Key messages

  • Grow the product assortment with the aim of offering 'Earth's Biggest Selection'
  • Expand its international business Integrate Whole Foods Market and grow its grocery business
  • To grow Prime membership
  •  Innovating to offer shoppers great convenience and differentiate
  • Integrate Whole Foods Market and grow its grocery business

Trading Strategy

Earth's Biggest Selection

  • Amazon continues to broaden its assortment and offer more choice
  • This could be through Amazon Marketplace and third parties selling on the site or through Amazon selling directly to consumers

Amazon Marketplace

  • By allowing third parties to sell on its site, Amazon is able to offer the broadest selection, whilst the competition drives down prices
  • The company generates revenue from its Marketplace sellers in the form of monthly seller fees and commission, which varies by product and category
  • Fulfilled by Amazon (FBA) is a distribution service that differentiates Amazon from other marketplaces. Sellers may outsource storing and shipping items to Amazon for a fee. FBA orders are eligible for inclusion in programmes such as Amazon Prime and Subscribe & Save and therefore allow sellers to grow sales volume. FBA also allows Marketplace sellers to extend their reach internationally to other Amazon sites

Innovation

  • Amazon is investing in its fulfilment operations to offer speed and convenience
  • Amazon's fulfilment services are a point of differentiation and its constantly innovating. For example, robotics, artificial intelligence, drones and Amazon Key
  • Amazon’s easy online ordering is also a differentiator and Amazon launched the Alexa-enabled Amazon Echo devices in 2016. This Alexa technology is being incorporated into other devices, such as fridges or cars
  • Its innovating with physical stores such as its 'Amazon Go' checkout free store

Whole Foods Market

  • In August 2017, Amazon acquired Whole Foods Market for $13.7bn.
  • The purchase gives Amazon: expertise in selling fresh, private label products, more stores to test concepts and additional customers to attract into Prime.
  • For more details on Whole Foods Market click here

International Growth

  • The company is continuing to grow its international presence with expansion in existing and new markets
  • India is a key focus following a year of heavy investment including the largest single investment of $5bn

Prime Membership

  • Prime offers customers more than convenient delivery and the access to entertainment enables Amazon to differentiate versus competitors
  • Amazon Prime helps attracts new customers, keeps them loyal and makes them spend more. It’s estimated that a Prime customer will spend more than double than a non-member
  • Each year Amazon holds an Amazon Prime Day and offers promotions across its products and services to drive awareness, membership and reward existing members.

Private Label

  • Amazon has a large number of private label brands. For instance: Basic Care (pain relief), Happy Belly (food), Mama Bear (Baby), Presto (cleaning), Solimo (various), Wag (pet), Wickedly Prime (various), Single Cow Burger, and Amazon Basics (various).
  • It also has Whole Foods Market and its 365 brand

Ranging & Sourcing

  • In markets such as the UK, Amazon Fresh differentiates versus competitors by offering products from Local Shops and Markets, such as artisan bakeries