AMAZON PRIME – STRATEGIES OF SUCCESSFUL BUSINESS

Overview:

Amazon is one of the largest and, without a question, one of the most successful merchants in the world. In addition, Amazon continues to lead the e-commerce business in both the United States and the rest of the world. Amazon's revenue hit 107.01 billion dollars in 2015, and the company is currently worth 360 billion dollars. Furthermore, the rate of increase does not appear to be slowing.

Two of the most essential factors are Amazon's capacity to think beyond the box in terms of customers and sectors, as well as its ability to reinvest its profits. Furthermore, the company's ability to think strategically, innovatively, and farsightedly is critical. These qualities are all anchored in Amazon CEO and founder Jeff Bezos' way of thinking, but many contemporary Amazon employees share them as well. One of these original and imaginative ideas that became reality is Amazon Prime.

Amazon Prime, which began as a reward club in 2005, has made it easier and less expensive to shop at Amazon. Amazon Prime transformed Amazon from a transaction-based e-commerce firm to a unique and profitable subscription business in a relatively short period of time.

When Amazon Prime was started in 2005, it was advertised as a 79-dollar annual subscription that included free two-day shipping on over 1 million different Amazon products. A Prime membership now costs 99 USD yearly or 10.99 USD monthly, but in exchange, the variety of products – still delivered for free – has grown to over 15 million. As a result, the Prime we have now had considerably more benefits for customers than the Prime we had 11 years ago.

Amazon has never revealed the exact number of Prime subscribers, leading to numerous rumor's. Amazon indicated at a figure of more over 20 million at the end of 2013. Three years later, Consumer Intelligence Research Partners estimates that there are roughly 63 million Prime members.

The development of prime:

Amazon Prime originated as a service that provided free two-day delivery to its users. Prime has been continuously enhanced and expanded since then, and it is now much more than just free shipping. Here's a rundown of Prime's evolution and the services that are now available:

·???????Free two-day delivery:

This was the beginning of everything. Prime was primarily a free two-day delivery service for six years, and it was a huge hit with users. If you ordered for more over 25 USD and were not a Prime subscriber, you could get free delivery, but as a Prime subscriber, you could get anything you wanted without having to pay for shipping. Of course, you indirectly paid for the load by paying a monthly subscription fee, but most customers saved more money on free transportation than they paid in the subscription fee. In fact, it was evident from the start that Amazon was losing money. It was never intended to be a money machine from the start.

·???????Prime instant video

Netflix, Hulu, and HBO are among the video services that compete with the service. Nonetheless, there are numerous signs that Prime Instant Video is a great success, particularly in terms of enticing customers to subscribe to Prime or staying with Prime. The video service is straightforward, with a vast range of available movies and episodes, much like Netflix. Amazon has also added self-produced TV shows to its line-up, such as Bosch, and it does not appear that the development and battle with the large companies is done — Amazon has only recently begun to attack this market.

·???????Amazon studios

Amazon Studios is a step forward in Amazon's long-term strategy to reach as many people as possible. Amazon Studios is Amazon's own film production company, with plans to make both TV shows and films. Currently, it only produces television series, but it has announced and scheduled several films. Amazon is attempting to include its customers in Studios by offering them the chance to create the next House of Cards or Game of Thrones. It is possible to submit a proposal or idea to Studios and, in the best-case scenario, have it developed. Of course, we're talking about extreme circumstances here, as this isn't a volunteer service.

·???????Prime music

Amazon's music streaming service is called Prime Music. Users can download over a million songs for free to a "Prime-Library" on this site. Prime members can also buy a CD for a lower price than usual, even if such purchases are uncommon in these times. When compared to Spotify and other music services, Prime Music's collection is not extravagant, as competitors provide over 20 million songs, but the fact that it exists is crucial, and devoted consumers get exceptional value for their money. The service is a clear indication from Amazon to its customers that the company is continually striving to be where the customers are, and that Prime is more than just "worth the money."

