What jobs are our customers trying to complete?
What pains do they experience when trying to achieve their goals?
How does our product/service help them achieve their goals/relief pains?
Aćimović, S., Mijušković, V., & Milošević, N. (2020). Logistics aspects of goods home delivery: The case of Amazon company. Marketing, 51(1). Web.
Gradinaru, C., Toma, S. G., Catana, S., & Andrisán, G. (2020). A view on transformational leadership: The case of Jeff Bezos. Manager, (31). Web.
Osterwalder, A., & Pigneur, Y. (2010). Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers (Vol. 1). John Wiley & Sons. Web.
Sadq, Z. M., Sabir, H. N., & Saeed, V. S. H. (2018). Analyzing the Amazon success strategies. Journal of Process Management and New Technologies, 6(4). Web.