Amazon.com, Inc.

is an American multinational technology company based in Seattle,

Washington, which focuses on e-commerce, cloud computing, digital streaming, and artificial
intelligence. It is considered one of the Big Five companies in the U.S. information technology
industry, along with Google, Apple, Microsoft, and Facebook. The company has been referred to
as "one of the most influential economic and cultural forces in the world", as well as the world's
most valuable brand.

Amazon was founded by Jeff Bezos in Bellevue, Washington, on July 5, 1994. The company
started as an online marketplace for books but expanded to sell electronics, software, video
games, apparel, furniture, food, toys, and jewelry. In 2015, Amazon surpassed Walmart as the
most valuable retailer in the United States by market capitalization.[14] In 2017, Amazon acquired
Whole Foods Market for US$13.4 billion, which substantially increased its footprint as a
physical retailer.[15] In 2018, Bezos announced that its two-day delivery service, Amazon Prime,
had surpassed 100 million subscribers worldwide.[16][17]

Amazon is known for its disruption of well-established industries through technological

innovation and mass scale.[18][19][20] It is the world's largest online marketplace, AI assistant
provider, live-streaming platform and cloud computing platform[21] as measured by revenue and
market capitalization.[22] Amazon is the largest Internet company by revenue in the world.[23] It is
the second largest private employer in the United States[24] and one of the world's most valuable
companies.

Amazon distributes downloads and streaming of video, music, and audiobooks through its Prime
Video, Amazon Music, Twitch, and Audible subsidiaries. Amazon also has a publishing arm,
Amazon Publishing, a film and television studio, Amazon Studios, and a cloud computing
subsidiary, Amazon Web Services. It produces consumer electronics including Kindle e-readers,
Fire tablets, Fire TV, and Echo devices. Its acquisitions over the years include Ring, Twitch,
Whole Foods Market, and IMDb. The company has been criticized for various practices
including technological surveillance overreach,[25] a hyper-competitive and demanding work
culture,[26] tax avoidance,[27] and for being anti-competitive.

Amazon.com has a number of products and services available, including:

 AmazonFresh
 Amazon Prime
 Amazon Web Services
 Alexa
 Appstore
 Amazon Drive
 Echo
 Kindle
 Fire tablets
 Fire TV
 Video
 Kindle Store
 Music
 Music Unlimited
 Amazon Digital Game Store
 Amazon Studios
 AmazonWireless

AMAZON SEGEMENTATION

Everyone on planet Earth knows Amazon is one of the largest e-commerce market
players. Not surprisingly, they have segmented their immense audience. The article
I’m linking to tells us about what criteria they used to find specific patterns for precise
targeting. Under each segmentation category you will find the criteria and the specific
Amazon target segment.
 In general, this illustrates how a huge marketplace sees you as a customer and adapts
its offers to your unique needs.

1. Geographic audience segmentation

o Region: Amazon covers over 100 countries.

o Density: both urban and rural areas.

2. Demographic segmentation
o Age: people aged from 18 y.o.

o Gender: both males and females.

o Life cycle stage: single, full-nest, empty-nest or solitary survivor people segmented by classic
family life cycle.
o Occupation: students, specialists and professionals.

3. Behavioural segmentation
o Loyalty: ‘Hardcore’, ‘softcore ‘switchers’.

o Benefit: products assortment, convenience competitive prices.

o Personality: easy-going, determined, ambitious.

o User status: non-users, potential, first-time, regular or ex-users.

4. Psychographic audience segmentation

o Social class: working, middle, upper.

o Lifestyle: resigned, mainstreamer, explorer, struggler, aspirer, reformer.

All in all, they segmented all their customers into the following categories, sorted by
conversion simplicity.

Examine this infographics to see their market size, purchasing power and other vital
attributes:
Another, more specific example of Amazon consumer segmentation is finding
common groups using classical approach. We described it in our ‘Audience
Segmentation: Basics, Examples, Cases’ article.

Amazon AWS

Besides segmenting their own worldwide audience, Amazon Web Services

recommends getting acquainted with audiences to anyone who starts a business and
wants to know their potential customers. After Amazon got extensive experience in
working with different audience segments, it’s team started teaching newbies how to
do that. Still, the approach differs slightly from the one they use for defining their own
customers groups.

AWS segmentation example for a random Sports app:

1. Demographic audience segmentation

o Males between 20 and 35 years old. 

o They speak English.

o They use tablets running iOS 10 and newer. 

2. Interest based segmentation

o Football fans. 

o They often watch live score updates.

o They prefer to be notified about available events & tickets. 

So, if you manage to learn what your clients are interested in, you can create strong
audience segments.

Combining interest based data with demographic data opens up new horizons in the
audience segmentation process. Amazon gives this example on the AWS website:

o Male Seattle Seahawks fans between 20 and 35 y.o.

o Spanish-speakers, football fans living in the US.

o iPhone users who would like to receive score updates.

