Investment Idea

Amazon is much more than just the largest online mail order company

Vontobel Markets
14/11/2023 | 3 min read

When Amazon was founded in a garage in Seattle in 1994, hardly anyone could have imagined how big the online giant's influence would be today. Initially, Amazon was purely a mail-order bookseller.

The name is derived from one of the longest rivers in the world and was chosen to symbolize the large selection of products. Towards the end of the 1990s, Amazon also expanded into Germany and the product range on offer was continuously extended. Today, less than 30 years after its foundation, the company is currently reporting a three-digit billion US dollar turnover for the third financial quarter.

Amazon's retail customer business

On its corporate website, Amazon emphasizes its claim to be the most customer-oriented company in the world. This is reflected in the behavior of many consumers, who frequently make purchases via Amazon instead of using brick-and-mortar retailers as they used to. Only a few companies are able to bring about such a change in customer behavior. With its Prime subscription, Amazon has established an unprecedented model for its customers. With Amazon Prime, users receive free premium shipping and same-day deliveries, a convenience that binds customers to the company. This customer loyalty in turn prompts countless other online stores to sell their products via Amazon, which increases the product selection and therefore also the attractiveness of the platform for customers. A business model that keeps Amazon's revenue flowing.

However, Amazon does not limit itself to free and fast shipping. With a Prime subscription, customers also receive access to the company's own music and video streaming service. Amazon also offers an interactive speaker, the Echo, to make its presence even more felt in the lives of its customers. The Fire TV Stick offers the option of making televisions internet-enabled in order to access online content such as Prime Video. Both products enable their owners to communicate with the cloud-based voice service Alexa. With the Kindle, an e-reader, Amazon is returning to its roots of selling books. The matching e-books can of course be purchased directly from Amazon and Amazon also offers a suitable subscription with Kindle Unlimited.

This wide range of products and services, which complement each other, shows how strong Amazon's market power is among private customers. This convenience, which has arisen due to the networking and complementary goods, shows how essential Amazon has become for the daily lives of most people.

Amazon in the field of cloud computing

AWS (Amazon Web Services) is the cloud computing service from Amazon. Cloud computing refers to the on-demand use of IT infrastructures and services that are rented and accessible via the internet. At Amazon, this area contributed around sixteen percent to total sales in the past financial quarter. Companies can use it to rent databases, storage and machine learning capacities, among other things.

With over 200 services, AWS is the world's most comprehensive and most frequently used cloud provider. In addition to Netflix, other global heavyweights such as Dropbox and Foursquare also use the services of Amazon Web Services.

The past quarterly figures

In the third quarter, Amazon reported sales of around 143 billion US dollars, an increase of 13% compared to the same period last year. The largest share of sales was generated in North America (61 percent). Thanks to cost reductions and a positive development at AWS, profits rose by 244 percent compared to the same period last year.

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Amazon has become an integral part of the everyday lives of countless private individuals and companies alike. This has been achieved through an extensive expansion and innovation policy, which is traditionally financed through the reinvestment of current profits. This is because Amazon has not paid out a dividend since it was founded, but uses surplus capital to further develop its various business models in order to penetrate the habits of potential customers even more effectively in the future.


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