Amazon: retailer in context

  • Amazon's vision is 'to be earth's most customer-centric company where people can find and discover virtually anything they want to buy online'.
  • Amazon's strategy is based on: customer obsession, passion for invention, operational excellence and long-term thinking.
  • Amazon differentiates versus competitors through its huge product assortment, its non-retail services, such as Prime Music, its easy ordering and efficient fulfilment.
  • Amazon’s Marketplace enables third parties to sell goods, driving competition and enabling it to offer choice and low prices.
  • The Amazon Prime loyalty scheme is a growth driver, as Prime members typically spend at least twice as much as non-members.
  • Amazon's largest international markets are in Germany, Japan and the UK but it is also growing rapidly in India
  • Amazon wants to expand its grocery business to attract more shoppers and drive frequency of shop.

Strategic priorities

Amazon continues to grow ahead of the rest of the market, benefiting from strong customer loyalty and upward growth trends across the channel as shoppers increasingly seek out convenience. Some of Amazon's areas of focus include:

Strategic priorities  
Continued growth in major markets

Amazon typically adds 1-2 new product categories in each of its established markets annually. By expanding its product selection, Amazon is able to attract new customers and increase spend across its existing customer base. Amazon Marketplace accounts for around 40% of products sold on Amazon and the retailer continues to broaden and deepen the range of products within many categories, including grocery, health & beauty, clothing and toys. In newer markets such as Spain and Italy, Amazon is continuing to add new product categories to bring the sites more in line with its established operations.

Getting closer to customers

Amazon continually invests in fulfillment and its supply chain, which allows it to bring services closer to customers. This gives the company the flexibility to offer same-day and next-day delivery in key markets and one-hour and two-hour delivery with Prime Now. New innovations are also allowing Amazon to deliver convenience for customers, particularly those that require additional flexibility to fit around busy lifestyles.  Amazon Lockers are now a common sight in the UK and US. Other methods Amazon is investigating to bring products to customers faster include Amazon FLEX and Amazon Prime Air, the future drone delivery system.

Expansion into new and emerging markets

Amazon aims to generate half of its revenue internationally over time by expanding in key markets and investing in emerging markets. Investment includes the expansion of Prime membership to more markets, rolling out 'Amazon Channels' (i.e. AmazonFresh, Amazon Prime Now, Amazon Pantry) to more markets and new fulfillment centres proposed for growing markets including Italy and Spain. Amazon continues to expand into emerging markets with heavy investment in India. Other emerging markets include AustraliaSingapore and Brazil.

Amazon Prime loyalty driving growth

Amazon Prime membership encourages loyal customers to shop more frequently by locking them into the 'Amazon Ecosystem'. Prime customers typically spend more than non-members and are increasingly willing to shop cross-category. The annual Prime Day (10 June 2017) was the biggest day ever for Amazon, and was also a record day for Amazon devices globally.

Product and service innovation

Amazon continues to focus on innovation within its business in order to drive development and growth.  Amazon is increasing its focus on FMCG categories and convenience for customers with new devices such as Amazon Dash Button and voice activated Amazon Echos. The Alexa  technology is increasingly being incorporated into other devices such as cars.

Amazon Fresh

Amazon Fresh is Amazon's online grocery service, which has been in operation in Seattle since 2007. It has since been expanded to numerous cities and urban areas across the US, and is also available in the UK, Germany and Japan. Fresh is expected to expand in a 'methodical and considered' approach to more areas and markets.  Amazon aims to expand its market position for household goods and convenience shopping with Prime Now and Amazon Pantry