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What is Amazon Business Strategy?

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Are you a retailer cracking your head on how to level up to eCommerce giants like Amazon? Or you may be a seller looking for ways to succeed on Amazon. You have to find a way to incorporate the retailer's business strategy into yours to have a better chance of success. ?

Amazon is considered a thought leader in the eCommerce marketplace.

Thanks to the internet and lately, the Covid 19 pandemic has pushed more people to embrace online shopping. But was the internet alone enough to see Amazon propel to such heights?


Amazon has carefully chosen what to focus on to make the retailer a success.

Its focus has been its customers’ happiness.

So, what has Amazon done about that?

They have anchored their strategy on the following principles:

Principles on Which Amazon Has Built its Business Strategy


Amazon is one of the few businesses considered to be risk-takers — they always see opportunities and no failures. That’s how Amazon has managed to diversify successfully and consequently mitigated the same risk they thirst for.

When Amazon started back in 1994, they sold physical books online. Today, Amazon sells anything sellable with a global outreach. While trying to find solutions for its customers, Amazon has evolved to find new niches and segments along the way.

Sometimes that has happened accidentally, like the Amazon Web Services (AWS). AWS was born from Amazon trying to find a solution to its own data management problems. Once they were able to find a solution, they extended the offer to their customers.

More Focus on Customer Satisfaction and less on Competition
A great business idea and an undeniable passion are good to start your business. But how sustainable is that?
When founded, Amazon’s mission was to become the most customer-centric company on earth, and this has set it apart from 95% of companies.
You probably didn’t know this but, there is always one empty seat at any Amazon’s board meeting. This seat represents the customer—you dare not forget who is the most crucial person in the room.
For Amazon, the concept is simple; start with the customer and work backward. That is how they have managed to build a culture of listening to the customer and inventing what he needs even before he knows that he needs it.

Amazon has built the culture of customer centrism by cultivating these five habits:

Listening to the customer to understand what they value and seeking their feedback.
Making decisions that are objective and based on facts
Ensuring that employees are empowered and in a position to act in ways that please customers
Innovating for the customer even before they realize they needed it
Exceeding customer expectations

Competitive Prices

Amazon believes customers want a wide range of selections at low prices, and that is what they offer—a wide selection of products with a personalized experience.
In the beginning, price fluctuations were not very common in the retail space, but the frequency has increased lately. That is mainly in niches and segments that Amazon has made an entrance to.
Why does Amazon pricing seem to impact competitor prices so significantly?

Amazon uses technology to come up with prices. The pricing algorithm works based on customer data collected and analyzed, as well as predicted future trends. That results in millions of price changes daily.

Speedy Service
Amazon is delivering perishable groceries to its customers lately.
It’s for this reason why relying on a third party to do deliveries can be tricky. So, they have been looking for ways to reduce reliance on third parties over logistics by owning part of the delivery chain to improve their service.
An increase in prime membership has meant that there is a need for a more reliable delivery system.
Investing in its logistics caused an increase in costs in the short term, but in the end, this has translated into increased sales, more customer loyalty, and an additional source of income. Economies of scale have also helped reduce fulfillment costs.
What has Amazon done so far to increase the speed of its service delivery?
Its distribution centers are fitted with conveyor belts and robots to help increase efficiency in shipping
Amazon currently owns truck trailers
Amazon will not hesitate to hire on-demand delivery workers whenever it becomes necessary

Training Employees

Amazon has a goal to trail 100,000 of its workers by the year 2025.
In today’s fluid digital business environment, Amazon finds it necessary to invest in upskilling for its employees. Amazon Technical Academy and Machine Learning University have purposely been set aside for this purpose.
Why is upskilling so crucial for Amazon?
Amazon believes that its future depends on the competency of its employees. But it also believes that no one will do a better job of training them than Amazon themselves.

Word-of-mouth focused Marketing

Word-of-mouth marketing (WOMM) is when your customers can’t stop talking about your product or service because your product or service exceeded their expectations. They will share their experience with family, friends, and anyone who cares to listen on social media.
See what’s going on there?
You get free advertisement, and that is only because you made your customer happy. You can save a lot on your marketing budget this way.
Amazon believes in WOMM and invests in it by focusing on improving customer experience. For Amazon, customer experience is how they can acquire new customers and keep the existing ones coming back.

Leveraging customer Data

Today, all major businesses that have managed to dominate the market have one thing in common—loads and loads of data. These companies understand the value of this data and how to use it to make them successful.
Amazon makes it it’s business to understand every one of its customer’s journey from the moment they sign up, all through to delivery of their order.
That will go a long way in building beneficial, long-lasting relationships with its customers.

Customers shift their loyalty depending on where they feel more understood, where it is easiest to make a transaction and, where they will generally get the best customer experience. Leveraging customer data helps Amazon to offer their customers all that.

Final Thoughts

Since 1995, the eCommerce space has undergone many changes, and most of those have been fueled by Amazon’s customer obsession which has completely changed the dynamics of the retail space.
Amazon has, over time, made a habit of quickly adapting to changes in customer behavior and coming up with strategies that focus on the customer.
If you plan on following Amazon’s lead, first, listen and understand your customer, then use that information to keep innovating and inventing for him. That way, you will keep your business diversified and keep your chances of business failure low or even non-existent.

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