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How does Amazon build the US e-commerce platform NO.1?

According to eMarketer’s data, in the market environment where the overall e-commerce market is not optimistic and the original growth rate is only 5.6%, Amazon’s total sales this year increased by 29% compared with last year, reaching 258.22 billion US dollars. The overall growth rate has increased to 16%. The Prime Day this year has once again expanded Amazon’s market share. Amazon pointed out that on July 16th, the number of users who subscribed their Prime membership was more than any day in the company’s history. Amazon said that the number of Prime members (including members from Australia, Singapore, the Netherlands and Luxembourg) who bought at Prime Day in 2018 reached a record high. Amazon has previously revealed that there are more than 100 million Prime members worldwide.

According to eMarketer’s data feedback, Amazon has double-digit market share growth in all product categories, and the fastest growth this year is expected to be food and beverage, apparel beauty and health care, and fashion accessories.
But other online retailers have also started the counterattack horn. According to a report released by LovetheSales, online retailers of electronic products have increased their sales by 30% since the beginning of the year. Since June, the average discount on online products has increased by four percentage points, from 32% to 36%. Among them, Apple even increased the discount by 24%.
How does Amazon maintain its high-speed growth in sales and occupy half of the US e-commerce market among strong competition of the peers and the sluggish market environment?

Business diversification

It is well known that Amazon’s net sales had reached $177.9 billion last year. But Nick Egelanian, a retail analyst at SiteWorks (Retail Development Consulting), points out that only $79 billion is in retail sales, including Amazon’s own retail business, e-commerce platform and Amazon Logistics. Only Amazon Retail represents Amazon’s real retail sales.
But as an Internet company, Amazon’s business is not just relying on its own online retail. Relevant information is shown that Amazon officially entered the medical industry in 2018 and invested in prescription drugs. At the same time, Amazon’s financial data shows that Amazon Web Services (AWS) had revenue of $17.5 billion last year. Although it was only a fraction of the total revenue of $177.9 billion, it ultimately caused Amazon’s Operating Income to reach $4.1 billion.

According to market research firm FactSet, Amazon ranked first in 2017 for US R&D spending companies for $22.6 billion, surpassing Alphabet ($16.6 billion), Intel ($13.1 billion), Microsoft ($12.3 billion) and Apple ($11.6 billion). .

It is undeniable that Amazon’s R&D focused on new areas such as AWS, Alexa, and computer vision, as well as new sections that are constantly evolving, creating new weapons for its business, which has also become an important guarantee for a long-term growth and giant position for Amazon.

Prime Day effect

Amazon’s official data reveals that Prime members have spread all over the world, with a total of nearly 100 million, of which at least 60 million members are from the United States – nearly half of American families. Studies have shown that Prime members are generally less likely to compare prices on other shopping sites.

There were other online retailers have responded to this. For example, the discount of Wal-Mart last year attempted to divert public attention. This is one of the few cases against Amazon Prime Day. But this year, many retailers have joined the promotion festival, allowing savvy shoppers to compare prices to ensure that Amazon is their best deal even on this big day.

Amazon said on the 18th that this is their biggest shopping activity to date, and its Prime members around the world have purchased more than 100 million items at the event. At present, Amazon has not disclosed specific sales, but Amazon has revealed that its sales of small and medium-sized e-commerce companies in the world “far exceeds” $1 billion.
Despite the pressure from other competitors, Amazon has successfully won this summer promotion through Prime Day and 100 million Prime members around the world.

All in all, Amazon has made a strong reserve for its business market, and it will become an important player in the US and global markets in the future.
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