3. Engagement based segmentation

You can also keep an eye on how actively customers use your product. Every business
should focus on loyal and revenue-generating clients. Finding weak points where
customers abandon your product without taking any active actions can boost your
success.

This can be tracked with ordinary engagement metrics including:

o Clients who registered the previous week.

o Clients who had several sessions per day.

o Clients who logged in and made a purchase during the last month.

Amazon recommends interacting with dynamic segments and comparing the cohorts
of users from week to week. People’s behavior may change for different reasons and
it’s vital that you make changes to move with the times.

AMAZON POSTIONING STARTEGY

Amazon’s brand is built on customer satisfaction. It wants to be known as the most
customer-friendly company on the entire planet. This means Amazon wants to
position itself as the most convenient company with the lowest prices and the best
customer service out there.  

Amazon largely achieves this goal, and it’s developed a strong brand as a result.
A 2019 survey of 2,000 US shoppers found that 89% were more likely to buy
products from Amazon than other e-commerce sites. The same survey found that
Amazon was indispensable through the customer journey, especially when it came to
reviews. As Kiri Masters writes in Forbes,  

Two-thirds of respondents (66%) typically start their search for new products on
Amazon, compared with one-fifth (20%) who start on a search engine such as
Google…and when consumers are ready to buy a specific product, 74% go directly to
Amazon.

AMAZON TARGET GROUP STARTEGY

Internet users – Primarily those who are comfortable with e-commerce

All internet users. Almost all internet users are in one way or other a
paid or non paid customer of Amazon. For different customer segments
different products have been launched. Ex. IMDB, Alexa, A9, fabric,
Zappos etc.

Both male and female, mostly in the age group 35 – 49. More
importance to females as they are the predominant customers for
Amazon. Amazon’s acquisition of Zappos was also for getting detailed
insights about young woman as an online customer from all over the
world. Amazon is a global company and looks for customers all around
the world. They have got tie-ups with third party sellers for
international coverage Tech Savvy users and Early technology adopters.
Separately designed products like Amazon mp3, Amazon kindle,
Amazon Appstore for them. Those who yearn on convenience
shopping. Seller customers. Amazon’s primary objective is to bring
maximum number of reliable sellers under it. App developers. New TG.
Started targeting through Amazon Appstore.

Amazon Value Chain Analysis

Value chain analysis is an analytical framework that assists in identifying business
activities that can create value and competitive advantage to the business. Figure 1
below illustrates the essence of Amazon value chain analysis.

 Amazon Primary Activities

Amazon Inbound logistics

Generally, Amazon does not have long-term contracts or arrangements with its vendors to
guarantee the availability of merchandise, particular payment terms, or the extension of credit
limits. Fulfilment by Amazon (FBA) is the cornerstone of Amazon inbound logistics for
company-owned retail business. Moreover, the economies of scale is an important source of
value creation for Amazon inbound logistics.

Sellers can also use FBA by stowing their inventory in Amazon fulfilment centres. In this case,
Amazon assumes full responsibility for logistics, customer service, and product returns. If a
customer orders an FBA item and an Amazon owned-inventory item, the company ships both
items to the customer in one box, as a significant gain of efficiency. The use of FBA is an
optional choice for sellers and this choice makes the products of third-party sellers eligible for
Amazon Prime free two-day shipping, free shipping and other benefits.

Amazon uses logistics beyond the point to serve Amazon Marketplace and starting from
recently, the company has been offering logistics services to others. For example, Beijing
Century Joyo Courier Services, an Amazon subsidiary registered with the U.S. government as an
ocean shipping provider. From this point of view, efficient logistics infrastructure also belongs to
the list of Amazon competitive advantages.
 

Amazon Operations

Amazon operations are organized into three segments:

1. North America. This segment operates North America-focused websites such as

www.amazon.com, www.amazon.ca, and www.amazon.com.mx. Sales in this segment increased
by 33% in 2017 and 2018, compared to the comparable prior years.

2. International. This segment operates internationally-focused websites such as

www.amazon.com.au, www.amazon.com.br, www.amazon.cn and others. International sales
increased by 23% and 21% in 2017, and 2018 respectively. Revenues from international
operations are subject to changes in currency exchange rates. Specifically, changes in foreign
currency exchange rates impacted international net sales by USD(489) million, USD138 million,
and USD1.3 billion in 2016, 2017, and 2018, respectively.

3. Amazon Web Services (AWS). This segment deals with global sales of computing, storage,
database, and other service offerings for start-ups, enterprises, government agencies, and
academic institutions. AWS sales increased by 43% and 47% in 2017 and 2018, compared to the
comparable prior years.

