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Amazon, having a market capitalization of about $1.6 trillion, is the 5th largest tech giant in the world. Although operating in segments such as cloud computing, digital content streaming, AI-powered voice assistants, and grocery retail chains, Amazon is primarily known for its e-commerce site and is one of the world’s leading e-commerce giants in terms of market capital.
According to Insider Intelligence, the company’s e-commerce sales amounted to more than $614 billion in 2021. Launched 3 decades ago by selling books online, Amazon now sells diverse products in 130 countries across the world, ranging from consumer electronics, clothing and fashion, beauty and personal care, sports, and outdoor activity products to pet care and toys. With over 330 million registered customers, why is amazon so popular?
Overview of Amazon
In 1995, Jeff Bases founded Amazon with the vision of creating a virtual bookstore. In the first two months of its operation, Amazon was able to sell books in 45 countries, including 50 states of the United States. In 1998, besides books, Amazon began selling CDs and DVDs with 125,000 music titles. Initially, Amazon was selling its own products, but later in September 1999, the platform launched a marketplace for third-party sellers as well.
In 2005, Amazon launched its ‘Prime’ service. In 2006, Amazon launched ‘Amazon Unbox’ – an online video service that is currently known as ‘Amazon Prime Video’. In that same year, Amazon launched its own cloud computing company, ‘Amazon Web Services or AWS’. Amazon originally built the platform for their own website, but later provided IT services for other companies as well.
At present, Amazon has more than 330 million active users worldwide, of which around 200 million is ‘amazon prime’ users. According to mircotrends, in the third quarter of 2021, the revenue of the company was more than 332 billion. Every month, around 197 million people visit amazon’s website. According to oberlo, every minute, around 4000 products are sold in the United States alone. In addition, 89 percent of the customers in the US prefer amazon over any other platform for shopping. However, what factors make Amazon so popular?
Convenient Online Shopping
Better user experience is a very important factor in maintaining customer retention on online platforms. Amazon is most concerned about this, which is why the company has included a full-fledged ‘User Experience Team’. Which makes the customers’ day-to-day shopping experience more comfortable.
By analyzing customers’ search history and purchasing patterns across different search engines, the team arranges their product recommendation section in a way that customers can easily find the product they need. In addition, Amazon’s search results show different product types, average customer ratings, prices, and availability, as well as different categories by brand. As a result, customers can easily find specific products according to their preferences and needs.
Customer Rating & Review
Amazon places great emphasis on the ratings and reviews of each product listed on Amazon. Amazon only considers ‘verified purchase’ ratings and reviews of products to show customers authentic product ratings and reviews. Having these verified purchase ratings and reviews, it becomes easier for customers to choose the right product. If Amazon finds evidence of fake reviews or ratings for a product, then Amazon bans that brand or seller from the platform.
According to an article by CNBC, as reported by SJ Consulting, 72% of Amazon’s packages are delivered by the company itself. Currently, Amazon is delivering products to customers through 175 fulfillment centers worldwide. As a result, it’s much easier for Amazon to check product authenticity, and ensure timely delivery of products. Consequently, Amazon becomes a more popular e-commerce website and has a higher acceptance among customers.
Fast & Free Shipping
Amazon mainly offers facilities like faster product delivery and free shipping. Although shipping time varies by region and location, Amazon has the capacity to deliver in less time for a fixed shipping fee. According to CNBC, Amazon has 40,000 semi-trucks, 30,000 vans, and more than 70 aircraft worldwide for product delivery only.
In addition, the platform is currently providing free shipping on certain products for at least $25 purchases on Amazon. According to a survey by Statista, about 80 percent of Internet users in the USA shop on Amazon because of this ‘fast and free shipping’ service.
Physical Pickup & Return Location
In addition to providing ‘home delivery’ using the fulfillment center and its own fleet, Amazon also has dedicated physical ‘pick-up and return’ points in several countries as per customer convenience. Amazon has ‘Product Return Corners’ at any of its physical outlets to make the product return facility more convenient.
