Sunday, October 5, 2014

The Many Amazons

Although I have often bought stuff off Amazon, I never thought to think about their business model. This article provided a fascinating insight into it, and into the limitations of what numbers can show. Although Ali Baba is growing, and in a different market segment, Amazon appears to be the giant in the online retail industry. 

Its rapid growth at first appears unexplained by its revenue numbers, but the analysis done by Horowitz helps shed a light on this contradiction. Amazon simply yet efficiently re-directs all profit into further developing it's business. Of course, the answer to it's success is not so simple. As stated in the article, Amazon is really composed of many micro teams, which set their own prices and protocols. The logistics of running an organization like this are fascinating, and would require an article of their own. 

What would be interesting would be to examine how the profits are re-invested. Does each team get a percentage? Are key areas identified for investment? How are these determined?

1 comment:

  1. Amazon has invested in its overseas ventures e-commerce (especially in India, and also including China, Spain, and Italy). Amazon is also investing in Prime by acquiring content (HBO, Time Warner, 21st Century Fox, BBC, etc.) and improving its capacity to deliver (especially in the U.K. and Germany). Those appear to be its primary investments.