·???????Amazon cloud drive

Amazon Cloud Drive is Amazon's answer to Dropbox's "cloud storage." Users can save files from their computers here as a backup and to save the computer's internal memory from filling up. Furthermore, as a Prime member, you have an additional benefit: unlimited photo storage with Amazon Prime Photos. This photo storage service was added to Prime in 2014, and it provides Prime customers with an unlimited direct backup of their images on their phones, as well as receiving the great majority of image files.

Benefits for subscribers of Prime:

The success of Amazon Prime is based on the fact that Prime members simply spend more money after joining. According to analysts, Prime subscribers spend up to three times as much money at Amazon as other customers. So far, it appears that the increased turnover quickly offsets Amazon's higher delivery and additional service costs. The urge to shop elsewhere is dramatically decreased after the Prime user has experienced the benefits of free delivery – and is already in the process of purchasing from Amazon. Furthermore, because most subscribers will need to recuperate the yearly lump payment, they may be motivated to buy even more things.

Prime has proved to be a powerful tool in building a strong relationship between Amazon and its customers. A relationship that has resulted in increased loyalty, more purchases and higher revenue per customer. But Prime is not only a means to lift the current business. Prime is also a very important component in Amazon’s future strategy concerning changing the retail and grocery market in the world. We will get back to that later in this report.

The long-term strategy behind prime:

Despite the fact that Amazon's current Prime programmed appears to be a big success, the corporation is far from finished evolving and revolutionizing the retail industry in the United States and around the world. Jeff Bezos and his Amazon colleagues are notorious for having such vivid ideas of the future that they can take your breath away. In fact, Bezos takes every opportunity to remind both his staff and the general public that Amazon is still in "Day One" in terms of both the Internet and the company's development. When it comes to Prime and its future development, Bezos is also looking ahead.

The second element in Amazon's approach has been and continues to be the expansion of the already vast and complex logistics machine. Amazon already has over 100 large fulfilment centers in the United States, which are massive warehouses and distribution centers from which Amazon can reach all of the country's major inhabited areas in just a few hours. Amazon operates more than 50 fulfilment centers outside of the United States, mostly in Europe. As a result, the strategic plan's three-stage rocket's last stage is to ensure that Amazon's consumers increasingly request same-day delivery. This will be accomplished by Amazon's foray into the grocery business.

Conclusion:

Amazon has grown from nothing to become the world's most successful e-commerce corporation, with an annual turnover of over 100 billion dollars and a market value of about 360 billion dollars in just 20 years. Despite this, the corporation is still in "Day One" of e-commerce development, because the great bulk of trade between companies and individuals is still physical, with customers physically entering a store or supermarket. This is something Amazon wishes to alter.

According to Jeff Bezos and Amazon, this transition will only occur if e-commerce becomes cheaper, faster, and easier for customers in the future than going to the local store or supermarket. As a result, when shopping online, the customer must have access to the greatest and broadest assortment of products. More crucially, the goods must be delivered promptly, typically on the same day. There are two major causes behind this. To begin with, Prime makes it considerably easier for customers to shop online by removing one of the most significant hurdles to e-commerce: delivery payment. This decreases the customer's purchase barrier, resulting in multiple purchases from Amazon. Second, by adding more and more services and content to Prime, Amazon employs "bundling" as a crucial approach. Members receive access to music, movies, data storage, and much more as part of their subscription, in addition to delivery. It's no accident that the number of Prime subscribers has exploded in recent years, along with the overall number of Prime services.

Amazon has a very deliberate approach for linking members even closer to the services and giving customers a good value-for-money experience. It is significantly more difficult for a customer to abandon several services after they have been used. For instance, studies show that new Amazon Prime members who utilize the video service during their free trial period convert at a higher rate than those who do not. As a result, the numerous built-in services aids in new sales, conversion, and retention.

It's amusing to consider how Prime came about by chance. In actuality, it was a staff concept that was submitted to one of Amazon's Idea Boxes. A concept that has been met with skepticism at Amazon for a long time. Today, Prime is a critical component of the company's present earnings and long-term strategy. Amazon's next move will be a big entry into the grocery sector in the United States and around the world, according to this approach.