AWS offers pay-as-you-go cloud storage, compute resources, networking and computing
services and its major customers include Pinterest, Dropbox, and Airbnb. Moreover, AWS is
positioned as a platform for building applications and businesses like GE, Major League
Baseball, Tata Motors, and Qantas have built applications ranging from apps for crowdsourcing
and personalized healthcare to mobile apps for managing fleets of trucks on the basis of AWS.

A creative and innovative approach to problem-solving is one of the major sources of value
creation associated with Amazon operations. Specifically, the tech giant initially developed
cloud storage and cloud compute resources for its own business needs in an attempt to
sophisticate its business operations. Later the company commercialized cloud services once its
benefits became evident.

Amazon Outbound Logistics

Generally, Amazon outbound logistics integrates the following:

1. Fulfilment centres. The e-commerce giant operates 109 fulfilment centres around the globe
and the company uses robotic technology in an extensive manner to manage receipt, stowing,
picking, and shipment of products.

2. Co-sourced and outsourced arrangements.

3. Digital delivery. These relate to products and services that can be downloaded from Amazon
website.

4. Physical stores. The e-commerce giant acquired Whole Foods chain in 2017. The company
has generated USD 4,3 billion revenues in Q2, 2018 from physical stores sales alone.

Traditionally, Amazon had relied upon the services of overnight delivery businesses such as
UPS, FedEx and TNT. However, during the past decade the largest internet retailer in the world
by revenue has been investing aggressively in its own logistics system.  Its logistics system
comprises increasing numbers of planes, trains, ships, vans, and trucks. The online retail giant
has also announced Amazon Prime Air (a drone delivery system) and Amazon Flex (gig-
economy based intra metro delivery service).

As it is illustrated in Figure 2 below, as a result of these and other initiatives Amazon has been
successfully decreasing its dependence on third-party courier companies, consequently taking
shipping in-house.
 Figure 2 Changes in Amazon shipping
patterns
It has been noted that Amazon’s enhancing logistics network consisting of planes, trains, ships,
vans, and trucks are not just for moving its own packages. Industry analysts note that the tech
giant may soon compete with FedEx and UPS for the global delivery business.

Amazon Marketing and Sales

Amazon’s annual global marketing expenses have been consistently increasing during the past
seven years to exceed USD 13.8 billion in 2018. This includes advertising and other promotional
costs that amounted to USD 5.0 billion, USD 6.3 billion, and USD 8.2 billion in 2016, 2017, and
2018 respectively.

In 2016, Amazon spent more on marketing than Wal-Mart Stores, Target, Best Buy, Home
Depot, and Kroger combined. Therefore, it can be argued that marketing and sales is one of the
major sources of value in Amazon chain of operations, but this value is generated thanks to
excessive marketing investments.

Amazon marketing message conveys the promises of the largest selection of products and
services, attractive prices, fast delivery of products and overall superior customer services.
Several components of the marketing communication mix such as print and media advertising,
sales promotion, events and experiences, public relations and direct marketing are used in an
integrated way in order to communicate the marketing message to the target customer segment.

Amazon Service
Exceptional customer service is a major source of value creation for the e-commerce and cloud
computing company. Amazon annual report says “we seek to be Earth’s most customer-centric
company” and accordingly, the company offers exceptional customer services. Customers can
contact Amazon by phone, email, chat, or social media.

Amazon Marketplace and Prime has two types of customers – sellers on and buyers from
Amazon platform. For sellers in particular, Amazon offers Selling Coach program “alerting
sellers about opportunities to avoid going out-of-stock, add selection that’s selling, and sharpen
their prices to be more competitive”.

Moreover, “Amazon’s returns process is dealt with entirely online through a customer’s account.
If there is an issue that does require a customer to speak with a customer service assistant over
the phone, they will have access to the customer’s account and order details, meaning that any
issues can be dealt with quickly and efficiently.”
The e-commerce and cloud computing company topped customer satisfaction ratings of UK
Customer Satisfaction Index (UKCSI) by the Institute of Customer Service for fifth year in a row
in 2018. Similarly, American Customer Satisfaction Index (ACSI) ranked Amazon #1, for eight
consecutive years by 2018.

AMAZON PERSONALITY TRAIT

Amazon personality is sincerity & competence.

‍ mazon is one of the world’s most trusted brands—very sincere, supported by

A
industry-changing shipping and return policies and exceptional product
accessibility.

Amazon has a reliable, competent, sincere and caring personality.

CEO Jeff Bezos is extremely customer-focused, telling the customer exactly
what to expect when interacting with Amazon and backing it up.

Amazon — Brand Personality

Some Amazon suppliers don’t like it, but he has built Amazon into one of the
world’s most trusted and sincere brands.
While Amazon continues to break new ground, not all products are
successful; Bezos is unafraid of failure, which helps make it more human.