E-Commerce: Amazon

E-commerce Midterm Assignment

Assignment B: Name of the chosen company: Amazon.com

1. Reasons for choosing this company:

Amazon.com is a very well-known global ecommerce company. It can be said that Amazon is a leading E-commerce company as on July 2015, it surpassed Wal-Mart Stores Inc. as the world's biggest ecommerce colossus after reporting a surprise jump in profit in the second quarter. The reasons I choose this company to analysis is because first of all, it is a very famous company that I believe that every single people who can access to internet would know about Amazon. Secondly, I want to know why Amazon can be successful like that, how it can satisfy its customer and how it can earn such a huge revenue.

2. Amazon.com business model

The core business models of Amazon.com are the B2C and also B2B models.

First of all, using B2C model, Amazon.com clearly focused on individual customer. Starting in books and then expanding into electrical and other goods, Amazon built an online retail business with the mission of "to leverage technology and expertise of our invaluable employees to provide our customers with the best shopping experience on the internet" and a vision of "to be earth's most customer centric company; to build a place where people can come to find and discover anything they might want to buy online" With this business, its revenue source is from the customers, hence its target of value creation is from customers. Amazon earns profit with each customer’s purchase. It also gains profit by having Prime account policy. Under a Prime account, customers pay an annual fee to secure free two-day or same-day shipping on eligible items and have access to streaming media, such as digital music or movies. ("Difference Between Amazon And Alibaba's Business Models," n.d.) On the other hand, Amazon also offers a third-party selling platform, which is Amazon marketplace, where it allows merchants to offer goods and services through an online shopping mall. Amazon charges a commission based on a formula involving the sale price of the item, a shipping credit, a referral fee of 6-25% of the sale price, a variable closing fee and a $0.99 fixed closing fee. ("Amazon Case Study Analysis," n.d.) For this type of business, the commission fee charged to third party shop is the main revenue source of Amazon.com.

In fact, not many people would know that Amazon also use B2B business model. In 2012, Amazon quietly launched AmazonSupply, the e-commerce company’s foray into the world of B2B wholesale. Now AmazonSupply has been upgraded to Amazon Business, a new platform aiming to do for business customers, matching millions of buyers and sellers with millions of products. Companies that register for an Amazon Business account will have access to business-only products from IT and lab equipment to education and food service supplies, with bulk discounts and free 2-day shipping on orders over $49. Like its e-marketplace for B2C model, Amazon Business also charges third-party sellers a commission on sales ranging from 6% to 15%, depending on the product category and the size of an order, for business sellers selling to business customers, which is the Amazon source of revenue. (Paul D., 2015)

Amazon has three core values creating for its customers: (1) Best prices: Amazon products are generally offered at a discount; (2) Unrivaled selection: Amazon often has the largest selection of goods in a particular category, especially books; and (3) Convenience: Amazon focus on the customer and try make purchasing an