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| == Company Overview == | == Company Overview == | ||
| === Business Model === | === Business Model === | ||
| - | [[Image:Amazon virtuous cycle.png|thumb|500px|right|Amazon's virtuous cycle]]<!--This chart is great but is not supported by the text, the terms are mentioned but their interactions aren't mentioned, If the writer cannot add text for the graphic, it should be deleted.--> | + | [[Image:Amazon virtuous cycle.png|thumb|500px|right|Amazon's virtuous cycle]]<!--This chart is great but is not supported by the text, the terms are mentioned but their interactions aren't men995 by Jeff Bezos as an online bookstore, Amazon has since greatly expanded its business. Today, Amazon’s stated mission is to be a place where “people can come to find and discover anything they might want to buy online.” Its key pillars of lowering ''price'', offering ''convenience'', exple,'' mpany offer a vast selection of goods (removing the [[granularity]] risk of relying on any particular product line) and without the capital investment and inventory risk that traditional brick and mortar retailers face. |
| - | Founded in 1995 by Jeff Bezos as an online bookstore, Amazon has since greatly expanded its business. Today, Amazon’s stated mission is to be a place where “people can come to find and discover anything they might want to buy online.” Its key pillars of lowering ''price'', offering ''convenience'', expanding ''selection'', and increasing ''availability'' are interrelated in what the company calls a ''virtuous cycle,'' and together make up the foundation of the fabulous growth that has taken Amazon from a bookstore started in a garage to a $14B retail machine. Amazon’s direct-to-consumer online model allows it to keep its inventory in a small number of strategically located large warehouses, letting the company offer a vast selection of goods (removing the [[granularity]] risk of relying on any particular product line) and without the capital investment and inventory risk that traditional brick and mortar retailers face. | + | |
| In comparison to brick and mortar retailers, whose input costs (e.g. rent, utilities, and labor) generally rise over time, Amazon and other technology-dependent internet retailers reap the benefits of technological progress as computational power, bandwidth, and data storage technologies all improve in quality and decline in cost over time. | In comparison to brick and mortar retailers, whose input costs (e.g. rent, utilities, and labor) generally rise over time, Amazon and other technology-dependent internet retailers reap the benefits of technological progress as computational power, bandwidth, and data storage technologies all improve in quality and decline in cost over time. | ||
| - | [[Image:Amazon_negative_cashflow_small.png|thumb|500px|right|Amazon gets paid by customers before it needs to pay its suppliers<ref name=10K-21>{{cite 10k|link=http://www.wikinvest.com/stock/Amazon.com_%28AMZN%29/Filing/10-K/2009/F1244387#tx74114_8 | form=10-K|ticker=AMZN|year=2008|pg=21}}</ref>]] | + | [[Image:Amazon_neg10-K|ticker=AMZN|year=2008|pg=21}}</ref>]] |
| In addition, due to sophisticated inventory forecasting, fast inventory turns, and overall operational efficiency, Amazon has managed to build a retail business with a negative operating cashflow cycle, which means Amazon gets paid for products by customers before they have to pay their suppliers for the goods. Working capital has effectively become a source of investment cash for the company. | In addition, due to sophisticated inventory forecasting, fast inventory turns, and overall operational efficiency, Amazon has managed to build a retail business with a negative operating cashflow cycle, which means Amazon gets paid for products by customers before they have to pay their suppliers for the goods. Working capital has effectively become a source of investment cash for the company. | ||
Revision as of 09:06, November 10, 2011
If Amazon’s 66 million active customers all lived in the same country, it would be the world’s 19th most populous country, with more citizens than every European country except Germany. And if every US household spent $170 at Amazon.com this year, the total amount they’d spend would still be less than Amazon’s 2010 revenues of over $34.2B.[1] Amazon has used the internet to create a truly global business platform, one which is poised for incredible growth in the coming decade. The question in many investors' minds these days is how profitable that business can be.
While most people naturally think of Amazon as the internet superstore that sells products in over forty categories, from books to electronics to groceries to jewelry to auto parts, the company has gradually expanded beyond that simple business platform; today Amazon is simultaneously an e-commerce and internet technology platform, a fulfillment and logistics platform, a search technology, an internet advertising platform, and even an internet startup incubator.
Company Overview
Business Model
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