Many Amazon sellers have opened stores on the Amazon platform for a long time. Many friends will wonder why Amazon is so powerful and dominates the market. Next, let's solve this problem for you. Why is Amazon so powerful? What are Amazon's competitive advantages?
A recent survey by big data startup BloomReach showed that 55% of online shoppers in the United States use Amazon as their preferred shopping search platform. I bet that most of these buyers will place an order after searching for products on Amazon.
Since Amazon has abundant customers, many manufacturers and sellers hope that their products can be listed here so that buyers can see them when searching.
Because of this, Amazon has a unique advantage in understanding consumer behavior, which has also led to one of its three main businesses: Amazon logistics and delivery services .
Unmatched
Currently, Amazon is actively expanding its warehousing and distribution centers. In the previous quarter, it built 18 new storage centers and established 5 new ones in this quarter. Even with such a breakneck pace, competition is fierce against retailers like Wal-Mart and Target that already have many physical stores. Because the latter two are also accelerating their layout, hoping to use the advantages of physical stores to better meet the needs of online shoppers.
What Walmart and Target can’t compete with, however, is driving customers to their own websites the way Amazon can. Walmart also reached out to acquire e-commerce startup Jet.com because it could bring significant benefits in the short term. In order to attract customers, Target compromised with the market and launched preferential activities such as free delivery during the holiday shopping season.
At the same time, Amazon has raised the threshold for free delivery, and believes that it has sufficient capabilities to attract consumers and can afford the cost of the high threshold.
Virtuous cycle
Due to the huge traffic on Amazon, many third-party sellers or manufacturers hope to sell their products through this platform. Amazon and third-party sellers have jointly cultivated a huge platform and made it seamless for visitors to access.
Many Amazon customers don’t know that half of the items sold on Amazon’s website come from third-party sellers, and Amazon is only responsible for delivery.
In terms of operating conditions, Amazon Logistics (FBA) is one of its three main businesses (the other two are Amazon Web Services and Prime membership services).
Amazon's logistics and delivery service can first transfer the seller's inventory to its own storage center, and then be responsible for delivering the goods to consumers. Accordingly, a certain fee will be charged to the seller. This logistics and distribution service can also be regarded as the main driving force for Amazon to expand the scale of its warehousing centers.
As more and more sellers join Amazon, more and more consumers can buy the products they want at an ideal price. This in turn can encourage more sellers to join the platform as it is a place visited by buyers. With this virtuous cycle, even though Walmart and Target have a large customer base, Amazon's sales are still growing faster than theirs.
Analysts at RW Baird, an American asset management company, said that 20 cents of every dollar of revenue in Amazon's North American market comes from sellers using Amazon's logistics distribution. As the number of third-party sellers continues to increase, this number will continue to increase.
While large retailers such as Walmart also provide platforms for third-party sellers on their own websites, none of them can provide services comparable to Amazon.
Maintaining a growing customer base is more difficult than building infrastructure such as warehousing centers and delivering goods to customers. This makes Amazon's logistics service one of its most competitive advantages.
The above is about Amazon's competitive advantages. If you want to get more information about Amazon, please continue to pay attention!
