I.

INTRODUCTION

1.1 General introduction about amazon:

- Established on May 7, 1994 in Seattle, USA.

-Founded by Jeff Bezos.

-The world's leading retail website.

-Presence in more than 180 countries and territories.

-Is one of the four giants in the technology field besides Google, Apple and
Facebook.

-Providing diverse products and services such as books, CDs, DVDs, home
appliances,Clothes, toys, sports products, etc...., also providing storage services
cloud (Amazon Web Service) and online video streaming service (Amazon Prime
Video).

-This group's commercial website has a large number of products and is not limited
to any country. Amazon's products are diverse and come from many different
brands.

1.2 History of formation and development of Amazon:

-1994: Jeff Bezos founded Amazon in Seattle, USA. Initially, due to insufficient
resources, Amazon only focused on books. In the early days, the website's official
name was Cadabra Inc. However, because the pronunciation of this word is similar
to the word "Cadaver" - which means corpse, Jeff decided to change the name to
Amazon because this is the longest river in the world and also means strange and
different. Seattle was chosen as Amazon's headquarters because Seattle is a major
technology center with many universities, which helps Amazon attract highly
skilled and creative employees. Just two months after the website was officially
established, Amazon had customers in all 50 states and 45 countries.

-May 15, 1997: the company was officially listed on the US stock exchange

-1998: begins selling video games and music, expanding internationally by

acquiring online booksellers in the UK and Germany.
-1999: Expanded market, in addition to items such as books and video games, also
added items such as electronics and household appliances. Besides, there is also a
quick auction service.

-2002: The company founded Amazon Web Service (AWS) - which provides data
on website popularity, internet traffic patterns and marketers' statistics.

-2004: Launched the A9 search engine, this tool works like Yellowpages but with
additional images. A9 provides additional Block View feature similar to Google's
Street View.

-2009: Amazon established the book publishing unit Amazon Publishing.

Previously, the company launched an online movie and sports video service called
Amazon Prime Video, an online music streaming platform and an online music
store. Amazon Prime Music stream.

-2013: Amazon acquired the Whole Foods Market supermarket chain for $13.4
billion. This deal helped Amazon increase its presence in the food sector.

-2018: Amazon confirmed that it would acquire online pharmaceutical company

PillPack, expanding its market into the drug distribution segment. In addition,
Amazon is also accelerating in the AI artificial intelligence race.

1.3 Factors leading to Amazon's success:

Amazon's success comes from many different factors, including:

-Vision and strategy: Jeff Bezos saw the development potential of the Internet
network and the field of online shopping. He accidentally read a report and learned
that the frequency of accessing the internet each month falls to 2,300. % in the
early 90s, realizing this huge potential, he decided to quit his previous job to start a
business.

-Ability to innovate: Amazon continuously innovates and develops products and

services to meet the increasingly diverse needs of customers

-Focus on customers: Always put customers at the center of every business

decision, always strive to provide the best shopping experience

-Technology and artificial intelligence: Continuously invest in technology and

artificial intelligence to optimize the shopping process and provide smart services
such as product recommendations, Alexa virtual assistant and management
algorithms. warehouse management
II. AMAZON’S MARKET ANALYSIS:

2.1 Amazon's Market Overview:

Amazon's market encompasses various services and product lines. The

company's main services include e-commerce retail, where customers can purchase
a wide array of products ranging from electronics and household goods to books
and clothing. Additionally, Amazon provides digital services through Amazon
Web Services (AWS), offering cloud computing solutions to businesses
worldwide. In the media and entertainment sector, Amazon Prime Video delivers
streaming content, while technology products like Amazon Echo cater to smart
home solutions. Amazon has expanded globally, operating localized websites in
numerous countries, catering to a diverse customer base.

