Amazon’s Revenue in 2022 surpassed $500 billion but It’s still in a Loss

Amazon’s Revenue in 2022 surpassed $500 billion but It’s still in a Loss

The study was first published on Feb 24, 2018, and then updated on Feb 13, 2020, Feb 4, 2021, Feb 18, 2022, and recently on Feb 15, 2023.

Back in 1994, Jeff Bezos was stunned after discovering the 2300% growth rate of the Internet, which eventually led him to think about starting an online business.

“ You know, things just don’t grow that fast. It’s highly unusual, and that started me about thinking, ‘What kind of business plan might make sense in the context of that growth?’.” – Jeff Bezos

When he asked his parents for money after sharing his idea, his dad’s first question was, “What’s the Internet?” which vividly indicates that at that time, people weren’t much aware of the Internet.

Surely, selling things would be a problem for the young entrepreneur, but somehow, he found low-cost products that could be easily sold on the web.

With his parents’ financial help of $245,573, Bezos started Amazon in his garage. Fortunately, now their investment is almost worth $30 billion – a 12,000,000% ROI.

In 1997, three years after its launch and post-IPO, Amazon’s estimated worth was $438 Million. The startup gradually evolved into a multinational corporation and now is worth a marvelous $1.6 Trillion. The E-commerce giant is the second US company to cross a trillion-dollar valuation after Apple when its stock price reached an all-time high ($2050.50) on September 4, 2018.

Internet was surely a huge part of Amazon’s growth, but technological innovation, marketing strategy, and, most importantly, its business model are what make Amazon the most innovative company of the current era.

Amazon has grown significantly since its inception as a book-selling website and spread its wings to other areas like logistics, consumer technology, cloud computing, and most recently, media and entertainment – domains that did and would help Amazon tread the path to emerge as a trillion-dollar corporation.

This Amazon business strategy study compiles the ideas, innovations, technological research, partnerships, and, most importantly, the strategies responsible for growing Amazon to such heights. You will also find their sales numbers in every segment and a brief summary of their stock prices for the past few years.

The Strategies that Amazon has used over the years and benefited from are mentioned here. But wouldn’t this information have been immensely helpful to Amazon’s competitors a few years prior? Turns out they could have known Amazon’s moves beforehand.

Amazon, in 2020, acquired Zoox, but one could have foreseen this decision had they been closely following the trail of patents that Amazon had created. One can find numerous patents on autonomous logistics in Amazon’s Portfolio.

It has been forecasted that this recent acquisition can heavily affect companies in the logistics, ride-hailing, and food delivery domains. Amazon’s patent portfolio held a tell-tale sign of its interest in these domains. Possessing this information before Amazon’s acquisition could have saved these companies from this now-present threat looming over their businesses.

If you wish to know about Amazon’s future plans and strategize your business moves accordingly, then going through Amazon’s patent portfolio is quintessential.

Fill out the form below to know which areas Amazon has been focusing on, the tech areas in which Amazon is working, which countries they are securing their IP in, and their acquisitions in various nodes in the form of an interactive dashboard.

While this study will give you more information about Amazon’s business strategy, it will also help you acquire some basic principles that could be applied to any kind of business.

So, ladies and gentlemen, gather around and pay heed as we deeply dive into Amazon’s moves. Before we get started, presented below is the table of contents, which you can use to jump to the section of your choice in case you want to skip to the meat of the material.

One more thing: I’ve converted this entire analysis into a PDF that you can download and save for later reading or even sharing. You can download it using the form below:

Table of Contents

Why is Amazon believed to be the most successful company in the Future?

Milestones after milestones, on the path to striving towards its personal zenith, Amazon has been recognized as one of the most successful companies. This statement is not a mere theory but purely supported by facts. Let’s have a look at some of them.

Amazon’s Achievements

FastCompany magazine listed Amazon as the most innovative company of 2017. Further, Amazon also ranked 3rd in MIT’ s Smart Companies 2017 listing, following Nvidia and SpaceX.

BCG placed Amazon as the 3rd most innovative company in 2022, while Forbes placed Amazon 5th in 2022.

Amazon Fortune 500 ranking

Source: Fortune

That’s not it.

Amazon ranked 8th on the Fortune 500 2018 list, 5th in 2019, and 2nd in the 2021 and 2022 lists – It’s the best rank ever since Amazon made its presence in the magazine for the first time in 2002. Since then, the company has been continuously listed on the coveted list, each with a rank better than the previous year.

Growing Revenue

In the last five years, the revenue of Amazon increased by 121% – from $232 billion in 2018 to a whopping $514 Billion in 2022. Finally, in 2022 alone, the revenue grew by 9% compared to 2021, surpassing the half-a-trillion milestone.

The chart below portrays Amazon’s revenue for the past five years. In Billions. Mighty numbers, Amazon!

Amazon Revenue 2022

Launching their services to more markets and expanding horizons, Amazon – as a result of their eCommerce business model – increased their sales numbers, customers, and hence Revenue.  Besides, its AWS business contributes hugely to Amazon’s revenue stream.

Amazon is equally expanding the operations for its three segments – North America, International, and AWS – where it offers its products and services to consumers, sellers, as well as developers, enterprises, and content creators.

Amazon revenue segment wise

Unsurprisingly, a big part of Amazon’s revenue comes from North America. Internationally, the company’s revenue decreased from $127.7 billion in 2021 to $118.0 in 2022 as the company is getting tough competition in big markets like India.

Further, AWS has been bringing significant revenue every year as it became the biggest cloud service provider on the planet. In 2017, the company rendered more than 90 cloud computing services with the Internet of Things (IoT) tools. Big shots comprising Netflix, Unilever, GE, and NASA form some consumer bases using AWS for better web services.

Investors’ Expectations

Amazon is worth more than 1 trillion dollars, yet it makes little to no profit. With $514 billion in revenue, Amazon suffered a net loss of $2.7 billion.

The reason for its huge market cap is investments. Investors took a huge interest in Amazon and bet a huge amount as they believe that Amazon could grow faster, longer, and bigger than almost any other firm.

Even though in 2022, Amazon stocks performed badly, the investor’s hope suggests Amazon be the most profitable firm than any other, at least, in America. And they are expecting big profits in the future. Its sales already crossed the half-a-trillion-dollar mark. The only interesting thing would be to see is if, in 2023, Amazon would surpass Walmart in revenue.

These are some potential pinpoints that force us to believe that it would.

What is Amazon’s Business Strategy?

“We’ve changed, again, the automation, the size, the scale many times, and we continue to learn and grow there.” – Brian Olsavsky, CFO, Amazon

The business strategy of Amazon consists of focusing on investing in technologies, enhancing its logistics applications, improving its web services by fulfillment capacity, M&A strategy, R&D activities in logistics, experimenting with Fintech, and securing its inventions using patents.

Let’s have a brief look at some of those.

Amazon’s Diversified Patent Portfolio

Amazon’s patent history is as old as the company itself. With the first patent filed in 1995, it is easy to guess that the company now owns patents in thousands. As Amazon gradually increased its patent filing activities in the starting years of the company. 

The major increase in filing activity can be noticed from 2010, when Amazon became more than an online retailer. 

Amazon patent filing trend

By 2011, Amazon had filed patents for multiple technologies, such as Cloud Computing, which is the third biggest source of revenue for Amazon. Amazon has also started filing patent applications for Augmented Reality, Speech Analysis (Alexa).

Amazon’s biggest patent share can be found in Logistics and Artificial Intelligence . Besides these, Media Entertainment and E-commerce applications hold a fair share of the Amazon Patent Portfolio.

Amazon Patents technological distribution

Amazon is a very diversified company, so the range of its patents can be very vast. 

But it is clear that in some sectors, Amazon wants to be at the top.

In Logistics, Amazon now competes with traditional logistics companies such as FedEx and DHL. 

During the Pandemic, when all businesses were down, Amazon had something else to plan to make the global crisis an opportunity. 

Amazon leased 12 Boeing 767-300 cargo aircraft, bringing its air fleet above 80 jets. According to an industry consultant, it added 220 package facilities since the start of the year, ranging from urban delivery stations to giant warehouses.

The company is close to building a logistic system to deliver one-day packages for customers and overtake its logistics rivals.

Amazon has been filing patents for logistics for a long time but the increase in activity can be seen after 2010.

amazon us business plan

In 2016, Amazon filed a record of 268 patents alone for Logistics. Amazon has been filing logistics patents for a long time, but in 2016, it went for big numbers. 

Amazon has covered almost everything for logistics, whether air, land, sea, or underground. Amazon has filed patents to deliver a shipment from any medium.

Amazon has hundreds of fulfillment centers all over the world. Also, Amazon wishes to be flying fulfillment centers that house drones to deliver packages. 

In Dec 2014, Amazon filed a patent for an Airborne Fulfillment center with drones for package deliveries. 

amazon us business plan

The idea seems to be futuristic as of now, but it’s one of the pillars of Amazon, i.e., long-term thinking. This idea could become a mainstream medium for package delivery in the future. The important thing is it shows how innovative Amazon can be when it comes to as simple as making an item delivery. 

Further, Amazon filed for other types of fulfillment centers that house drones and cargo trucks. 

Besides Logistics, Amazon’s AWS arm is significantly bigger than many of the big corporations, as it generated $80 billion in revenue with a $22.8 billion Operating Income in 2022. 

Amazon has been filing patents for Cloud Computing since 2010. Amazon is probably the biggest cloud computing company in terms of revenue compared to Microsoft.

Also, Amazon is one of the top companies in Edge computing. With enough resources to build an edge portfolio, Amazon also owns tens of patents in Edge computing.

Further, Amazon’s Alexa Everywhere strategy seems to work as the company includes more and more features for its assistant and Alexa-enabled devices. Amazon has filed significant patents on Speech Recognition. 

They even filed an Alexa patent that can recognize your physical and emotional states and can suggest relevant solutions.

amazon us business plan

For more Amazon Alexa Patents: Click here . 

Amazon is not just dependent on in-house patent filing but also acquires patents. The famous Zoox acquisition is said to have made Amazon enter the self-driving vehicle market. However, besides Zoox’s position in the market, Amazon found its patent portfolio amazing . 

IAM also says that Zoox patents are the fifth most cited patents by others for self-driving technology. Further, it owns two of the three most-cited grants by other levels 4 and 5 patent owners.

Zoox cited patents

“ Amazon’s plans to put a fleet of autonomous taxis as well as delivery vehicles on the road, the acquisition appears to have handed it a powerful stockpile of IP to secure freedom to operate in what is only going to become a more crowded field. ”, says IAM. 

Amazon Patent Prosecution Stats

We looked ahead and looked at Amazon’s pending patent applications currently in the US patent office. Below are our findings on how their patents perform in the patent office and their prosecution process.

Amazon has an impressive 97.26% grant rate for its patents.

Amazon has filed 14316 patent applications at USPTO so far (Excluding Design and PCT applications). Out of these 12764 have been granted leading to the grant rate of 97.26%. Not only this, the application Abandonment/Rejection rate of Amazon is meager at 2.47% and only 299 applications have faced abandonment or rejection. – Insights;Gate by GreyB

The data below is a bird’s eye view of Amazon’s pending patent applications at the US patent office. Our in-house prosecution intelligence tool – FIT – was used to perform this analysis. You can explore more about FIT from here.

Currently, Amazon has 1108 patent applications pending at USPTO. Under the lens, 654 patent applications out of these are on the right track to a smooth grant; however, the rest of the 454 applications are facing high difficulty at the office. Some of them are already in the danger zone.

These patent applications are getting more than an average number of rejections or taking longer than the average time than other applications in similar tech areas. We segregated all these applications into 3 categories:

  • SOS  – Facing High difficulty at USPTO
  • At-Risk  – Applications that were running smoothly but of late have started displaying high probabilities of turning into an SOS application
  • On-Track  – Running smooth as butter

Below are the patent applications based on their group art units, how many of them are on the right track, and which ones need intervention:

amazon us business plan

These are the Top 4 tech areas where Amazon’s maximum number of applications are currently pending at the USPTO. The number of an application under the SOS column are the ones that need immediate intervention from Amazon’s IP team.