The e-commerce site offers free returns on products that weigh less than 50 pounds, and are purchased from Amazon within a maximum of 30 days. According to a survey by Statista, about 44% of Internet users in the USA purchase products from Amazon for the ‘easy return process’.
Diverse Product Offering
According to Marketplace Pulse Research, currently Amazon has 9.7 million sellers worldwide, of which about 1.9 million sellers are actively selling their products. Apart from that, more than 1 million new sellers are added to Amazon every year. According to Retailtouchpoints, there are over 353 million products on Amazon’s platform. On the other hand, Amazon has a low-budget brand called ‘Amazon Basic’ through which they sell various necessities like kitchenware, consumer electronics and household products.
Additionally, Amazon offers some exclusive and unique handcrafted, vintage or custom made products that are not available on other platforms. In addition, ‘Amazon Fresh’- another subsidiary of Amazon e-commerce, provides home delivery of grocery products on the same day or on schedule as per customer requirements.
Due to this wide range of product variety, customers do not have to look for other platforms for any kind of product purchase. As a result, Amazon can attract a lot more customers and customers are more likely to purchase products from Amazon on a regular basis.
Amazon Prime is another reason for the immense popularity of Amazon. It is basically a monthly ($12.99) or yearly ($119) membership program under which members can avail several services including Prime Video, Prime Music, Prime Reading, Prime Gaming, Amazon Family offers, Amazon Photos.
In addition, for e-commerce, Amazon Prime members can enjoy a number of features like Free Product Delivery in two days or even ‘same day delivery’, Scheduled Delivery, No Minimum Order Value, No Cost EMI, 6 Months Free Screen Replacement and much more. According to a source at Backlinko, as of October 2021, the Amazon Prime service is available in 22 countries worldwide.
According to a CNBC report, in 2020, 65% of Amazon’s total customers are Amazon Prime users, of which 70% users renew their Prime membership every month; In addition, 90% of prime Subscribers renew their Prime membership at the end of the year.
Deals & Discounts
In most of the product categories on the Amazon platform, sellers are constantly offering various types of discounts. Amazon also offers a number of deals on a regular basis, such as Today’s Deals, Watched Deals, Outlet Deals, eBook Deals, and Warehouse Deals.
In addition, Amazon has its own annual Global Sales Day for Prime subscribers called ‘Prime Day’, where users can shop at many exclusive deals and discounts. In 2021, the platform generated more than $11 billion in sales revenue from the Prime Day event alone.
In addition, Amazon offers a variety of deals and discounts on a number of global sales days, such as ‘Black Friday’ and ‘Cyber Monday’. According to Statista, a survey reported, about 50% of Internet users in the USA shop from Amazon only for Amazon’s ‘Best Pricing’.
Technological Integration In Online Shopping
Since the beginning of the journey, Amazon has been integrating various innovative technologies to enhance the online shopping experience of its customers. In addition, using Amazon’s “1-Click Purchase” feature, customers can place orders in the cart with a single click without having to input new payment or shipping details.
On the other hand, Alexa, an AI-powered voice assistant service, is integrated with the company’s own device, the “Amazon Echo”. Through which, customers can add any product to the shopping list or order directly only by speaking, which is then delivered to the Amazon customer’s address at the right time. For example, if a customer runs out of bread at home and only informs Alexa about it and asks Alexa to add it to the shopping list, Alexa will do it on its own.
Wide Global Reach
Amazon is a global e-commerce company operating business through specific websites in 13 countries including the US, UK, Australia, and Canada.
In addition, for international product shipping, the platform uses the “Amazon Global” service. Although shipping rates vary depending on the address, Amazon currently delivers products to 130 countries and regions around the world. In addition, Amazon has about 175 fulfillment centers worldwide. These fulfillment centers serve as product storage as well as distribution centers from which products can be picked up, packed and shipped quite quickly and efficiently.