Amazon has two primary ways of selling products. Amazon has products they sell
directly to consumers and then they allow the general public to sell certified items
on Amazon so there is opportunity for others to make money as well. Amazon has
a large accounting profit. Amazon makes "$386 billion dollars annually, which
means $32 billion per month and $7.4 billion per week" (Digel 2021). With
COVID-19 the increase in Amazon's business absolutely skyrocketed. This led to
the increase in Amazon employees, vehicles and warehouses. With this increase,
"Amazon's annual operating expenses for 2020 were over $363 billion, a 36.54%
increase from 2019"

(Amazon Operating Expenses 2006-2021). Operating expenses are a mix between

fixed cost and variable cost. Amazon is considered a fixed cost business model.
What this means is that Amazon essentially uses the internet to its advantage to get
maximum volume. A fixed business model aims to gain enough volume in sales
that the total profit exceeds fixed cost and therefore a profit is earned

2.2 Factors Affecting Supply and Demand of Amazon:

Amazon's supply and demand dynamics are influenced by several factors.

Production costs, including labor, raw materials, and technology expenses, impact
the company's supply chain efficiency and pricing strategies. Technological
advancements play a crucial role in enhancing operational efficiency, logistics, and
inventory management, affecting Amazon's supply capabilities. The regulatory
environment, encompassing compliance with trade policies and regulations,
influences Amazon's supply chain operations and overall supply availability.
Competition from other e-commerce platforms also affects Amazon's supply
decisions, pricing strategies, and product offerings.
On the demand side, consumer preferences, economic conditions, seasonality, and
marketing efforts shape consumer behavior and demand for Amazon's offerings.
Shifting consumer preferences towards online shopping, convenience, and
personalized experiences impact the demand for Amazon's products and services.

2.3 Competitors and Market Share Analysis:

Amazon faces competition from major players such as Walmart, Alibaba,

eBay, Google, and Apple. These competitors operate in an oligopolistic market
structure, characterized by a few dominant firms competing intensely. While
Amazon holds a significant market share due to its diverse product offerings and
global presence, competitors collectively account for a substantial portion of the
market. The competition among these firms influences supply dynamics, pricing
strategies, and innovation in the market.
Without question, other online stores, Walmart and Apple are Amazon's biggest
competitors. Competing with other online retailers, Amazon offers the fastest
shipping. In addition, compared to other online retailers, Amazon has a great return
policy and has several partner businesses that take drop offs for returns such as
Kohls. Many other online retailers require a trip to the Post Office, UPS, or FedEx
to administer a return. For stores such as Walmart and Target, Amazon offers
lower prices and a larger selection of products. Going to a store in person is great
because the consumer can get the product then and there, but everyone has
experienced going to the store for one item and the store not having that very
specific item.

There are large debates on if Amazon falls into the Monopoly market structure. A
monopoly market structure is essentially a company that has and controls the
market to the point where they can control the prices, and output of products. One
of the reasons that Amazon is identified as a monopoly is because, "through low
prices, Amazon has a monopoly in shaping consumer preferences and influencing
demand patterns, especially through methods of personalized and targeted
advertising". A monopoly market structure absolutely ties into the inelastic
structure because Amazon can control the prices of products within reason and
consumers will absolutely continue to stay loyal consumers to Amazon. The other
end of the argument is that Amazon is not a monopoly market because of the third-
party sellers that sell on Amazon. The small sellers help Amazon not be considered
a monopoly. I personally believe that Amazon better fits into the monopolistic
market because they absolutely have control over pricing.

2.4 Changing trends in the current market:

Amazon targets consumers of all ages, genders, and income levels. Their goal is to
have something for anyone and everyone. On terms of their shopping perks,
"79.8% of internet users shop on Amazon because of the fast, free shipping. 68.9%
choose Amazon because of its broad selection and lastly 65. 7% of shoppers opt
for Amazon because they are Prime members". Amazon shopping carries anything
from caskets, to laundry supplies, to school supplies, decorations, food, tools,
clothing, car parts, ... etc.