This overviewed Amazon’s patent applications and their performance at USPTO. As I mentioned above, the insights you see here were extracted from our in-house FIT tool. FIT also suggests the type of actions Amazon or any applicant can take to help their patent application get granted smoothly.

If you’re interested, you can read more about FIT and how it helps strengthen your patent prosecution process from here .

Fill the form below to know which areas amazon has been showering its attention on, the tech areas in which Amazon is researching , which countries they are securing their Patents in , and their acquisitions in various nodes in the form of an interactive dashboard .

Amazon’s Investment in Different Technologies

Amazon robotics.

Amazon has been investing considerably in robotic and drone technologies for the past decade and has acquired many patents on them. Its warehouses alone house more than 45,000 robots.

In 2012, Amazon acquired Kiva Systems – a company that designs robots for the picking and packing process – for $775 million. By 2014, the company had 14,000 robots for its 10 warehouses. The following year, the count increased by 114% to 30,000 robots, and in 2017, the number increased by 50% to 45,000 robots across 20 warehouses.

In addition to acquisitions, Amazon also organizes challenges in different universities and institutes worldwide, offering a large sum of money for inventing a next-generation robot. In 2017, the prize money was $250,000.

Amazon Drones

Amazon is also researching drones for its initiative and future drone delivery service. In Britain, Amazon started its drone delivery service under Amazon Prime Air.

In Oct 2017, the US Federal Government also approved a drone delivery program in the US. The administration stated that they wanted to open new opportunities and commercial uses for drones to create jobs.

Amazon recently filed numerous drone patents on package delivery, a parachute, and a floating airship warehouse. Also, it has patents on drone design for better maneuvering, secure landing, and long flights.

On an advanced level, they got a patent for a method to charge electric vehicles through drones. This shows their interest in automobiles as the future will require many methods to charge an EV. Further, there would be no surprise if Amazon ventures into the automobile domain.

But in Aug 2021, Amazon shut down the drone delivery program, Prime Air, in the UK as it removed more than 100 employees from the program, says a report by Wired .

Five years ago, it was a big thing for Amazon but the focus slowly shifted to autonomous vehicles which saw a huge acquisition by Amazon. As per Amazon, people are still working on the project but it is unclear and less likely that Amazon is giving priority to drone delivery.

Amazon Alexa

“These big trends are not that hard to spot (they get talked and written about a lot), but they can be strangely hard for large organizations to embrace. We’re in the middle of an obvious one right now: machine learning and artificial intelligence.”  – Jeff Bezos 

Artificial Intelligence is one tough area where despite having many competitors Amazon got a big draw. It’s continuously focusing on AI and machine learning to enhance the customer experience. The segment AWS and its venture Alexa Internet is a big part of their investment in AI.

In October 2017, the company announced a  new research center in Germany focused on developing AI. During the same month, the company and Microsoft partnered to roll out new tools that will make it easier for developers to use open-source artificial intelligence software. Developers can use Gluon, a Python-based application programming interface, to easily work with MXNet, the AI framework backed by public cloud market leader Amazon Web Services.

Amazon’s partnership with Microsoft also ensures collaboration for researching in AI where their personal assistants Cortana and Alexa would communicate with each other and will offer services to the users.

“Ensuring Cortana is available for our customers everywhere and across any device is a key priority for us. Bringing Cortana’s knowledge, Office 365 integration, commitments, and reminders to Alexa are a great step toward that goal.” – Satya Nadella, CEO, Microsoft

In Jan 2021, Amazon announced Alexa Custom Assistant , a new service that lets device makers, automakers, and service providers create custom-branded voice assistants that are powered by and work in cooperation with Alexa. The Alexa Custom Assistant can be built into automobiles and consumer electronics, including smart displays, speakers, set-top boxes, fitness devices, and more, providing a complete, managed voice solution that substantially reduces cost, complexity, and time to market.

Alexa Everywhere – Strategy

Amazon announced its Alexa Everywhere strategy in 2017 and surprisingly it became a huge success despite the presence of other top personal assistants in the market.

Alexa, Amazon’s AI-infused voice assistant, was first released with the original Amazon Echo smart speaker in November 2014. Since then, it’s been giving head-to-head competition to its rival Google Home and now Apple also has joined the race with its Siri-enabled speaker, Homepod.

In 2017, Amazon announced to install Alexa (AI) in every echo device and launched a number of new products. Currently, Amazon Echo and Echo Dot hold 2/3 market share of smart speakers – beating Google Home and Apple Homepod to a great margin. Amazon also announced two major Alexa integrations for non-Echo devices. Amazon further revealed that Alexa would be supported in BMW cars beginning of the next year.

Further, the Fire TV set-top box was launched with microphones embedded in the device so consumers can shout Alexa commands across their homes.

Alexa, Play The Boys.

If that was not it, Alexa-based in-house drones were released, which could be called from anywhere around the house.

Alexa, Where’s my drone?

Alexa became more multilingual, allowing household members to interact with Alexa in two languages without changing the settings. In the U.S., the multilingual mode allows bilingual customers to code-switch from English to Spanish and vice versa. Amazon also launched a multilingual mode in new languages and countries, including Germany, Spain, France, Italy, and Japan.

Further, Amazon added new Alexa features that make customers’ daily lives more convenient, including sharing a shopping list with Alexa contacts by voice, video calling on Fire TV, and new Alexa Routines on Fire TV.

In Dec 2016, Amazon demonstrated the world’s most advanced physical store . In 2018, Amazon officially opened the store  to the public and showed the world that its machine-learning research could eliminate jobs.

In Feb 2020, Amazon opened the first cashier-less grocery store using “Just Walk Out” technology that powered 25 Amazon Go stores.

The store has no checkout point and, therefore, has no cashier for making payments for your purchases. The payment can be added automatically to the cart whenever you take a product from the shelves. And after the purchase, the payment automatically gets deducted from your account or digital wallet.

Amazon Web Services (AWS)

Amazon has recently acquired companies in the cloud computing space and invested in businesses based on the cloud. In early 2017, the company acquired many companies to strengthen its AWS Cloud business. Some of these include GameSparks, Thinkbox Software, and Harvest.ai. Additionally, Amazon invested in Grail, which is a potential future customer of Amazon’s cloud services.

In order to increase the usage of its cloud technology, Amazon Web Services (AWS) is investing some of its money to open data centers in Britain and France.

In 2020, Amazon’s cloud segment, AWS, accounted for 58.9% of the company’s overall operating income.

Autonomous Vehicles

The tech and automotive industries alike are abuzz with the news of Amazon acquiring Zoox, a California-based startup that develops autonomous driving technology in a deal estimated to be worth over $1.3 billion.

Amazon announced in late June that they are acquiring Zoox “to help bring their vision of autonomous ride-hailing to reality”.

Although it was the first strong move by Amazon to take part in autonomous vehicles, there were certain pieces that suggest the company’s interest in driverless vehicles before this deal.

The company has invested in one of the top autonomous driving startups , Aurora ,  and it has tested self-driving trucks powered by self-driving freight startup Embark . 

Since Amazon has been aggressively investing and researching in the domain of autonomous vehicles and various automated methods of delivery.

In Dec 2020, Zoox revealed the first look at their fully functional, electric, autonomous vehicle, which features bi-directional driving and is capable of speeds up to 75 miles per hour.

Zoox Car

Wants to know about Zoox Patent Portfolio, here is a glimpse: Zoox Patent Portfolio .

Amazon In Entertainment Sector

Amazon prime video.

Amazon has been investing in TV series and movies either by acquisition or production as it strives to compete with streaming rivals Netflix, HBO, Hulu, and Disney. In 2022, Amazon bought MGM and acquired the rights to big franchise like James Bond.

amazon us business plan

Though Amazon Prime members can enjoy their streaming service as a part of the membership, Amazon also launched a video-only plan for non-prime members for a cost of $8.99/month.

“Amazon planned to triple the amount of original content over the rest of the year, and it’s probably safe to assume that its torrid investment pace will continue into 2017.” –  Amazon CFO, Brian Olsavsky ,

In 2017, Amazon acquired many TV shows and movies. Amazon acquired Marvel’s Inhumans and Runaways to give good competition to Netflix — which also owns the rights to stream some of Marvel’s shows.

Amazon also spent a big amount on some small-budget movies that have excellent reviews. They paid  $12 Million for ‘The Big Sick’ even before its theatrical release. It’s the amazing reviews – 98% Rotten Tomatoes – that made Amazon pay the price.

Amazon has over 126 million Prime members in the U.S. while Netflix has 73.94 million subscribers . After the success of Prime in the U.S., Amazon is pushing the same playbook in Europe.

Prime Video continues to launch Amazon Original series and movies globally. Amazon’s Original movie Borat Subsequent Moviefilm , starring Sacha Baron Cohen, generated tens of millions of customer streams globally on opening weekend.

In 2022, Amazon released the most expensive TV series Lord of the Rings: The Rings of Power . Its superhero series The Boys is also regarded as the best superhero show of the year despite having big competition with Marvel and DC franchises.

Amazon Studios

Alone creating a video-streaming service is not going to help, that’s why Amazon went for creating its own film and tv series production distributor, known as Amazon Studios . Currently, the original content by Amazon is too less when compared to other services such as Netflix, Hulu, and HBO. But Amazon has planned to produce its own content with a great number.

Amazon studios not only focus on English content but also works on content related to a particular geography.

amazon us business plan

Much of Amazon’s original content has won major awards. For example, Manchester By the Sea, which was nominated for six Academy Awards, made Amazon Studios the first streaming service to nominate for the Academy Award for Best Picture. The Marvelous Mrs. Maisel and Fleabag are some top-performing and award-winning TV series created by Amazon.

Amazon Studios announced deals for upcoming Prime Video series and movies, including the Eddie Murphy comedy Coming 2 America , which premieres in March 2021 on Prime Video globally, and an unscripted docuseries and new coming-of-age series based on Jessica Simpson’s best-selling memoir Open Book .

On May 26, 2021, Amazon acquired MGM for $8.45 billion. And with this acquisition, Amazon also acquired MGM’s vast content library of 4000 films including classics such as 12 Angry Men, Basic Instinct, Legally Blonde, Silence of the Lamb, Rocky, and the James Bond franchise as well as 17000 TV shows – including Fargo, Vikings, and The Handmaid’s Tale .

Prime Music

amazon us business plan

Amazon is not limited to providing video streaming as the company also has its own music streaming platform – tough competition for Spotify, YouTube Music, Apple Music, etc. Amazon has millions of songs in its library which they are offering to its prime members. Prime Music is a kind of gift for their prime members as the company isn’t charging any extra cost for this music platform.

It’s cool, isn’t it?

Even for a better experience, Amazon integrated Alexa into its music app which can help you find the songs you are searching for.

Further, Amazon Music signed an agreement to acquire an innovative podcast publisher, Wondery. Through this acquisition, Amazon Music aims to accelerate the growth and evolution of podcasts by bringing creators, hosts, and immersive experiences to even more listeners across the globe.

Becoming A Logistics Powerhouse

Amazon is opening small warehouses to support Prime Now and Amazon Fresh – its grocery delivery service. In Germany where a rapid expansion in online grocery delivery is expected , Amazon has been running warehouse purchase plans to tap into the market opportunity.

Amazon Fulfillment Centers

In Jan 2020, Amazon said it has 110 active fulfillment centers in the US and 185 globally.

Its plans include investing heavily in expanding fulfillment centers and other logistics capabilities. Driving further growth in the number of sellers and packages going through Fulfilled by Amazon (FBA) is a key focus.

Amazon Logistics App

To strengthen the logistics and delivery network, Amazon announced developing an app to help truck drivers. Amazon hired aggressively for the project and announced to launch of it in 2017.  In November 2017, they secretly launched the app , Relay. The app makes it easier for truck drivers to pick up and drop off packages at Amazon warehouses. Besides, Amazon is also working on a second app that could connect truck drivers with cargo.

