How does Amazon beat its competition? (2024)

Amazon.com, Inc. is a global technology firm based in the United States specialising in e-commerce, cloud computing, digital streaming, and artificial intelligence. Along with Alphabet (Google), Apple, Meta (Facebook), and Microsoft, it is one of the Big Five corporations in the United States’ information technology sector. The corporation has been described as “one of the world’s most important economic and cultural forces,” as well as “the world’s most valuable brand.”

On July 5, 1994, Jeff Bezos launched Amazon from his garage in Bellevue, Washington. From a mere online bookstore, the portal has now evolved to include gadgets, software, video games, clothing, furniture, food, toys, and jewellery. Its rapid progress and competitive advantage were evident from the market capitalisation figures in 2015, which surpassed Walmart, one of the biggest, oldest and most valuable retailers in the country.

After that, in August 2017, Amazon purchased Whole Foods Market for a whopping $13.4 billion to significantly expand its physical retail reach. Amazon Prime, the company’s two-day delivery service, topped 100 million users globally in 2018.

The competitive retail landscape comprises Walmart, which accounts for a little more than 10% of all retail sales in the United States, primarily due to low costs and a wide selection. On the other hand, Amazon accounts for 40% or more of online retail sales in the country. So, what’s the secret to this competitive edge? Along with low pricing and a wide range of options, Amazon gave people convenience.

Competitive Advantage

Online Marketplace domination

For the last 15 years, Amazon has positioned itself as a market leader for retail products. According to Jeff Bezos’ annual shareholder letter from 2015, close to 50% of products on Amazon are sold by third-party merchants. The marketplace is excellent for customers due to its unique assortment of products. It is great for sellers because of the flexibility and popularity that the platform brings along with itself. More than 70,000 entrepreneurs with annual sales of more than $100,000 are on Amazon.This puts traditional brick-and-mortar businesses at a significant disadvantage over Amazon.

Focused Customer Services

In comparison to other websites, Amazon offers a more user-friendly experience to its clients. Major differentiators include improved search and query capabilities, suggestions based on prior purchases, one-click ordering at check-out, numerous user reviews and ratings, and dash buttons for automatic re-buying. In addition, when combined with Prime membership, Amazon has a 360-degree view of its consumers, including data on online transactions, purchase frequency, entertainment preferences, and regional demographics. All of this enables Amazon to tailor its online experience to its consumers’ needs and experiment with continuously improving its functioning.