The demand and supply curve for Amazon is relatively standard. If the demand of
a product increases, for example, Christmas decorations currently are in demand,
the supply typically remains unchanged and therefore a shortage occurs and that
leads to the products prices increasing. Another example of this relationship
happening was during the beginning shut down that took place with COVID-19.
Globally there was a shortage of many products including hand sanitizer.
Consumers who seeked this product and on Amazon, hand sanitizer hit sky high
pricing, and eventually became completely unavailable. If the demand of a product
decreases, such as shopping for Easter decorations in December, the supply will
remain unchanged and this leads to lower prices. When the demand for a product is
unchanged and supply increases, then prices ultimately get lowered. Lastly, if
demand stays the same, and the supply of a product decreases, then prices will
raise. Amazon's relationship with supply and demand follows these four trends
constantly depending on what the consumer is desiring and how production of a
product fluctuates.

Amazon's products in general have an inelastic demand. Elasticity demand does

not entirely apply to Amazon for several reasons. The reason Amazon is inelastic
is because despite price increases, consumers continue to purchase because the
subscription benefits outweigh a price increase of a product. For example, if
Amazon is selling a Christmas Tree for $150 right now, and any other time of the
year that tree sells for $100. Amazon Prime members will spend the $150 on the
tree instead of looking into other stores, and prices. The convenience of that
product arriving quickly, and getting delivered directly to the consumers door
makes that increased price all worth it.
III. MARKET POTENTIAL
3.1 Proposal analysis/profibility

Amazon’s profitabilty has shown notable

Amazon's prospects can be analyzed through a SWOT framework, highlighting its strengths,
weaknesses, opportunities, and threats.

Strengths:

1. Technological Leadership: Amazon has invested heavily in artificial intelligence (AI)

and machine learning (ML), which enhances its operations, such as optimizing inventory
and improving personalized shopping experiences. This technological edge is a key
differentiator

2. Dominant Market Position: Amazon holds a significant share of the e-commerce market
due to its vast product selection, competitive pricing, and customer-centric approach. Its
market share enables economies of scale and increased profitability (

3. Amazon Web Services (AWS): AWS is a major strength, contributing significantly to

Amazon's revenue. As a leader in cloud computing, AWS offers a wide range of services
that cater to businesses of all sizes

Weaknesses:

1. Dependence on Third-Party Sellers: Amazon's reliance on third-party sellers can lead to

inconsistencies in delivery times and product quality, which may harm its reputation.
Additionally, issues with counterfeit products persist, potentially eroding customer trust
Employee Treatment: Amazon has faced criticism over its workplace practices,
including high turnover rates and labor disputes, which can affect operational efficiency
and public perception

2. Limited Physical Presence: Compared to traditional retailers, Amazon has fewer physical
stores, which may limit its ability to capture certain market segments that prefer in-person
shopping experiences

Opportunities:

1. Global Expansion: There are significant growth opportunities in emerging markets such
as Africa, Southeast Asia, and Latin America, where internet penetration and middle-
class populations are increasing

2. Healthcare and Financial Services: Amazon has the potential to expand into new sectors
like healthcare, with initiatives like Amazon Care, and financial services, leveraging its
data and platform capabilities to offer new products and services
 3. Sustainability Initiatives: Investing in renewable energy and sustainable practices can
enhance Amazon's public image and comply with increasing regulatory demands for
environmental responsibility

Threats:

1. Intense Competition: Amazon faces stiff competition from other tech giants like Google
and traditional retailers such as Walmart, which are also expanding their e-commerce
capabilities .

2. Regulatory Scrutiny: Increasing regulatory pressures related to antitrust, data privacy,

and taxation could result in significant fines, operational changes, or even forced
divestitures.

3. Cybersecurity and Data Privacy: As a data-centric company, Amazon is vulnerable to

cybersecurity threats and data breaches, which could damage customer trust and lead to
regulatory penalties.

Overall, while Amazon is well-positioned to continue its growth and maintain its market
leadership, it must navigate these challenges carefully to sustain its competitive advantage.