Amazon Prime Air

In March 2016, Amazon gave a public demo of its Prime Air delivery drones in the US. The concept has multiple regulatory barriers. However, the situation may get better, as in October 2017, the Trump Government issued an order giving local governments more authority to conduct tests of such new technologies.

Amazon is experimenting with a new delivery service intended to make more products available for free two-day delivery and relieve overcrowding in its warehouses.

The service, Seller Flex, began two years ago in India, and Amazon has been slowly marketing it to US merchants in preparation for national expansion. The trial began this year on the West Coast with a broader rollout planned in 2018.

Amazon will oversee the pickup of packages from warehouses of third-party merchants selling goods on Amazon.com and their delivery to customers’ homes. Handling more deliveries is expected to provide Amazon with greater flexibility and control over the last mile to shoppers’ doorsteps.

Logistics Partnership

In October 2017, French supermarket operator Leclerc was approached by Amazon for a possible logistics partnership. This probable collaboration shows Amazon’s intentions to expand in the supermarket sector.

The partnership and other logistic investments became an immediate reason for other services’ fall as companies like UPS and FedEx’s share prices dropped drastically. UPS shares fell as much as 2.1% to $116.52 and were trading down 1.3% in New York on October 4th, 2017. FedEx dipped by 1.6% to $217.77 before recovering somewhat to $220.09 on October 4th, 2017.

Amazon Acquisition Strategy

Amazon has been harnessing aggressively its merger and acquisition strategy, as it closed 30+ deals in the past five years. In the first two quarters of 2017 alone, the company closed eight deals that cost them an arm and a leg.

The chart below summarizes the M&As of Amazon from 2017 to 2021.

Amazon acquisitions

2020 saw a big drop in M&A activity but it’s also the year when Amazon surprised the world by acquiring Zoox for more than $1 billion, making it the company’s one of biggest acquisitions. With it, Amazon has entered the self-driving industry as well.

2021 saw the second-biggest acquisition of Amazon when it acquired MGM for $8.45 billion to boost its streaming services Prime Video. MGM owns 4000 movie titles and 17000 TV series which are enough to attract customers to its streaming platform to binge on some of the classic movies such as 12 Angry Men, Basic Instinct, Legally Blonde, Rocky , and the evergreen James Bond movies.

During the last few years, Amazon made multiple acquisitions to strengthen its core e-commerce operations. Additionally, it also invested in technology companies such as Harvest.ai – a cybersecurity player, and Do.com – a software for meeting productivity needs.

In June 2017, Amazon acquired grocery giant  Whole Foods for a whopping $13.7 billion. Buying Whole Foods has been a big step ahead for Amazon as it not only strengthened its grocery e-commerce segment but also opened doors to new opportunities.

Internationally, Amazon expanded its operations by acquiring other businesses such as Souq.com in the middle-east for growing e-commerce in the region.

Amazon made their first acquisition of 2018 — their second-biggest ever —  in a deal valued more than $1 Billion purchasing Ring , a video doorbell maker that shows their interest in robust home security to flourish their Amazon Key service .

In 2022, Amazon made two big acquisitions, i.e. One Medical and iRobot both billion-dollar acquisitions. With One Medical, Amazon could create a healthcare ecosystem that it could include in its retail store, prime memberships, etc. Consider it similar to what Amazon has done with Whole Foods.

And with iRobot, the company could get potential data from people’s homes such as mapping and layout thus raising concerns for privacy by FTC.

Here are the 10 biggest acquisitions of Amazon:

Amazon biggest acqusiitions

New Businesses and Emerging Markets

Amazon has been experimenting with fintech initiatives and intends to become a prominent player in the fintech segment. Amazon nearly lent out $1 billion in small loans in 2016.

In India, the company has been offering thousands of loans to e-sellers so suppliers can expand their operations and manage seasonal spikes.

Amazon expanded its financial reach by launching Amazon Cash which allows users to add to their Amazon.com balance by showing barcodes at brick-and-mortar checkout locations.

“Amazon is the most formidable. If Amazon can get you lower-debt payments or give you a bank account, you’ll buy more stuff on Amazon.” –   Alex Rampell, Partner, Andreessen Horowitz

Amazon makes big moves in emerging markets too. One of the key international markets targeted by Amazon is India, which is perceived to be one of the fastest-growing e-commerce markets globally in the near future.

In Late 2016, the company’s CEO Jeff Bezos announced an additional investment of $3 billion in India, taking its net investment to over $5 billion in the country. This amount is more than the company’s total capital expenditure of $4.5 billion in 2016. Looks like Amazon sees huge potential in India.

In October 2017, Amazon announced to expansion in Brazil to enter the electronics and appliances marketplace. Amazon also expanded its operations in the Middle East, one of the fastest-growing e-commerce markets in the world. It acquired Souq in the UAE to serve the local market. In September, Amazon-owned Souq acquired Wing.ae, a startup that is building a network for Prime-style same-day and next-day deliveries for various e-commerce marketplaces.

On May 21, 2020, in the midst of a pandemic, Amazon launched a food delivery service in India. The service known as Amazon Food is currently available in Bangalore now but with top players having a setback the company has enough resources to go big and be a worthy competitor.

In Nov 2020, Amazon opened yet another venture called Amazon Pharmacy that could disrupt US healthcare. With the service, the company offers prescription medications to customers’ doorsteps. Customers can now browse medications, create a secure pharmacy profile, and request or manage prescriptions on Amazon.com. Just like other services, Amazon offers Prime members unlimited, free two-day delivery on Amazon Pharmacy orders with their membership.

Amazon Investment Landscape

Amazon is investing in a wider variety of industries. During the period of 2011-2013, Amazon slowed down its investment activities as it invested mostly in internet companies.

During 2014-2016, the company changed its investment strategies and started channelizing investment in other industries like Media, Auto & Transport, and Mobile. Amazon also made a few other big investments, as they invested in the UK-based Yodel Delivery Network to expand its logistics network in the UK.

In 2016, Amazon partnered with Twilio to strengthen its communication platform through text and voice messaging.

In 2017, Amazon invested in a healthcare startup Grail which specializes in genomics for cancer diagnostics. This is Amazon’s first investment in the life science segment.

In the last few years, Amazon focused on late-stage deals where most of the investment amount fell into the $10M-$20M range.

Amazon founded the investment venture in 2015. The Alexa Fund provides up to $200 million in venture capital funding to fuel voice technology innovation.

As of Feb 4, 2021, Alexa Fund has made 102 investments in startups of different industries such as AI/ML, Education, Fintech, Gaming, Hardware, Health, Mobility, Robotics, Smart Home, and Voice Developer Tools. 

The maximum number of investments can be seen in Artificial Intelligence (10 startups), Healthcare (13 startups), and Smart Home (11 startups) sectors.

Here are the last 10 investments made by Alexa Fund:

Alexa Fund Investments

Amazon Financial Analysis

Amazon revenue analysis.

Recently, Amazon announced its revenue for the 4th quarter of 2022 , and with that, we found its overall revenue for 2022. AWS arm proved to be the most profitable segment raking in $22 billion operating income alone leading to record-breaking sales in 2022.

Amazon revenue and operating income

There are several reasons for this immense growth of Amazon’s revenue. While its online shopping business is the major source of revenue, its physical stores didn’t generate many sales due to the pandemic.

The subscription service also grew but a significant growth happened due to third-party sellers which accounted for $117.71 billion dollars, crossing the 100-billion mark for the first time. Amazon is a huge marketplace and one can sell their products via Amazon for which the company takes a margin of 15 to 20%.

Its online stores also achieved a record of crossing the 200-billion mark for the first time. Amazon now has two divisions with a revenue of more than $100 billion.

Furthermore, advertising on Amazon is also increasing at a faster rate and accounted for $37.73 billion in 2022 . The potential of Amazon’s advertising business has such potential that analysts affirmed it could surpass the AWS revenue by 2021 . It didn’t surpass AWS revenue but it sure saw immense growth. Considering the AWS revenue, it’s highly unlikely that Advertisement can surpass AWS in the next 3 years.

amazon us business plan

Majorly, Amazon operations, from the revenue perspective, can be divided into three major segments: North America, International, and AWS .

North America Segment

The segment includes earnings from retail sales of consumer products (including sellers) and subscriptions through North America-focused websites. The major competitors in the North American region are Best Buy, Target, eBay, Peapod, and Netflix.

Amazon North America Revenue 2022

The chart above shows both the sales and operating income of Amazon in North America for the last three years.

The segment is responsible for 61.2% of the total revenue.

North America has three sub-segments namely Media, Electronics, and other general merchandise and others. Electronics and other general merchandise represent the highest share of sales in North America with consistent growth.

International Segment

The international segment includes earnings from retail sales of consumer products and subscriptions through internationally-focused websites. The chief challengers are Alibaba Group in China, Woolworths in Australia, Rakuten in Japan, Flipkart in India, and JD.com in the United Kingdom.

Amazon International Revenue 2022

Amazon International Segment Revenue decreased to $118 billion in 2022  with an operating loss of $7.7 billion .

Last year, it seemed like the segment would turn profitable in 2022 but the opposite happened. The segment has yet to become profitable and it might take 3 or more years for this segment to become profitable.

The sales growth was due to increased unit sales, including sales by marketplace sellers. The changes in foreign currency exchange rates impacted International net sales. Increased unit sales were driven largely by the continued efforts to reduce prices.

Amazon hosts the three major sub-segments, i.e. Media, Electronics, and other merchandise and Others, internationally. With Prime Services, the Electronics and other general merchandise successfully increased sales in the International segment, too which was more than $30 billion.

AWS Segment

Like every year, AWS was the most profitable segment of 2022, thanks to the Amazon B2B strategy, which bagged $22.8 billion operating income .

AWS Revenue 2022

The AWS segment is earning from global sales of computing, storage, database, and other service offerings for startups, enterprises, government agencies, and academic institutions. The major rivals in this segment are Microsoft, Google, Oracle, and IBM.

AWS is the fastest-growing segment of Amazon in terms of sales and net income. The sales increased by 30% in 2022. Amazon’s increased sales are proof of growing consumers and product cost structure.

Amazon Stock Analysis

The year 2022 was generally bad for Amazon’s stock price. The company split its stock 20 to 1 in June 2022. Further, Amazon is one of the worst-performing stocks of 2022 as it declined more than 50% in 2022.

Amazon hasn’t seen good growth in terms of stock in 2022 compared to its counterparts like Alphabet, Apple, and Microsoft.

Amazon stock price

After comparing the 52-week low and high, Amazon stock shows a growth of only 2.3%. This is the lowest growth in the last 5 years.

Amazon has a total of 10.24 billion shares and 59.83% of the total share. i.e. 6.13 billion shares are being held by Institutional holders that make a total holding of $620 billion.

Amazon stock holdings

Undoubtedly, the world’s richest man holds the most shares – 992 billion. This makes his net worth $124.7 Billion. His net worth surpassed the $100 Billion mark for the first time on November 24, 2017, when the share prices increased by 2.5%. In November, he sold 1 Million shares when the price reached an all-time high of $1100/share which helped him make $1.1 billion.

With 233 billion shares, Mackenzie is the 2nd largest individual shareholder of Amazon making her net worth more than $27 billion. .

Amazon’s Business and Research Partnerships

  • Amazon and Microsoft partnered to integrate Alexa and Cortana

In August of 2017, Amazon and Microsoft entered into a partnership for better integration of their Alexa and Cortana digital assistants. This cross-platform integration would allow Alexa users to access some unique aspects of Cortana and vice-versa.

  • Amazon and Ford partnered to access cars from a distance

Ford and Amazon teamed up to offer consumers the ability to access their cars from a distance. This is done by bringing Amazon Echo into Ford’s cars. With the help of Alexa – Amazon’s cloud-based voice service, the car lets you control functions such as lighting, security systems, garage doors, and other Alexa smart home devices.

  • Dish Network and Amazon wireless collaboration

Dish Network is looking to use an e-commerce platform, streaming service, home assistant (Amazon Echo), and proposed drone delivery services, in collaboration with Amazon and T-Mobile USA. According to the deal, Dish will utilize their spectrum for wireless service, in collaboration with Amazon and T-Mobile USA.

