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Amazon

How the World’s Most Relentless Retailer will Continue to Revolutionize Commerce

By Natalie Berg & Miya Knights
15-minute read
Audio available
Amazon by Natalie Berg & Miya Knights

Amazon (2019) investigates the rise of the most disruptive online retailer of the twenty-first century, from humble online bookstore to global business empire. Drawing on industry data and insider knowledge, retail experts Natalie Berg and Miya Knights explain why Amazon dominates today’s e-commerce market, how it will continue to revolutionize retail, and what other businesses can do to keep up.

  • Aspiring business strategists and marketing experts
  • Anyone wondering how their business can thrive in an Amazon world
  • Online shoppers interested in the future of retail

Natalie Berg is a British retail expert and consultant specializing in merchandising, pricing, and shopper-centricity. She is the former Global Research Director at Planet Retail and runs the consultancy NBK Retail. Her co-author Miya Knights is Head of Industry Insight at digital-marketing company Eagle Eye.

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Amazon

How the World’s Most Relentless Retailer will Continue to Revolutionize Commerce

By Natalie Berg & Miya Knights
  • Read in 15 minutes
  • Audio & text available
  • Contains 9 key ideas
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Amazon by Natalie Berg & Miya Knights
Synopsis

Amazon (2019) investigates the rise of the most disruptive online retailer of the twenty-first century, from humble online bookstore to global business empire. Drawing on industry data and insider knowledge, retail experts Natalie Berg and Miya Knights explain why Amazon dominates today’s e-commerce market, how it will continue to revolutionize retail, and what other businesses can do to keep up.

Key idea 1 of 9

Amazon is the most successful retailer in the world because it’s much more than just a retailer. 

The internet has a few simple rules, and the most recent addition to them might be this: if it exists, you can probably buy it on Amazon.

Founded as an online bookstore in a garage in Seattle in 1997, Amazon now sells millions of products across an ever-growing range of categories. From fashion to electronics to sporting goods, and, most recently, even groceries – on Amazon, it’s all just a click away.

Amazon functions both as a vendor, selling and handling products itself, and as a marketplace, allowing third-party vendors to sell over its platform. But it’s increasingly taking on other roles too. Amazon has quietly developed over 100 brands of its own, from fashion labels to coffee brands. It produces and sells its own electronic devices, most prominently the Kindle e-readers and the Echo voice assistant. And it offers its own payment services, credit card, cloud storage system, and much, much more.

Why invest so much in diversifying its range when the basic principle – selling stuff online – already works?

It’s all part of Amazon’s business strategy, which follows the principle of the flywheel. The basic logic behind it is simple: low prices and good service attract more customers. More customers lead to more sales. More sales attract more third-party sellers. More third-party sellers means more money for Amazon, who can reinvest it to further lower prices and improve service.

If you feed any part of this virtuous cycle long enough, the flywheel will start to build momentum of its own and propel the company to higher and higher levels of success.

To feed the flywheel, Amazon has shifted the boundaries of traditional retail through relentless innovation. For example, to attract more customers, it has continuously expanded its entertainment offerings: Amazon Music and Video allow Prime members to stream thousands of songs, movies, and TV shows. To attract more third-party sellers, it introduced services like Fulfillment By Amazon, or FBA, in which Amazon manages the storage and delivery of other businesses’ products.

In many cases, feeding the flywheel through new products and services initially comes at a high cost. In fact, for the first eight years, Amazon operated at a loss, relying on the patience and goodwill of its investors. But today, the flywheel is finally spinning – and it will be near impossible to stop.

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