Amazon is a consumer e-commerce platform with a diversified business model spanning across e-commerce, cloud, advertising, streaming, and more. Over the years, Amazon acquired several companies. As it operates across several industries, Amazon has a wide range of competitors across each of those industries. For instance, Amazon’s E-commerce competes with Shopify, Wix, Google, Etsy, eBay, and BigCommerce.
A multinational retail corporation with both physical stores and an e-commerce presence, offering a wide range of products.
Walmart’s extensive retail network and e-commerce platform make it a direct competitor to Amazon.
Both offer a vast range of products and compete in online retail.
Walmart’s physical presence, in-store pickup options, and pricing strategies.
eBay
An online marketplace that allows users to buy and sell a wide range of products, including new and used items, through auctions and fixed-price listings.
eBay’s user-to-user selling model overlaps with Amazon’s third-party seller platform.
Both facilitate online buying and selling, with eBay’s auction-style listings as a differentiator.
eBay’s auction-style listings, collectibles, and unique items.
Alibaba
A Chinese multinational conglomerate specializing in e-commerce, retail, internet, and technology. It operates various online marketplaces, including Alibaba.com, Taobao, and Tmall.
Alibaba’s diverse ecosystem includes B2B and B2C marketplaces and competes with Amazon on a global scale.
Both are global e-commerce giants, but Alibaba primarily targets the Chinese market.
Alibaba’s strong presence in China, global reach, and B2B focus.
Target
A retail corporation with a mix of physical stores and an e-commerce platform, offering a wide array of products, including clothing, electronics, and groceries.
Target’s omnichannel strategy combines physical and online retail, directly competing with Amazon.
Both offer a wide range of products and have both physical and online retail presence.
Target’s physical stores, in-store pickup options, and exclusive partnerships.
Shopify
An e-commerce platform that enables businesses to set up their own online stores. Shopify indirectly competes with Amazon by providing businesses with the tools to establish their e-commerce presence.
Shopify’s platform empowers businesses to compete with Amazon by creating their online stores.
Both play roles in the e-commerce ecosystem, but Shopify enables businesses to operate independently.
Shopify’s focus on enabling businesses to build their brands and websites.
Netflix
A subscription-based streaming service for movies and television series. While not a direct retail competitor, Amazon Prime Video competes with Netflix in the streaming content space.
Amazon Prime Video competes with Netflix in the streaming content industry.
Both offer streaming content, but their primary focus differs, with Amazon’s broader e-commerce ecosystem.
Netflix’s focus on streaming entertainment content.
Google
A multinational technology company that operates a search engine, online advertising services, and offers Google Shopping for product searches.
Google Shopping competes with Amazon as a product search and advertising platform.
Both offer product search and advertising services, with Google’s primary focus on search.
Google’s search engine dominance and advertising services.
Best Buy
An electronics retailer with both physical stores and an online presence, specializing in consumer electronics, appliances, and services.
Best Buy competes with Amazon in the consumer electronics and appliances market.
Both offer consumer electronics, but Best Buy has a strong physical presence.
Best Buy’s in-store customer experience and technical services.
Rakuten
A Japanese e-commerce and online retail company that operates a global online marketplace similar to Amazon.
Rakuten’s marketplace competes with Amazon in various regions, offering products and services worldwide.
Both operate global online marketplaces, but Rakuten has a significant presence in Japan.
Rakuten’s Japanese roots and global marketplace approach.
Zalando
A European e-commerce company specializing in fashion and clothing, competing with Amazon’s fashion retail segment.
Zalando competes with Amazon in the European fashion e-commerce market.
Both offer fashion and clothing products, but Zalando’s primary focus is on fashion.
Zalando’s European presence and fashion-oriented platform.
How to analyze a company with tentacles across many industries
Analyzing a company can be done from several perspectives. For a diversified business model, like Amazon, things can get even more complicated. Indeed, over the years, Amazon started with a simple use case (books), and it expanded in all directions on online commerce. At the same time, over the years, Amazon also bought several companies,
Amazon is a consumer e-commerce platform with a diversified business model spanning across e-commerce, cloud, advertising, streaming, and more. Over the years Amazon acquired several companies. Among its 12 subsidiaries, Amazon has AbeBooks.com, Audible, CamiXology, Fabric.com, IMDb, PillPack, Shopbop, Souq.com, Twitch, Whole Foods Market, Woot! and Zappos.
Amazon expanded in several verticals, and for each vertical, we can identify different competitors:
Digital advertising: Google, YouTube, Facebook (Instagram), Bing (Microsoft), Twitter, Pinterest.
We could expand the analysis further if we were to zoom further from the perspective of all of Amazon’s subsidiaries.
E-commerce:
Shopify: A popular e-commerce platform for businesses of all sizes, offering customizable online stores and a range of tools.
Wix: Website builder that also enables e-commerce functionality, catering to individuals and small businesses.
Google: Through Google Shopping, it provides a platform for product listings and comparison shopping.
Etsy: A marketplace focused on handmade and unique products, appealing to a niche audience.
eBay: A well-known online auction and shopping platform, facilitating both new and used product sales.
BigCommerce: Offers e-commerce solutions with customizable storefronts, suited for mid-sized businesses.
Physical Retail:
Target: A large retail chain offering a wide range of products, including groceries, clothing, and electronics.
Walmart: One of the world’s largest retail corporations, known for its extensive product selection and low prices.