  • Cognizant is a Premier Consulting Partner for AWS

Cognizant in partnership with AWS  provides services like migration competency, big data, workspaces, healthcare and life sciences, financial services, and SharePoint. The AWS Cognizant Team (ACT) delivers the differentiating integration strategy and creates industry-specific and horizontal solutions for their mutual customers.

  • Amazon and Accenture united

Amazon and Accenture combined to precipitate real innovation by combining AI tools into a contact center running from the cloud. Amazon offers Amazon Connect, a fully hosted, customizable, cloud-based contact center service. The collab structures such that Accenture would help its clients rapidly deploy Amazon Connect at scale and build vertical industry applications that use AWS AI services. The partnership will focus on delivering cloud transformation projects.

  • Nokia announces a Strategic collaboration with Amazon Web Services

Nokia and Amazon Web Services (AWS) collaborated  given the rising need for “tighter integration” between networking and IT infrastructure. The partnership will improve cloud migration and software-defined wide-area networking (SD-WAN) services for enterprises, along with working across the development of 5G and Internet of Things (IoT) use cases.

  • 2nd Watch Named AWS Management Tools Service Delivery Launch Partner

2nd Watch achieved AWS Service Delivery Launch Partner status for three Amazon Web Services (AWS) Management Tools in the AWS Service Delivery Program. The Partner Program is designed for those who are skilled at cloud infrastructure, and application migration and deliver value to customers by offering proactive monitoring, automation, and management of their customer’s environment.

  • Ericsson wants a presence in Cloud Computing by merging with AWS

Ericsson which is one of the top companies working on 5G also wants to strengthen its position in cloud computing. In 2016, the Swiss giant  worked with AWS for enhancing its infrastructure for developing and deploying mobile apps.

Amazon, for quite some time, has been focusing its efforts on cloud services and its personal assistant Alexa for which it has raised millions in Funding. Further, it is also trying to make Alexa a smarter assistant by hiring more AI talents .

The increase in the sales of AWS suggests it might become a favorite choice for corporations in the future. Prime, after record-breaking sales , is getting bigger in India and Mid-East. Further, the company is trying to get a hold of the Indian Fintech market for which in Dec 2017, it funded a digital lending startup Capital Float.

Last year, Jeff Bezos also announced its $1 billion investment in India for the next five years.

The company has hit $457 billion in revenue and has more than $1.6 Trillion in market capitalization.

Such huge sources could make Amazon enter any kind of business they want and this could be a problem for the players in different domains. Zoox acquisition is a solid example as it could make other autonomous vehicle companies a run for the money. 

But when talking about the most noteworthy competitor of Amazon, Walmart would be the prime choice.

Even though Amazon is way ahead of Walmart in terms of market capitalization, in revenue, it’s still behind Walmart. Sources predict that Amazon would overtake Walmart’s revenue by 2022 but it would another or two years for Amazon to overthrow Walmart from Fortune 500 rank 1.

Amazon already surpassed Walmart as the world’s largest retailer in 2019 and in the coming one or two years, it would surpass Walmart’s revenue too.

But after a downfall, Walmart too has taken new steps to be more than a retail company and has now collected resources to give Amazon tough competition. Walmart now understands the value of technology as the company started investing in technologies and patents to take on Amazon.

Related Study: Strategy for Walmart’s Rise: A Tech-Centric Approach to Compete with Amazon

Authored by: Vipin Singh , Sr. Research Analyst, Market Research.

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Amazon has been notoriously secretive about its business strategy, but thanks to some diligence on the part of analysts and reporters, we have a pretty good idea of what the company is up to.Amazon’s business strategy can be summed up as follows:1. Focus on investing in technologies that will give it a competitive advantage.2. Enhance its logistic applications to further improve its web services.3. Improve its fulfillment capacity to keep up with customer demand.4. pursue a mergers and acquisitions strategy to acquire companies that can complement its core competencies.5. Increase its R&D budget to continue to innovate and staying ahead of the competition.

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2023 Analysis: Amazon Business Plan & Market Dominance

01 2023 analysis

With a net sales revenue of $513.98 billion  in 2022, Amazon is one of the world’s largest and most successful companies. According to FINBOX , for the next five fiscal years , Amazon’s revenue is projected to increase by an average of  713.7 billion . What makes Amazon successful?

This dominance, however, is not achieved by chance or luck, and it results from an intensive business plan  refined over the years to achieve unprecedented success . The Amazon business model is designed to ensure that the company can achieve its goals while maintaining its position as a leader in the e-commerce industry . The plan includes strategies for revenue growth, cost reduction, and customer acquisition and retention, among other things.

The success of Amazon’s business plan is a testament to the importance of having a solid plan in place. While many factors contribute to a company’s success, a well-designed business plan is often the driving force behind it. As we deep dive into Amazon’s 2023 business plan, we’ll see how important this document is to the success of the world’s largest e-commerce company.

A Peek into Amazon’s Past: The Making of an E-commerce Behemoth

Let’s look at how Amazon transformed from a humble online bookstore to a global e-commerce powerhouse.

The Humble Beginnings of Amazon

In 1994 , Jeff Bezos  founded Amazon as an online bookstore. The company was initially named Cadabra, Inc, but Bezos quickly changed the name to Amazon, inspired by the vast South American River . The company began operations in Bezos’ garage to keep overhead costs low.

Amazon’s user-friendly website  and an extensive collection of books quickly resonated with customers. In its first month, Amazon shipped books to customers in all 50 US states and 45 countries . Amazon became the world’s largest online retailer in just a few years by focusing on customer satisfaction and continuous improvement.

From Bookstore to Diversified E-commerce Giant: The Evolution

Amazon’s journey from a simple online bookstore to a diversified e-commerce giant  includes strategic acquisitions and an expanding product range.

The company entered new markets, such as consumer electronics and apparel, and introduced new services like Amazon Prime and Amazon Web Services (AWS) , significantly increasing its overall revenue and reach.

Key factors contributing to remarkable transformation include:

  • Customer obsession : By prioritizing customer needs, Amazon ensured a seamless shopping experience and high customer loyalty.
  • Innovation:  Amazon continuously invested in research and development , enhancing its existing services and creating new ones.
  • Global Expansion : Amazon expanded its operations worldwide, catering to customers from different regions and cultures.
  • Diverse Ecosystem : Amazon developed a comprehensive ecosystem of products and services, from e-commerce and cloud computing to entertainment and logistics.

Amazon’s ability to adapt and evolve enabled it to establish a dominant presence in global e-commerce, transforming the industry.

Understanding Amazon’s Customers: Delivering Value Propositions

Amazon’s success has mainly been attributed to its ability to recognize and satisfy its consumers’ wants. By prioritizing the consumer experience, Amazon has built a solid reputation for providing value , which has helped them hold a leading position in the e-commerce sector.

This section will examine how Amazon recognizes its clients and the benefits they derive from the business .

The Wide Spectrum of Amazon’s Customer Base:

Amazon  caters to a diverse customer base across various age groups, regions, and demographics . This vast audience includes individuals , small businesses , and large enterprises .

By offering a myriad of products, services, and entertainment options, Amazon has established itself as a leading online marketplace .

The Unique Value Proposition Offered by Amazon

02 unique value proposition offered

The value Amazon provides to its customers is unparalleled . With the following key features, Amazon distinguishes itself from its competitors:

  • Convenience : Amazon’s user-friendly interface, quick delivery options, and easy returns policy make online shopping a hassle-free experience.
  • Wide Product Selection : Amazon offers a vast product range, ensuring customers can find what they want in one place, invariably saving time and energy.
  • Competitive Pricing:  The platform is known for offering competitive prices on products and services, making it a cost-effective option for buyers and sellers.
  • Customer Reviews : Amazon’s reliable and extensive customer review system helps make informed decisions , enhancing the shopping experience.
  • Amazon Prime: With Prime membership, you get exclusive benefits such as exclusive deals, free shipping, and streaming services, further enhancing the value offered to customers.

The Pillars of Amazon’s Success: Key Resources and Activities

A business plan provides direction and purpose , helps to align resources and efforts, and enables a company to measure progress and adjust course when necessary.

In recent years, Amazon has also made significant investments in technology and innovation, allowing them to stay ahead of the competition and continually improve its services.

Amazon’s Key Resources: From Technology to Human Capital

As an e-commerce giant, the technological infrastructure of Amazon plays a vital role in its success . You’ll find that their extensive use of data-driven approaches, combined with cutting-edge technology, helps them stay ahead of the competition.

Additionally, Amazon heavily invests in its human capital, understanding that a knowledgeable and efficient workforce is essential for continued growth.

The Launch of Amazon Associates

In 1996, the Amazon Associates Program  was introduced, revolutionizing affiliate marketing  in the e-commerce sector. This innovative program allowed website owners and bloggers to earn commissions by referring customers to Amazon .

By leveraging a diverse network of associates, Amazon effectively expanded its reach, increasing sales and brand visibility.

Amazon’s Key Activities and Their Impact on Growth

Amazon’s key activities mainly revolve around enhancing customer experience, investing in new technology, and diversifying its product offerings. These activities have contributed to the company’s substantial growth:

  • Customer experience : Amazon consistently prioritizes the user experience by focusing on fast shipping , a seamless online shopping platform, and customer-centric policies.
  • Technology investment:  From AWS to robotics in warehouses, Amazon’s cutting-edge technological adoption drives efficiencies and supports scalability.
  • Product diversification:  By expanding into different markets, Amazon has become a one-stop shop  for customers, ensuring continued loyalty and growth.

Amazon’s SWOT Analysis

Amazon is a global e-commerce and has become one of the most valuable companies in the world. We can perform a SWOT analysis to understand Amazon’s strengths, weaknesses, opportunities, and threats.

  • Strong brand recognition and reputation
  • Diversified revenue streams, including e-commerce, cloud computing, and advertising
  • Wide selection of products and services
  • High customer satisfaction ratings

Weaknesses:

  • Dependence on third-party sellers
  • Overreliance on e-commerce sales
  • Limited physical presence in some countries

Opportunities:

  • Expansion into new markets, such as healthcare and finance
  • Increased adoption of cloud computing services
  • Continued growth in e-commerce and online advertising
  • Intense competition from established companies and new entrants
  • Changing consumer preferences and behaviors
  • Government regulations and antitrust scrutiny

Amazon’s Diversified Patent Portfolio: A Testament to Innovation

You may already know that Amazon’s growth as an e-commerce giant is partly due to its persistent innovation. We can look at their diversified patent portfolio to see the extent of their creative efforts.

Let’s discuss the scope of Amazon’s patents and how this wide-ranging collection contributes to its competitive edge.

The Scope of Amazon Patents

03 scope of amazon patents

Amazon’s patent holdings cover many technologies, such as logistics, aircraft technology, robotics, machine learning, and drone deliveries. This extensive range reflects their drive to innovate in every aspect of their business.

To give you an idea, here’s a brief list of patent holdings in different fields:

  • 1-Click ordering system
  • Fulfillment center automation
  • Machine learning algorithms
  • Drone deliveries

How Does the Patent Portfolio Contribute to Amazon’s Competitive Edge?

Amazon’s vast patent holdings  showcase its innovative spirit , giving them a significant edge over competitors.

By having proprietary technology , Amazon can ensure constant advancements in user experience, making them the go-to  choice for online shopping. Their patents also create hurdles for competitors, making it difficult for them to catch up or duplicate Amazon’s success .

Amazon Web Services (AWS): The Cloud Computing Cash Machine

Amazon Web Services (AWS) has become a significant revenue driver for Amazon. In this section, we’ll explore the inception of AWS, its growth, and its impact on Amazon’s overall revenue.

The Inception of AWS Services

AWS began to take shape in the early 2000s when Amazon realized that its infrastructure could be utilized to provide cloud services to other businesses . They also saw the need for a scalable, flexible cloud infrastructure that could grow with the businesses using it.

AWS officially launched in 2006, with services like S3 for storage and EC2 for computing resources. This move allowed Amazon to diversify its revenue and leverage its expertise in managing large-scale  internet services for others to utilize and build upon.

