Amazon, the company that acquired Whole Foods Market and showed significant growth with its expansion into various sectors. What made it this successful? What are the uncompromising secrets to success for this retail giant?
Amazon bought Whole Foods for $13.7 billion dollars in August 2017. It is said that it will become the largest retailer in the world by market capitalization with its excellent business strategies.
Amazon was started in a garage in Seattle. Jeff Bezos, who had predicted the arrival of the Internet age, had a thought: “Someone out there in the world has already started what I’m thinking of. I need to act fast.” He then quit his job as a vice-president at a financing company and started his company.
He started an online bookstore due to the following 3 factors: 1. Product quality is guaranteed for customers 2. Supplies can be acquired by just having dealings with 2 major companies 3. Even major bookstores cannot ensure complete stock due to the enormous number of titles. Books were delivered to Amazon within 2-3 days, and the packaged books were delivered to the customers in 3-4 days after being sent to the post office.
Amazon experienced significant growth in an instant, went public on Nasdaq in 1997, and steadily expanded the products offered, including music CDs and DVDs, electronics, toys, DIY products, etc. Amazon dominated the market by the time major companies like Barnes & Noble and Walmart entered.
In 2000, Bezos set up Blue Origin, a space tourism firm, with funds from his personal shares. In collaboration with NASA, the firm is looking at a tourist rocket launch as early as 2019.
Despite facing opposition from its retail department, Amazon launched its Marketplace platform in 2003. By listing used products at a lower price than its own new products, it shows Amazon’s customer-first policy.
Marketplace became a platform that sells over 2 billion products in 2016. Besides allowing SMEs to have dealings with the rest of the world easily, popular products were made into private-label products (AmazonBasics: dry-cell batteries topping the list at 1/3 of its shares, and baby wipes ranked third at 15%), posing a threat to manufacturers as well.
Amazon is one of the pioneers even for cloud businesses. Start-ups like Uber only succeeded because of the existence of AWS. With its Internet infrastructure, Amazon has become one of the world’s leading cloud service businesses with an annual revenue of $10 billion. Even now, Amazon enjoyed a 40% growth rate compared to the previous year.
Amazon launched the Kindle and provided an unlimited reading for Prime members. It took over real bookstores, and also published its own PODs and other materials, making it a great threat to publishing companies as well.
Amazon started a free video and music streaming service where Prime members can have unlimited access to videos and music. It also improved its content greatly. The number of Prime members in the US increased by threefold (85 million users) in 3 years.
Amazon acquired Washington Post, and was heavily criticized by Trump.
With Amazon Echo, customers can order products on Amazon from their living rooms. It can also turn on electronic appliances, music, tell you the weather forecast, read books aloud, and so on. Consumers can enjoy Amazon’s services integrated into their daily routines without having to go on the Amazon website.
Same-day delivery is made possible with over 150 delivery centers all over the world, Amazon Flex (delivery by non-employees), and Prime Air, Amazon’s very own cargo airline.
With its acquisition of Whole Foods, Amazon now has a whole network of actual grocery stores. Amazon has both virtual and physical stores now and is trying to break into the $800 billion grocery market. If Amazon Go, a new kind of cashier-less store, is used by 2000 of Whole Foods’ physical stores, cash registers may disappear from stores all over the world in the future.
With its wide range of products, affordable prices, fast delivery speeds, attractive member services, Amazon introduced its own manufactured products at low prices, and grew to become a huge corporation with over 40% of e-commerce shares, a net revenue of $135.9 billion, and a market capitalization of $470 billion.
Amazon gained customers using e-commerce with its long tail in book retail. It then won over customers with its outstanding service by providing unlimited reading, music, and videos for Prime members, and provides incredibly fast delivery by with its in-house distribution serviced by its own private warehouses and cargo airline.
With the used goods market is integrated into its business, customers can find a huge variety of products on Amazon, realizing the concept of the “Everything Store”. Amazon’s own house brand products are being sold there as well. Many people have begun to visit Amazon, search for products, and buy Amazon’s products due to the affordable price points and a large variety of products.
However, dominating the e-commerce industry was not enough to satisfy Bezos’ ambitions. Amazon was able to acquire not only customers but also a variety of businesses online with AWS. It is now an essential service for business expansion to start-ups in Silicon Valley.
Taking over the world itself with e-commerce, Amazon has now acquired 2000 of Whole Foods’ stores and is about to break into the real world. Bezos is expected to implement the cashier-less store Amazon Go in all stores.
Amazon is not only setting its sights on the real world. With Amazon Echo, Alexa has already infiltrated the daily lives of customers.
Amazon does not only provide a service where customers can buy products easily and conveniently. What it is trying to do is to make customers’ lives more convenient, and change the lifestyles of modern people by integrating itself as a part of daily life.