Amazon’s fabled eCommerce platform needs no introduction, but it may surprise some to learn that the company has made at least 91 acquisitions across numerous different industries since it was founded in 1994.
Amazon completed its acquisition of movie studio Metro-Goldwyn-Mayer (MGM) in March 2022 in a deal worth $8.45 billion. In an interview with The Washington Post, senior vice president of Prime Video and Amazon Studios Mike Hopkins said that “MGM has a nearly century-long legacy of producing exceptional entertainment, and we share their commitment to delivering a broad slate of original films and television shows to a global audience.”
The acquisition would allow Amazon to bolster its content library with MGM’s decades of production experience on titles such as Legally Blonde and Rocky. More importantly, it would allow the company to compete with established competitors such as HBO Max and Netflix.
The move was one of the company’s first serious forays into bricks-and-mortar retailing after noting that consumers stubbornly preferred to buy items such as meat and fresh produce in person.
Zoox decided to take one of the hardest and most complex paths in the industry, building a self-driving passenger vehicle from scratch in addition to the associated AI and software.
According to Amazon, the acquisition took place to provide Zoox with the necessary funds to bring its vision of autonomous transportation to life. However, some pundits believe the technology could also easily be used in Amazon’s logistics operations.
One Medical is a subscription-based primary care provider that combines digital, virtual, and in-person services that are most convenient to consumers.
Amazon paid handsomely for the company which, at $18 per share, was 77% above that day’s closing price. The motivation for the purchase was the company’s belief in a tech-based, human-centered approach to healthcare.
Zappos was a small competitor at the time and nowhere near making a profit. What’s more, the deal was seen as somewhat unusual since Amazon promised to stay out of management decisions so long as financial objectives were met.
Bezos approached CEO Tony Hsieh with an offer to buy the company as early as 2005 and was ultimately declined. Four years later, however, and one year after the GFC, cash became harder to come by and Hsieh was more amenable to selling. The deal was eventually struck one year later.
Key takeaways:
Amazon is best known for its eCommerce platform and associated services, but it has made around 91 acquisitions since its inception in 1994.
Amazon completed its acquisition of movie studio Metro-Goldwyn-Mayer (MGM) in March 2022 as a way to bolster its streaming line-up and become more competitive. The record acquisition of Whole Foods in 2017 marked the company’s first serious foray into bricks-and-mortar retailing.
Additional Amazon acquisitions include autonomous driving tech company Zoox, shoe company Zappos, and medical subscriptionplatform One Medical.
Amazon has a diversified business model. In 2021 Amazon posted over $469 billion in revenues and over $33 billion in net profits. Online stores contributed to over 47% of Amazon revenues, Third-party Seller Services, Amazon AWS, Subscription Services, Advertising revenues, and Physical Stores.
Amazon’s mission statement is to “serve consumers through online and physical stores and focus on selection, price, and convenience.” Amazon’s vision statement is “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices.”
In the Amazon Shareholders’ Letter for 2018, Jeff Bezos analyzed the Amazon business model, and it also focused on a few key lessons that Amazon as a company has learned over the years. These lessons are fundamental for any entrepreneur, of small or large organization to understand the pitfalls to avoid to run a successful company!
Amazon has a business model with many moving parts. With the e-commerce platform which generated over $222 billion in 2021, followed by third-party stores services which generated over $103 billion, Amazon AWS, which generated over $62 billion, Amazon advertising which generated over $31 billion and Amazon Prime which also generated over $31 billion, and physical stores which generated over $17 billion.
The Amazon Working Backwards Method is a product development methodology that advocates building a product based on customer needs. The Amazon Working Backwards Method gained traction after notable Amazon employee Ian McAllister shared the company’s product development approach on Quora. McAllister noted that the method seeks “to work backwards from the customer, rather than starting with an idea for a product and trying to bolt customers onto it.”
The Amazon Flywheel or Amazon Virtuous Cycle is a strategy that leverages on customer experience to drive traffic to the platform and third-party sellers. That improves the selections of goods, and Amazon further improves its cost structure so it can decrease prices which spins the flywheel.
In the letter to shareholders in 2016, Jeff Bezos addressed a topic he had been thinking quite profoundly in the last decades as he led Amazon: Day 1. As Jeff Bezos put it “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