AWS Growth and Its Impact on Amazon’s Revenue

Since its launch, AWS has experienced tremendous growth in both the number of customers and the services offered . This growth has been primarily fueled by the rising demand for cloud infrastructure services , enabling businesses to scale up or down as needed without significant upfront capital investments.

AWS is one of the market’s most prominent cloud services providers, boasting a diverse and extensive customer base ranging from  startups to enterprises . Now you might be wondering about the significance of AWS in Amazon’s overall revenue .

While historically overshadowed by its retail operations, AWS has significantly contributed to Amazon’s overall revenue. In recent years, AWS has accounted for about 10-15% of Amazon’s total revenue, and its net profit margins are significantly higher than those of Amazon’s core retail business .

According to Forbes , AWS increased sales by 41%  in the recent fiscal quarter year over year, pulling in  $7.6B . This growth has been instrumental in driving Amazon’s financial performance, and it shows no signs of stopping anytime soon.

Building Strong Customer Relationships: Reviews and Customer Service

As an e-commerce entrepreneur, you know the importance of building strong customer relationships. This section will cover how Amazon achieves this through reviews and excellent customer service.

The Role of Customer Reviews in Shaping Amazon’s Offerings

Customer reviews are essential in helping Amazon improve its offerings. They provide valuable insights into what customers like and dislike about a product, allowing sellers to adapt accordingly. Furthermore, reviews help other customers make informed decisions when shopping on Amazon .

Amazon encourages users to leave reviews by making the process user-friendly and seamless. The more reviews a product has, the more trust it garners, increasing the likelihood of future sales. In turn, this strengthens customer relationships and promotes loyalty.

Top-notch Customer Service in Amazon’s Business Strategy

Excellent customer service is crucial to the Amazon business model . They understand that addressing issues  and concerns can improve a customer’s experience, and providing top-notch customer service  impacts customer retention and overall satisfaction.

04 top-notch customer service

To maintain its commitment to customer service, Amazon has implemented various strategies , such as offering a comprehensive help center, easy returns, and a responsive customer support team. By prioritizing customer service, Amazon ensures your business thrives and maintains long-lasting customer relationships.

Exploring the Amazon Marketplace: A Platform for Buyers and Sellers

Amazon Marketplace is a platform for countless buyers and sellers worldwide, providing a digital space to conduct business and exchange products. In this section, we’ll discuss the purpose and benefits of Amazon Marketplace and how Amazon generates revenue from it.

The Purpose and Benefits of the Amazon Marketplace

Amazon Marketplace exists to  simplify and streamline  the buying and selling process. You can access a vast customer base as a seller, minimizing the need for advertising and marketing efforts. Using Amazon’s infrastructure reduces operational costs such as warehousing and fulfillment .

As a buyer, you enjoy the convenience of shopping from countless sellers in one location, with the added security of Amazon’s customer protection policies. This creates a seamless, trustworthy experience for both parties, contributing to customer satisfaction and trust.

How Amazon Makes Money from the Marketplace

Amazon generates revenue through fees , such as subscription fees , referral fees , and variable closing fees .

  • Subscription fees are charged monthly to professional sellers .
  • Referral fees are a percentage-based commission on products sold, applicable to individual and professional sellers . Most referral commissions range from 8% to 15% .
  • A variable closing fee is applied to specific categories, such as media categories.

Additionally, Amazon offers optional services, like fulfillment by Amazon (FBA) , which charges service fees in return for handling storage , shipping , and customer service  on behalf of the seller.

By offering these services and charging fees, Amazon continues to invest in and grow its Marketplace, maintaining its status as a global leader in the eCommerce market platform .

Amazon’s Multiple Revenue Streams: Diversification at Its Finest

Amazon’s success results from its ability to diversify its revenue streams. Rather than relying solely on one product or service, Amazon has developed multiple sources of revenue that complement and reinforce each other.

A. Breakdown of Amazon’s Primary Revenue Streams

As an e-commerce seller , you’re aware that Amazon generates revenue in various ways. One such income source is their online stores ( sales of products), where they are the retailer or a third-party seller .

Other income sources include:

  • Amazon Web Services (AWS) : Their cloud computing platform.
  • Subscription services : Like Amazon Prime and Kindle Unlimited.
  • Stores : Physical stores, including Whole Foods Market and Amazon Books.
  • Advertising services: Where advertisers pay to display ads to Amazon users.

Each stream contributes to the company’s success and allows them to remain dominant in the global market.

B. The Significance of Amazon’s Cash Conversion Cycle

Cash is king, and Amazon knows it. Their cash conversion cycle is a critical part of the Amazon business model. What’s the secret to Amazon’s cash flow success ? It’s all in their cash conversion cycle. Let’s explore why it matters.

Amazon has a negative conversion cycle ( CCC ) than its competitors, so they receive payments before paying to the suppliers. This efficiency allows them to:

  • Reinvest funds for growth.
  • Offer competitive prices to customers.
  • Expand their products, inventory, and services.

By maintaining a short CCC, Amazon capitalizes on its multiple revenue streams and sets itself apart in the crowded e-commerce landscape.

Diving into Amazon’s Product Ecosystem: From Alexa to Prime Video

This section will explore how Amazon’s diverse product ecosystem contributes to its business strategy . We’ll focus on two essential products: Amazon Alexa and Amazon Prime Video.

Introducing Amazon Alexa and Its Place in the Business Strategy

05 amazon alexa

Amazon Alexa, the voice-controlled virtual assistant  complements your daily life by allowing you to schedule appointments, set reminders, and control smart devices in your home.

By integrating Alexa into various products such as Echo devices  and Fire TVs , Amazon has created a seamless, innovative home experience for its customers.

Alexa makes daily tasks easier for users and benefits Amazon’s business strategy by connecting users to their services like Amazon Music and Prime shopping. This encourages brand loyalty and more time spent using Amazon’s platform.

The Role of Amazon Prime Video in the Overall Business Plan

Amazon Prime Video is another critical component of Amazon’s product ecosystem . As a Prime member, you can access a vast library of movies, TV shows, and original series . This entertainment platform gives you another reason to maintain your Prime membership, increasing subscription revenue for Amazon.

Moreover, Prime Video’s  original content diversifies Amazon’s offerings and contributes to the company’s revenue streams through licensing and distribution. In turn, this increased revenue allows Amazon to invest in other business areas, strengthening its overall position in the market.

Amazon’s Business Model: The Financial Backbone

Amazon’s financial structure is pivotal in its success, shaping its business model to maximize profits and growth .

How Amazon’s Financial Results Reflect Its Business Model

Amazon’s revenue comes from various sources, including its retail business, third-party marketplace, and cloud services . Their high-growth strategy focuses on reinvestment for long-term gains. By consistently investing in new technologies, infrastructure, and acquisitions, Amazon creates a competitive advantage that keeps rivals at bay.

As you examine Amazon’s financial results, you’ll notice that their profits are often thin or negative ( Amazon reported a net loss of 2.7 billion U.S. dollars in 2022 ).

This is because they prioritize market share instead of short-term profits . This approach has led to Amazon becoming a dominant global player in ecommerce and cloud services.

Amazon’s Cost Structure and Its Implications

Amazon’s cost structure is as complex as its business model. The key components are:

  • Fulfillment costs:  Warehouses, order processing, shipping, and customer support costs.
  • Marketing costs : Advertising, sponsorships, and promotions.
  • Technology costs:  Infrastructure development, R&D, and Amazon Web Services hosting.
  • Content costs:  Purchasing licenses for streaming media on Amazon Prime.

As you can see, Amazon invests heavily in these areas to sustain its market presence and growth. They also benefit from economies of scale, reducing per-unit costs as the company grows, and this cost structure allows the company to offer competitive pricing and maintain customer loyalty.

Mastering Logistics: Amazon’s Supply Chain and Fulfillment Options

As you navigate the world of ecommerce, it’s crucial to grasp how Amazon’s robust supply chain and an assortment of fulfillment options make it a leader in the industry.

The Various Amazon Fulfillment Options

Amazon offers a range of fulfillment options, each designed to cater to specific seller needs:

  • Fulfillment by Amazon (FBA) : Store and ship your products through Amazon’s fulfillment centers . They handle storage, shipping, returns, and customer service for you.
  • Fulfillment by Merchant (FBM):  You manage your product inventory and shipping but can use Amazon’s Multi-Channel Fulfillment service when needed.
  • Seller Fulfilled Prime (SFP) : Take advantage of Amazon Prime’s benefits by guaranteeing two-day shipping on eligible products while handling fulfillment in-house.

Becoming a Logistics Powerhouse: Amazon’s Renewed Business Playbook

Amazon has strategically invested in its logistics infrastructure, streamlining processes and enhancing customer experiences to stay competitive. Key initiatives include:

06 logistics powerhouse

Understanding these various fulfillment options and Amazon’s logistics strategies will contribute to your success in the ecommerce space, helping you make informed decisions as you craft and grow your business.

The Flywheel Effect: Jeff Bezos’s Vision for Amazon’s Business

The concept of the flywheel in amazon’s business strategy.

The Flywheel Effect  is critical to Amazon’s business strategy. You should understand as an e-commerce merchant. It represents the self-sustaining momentum generated through a series of interconnected elements  reinforcing each other.

Amazon’s Flywheel revolves around four core elements:

  • Customer experience,
  • Seller success ,
  • Infrastructure and operational efficiency,
  • Profitable growth.

As each element improves, the momentum of the Flywheel increases, creating a cycle of continuous growth and success for the company.

Amazon’s Flywheel Approach to Customer Experience Optimization

Amazon’s primary focus is enhancing the customer experience, and the Flywheel approach is instrumental in achieving this goal.

  • The company continuously improves the selection  and  availability of items , making it easy to find what you’re looking for.
  • Low prices  are another crucial aspect of this approach, allowing Amazon to provide customers like you with the best possible value for your money .
  • Driving down costs  while maintaining quality attracts more customers and increases sales for third-party sellers.

Amazon’s efficient , extensive logistics and fulfillment infrastructure ensures a reliable and fast delivery experience, leaving customers satisfied and eager to return. This relentless focus on customer experience strengthens the various aspects of the Flywheel, leading to long-term success and growth.

Acquisitions and Advertising: Amazon’s Pursuit of Expansion

From Whole Foods to Ring, Amazon’s acquisitions have allowed them to diversify and expand their offerings. Meanwhile, their advertising platforms have enabled them to reach new audiences and boost sales .

Analyzing Amazon’s Acquisitions and Their Connection to Its Goals

Throughout its history, Amazon has made  strategic acquisitions  to drive growth  and expand its offerings. Some notable examples include the purchase  of Whole Foods, Twitch, and Zappos. Each acquisition has played a pivotal role in helping Amazon achieve its long-term goals:

  • Whole Foods:  By acquiring this grocery chain, Amazon expanded its retail market footprint while enhancing its grocery delivery capabilities.
  • Twitch:  The acquisition of this streaming platform  allowed Amazon to strengthen its presence in the gaming industry and deliver engaging content to millions of users like you.
  • Zappos : As an online shoe retailer, Zappos enabled Amazon to improve its fashion offerings and provide better customer service to online shoppers like yourself.

The Growing Influence of Amazon Advertising Business

Advertising has become crucial to Amazon’s expansion strategy. Over the years, the company has evolved from primarily an e-commerce platform to a formidable advertising player, allowing businesses to reach millions of potential customers like you.

Amazon’s advertising services include sponsored products, display ads, and video ads , allowing you to discover relevant products and offers while shopping. With the rise of its advertising platform, Amazon has the potential to challenge significant advertising giants such as Google and Facebook in the future.

As the heart of the Amazon ecosystem, advertising generates significant revenue for the company and enhances the shopping experience for customers like you. By delivering personalized and timely ads, Amazon ensures you find the products you need and desire, making your shopping journey more enjoyable and efficient.

07 advertising business

In any business model, it’s vital to focus on customer-centric solutions  and leveraging the various services and tools provided by the platform. This will enable you to stay ahead in the highly competitive e-commerce market and successfully scale your business .

