The Business of Amazon.com

1. Introduction

Amazon.com is the largest online retailer in America dealing with a wide range of consumer products such as books, music, movies, home improvement items, and other products. Amazon.com is considered a transnational electronic commerce company. The company was founded in 1994 by Jeff Bezos and is headquartered in Seattle, Washington. Amazon.com has five different businesses: Retail, AWS, Marketplace, Digital content, and Devices & Services. The company has experienced significant growth since its inception and continues to grow at a rapid pace. In 2017, Amazon’s revenue was $177.9 billion, which was up from $107 billion in 2015. The company’s net income has also grown significantly over the years, increasing from $2.4 billion in 2015 to $3.0 billion in 2017. Amazon.com continues to invest heavily in new initiatives and is constantly expanding its business operations into new areas such as transportation, logistics, and healthcare.

2. Company Analysis of Amazon.com

Amazon.com is the largest online retailer in America and operates as a transnational electronic commerce company. The company was founded in 1994 by Jeff Bezos and is headquartered in Seattle, Washington. Amazon.com operates five different businesses: Retail, AWS, Marketplace, Digital content, and Devices & Services.

The Retail business is the largest business for Amazon.com and includes the sale of physical goods through the company’s online store. The AWS business provides cloud computing services to businesses and individuals. The Marketplace business allows third-party sellers to sell their products on Amazon’s website. The Digital content business provides digital content such as e-books, music, and videos through the Kindle Store and Prime Video platform. The Devices & Services business manufactures and sells electronic devices such as the Kindle e-reader and Fire TV streaming device.

Amazon.com has experienced significant growth since its inception and continues to grow at a rapid pace. In 2017, Amazon’s revenue was $177.9 billion, which was up from $107 billion in 2015. The company’s net income has also grown significantly over the years, increasing from $2.4 billion in 2015 to $3.0 billion in 2017. Amazon.com continues to invest heavily in new initiatives and is constantly expanding its business operations into new areas such as transportation, logistics, and healthcare.

3. The Five Different Businesses of Amazon.com

Amazon.com operates five different businesses: Retail, AWS, Marketplace, Digital content, and Devices & Services.

The Retail business is the largest business for Amazon.com and includes the sale of physical goods through the company’s online store. The AWS business provides cloud computing services to businesses and individuals. The Marketplace business allows third-party sellers to sell their products on Amazon’s website. The Digital content business provides digital content such as e-books, music, and videos through the Kindle Store and Prime Video platform. The Devices & Services business manufactures and sells electronic devices such as the Kindle e-reader and Fire TV streaming device.

4. Seasonal Trends

Amazon.com experiences seasonal trends in its business operations due to the nature of the products it sells. The company’s sales are typically highest during the holiday season (November and December) as consumers purchase gifts for family and friends. Sales typically dip during the first quarter (January to March) as consumers spend less after the holiday season. However, sales begin to increase again in the second quarter (April to June) as consumers start to make purchases for summer vacations and other activities. Sales continue to increase in the third quarter (July to September) as schools start back up and families prepare for the holiday season. Finally, sales peak again in the fourth quarter (October to December) as consumers purchase gifts for the holidays.

5. Capital Structure and Transportation

Amazon.com has a complex capital structure with multiple financing sources including debt, equity, and cash flow from operations. The company’s debt consists of Corporate bonds, Senior notes, Convertible notes, and Term loans. As of December 31, 2017, Amazon.com had $16.9 billion in outstanding debt obligations with a weighted average interest rate of 4.1%. The company’s equity consists of Common stock, Class A common stock, and Class B common stock. As of December 31, 2017, Amazon.com had $114 billion in shareholders’ equity on its balance sheet.

Amazon.com’s primary transportation method is through its own shipping facilities using a combination of trucks, planes, and trains. The company also uses third-party shipping providers such as UPS and FedEx for some orders. In 2017, Amazon spent $21.7 billion on transportation expenses which represented 12% of total revenue for the year.

6. Information Technology

Information technology is a critical part of Amazon’s business operations and is used extensively throughout the company. Amazon has built a proprietary technology platform that it uses to power its online store and other services such as AWS and Prime Video. The company has also invested heavily in developing new technologies such as drones and robotics to further improve its shipping capabilities and efficiency. Amazon spends billions of dollars every year on research and development related to information technology initiatives. In 2017, Amazon spent $16.1 billion on research and development which represented 9% of total revenue for the year.

7. Publishing

Amazon.com operates a publishing business under the Amazon Publishing imprint. The company publishes books in both digital and print formats across a wide range of genres. Amazon Publishing also offers self-publishing services for authors who want to publish their own books. In 2017, Amazon Publishing generated $1.7 billion in revenue which represented 1% of Amazon’s total revenue for the year.

8. Brand and Customer Service

Amazon.com has built a strong brand that is associated with convenience, selection, and low prices. The company offers excellent customer service with 24/7 live customer support and easy returns for all products purchased on its website. Amazon.com also offers a Prime membership program which provides free shipping on all orders, access to Prime Video streaming, and other benefits for an annual fee of $99. In 2017, Amazon had 90 million paying Prime members worldwide.

9. Unauthorized Downloading

Amazon.com has been the target of unauthorized downloading of its digital content products such as e-books, music, and videos. The company has taken measures to combat this issue by encrypting its digital content products and offering DRM-protected downloads. Additionally, Amazon has sued individuals and companies who have engaged in unauthorized downloading of its digital content products.

10. Conclusion

Amazon.com is the largest online retailer in America and operates as a transnational electronic commerce company. The company was founded in 1994 by Jeff Bezos and is headquartered in Seattle, Washington. Amazon.com operates five different businesses: Retail, AWS, Marketplace, Digital content, and Devices & Services. The company has experienced significant growth since its inception and continues to grow at a rapid pace. In 2017, Amazon’s revenue was $177.9 billion, which was up from $107 billion in 2015. The company’s net income has also grown significantly over the years, increasing from $2.4 billion in 2015 to $3.0 billion in 2017. Amazon.com continues to invest heavily in new initiatives and is constantly expanding its business operations into new areas such as transportation, logistics, and healthcare

FAQ

Amazon's core products and services include e-commerce, cloud computing, digital streaming, and artificial intelligence.

Amazon has evolved its business model over time to include new products and services such as Prime membership, Kindle e-readers, and Fire TV streaming devices. The company has also expanded its physical presence with the addition of Whole Foods Market stores.

Key drivers of Amazon's growth include the expansion of its product and service offerings, the increasing adoption of its Prime membership program, and the growing popularity of its digital streaming content.

Amazon is positioned to compete in the future by continuing to invest in new technology and expanding its global reach.