Sunday, October 5, 2014

Is Amazons Business Model the Ideal Model to Benefit the Consumer?

         In the article "Why Amazon Has No Profits (And Why It Works)" the author Benedict Evans examines Amazons business model, specifically in regards to the fact that despite being a wildly successful company they have yet to show significant net profits. The Benedict explains that the consistent net profits so near zero for every quarter comes from the fact that they invest all net profits directly back into the company at the end of every quarter. This results in a better service for the consumer of amazons products and services but less of a return for investors in the promise of a big payoff down the road.
     My question is if this is the ideal model in terms of what the consumers want. As the customer base for amazon has increased and the money flowing into the company have dramatically increased Amazon has continuously made customer satisfaction and service assurance their priority. This service isn't cheap and it requires Amazons continuous growth to  meet the growing demand. As stated investors seem to currently have the bum end of the deal but regardless Amazons stock has consistently risen (with a small drop since 2013) for the past 5 years as they have instituted this plan(see end for link to stocks). As it looks now if everyone is happy with the situation why don't more companies have this business policy.

1 comment:

  1. They best way to determine what consumers want is to look at where they spend their money. Amazon has a lot of money coming in and it looks like that number is only growing.