Remember to utilize data analytics and performance tracking to evaluate the effectiveness of your marketing strategies and optimize them accordingly. By staying data-driven and having a business model focused on customers, you can drive sustainable growth and maintain a profitable business model.

In a nutshell, the success of Amazon relies upon its ability to adapt  to the ever-changing e-commerce landscape . A well-developed business plan serves as the foundation for this adaptability. By staying true to these strategies and principles, you’ll position your business for long-term success on Amazon .

Frequently Asked Questions (FAQs)

Q. how does amazon’s business work.

Jeff Bezos Amazon operates as an online marketplace, connecting sellers with buyers . Sellers list their products, while buyers search and purchase items they need. Additionally, Amazon offers services such as Prime, streaming, and cloud computing  through Amazon Web Services (AWS).

Q. What is Amazon’s core business strategy?

Amazon is a customer-centric company  aiming to provide a seamless shopping experience. Amazon focuses on low prices , a vast selection, and fast delivery. By continuously investing in technology and optimization, they stay ahead of competitors.

Q. How significant is AWS to Amazon’s overall revenue?

AWS is crucial to Amazon’s income, accounting for a significant portion  of its overall revenue. AWS has become a primary profit driver  in recent years thanks to its high-margin business model and rapid growth in the cloud computing market.

Q. How does Amazon manage to keep its cost structure low?

Amazon keeps costs low by leveraging economies of scale , investing in automation , and using data-driven decision-making . They can reduce overhead and maintain competitive prices by analyzing customer data and optimizing supply chain management .

Q. What are some notable acquisitions? How do they align with its goals?

Over the years, Amazon has made several strategic acquisitions to expand its presence in various sectors and improve its customer experience.

Whole Foods Market: Acquired in 2017 to expand Amazon’s presence in the grocery sector and enhance its delivery capabilities. Zappos: Acquired in  July 2009  to strengthen its online shoe and apparel sales position. Kiva Systems:  Acquired in 2012 for warehouse automation, leading to the development of Amazon Robotics for improved efficiency in fulfillment centers. Ring: Acquired in 2018 to enhance their innovative home product offerings and bolster the connected home ecosystem.

These acquisitions align with Amazon’s goal of expanding its product and service offerings, improving customer experience, and increasing market share in various sectors.

Q. How does Amazon make money?

Amazon generates revenue through various sources, primarily e-commerce sales. They sell products directly to consumers through their website and mobile applications, as well as through third-party sellers who use Amazon’s platform to reach customers.

Besides e-commerce sales, Amazon generates revenue through cloud computing services, advertising, and subscription services, such as Amazon Prime, which offers free and fast shipping, movies and TV shows streaming, and exclusive deals.

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8-figure Amazon seller and serial online entrepreneur since 2015. Research and practice various online business models, and apply his in-depth learnings to further expand and grow his businesses as well as help others to achieve greater successes. Ex-VP of a high tech VC in Vancouver and a Management Consultant with over a decade of experience in the industry. Master's Degree from HEC Paris.

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HBR On Strategy podcast series

Inside Amazon’s Growth Strategy

If the key to success is focus, why does Amazon work?

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Since Amazon started as an online retailer in 1994, it has expanded into streaming, cloud computing, content creation, and even groceries. But traditional business strategy tells us that the key to success is focus. So, why does Amazon work?

“I think in Amazon’s case, everything is very tightly connected. If you remove one part, the whole becomes less,” says Harvard Business School professor Sunil Gupta . “That’s the key question: are the pieces fitting together nicely, or they just happen to be another business because it’s profitable?”

Gupta has studied Amazon’s growth strategy and he tells Cold Call host Brian Kenny how Amazon looks beyond traditional industry boundaries to define their competitors and why connecting products and services with their customers is at the core of their strategy.

Key episode topics include: business models, growth strategy, operations and supply chain management, innovation, technology and analytics, online retail, customer-centricity, customer experience, competitive strategy.  

HBR On Strategy curates the best case studies and conversations with the world’s top business and management experts, to help you unlock new ways of doing business. New episodes every week.

  • Listen to the original HBR Cold Call episode: If the Key to Business Success Is Focus, Why Does Amazon Work? (May 2019)
  • Find more episodes of Cold Call .
  • Discover 100 years of Harvard Business Review articles, case studies, podcasts, and more at HBR.org .

HANNAH BATES: Welcome to HBR On Strategy , case studies and conversations with the world’s top business and management experts, hand-selected to help you unlock new ways of doing business. Amazon started as an online retailer back in 1994. Since then, it has expanded into streaming, cloud computing, content creation, and even groceries. But if traditional business strategy tells us that the key to success is focus – why does Amazon work ? Today, we bring you a conversation with Harvard Business School professor Sunil Gupta – who has studied Amazon’s growth strategy. You’ll learn how Amazon builds its business around its customers — rather than its products and services. You’ll also learn how they look beyond traditional industry boundaries to define their competitors – and why connecting products and services with their customers is at the core of their strategy. This episode originally aired on Cold Call in May 2019. Here it is.

BRIAN KENNY: In the world of computer science, Jon Wainwright is kind of a big deal. A pioneer of computer languages, he was the principle architect of both Script 5 and Manuscript. What makes Jon a legend has nothing to do with programming. Let me explain. On April 3, 1995, Jon was in need of some work-related reading material. So, he fired up his T1 modem and navigated the fledgling internet to the beta version of a new online bookstore. With the click of a mouse, he became the very first customer to make a purchase on Amazon.com. Fluid Concepts and Creative Analogies, the book he purchased, never became a best seller. But Amazon took off like a rocket ship and hasn’t slowed down since. With a market cap larger than all other retailers combined, including Walmart, Amazon owns 49% of all online sales. In the time it takes me to read this introduction, the company will earn over 300,000 dollars. Will we ever see the likes of it again? Today, we’ll hear from professor Sunil Gupta, about his case entitled, “Amazon in 2017.” I’m your host Brian Kenny. You’re listening to Cold Call, part of the HBR Presents network. Sunil Gupta is an expert in the area of digital technology and its impact on consumer behavior and firm strategy. He is the author of the recently published, Driving Digital Strategy, a guide to re-imagining your business. This case is the perfect stepping off point to cover some of the ideas in that book, Sunil. Thank you for joining me today.

SUNIL GUPTA: Thank you for having me.

BRIAN KENNY: This is your second spin I think on Cold Call. We appreciate you coming back.

SUNIL GUPTA: I enjoy doing this.

BRIAN KENNY: Good, as long as it’s not too painful for you. I like having you here. I’ve had an opportunity to read the book. The case I think is really kind of a great foundational piece to launch into some of the ideas. I’m going to assume anybody listening to this podcast has purchased something on Amazon or watched something on Amazon Prime. I had forgotten about their modest beginnings and just how much they’ve grown and expanded and changed. The case was a great reminder of that. We’ll get into some of that. Let me start by asking you, just to set it up for us. What led you to write the case?

SUNIL GUPTA: As you said, everybody knows Amazon. At the same time, Amazon has become quite complex. I mean, they have gone into businesses that defy imagination. That raises the question, is Amazon spreading itself too thin? Are they an online retailer? Are they video producers? Are they now making movies? In strategy, we learn, everybody should focus. Obviously Jeff Bezos missed that class.

BRIAN KENNY: He didn’t come to HBS by the way.

SUNIL GUPTA: You sort of start wondering as to, what is the magic behind this? What is the secret sauce that makes Amazon such a huge success? The market gap almost touched a trillion dollars a few months ago.

BRIAN KENNY: Insane.

SUNIL GUPTA: That was the reason why I thought A, everybody knows about it, and B, it’s hugely successful and C, his business model seems to defy logic.

BRIAN KENNY: The case we know by the title takes place in 2017. Maybe you can just start us off by setting it up. How does the case open up?

SUNIL GUPTA: At that point in time, Amazon had just bought Whole Foods, which was very counterintuitive because Amazon has been an online player. So why is it getting into offline business? That was against his grain as an online player. The second thing is food is a very low margin category. You sort of say, Amazon is a technology company, its stock is going to stratosphere. Why buy a low margin business that Amazon actually had been trying Amazon Fresh for 10 years and hasn’t succeeded? Why don’t they give up? That was a starting point. But of course, the case describes all the other 20 different things that they have done in the last 20 years and asked the question, what is Amazon up to?

BRIAN KENNY: Amazon and Jeff Bezos are sort of synonymous. He’s a cult of personality there, kind of like Steve Jobs was with Apple. Jeff’s been in the news a lot lately for other reasons, you know, personal reasons. He is still obviously, probably one of the best known CEOs in the world. What’s he like as a leader?

SUNIL GUPTA: I don’t know him personally. Based on the research that I’ve done, he certainly is very customer obsessed. He’s focused on customer. He always says, “You start with the customer and work backwards.” He still takes evidently calls on the call center. The culture is very entrepreneurial, but also very heart driven. I mean, the idea for example of Amazon Prime evidently didn’t come from Jeff Bezos, it came from a low person in the organization. He’s quick to adapt the ideas if he sees some merit in it. It’s almost a 25-year-old company that still works like a startup.

BRIAN KENNY: Was the original concept for Amazon … I mean, I know he sold books originally. Was it ever really a book company?

SUNIL GUPTA: I think it started more as an online retailer. Book was an easy thing because everybody knows exactly what you’re buying. It’s no concern about the quality. His premise in the online store was a very clear value proposition of three things. One was convenience that you can shop in your pajamas, so we don’t have to fight the traffic of Boston or Los Angeles. The second was infinite variety. I don’t have the constraint of a physical store. Even if I have Walmart, which is a huge store, I can only stock so many things. As a result, you only have the top sellers. In Amazon, I can have the long tail of any product if you will. The third was price. It was cheaper, simply because I don’t have fixed costs of the brick and mortar store. I can reduce the cost structure and therefore I can be cheaper. Those were the three key value propositions. That’s how it started. The idea was, I’ll start with books and then move on to electronics and other things. But then of course, it moved far beyond being an online retailer.

BRIAN KENNY: This gets into some of the ideas in your book. I was really intrigued in the book about the notion of what kind of business are we in? Just that question alone. At face value, it looked like Amazon was a retailer. They went in directions that nobody could have imagined. The case really goes into some of a litany of all the things they tried.

SUNIL GUPTA: Right. Again, the purpose of the case was to illustrate as to how these are all connected. From a distance they look completely disconnected and completely lack of focus. Let’s start with how the concept evolved. The first thing was, as I said was online retailer. Very soon it became a marketplace. Now, what is a marketplace? They basically allow third party sellers also to sell on the Amazon platform, which is distinct from a traditional retailer. Walmart doesn’t allow me to set up shop within Walmart, but Amazon allows me to do that. Now, why would they do that? Simply because it increases the variety that they can sell on the platform. Therefore, consumers are quite happy with the variety of the product they can get on Amazon. Amazon gets commission without having the inventory and the capital cost. Perhaps the most important thing of becoming a platform is it creates what we call the network effects. If there are lots of products, everything I can buy is available on Amazon. More consumers are likely to go there. Because there are more consumers, more sellers are likely to go there. It just feeds in itself. More consumers mean more sellers, more sellers mean more consumers, and it becomes a virtual cycle. That’s why there is only one Amazon. Even if I start an online retail, which is in many ways better than Amazon, nobody’s coming to gupta.com, because buyers and sellers are not there. That became the next phase, change from online retailer to marketplace. Then it went into AWS, and you sort of say, “Well, how can it go into a technology company and compete with IBM and Microsoft?” It was competing with Walmart before.

BRIAN KENNY: That’s the web services division.

SUNIL GUPTA: That’s the web services. In fact, at that point in time, Wall Street was very down on that. They said, “What is Bezos thinking?” The idea again, if you think about it, it was very simple. Amazon was building this technology for its own purpose. And then, they started giving this technology, using this technology for the third party sellers, who were selling on its platform.

BRIAN KENNY: Let me just interrupt for a second. That’s a marked, a marked change in direction. They had always been a consumer platform. Now they’re in a business-to-business play. I bet a lot of consumers don’t even know about Amazon Web Services.