Best Buy: Specializes in consumer electronics and appliances, with both physical stores and online presence.
The Home Depot: Focuses on home improvement products and services, catering to DIY enthusiasts.
Costco: A membership-based warehouse club offering bulk purchases and a variety of products.
Walgreens: A pharmacy retail chain that also sells health and wellness products.
Last-Mile Delivery:
Flipkart: An Indian e-commerce company offering a wide range of products and delivery services.
Instacart: An on-demand grocery delivery and pickup service, partnering with various retailers.
Doordash: A food delivery platform connecting customers with local restaurants and eateries.
Streaming:
Netflix: A leading subscription-based streaming service known for its original content and extensive library.
Spotify: Offers a vast music library with both free and premium subscription options.
YouTube (Google): The world’s largest video-sharing platform, offering a mix of user-generated and professional content.
Disney+: Disney’s streaming service featuring its iconic movies, TV shows, and original content.
Hulu: Provides a variety of on-demand streaming options, including current TV episodes and original content.
HBO: Offers premium content including original series, movies, and documentaries.
Cloud:
Microsoft (Azure): A major cloud services provider offering a wide range of solutions, including infrastructure and software.
Google Cloud: Google’s cloud computing platform providing storage, data analytics, and machine learning services.
IBM Cloud: Offers a suite of cloud computing solutions, including AI and analytics services.
Digital Advertising:
Google: Dominant in online advertising with search and display ads, along with YouTube advertising.
YouTube: Offers video advertising and monetization options for content creators.
Facebook (Instagram): A major player in social media advertising, with a focus on targeted ads.
Bing (Microsoft): Provides search and display advertising services as an alternative to Google.
Twitter: Offers advertising opportunities through promoted tweets and trends.
Pinterest: Known for visual discovery and shopping, offering advertising options for brands.
More on Amazon
Amazon has a diversified businessmodel. Amazon’s primary revenue streams comprise its e-commerce platform, made of Amazon labeled products and Amazon third-party stores. In addition to that, Amazon makes money via third-party seller services (like fulfilled by Amazon), advertising on its platform, AWS cloud platform, and Prime membership.
Amazon has a diversified business model. In 2023, Amazon generated nearly $575 billion in revenues while it posted a net profit of over $30 billion. Online stores contributed over 40% of Amazon revenues. Third-party Seller Services and Physical Stores generated the remaining. Amazon AWS, Subscription Services, and Advertising revenues play a significant role within Amazon as fast-growing segments.
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!
With 64,588,418 shares, Jeff Bezos is the primary individual investor. Owning 12.7% of the company. Other top individual investors include Amazon’s CEO Andy Jessy, who has 94,729 shares. Top institutional investors include mutual funds like The Vanguard Group (6.6% ownership) and BlackRock (5.7% ownership).
Amazon generated over half a trillion dollars in revenue in 2023, of which $231.87B from online stores, over $140.05B from third-party seller services, $90.76B from AWS, $46.9B from advertising, $40.21B from subscription services, $20.03B billion in physical stores, and $4.96B from other sources.
Amazon was profitable in 2023. On nearly $575 billion in revenue for 2023, Amazon generated a net profit of over $30 billion. Since 2014, Amazon hasn’t recorded a net loss, but it did record a net loss of over $2.7 billion in 2022, while it recouped that in 2023. Indeed, in 2014, Amazon reported a net loss of $241 million, and it would be profitable until 2021. In 2022, Amazon turned unprofitable again and highly profitable again in 2023.
Amazon AWS follows a platform business model that gains traction by tapping into network effects. Born as an infrastructure built on top of Amazon’s infrastructure, AWS has become a company offering cloud services to thousands of clients from the enterprise level, to startups. And its marketplace enables companies to connect to other service providers to build integrated solutions for their organizations.
Amazon subscriptionrevenue in 2023 was over $40 billion, compared to over $35 billion in 2022 and nearly $32 billion in 2021. Amazon Prime grew from a $4.5 billion revenue segment in 2015 to an over $40 billion segment in 2023.
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.”
A regret minimization framework is a business heuristic that enables you to make a decision, by projecting yourself in the future, at an old age, and visualize whether the regrets of missing an opportunity would hunt you down, vs. having taken the opportunity and failed. In short, if taking action and failing feels much better than regretting it, in the long run, that is when you’re ready to go!
A network effect is a phenomenon in which as more people or users join a platform, the more the value of the service offered by the platform improves for those joining afterward.
A platform business model generates value by enabling interactions between people, groups, and users by leveraging network effects. Platform business models usually comprise two sides: supply and demand. Kicking off the interactions between those two sides is one of the crucial elements for a platform business model’s success.
Jeff Bezos was best known for founding eCommerce giant Amazon in 1994. However, the entrepreneur owns companies in several industries, including health care, retail, robotics, real estate, and media. Many of these companies have been acquired by Amazon over the years, but some have been the result of direct investment from Bezos himself (through his investment arm is called Bezos Expeditions).
Amazon is a consumer e-commerce platform with a diversified business model spanning across e-commerce, cloud, advertising, streaming, and more. Over the years Amazon acquired several companies. Among its 12 subsidiaries, Amazon has AbeBooks.com, Audible, CamiXology, Fabric.com, IMDb, PillPack, Shopbop, Souq.com, Twitch, Whole Foods Market, Woot! and Zappos.
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.
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