3.2 Amazon development trend in the last 5 years

Amazon's financial data over the past five years reflects substantial growth despite some
volatility. Revenue nearly doubled from $280.5 billion in 2019 to $574.8 billion in 2023,
showcasing strong market demand and expansion. However, net income showed significant
fluctuations, indicating challenges in cost management and market conditions. The recovery in
free cash flow in 2023 to $36.8 billion after a dip to -$11.6 billion in 2022 highlights Amazon's
resilience and ability to bounce back. Overall, Amazon's financial health appears robust with
occasional setbacks managed effectively.

IV. CONCLUSION
4.1 Evaluate Amazon through the analysis in part II

+ Amazon stays ahead of its competition by focusing on new technology and

keeping prices low. This helps it be more efficient and organized in how it does
things. Amazon gets an advantage over others by being cheap, which is important
when people don't have much money to spend. People like that Amazon is cheap
and often pick it because of that. Amazon also makes cool new stuff like the
Kindle, while still keeping prices low. This makes people like Amazon even more.
Amazon also listens to its customers by letting them leave reviews, so it can make
changes to make customers happy.
+ At Amazon's corporate level, the primary emphasis is on expansion. Among the
success stories in Media Commerce during the recession period of 2008-2012,
notable focus has been placed on product development, particularly the evolution
of Kindle.

+ This success can also be linked with the diversification of AWS which provides
its service to products such as DropBox, Netflix, etc to perform well and using the
capabilities that Amazon has to offer. This helps both the products as well as
Amazon in generating the desired revenue

4.2 Provide solutions/ideas for businesses to improve

+ Develop further private brands for Amazon, because the company already has
industry strength introducing more of their own brands into the market would
benefit their brand. Having more private brands would make Amazon a more
competitive company, similar to Walmart's private brand strategy.

+ Enhancing Amazon Prime: Allow Prime members to customize their benefits

based on their preferences, such as more storage for Amazon Photos or additional
reading options on Kindle.

+ Augmented Reality (AR): Expand the use of AR to allow customers to visualize

products in their homes before purchasing, particularly for furniture and home
decor.
+ Eco-friendly Packaging/Green Delivery Options: Increase the use of recyclable
and biodegradable materials and offer customers the option to choose minimal
packaging. Moreover, expand the fleet of electric delivery vehicles and promote
eco-friendly delivery options, such as bicycle couriers for short distances.
IV. Conclusion
4.1 Evaluate Amazon through the analysis in part II
+ Amazon stays ahead of its competition by focusing on new technology and
keeping prices low. This helps it be more efficient and organized in how it does
things. Amazon gets an advantage over others by being cheap, which is important
when people don't have much money to spend. People like that Amazon is cheap
and often pick it because of that. Amazon also makes cool new stuff like the
Kindle, while still keeping prices low. This makes people like Amazon even more.
Amazon also listens to its customers by letting them leave reviews, so it can make
changes to make customers happy.

+ At Amazon's corporate level, the primary emphasis is on expansion. Among the

success stories in Media Commerce during the recession period of 2008-2012,
notable focus has been placed on product development, particularly the evolution
of Kindle.

+ This success can also be linked with the diversification of AWS which provides
its service to products such as DropBox, Netflix, etc to perform well and using the
capabilities that Amazon has to offer. This helps both the products as well as
Amazon in generating the desired revenue

4.2 Provide solutions/ideas for businesses to improve

+ Develop further private brands for Amazon, because the company already has
industry strength introducing more of their own brands into the market would
benefit their brand. Having more private brands would make Amazon a more
competitive company, similar to Walmart's private brand strategy.

+ Enhancing Amazon Prime: Allow Prime members to customize their benefits

based on their preferences, such as more storage for Amazon Photos or additional
reading options on Kindle.

+ Augmented Reality (AR): Expand the use of AR to allow customers to visualize

products in their homes before purchasing, particularly for furniture and home
decor.

+ Eco-friendly Packaging/Green Delivery Options: Increase the use of recyclable

and biodegradable materials and offer customers the option to choose minimal
packaging. Moreover, expand the fleet of electric delivery vehicles and promote
eco-friendly delivery options, such as bicycle couriers for short distances.