SUNIL GUPTA: Correct. Again, not in a traditional sense saying, “This is my market.” That’s simply saying, “I have this capability. There’s a demand for this capability. Can I do it?” Part of that was opportunistic also. If you remember in 2001, the dot.com bubble crashed. If you’re a B2C company, you hedge your bets and get into B2B business. Part of that may have been luck. That was, again, a change of direction. And then, Amazon started producing hardware, Kindle, and now competing with Apple. You sort of say, why is an online retailer getting into hardware production? If you think a little bit about it, the answer is very easy. Kindle was designed to sell eBooks as people move from buying the hard copy books to downloading the eBooks. The Kindle is the classic razor and blade strategy. I sell razors cheap in order to make money on the blades. I’m not making that much money Kindle, but I’m making money on eBooks, which is very different from Apple’s strategy. Apple actually makes money on devices, but Amazon is not making money on devices, or at least not making huge money on devices. Similarly, it moved into online streaming of the video content and suddenly became a competition on Netflix. You sort of say, “Why is a retailer becoming a competition on Netflix?” Again, if you think a little about it, the answer becomes clear. As you and I moved on to not buying DVDs, but actually streaming the stuff, that’s what Netflix did. They used to send the DVDs to us.

BRIAN KENNY: I remember that. I still have a couple.

SUNIL GUPTA: Amazon is very good in sort of moving with the customer. If the customer moved from buying books to eBooks, I move in that direction. If customers move from buying DVDs to streaming, I move in that direction. Now, can Amazon do it? Of course, they can. They have AWS. Netflix is one of the largest customers.

BRIAN KENNY: Are they leading or following? Are they creating a market? In the beginning it seemed like they created something entirely new. Now, are they anticipating, or are they just sort of reacting to what’s happening?

SUNIL GUPTA: No, it’s a combination of both. In some ways they are actually following the consumer behavior and say consumers are moving to a streaming and move with that. They were not the first ones. Netflix actually started the streaming thing. Then, they sort of come up with it. If you think about it, Amazon became not only distributing third party content on videos, but now they have Amazon Studio. I mean, they are making movies, and the competition now becomes Hollywood instead of Walmart. You sort of say, “What has gone wrong with Jeff Bezos? Why is he making movies?” Movies are pretty expensive business and highly risky. The key to that is to understand the purpose of the movies. The purpose of the movies is to hook the consumers from Amazon Prime. If you remember, Amazon Prime started with 79 dollars per year. The benefit at that time was two-day free shipping. Now, you and I are smart enough to sort of do the math in our heads saying, how many shipments do we expect next year, and is 79 dollars worth it or not? Bezos does not want you to do that math. He basically says, “Oh, by the way, I’ll throw in some free content, some free music, some free unique movies.” Now you can’t do the calculation. Why does he care about Prime? Right now, Amazon has about one hundred million Prime customers globally. Let’s say I get an average 100 dollars per year, that’s 10 billion dollars in my pocket before I open the store.

BRIAN KENNY: Right.

SUNIL GUPTA: The research also shows that Amazon Prime customers buy three to four times more than non-Prime customers. I mean, if you’re a Prime customer, you don’t even price shop.

BRIAN KENNY: Once you’re Prime, you’ve got to justify being a member. You buy everything on Amazon.

SUNIL GUPTA: Exactly. Your purchase increases. You become price sensitive, which is fantastic. In fact Jeff Bezos has gone public and say that every time we win a Golden Globe award for our content, we sell more shoes. The purpose of creating their own content is not to make money on the content. This is another different razor to sell you more shoes. Once you understand that, what looks like disparate business is actually extremely tied together.

BRIAN KENNY: It all comes right back to the core. They haven’t always had good ideas. Have they had some misses along the way too?

SUNIL GUPTA: I think the biggest failure was Fire phone.

BRIAN KENNY: Remind us what that was?

SUNIL GUPTA: Amazon launched their own phone. They were obviously very late in the market. iPhone was already there. Samsung had done very good. You have two major players, if not many others, who are very well established. Consumers love their iPhones. The question of course was, why is Amazon launching the phone? What are the odds of success? Clearly the odds of success were low. The reason to launch it was they didn’t want to be beholden to the iPhone or the Googles of the world. They know that the world is moving towards mobile, in terms of shopping, certainly in emerging markets, everybody’s moving to mobile shopping. If tomorrow Apple or Google sort of restrict the Amazon use, or availability of Amazon, because they’re all competing with each other now. It becomes a challenge. To Amazon’s credit, I mean, it’s true for all innovations. Not all innovations succeed. You’ve got to take a shot. If you think about it, all the technology and thought process that got into Fire phone, was not completely a waste. That went into Echo. Now Alexa is a big hit.

BRIAN KENNY: They’re a market leader in that in that. Let’s talk a little bit about the ideas that underlie his Amazon case. I think it starts with knowing what business you’re in. Your book addresses this. I think I know we’re in the education space here at Harvard Business School. Should we be thinking about other businesses?

SUNIL GUPTA: You’re right. The bigger question that Amazon case raises is: how do you define what business you are in? Most of us tend to define business by the traditional industry boundaries. If I’m a bank, I’m in banking and other banks are my competition. I think industry boundaries are getting blurred today. Amazon can get into banking. I have lots of customers, I can start giving loans to small and medium enterprises.

BRIAN KENNY: They know a lot about those customers.

SUNIL GUPTA: They know a lot about customers. The key asset is now customers and data, and not the product and services that you offer. Once you know about customers, you can do lots of different things. One thing is, I would say is the industry boundaries are getting blurred. You need to think about not competition, but what do customers want. Do I have capabilities to serve that? The second thing is the traditional definition of where competitive advantage comes from is changing. What I learned, in doing my MBA class many years ago, we used to read Michael Porter’s competitive strategy stuff. If I were to simplify and summarize what I learned in competitive strategy was competitive advantage comes from making your product better or cheaper. Differentiation or cost leadership, which makes sense. If you think about it, it’s very much product-focused. I think in today’s world, competitive advantage comes from connecting products and connecting customers. The Kindle and eBooks is an example of connecting products, multiple products right? Making movies of Amazon and selling more shoes is connecting products. Razor and blade have been around forever. I think what is different today is razor and blade could be in completely different industries. Movies and shoes. The other side is connecting customers. We are in a network economy. That’s why there is only one Facebook, or one WhatsApp. If you are the only person on Facebook, what’s the value of Facebook? Not much, unless you love yourself. As more and more people get onto Facebook, the value of Facebook increases. It’s not about improving product. Without changing product, Facebook value increases. I think in this connected world that we live in, it’s about connecting products and connecting consumers.

BRIAN KENNY: We’ve got a lot of listeners out there. Many of whom are probably leading firms of one kind or another. How do they even go about exploring redefining their business?

SUNIL GUPTA: I think again, you need to think about what is your key asset? Everything starts with the consumer. In the Amazon case, you move with the consumer to some extent. I asked the same of a company for a medical device manufacturer. I said, “Who’s your competition?” The typical answer is: the other medical devices. Medical business is now becoming a lot about data. Google is getting into that. Apple. iPhone is becoming a medical device. Suddenly you have a very different kind of player getting into this thing. When I say, “What business are you in?” You need to think about who might actually get into that business and that changes the whole picture.

BRIAN KENNY: Why is Amazon so good at engaging customers?

SUNIL GUPTA: I think it comes from the culture of being customer obsessed, that no matter what the customer is right. They deliver on that promise. I mean, the level of convenience that customers expect from companies has changed. It used to be, if a company delivers a product within a week, that was considered good. Now, if you don’t deliver on the same day it just seems awful. They’ve raised the bar in everything. Of course, they’re using technology very effectively, whether it’s in their warehousing, whether now they’re investing in drones. I think they’re still a 25-year-old startup.

BRIAN KENNY: That’s another point that I wanted to touch upon. They’re able to adapt their supply chain it seems almost effortlessly to whatever business direction they move in. Is it possible for another entry to come into this space and scale in the same way that Amazon has? Is this a once-in-a-lifetime type thing?

SUNIL GUPTA: That’s a tough question. I think Amazon, it’s not that they’re adapting supply chain for everything, right? For example, I don’t think Amazon supply chain is ready for delivering frozen food yet. If I have a supply chain to ship you electronics, I can use the same supply chain to ship you prescription medication. That opens up another billion dollar, several billion dollar market. If I call myself an online retailer, I will never think of prescription drug delivery. If I think of my capabilities, I have the warehouse to deliver electronics and books. Why can’t I deliver your prescription medication? That opens up completely different businesses.

BRIAN KENNY: What are the kind of pitfalls that you need to be careful of, as you start to move into adjacent markets?

SUNIL GUPTA: I think definitely the big challenge is: how far do you go? On one hand it’s good to expand the business scope because the industry boundaries are getting blurred. The danger is do you lose focus? The classic challenge of losing focus. There’s a balance. I think in Amazon’s case, if you notice, everything is very tightly connected. If you remove one part, the whole becomes less. That’s the key question: are the pieces fitting together nicely, or they just happen to be another business because it’s profitable?

BRIAN KENNY: We’ve done a couple of cases on Cold Call that touch on the organizational impact of firms that move into new businesses. Some of them are examples of where it’s benefitted the employees. In other cases, it seems to have disrupted the culture in negative ways. How do you see this playing out at Amazon? Does it impact them in any way?

SUNIL GUPTA: If you look at Amazon, it has grown the top line 20, 25% every quarter without fail, except for one quarter in 2001. Right now, it’s in 2019, their sales are 232 billion. I don’t know that many companies, which grow at that rate, even when they’re over 200 billion. I think, if you’re on a winning team, that as an employee, it has to energize you. If you are in a culture which encourages experimentation and innovation, it has to excite you. At the same time, I’m sure it’s a very demanding culture, and there have been reports about how demanding the culture of Amazon is. It probably is not for everybody. For the people who are innovative, who are entrepreneurial, who want to be on a winning team, I’m sure it’s an exciting place.

BRIAN KENNY: There are sort of shades of Apple there. I mean, I think Apple had the same reputation. You’ve discussed this case in class with students.

SUNIL GUPTA: Oh, many students.

BRIAN KENNY: What are sort of the top line things that surprise you as you discuss it?

SUNIL GUPTA: The nice thing about this case is, everybody knows Amazon as a consumer. Everybody has shopped at Amazon. It’s very easy case. In fact, it’s a very short case that I give, at the opening of most sessions. People see it as very surface level. They sort of don’t realize the deep insights that comes out. As a three page case, you sort of say, I will be done in ten minutes, but then you peel the layers of the onion. That was a shocking thing to them, as to how you peel the layers of the onion and how you see the connection across different things. Why did Amazon buy Whole Foods? It makes no sense. Why did they get into AWS? It makes no sense. When you start un-peeling that layer, you see the connection as to why Amazon is doing all these different things. I think that’s the “A-ha” moment that comes across.

BRIAN KENNY: Much more on that in your book. How’s the book doing?

SUNIL GUPTA: Book is doing great.

BRIAN KENNY: Great.

SUNIL GUPTA: Fabulous. It was released in August. I’ve been going around on tour for many, different parts of the world.

BRIAN KENNY: I bet you can buy it on Amazon.

SUNIL GUPTA: You can certainly buy it on Amazon.

BRIAN KENNY: That’s great. Sunil, thanks for joining us today.

SUNIL GUPTA: Thank you very much Brian.

HANNAH BATES: That was Harvard Business School professor Sunil Gupta – in conversation with Brian Kenny on Cold Call . If you liked this episode and want to hear more of Harvard Business School’s legendary case studies in podcast form – search for Cold Call wherever you get your podcasts. We’ll be back next Wednesday with another hand-picked conversation about business strategy from the Harvard Business Review. If you found this episode helpful, share it with your friends and colleagues, and follow our show on Apple Podcasts, Spotify, or wherever you get your podcasts. While you’re there, be sure to leave us a review. We’re a production of the Harvard Business Review – if you want more articles, case studies, books, and videos like this, be sure to subscribe to HBR at HBR.org. This episode was produced by Anne Saini, Ian Fox, and me, Hannah Bates. Special thanks to Maureen Hoch, Adi Ignatius, Karen Player, Ramsey Khabbaz, Nicole Smith, Anne Bartholomew, and you – our listener. See you next week.

