Question

Company: AMAZON What industries does Amazon operates in? Provide a brief description of this industry, including its attractiveness (or potential profitability) as well as its stage in the evolutionary process.

Answer 1

Amazon.com was established by current CEO Jeffrey Bezos in 1994 and is globally the highest gross online retailers with $ 136 billion earnings in 2016. It is headquartered in Seattle, Washington and listed in NASDAQ global select market under the symbol “AMZN” since its preliminary public offering in 1997.

Over a period of time organization has expanded into an extensive variety of product categories such as electronics, media, apparel, health etc. and facilitates third-party traders to offer their goods on Amazon’s retail websites and generates revenue in form of fees, commission etc.

Amazon Web Services (AWS) also offers diverse cloud computing, database and analytic services. It also serves authors and independent publishers through Kindle Direct Publishing and Amazon Publishing by permitting them to publish and sell their contents.

Amazon operates principally on geographical basis with its two main segments being North America and International which accounted for 62% and 38% of net sales as on 2014 respectively. As both the segments offer identical goods and services they are further subdivided into media, electronics and other general merchandise products.

Amazon from 2010 to 2014 earned a consistent average growth rate (CAGR) of 35% in revenues which signifies that the enterprise was able to capture a major market share. Furthermore independent market research organization Forrester Research envisages a 9% CAGR for e-commerce business in US thus enabling a growth from $295 billion in 2014 to $415 billion in 2018.

Global increase in internet usage has been able to facilitate furthermore better prospects for e-commerce trade in international markets for instance Forrester Research had estimated a 12% CAGR for the European e-commerce trade from 2013 to 2017 and 20% CAGR in Southern European countries like Italy and Spain.

Thus going forward its very crucial and critical that the macro-economic environmental factors should also be supportive facilitating the low economic pricing policies complemented with low shipping costs and a robust enhancement in consumer spending can indeed facilitate the overall growth and development of the online retailing business.