Amazon Competitive Analysis-What is Competitive Advantage?

Introduction

Hardly there is any folk on the planet who is not aware of the company, Amazon. Amazon. Inc. is an American company that is engaged in the business of electronic commerce or e-commerce. The company was founded by Jeff Bezos, in the year 1994 in the city of Seattle.In this article we will see about Amazon Competitive Analysis

Amazon Competitive Analysis

Amazon started its business by selling online videos and music, video games, soft wares, etc. Soon the company expanded its business beyond the boundaries of America. It started acquiring online booksellers of countries like the United Kingdom and Germany and since then there is no looking back. By the year 2000, Jeff Bezos’s marketing strategies along with Amazon’s competitive Analysis have made Amazon the pioneer of e-commerce across the globe. 

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Hence it is of paramount importance that we learn about the competitive advantages of Amazon that lead to the glorious success of amazon and made Amazon’s founder, the second richest man in the world.

What is Competitive Advantage?

Each and every company has some unique, distinct features that not only differentiate one corporate body from another but provide an edge over the rest of the competitors existing in the market. These features that enable a company from beating the cutthroat competition and to stand out from the crowd are termed Competitive Advantages. Competitive advantages mainly constitute the factors that lead any company to either supply goods and services at a rate lower than the competitors or quality superior to the competitors. The prime reason to dive deeper into the meaning is, that the competitive advantage has a direct effect on how the company’s financial statement is going to look.

Does Amazon have Competitive Advantages?

Undoubtedly, Yes. The heights that Amazon has reached today, no organization can attain without strong and invincible strategies and competitive Analysis. Hence, it is obvious that the factors and traits that Amazon poses act as the backbone in being the pioneer in the e-commerce business today.

What are the Amazon’s Competitive Advantages?

Jeff Bezos never fails to address the three most crucial Competitive Advantages that Amazon has in its cart. These three are considered as the ultimate weapon in the hands of Amazon that enables it to beat every retail competition in whichever country it sets its foot. 

Low-cost leadership, Customer Preference, and Third-Party Consignment are the three most vital competitive advantages exploited by Amazon. Let’s discuss these factors in detail.

  • Low-cost leadershipAmazon is known for selling goods at a price lower than one’s imagination without compromising with the quality. You can find a product costing low as 50% when compared to a merchant’s store or any other website. Amazon’s objective is nothing but to make the products available to the customers at a price so low that the competitors cannot afford to sell without booking loss in the transaction. This is the sole reason why Amazon is in a position to wipe out retail and wholesalers from the market.
  • Customer Preference – Going on to the next Competitive advantage, which is customer preference. Amazon leaves no stone unturned in easing the process of online purchase. It has curated its website in such a manner that even a non-tech-savvy person can use Amazon. Features like recommendations based on past purchases, search queries, most viewed items, customers review, and Amazon ratings, all these tiny details in its website have succeeded in winning customers’ loyalty and trust. Besides, Amazon has introduced a customized delivery option under its scheme “Amazon Prime”. Customers can get their purchased item delivered within one day with Amazon Prime subscription. 
  • Third-Party Consignment – The array of products we see today on Amazon’s website, are not actually owned by Amazon. Yes, you read it right. Almost half of the product displayed on Amazon’s site is supplied by a third party aka a vendor who has tied up with Amazon. Putting it in simple words, when you place an order, Amazon sends the same to the vendor owning the product who in turn delivers it to you. Now you may ask how amazon is benefitted from the transaction? Well, Amazon gives sellers a wider market and large customer base which would not have been possible otherwise. In return, Amazon charges commission from the vendors. Another advantage that third-party consignment offers is low cost. Managing inventory is a tedious and costly affair, Amazon saves a huge quantum of outflow of cash.

Conclusion

Amazon has changed the way business was being conducted online. Various e-commerce organizations have started prioritizing customers’ comfort and preferences above all and strive to sell them products at slashed down prices. Of course, they can never beat Amazon but can provide stiff competition as compared to earlier. Nonetheless, Amazon has not yet stooped evolving and making itself more dominant by expanding in every corner of the world. 

Amazon Competitive Analysis-What is Competitive Advantage?

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