In the online world of shopping, Amazon.com seems to have a stranglehold over the competition. After wrapping up the best holiday season the website has ever had, CEO Jeff Bezos is still looking for ways to expand the business.
It may appear that Amazon.com is already the king of the e-commerce world, but CEO Jeff Bezos doesn’t agree. He recently started in an interview with the Harvard Business Review that it isn’t Amazon.com’s intention to make the most money based on percentages, but rather to have more cash coming in despite the actual profit made.
Bezos still thinks there’s a lot of real estate left on the web, and he wants Amazon.com to grab it. This means that if the company is only pulling in a profit of about two percent for every item sold, he thinks the low prices will encourage more and more people to become customers and stay customers for good. In that sense, the company will make much more in the long run.
Looking at recent numbers posted by the Seattle startup, it is easy to see that Amazon.com is becoming one of the most popular shopping destinations in the United States. Over the 2012 holiday season alone, Amazon sold more than 26.5 million products worldwide at an astonishing 306 items a second. Amazon’s stock recently hit its highest point ever and, according to estimations by Morgan Stanley, Amazon will control 25 percent of the predicted $1 trillion e-commerce market in 2016.
Cutting prices to the bare minimums may not seem like smart business, but it can be. It’s not bringing in the most money possible, but not many companies will try to compete for a two-percent profit margin.
Amazon’s customer experience is always involving as well. A yearly membership to Amazon Prime not only gives a customer free two-day shipping, it also provides them with an ever-growing library of movie and TV shows that is turning into a legitimate rival to Netflix.
Target, the second-biggest retailer in America behind Wal-Mart, recently unveiled a new price-match guarantee. Target hopes that this will stop ‘showrooming,’ a trend in which people in the market for an item will go to a physical store to see and try a product only to buy it online later at a better price.
Amazon.com is also benefitting from more fulfillment centers across the country, which may eventually lead to a nationwide rollout of its Amazon Fresh grocery business. Amazon Fresh is currently only available in Seattle and would likely be an expensive expansion for the company, but Bezos is for anything that would appeal to a customer.