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Everything you need to know about Amazon Business, one of Amazon’s fastest-growing ventures

Tomas Kellner

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amazon us business plan

Amazon spent the last 25 years building Amazon.com. It now serves over 300 million active customers a wide selection of goods at competitive prices. You may be one of them.

But different customers have different needs.

Amazon has long known that businesses and organizations were shopping for office supplies and other goods in bulk on its store. To better serve them, the company launched Amazon Business in 2015.

“Everything we do at Amazon starts with the customer, and we kept asking ourselves, ‘How can we better serve those business customers?’” said 20-year Amazon veteran Alexandre Gagnon, vice president of Worldwide Amazon Business. “The procurement space is ready for innovation. We have leveraged the size, expertise, technology, and infrastructure we have built at Amazon, and adapted it for businesses and organizations of all sizes.”

Amazon Business has since become one of the fastest-growing ventures in Amazon’s history. It reached $35 billion in annualized sales in 2023.

An illustrated image of a person using a laptop at a desk. There are three Amazon boxes in front of them with a pet on top of them.

"I’ve been excited about Amazon Business since the day it launched,” said Doug Herrington, CEO of Amazon Worldwide Stores. “The Amazon Business team is committed to long-term success of their business and its customers. Day in and day out, we dig into the specific purchasing needs of businesses and organizations and come up with innovative ways to deliver great prices, extensive selection, and consistent, reliable convenience. Businesses and organizations need different tools and features for their purchasing, and Amazon Business has built those tools. But we know that’s not enough, and we’ll keep iterating to make the customer experience even better.”

More than 6 million customers are now buying on Amazon Business. This includes small and medium-sized companies like the family-owned Red River Brewing Company in New Mexico, as well as large companies and institutions. Ninety-six Fortune 100 companies use Amazon Business, including Intel and Citi, as well as organizations like Johns Hopkins University, Seattle Children’s Hospital, and the United Service Organizations, and U.S. governmental entities, including the state of Utah and the U.S. Air Force.

“Amazon Business is constantly innovating on behalf of its customers—working on solutions and integrations that make procurement more efficient, reducing overhead and manual processes,” Gagnon said. “Amazon Business supports integrations with Coupa and over 100 other procurement, payments, and ERP systems. We also support purchasing directly on Amazon.com for organizations that do not rely on an e-procurement system.”

Despite the progress and growth of Amazon Business, the energy inside makes it feel like a startup with a lot of room to expand further. Amazon Business director Todd Heimes said there are millions of small businesses around the world, and they spend trillions every year on supplies and procurement.

“We are just getting started,” Heimes said.

Here are some answers to frequently asked questions about Amazon Business.

Who can open an Amazon Business account?

Businesses and organizations of all sizes—a local hair salon, global corporations, schools, non-profits, hospitals, and government agencies—can open an Amazon Business account. The account is free, and there’s no spending minimum.

How does Amazon Business work?

Amazon Business gives organizations of all sizes the ability to buy from a large selection of hundreds of millions of items directly from the Amazon Business store, which has the same easy-to-use and intuitive interface as Amazon.com.

Business owners work on their laptops.

“One of the best things we have as a tailwind for Amazon Business is all of the work we've done for the last 25 years for consumers on Amazon,” Heimes said. “We've got a catalog with a wide selection, a world-class fulfillment capability, and a great customer experience that you're used to. It’s easy to use with no training necessary. The search experience, the reviews, the shopping cart, and other popular features are all the same, and on top of that we’ve built business-specific features that allow companies of all sizes to integrate their procurement policies into the buying process.”

What does Amazon Business offer beyond vast selection, low prices, and convenience?

“We are so much more than a B2B store or a procurement organization,” said Aster Angagaw, vice president and head of commercial, public, and strategic sector at Amazon Business. “Amazon Business is designed to be flexible and can support customers of all shapes and sizes. We continuously develop scalable solutions by customer size and industry vertical. We work with our customers to solve their biggest procurement challenges by giving them incredible technology such as Amazon Business analytics and Guided Buying, available with eligible Business Prime memberships.”

“Amazon Business lets our customers use a set of policies or rules to ensure that certain types of products they buy meet those requirements,” Heimes said. “So, you could say, ‘I want to buy local,’ ‘I want to buy products with sustainability certifications,’ ‘I want to buy from veteran-owned or diverse suppliers.’”

A photo of Amazon Business information on a desktop computer. Next to the computer is a coffee mug and a vase that holds a plant.

Angagaw said that business owners and procurement staff are using Amazon Business for its end-to-end solution which provides tools and analytics that give them control, visibility, and insight into purchasing, supply chain, and other activities.

“It's about making sure that Amazon Business gives flexibility to customers so that they focus their time on what matters most to them. This means an organization can ensure they are spending the money where they want to spend it in the way they want to spend it, and that they have control over who spends that money within their organization,” she said. “Because of our end-to-end solution capability, our customer-facing teams work with the largest enterprises to understand their unique business procurement needs and build tailored solutions that best fit their business, requirements, and unique purchasing criteria.”

“Smart business buying is really the culmination of machine learning and artificial intelligence we are bringing to bear on the procurement space to help our customers buy and supply their needs in a smart way, to free them up to do what they really want to do, which is run their business,” Heimes said.

Does Amazon Business have a Prime membership program?

Yes. Business Prime is a popular membership similar to Amazon Prime but with business specific benefits tailored to business buyers. It provides benefits like free shipping on eligible items, deals, and other features like Guided Buying and Spend Visibility. The Business Prime membership includes benefits and pricing* plans tailored for various business sizes.

*Pricing varies across regions.

How do customers use Amazon Business?

Angagaw said Amazon Business helps large and small customers leverage what they're doing today in the area of spend. But Amazon Business can also help them source products with sustainability certification or goods sold by local, diverse, and other businesses.

“We are really giving customers control and visibility of these purchases and knowing where they spend their money,” she said. “If you're a teacher and you want to be able to buy specific books or tools for your class, you no longer have to go through a series of people in the process. You can go to the Amazon Business store, and you will be able to purchase what you need for your students. Utilizing the set budget that is designed for you, you can actually spend it over a semester or a year or a month—however you want to manage it.”

These benefits also translate to tangible savings. “We make it really easy for them to procure at competitive prices and save money that can be then reinvested,” Gagnon said.

How do small businesses benefit from shopping on Amazon Business?

Amazon Business is a B2B store with hundreds of thousands of sellers competing to offer a wide selection of products at competitive prices with the convenient delivery experience you are used to from Amazon.

A person's hands hold an iPhone with a product page pulled up with the "Buy with Prime" blue button as an option.

“It offers small businesses and organizations the opportunity to reduce costs and improve their efficiencies, so that they can focus on running their business,” said Heimes. “All of the conveniences we take for granted as consumers now are available to business customers.”

What attracts large customers to Amazon Business?

Heimes said that “digital procurement”—like shopping for supplies on Amazon Business—is a new concept for large organizations. He said that large businesses typically negotiate and buy from a limited set of suppliers. Amazon Business enables them to access hundreds of thousands of suppliers in one store.

“It's a really big opportunity for those large organizations,” he said. “It allows them to become much more efficient, reduce costs, and streamline their suppliers, which is a huge benefit to them.”

“Sometimes we forget all the great things that Amazon.com offers to consumers that generally don't exist in the business world. Simple things, like knowing when items are going to get delivered. On that note, we can deliver millions of items next day,” Heimes said.

Amazon Business also helps business customers find competitive pricing for large orders.

“If you want buy 500 black chairs, we will take that quote, send it out to sellers we know sell chairs, and give them the opportunity to bid on that order,” Heimes said. “It’s called a request for a ‘quote,’ and it’s our offering to address our customer's forecasted and large purchase needs.”

Who sells on Amazon Business?

Amazon Business offers hundreds of millions of products on its store. Most selling partners who sell on Amazon.com are automatically included in the Amazon Business store too.

Business owners work on their laptops.

The Amazon Business teams also identify sellers with products that may be popular with business customers, then work to add their selection. “We’ve had personal paper shredders on Amazon.com forever, but we’ve now engaged sellers to secure industrial models to sell on Amazon Business,” said Heimes.

How do small and diverse businesses benefit from selling on Amazon Business?

Customers can use the Amazon Business store to not only spend their dollars frugally, but also in ways that support their communities.

“A good example of this is when a local city government came to us and asked to keep their procurement spend within their local community. We worked with them to ensure that local businesses were identified as preferred suppliers so the spending for their organizations was staying within their community,” Angagaw said. “We are able to do this because if you qualify as a certified small, black-, veteran- or woman-owned business, we integrate those qualifications from the federal government, or other standard-defining organizations, and design tools so that any business owner or procurement officer at a large entity can direct their customers to support those specific businesses.”

Angagaw added that it can be challenging for large organizations to interact with small businesses given their processes and system requirements.

“We facilitate that, and I think it is exciting to be able to make that connection between small businesses and corporations,” she said. “Our purpose is to give access for diverse, small, and local sellers to be able to interact with a large organization.”

The U.S. Air Force is a good example. Keen to buy more goods from small and local businesses, and keep and create jobs in their communities, Amazon Business enabled Air Force procurement staff to access a database of more than 100,000 small businesses and check whether any local small business within 50 miles of any Air Force base were selling the relevant supplies.

There were thousands of them. The Air Force has made 7,600 purchases from 2,600 local small businesses through Amazon Business . It said that $1.29 million went to small businesses, including woman-owned, veteran-owned, and businesses in historically underutilized business zones.

“It's exactly like ticking a box. You set a rule—‘I want my users to buy from a local supplier,’—and then that selection will be reduced down to just that local suppliers’ products when that user is trying to make a purchase. It's very much about putting that type of control and those abilities in the hands of our customers.”

Where is Amazon Business available?

Amazon Business started in the U.S. and since expanded to Canada, the UK, Germany, France, Italy, Spain, Japan, and India.

Visit the Amazon Business website to learn more.

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How to start an Amazon business

Everything you need to finally start an Amazon business

A person lifting a packing box.

Benefits of starting an Amazon business

What you need to know before starting an amazon business, business setup and legal considerations, how much money do you need to start selling on amazon, which type of business is best on amazon, how to set up your amazon seller account, how to list and optimize your product, how to market and promote your product, how to provide excellent customer service, how to be successful with amazon business, how to make my amazon business profitable, chapter 1 .

- Amazon marketplace overview

- Benefits of starting an Amazon business

- What you need to know before starting an Amazon business

- Business setup and legal considerations

- How much money do you need to start selling on Amazon?

- Which type of business is best on Amazon?

- How to set up your Amazon Seller account

- How to list and optimize your product 

- How to market and promote your product

- How to provide excellent customer service

- How to be successful with Amazon Business

- How to make my Amazon business profitable

Amazon is the world's favorite online retailer, a place where hundreds of millions of customers spent $500 million+ a year on everything from electronics and entertainment to sports goods, clothing, beauty, home products, kitchen and almost anything else you can imagine.

The figures are staggering, but Amazon' isn't doing this all on its own. There are around 10 million sellers using the platform to market their own products worldwide, and if you have something to sell, you could get a share of profits.

This guide will walk you through the process of starting a business on Amazon, and offer tips on how to make it a big success.

Amazon marketplace overview

Amazon Marketplace is an e-commerce platform where third-party sellers can market their own products on the Amazon site. These are some of its benefits.

1. Large customer base : Amazon has an army of customers from around the world, and they regularly visit the site to search for products. Access to that kind of audience is perfect for generating sales and growing your business.

2. Reliability : Amazon has spent years in investing in its infrastructure, and the end result is a fast and reliable site which works exactly as its visitors expect, just about all the time.

The end result is a site which has earned the trust of hundreds of millions of buyers worldwide. Sell on Amazon and you immediately get a share of that confidence.

3. Global reach : If you're currently selling products in your own country only, Amazon's global reach could be a huge opportunity. You can easily list your business in dedicated marketplaces for specific countries, such as Amazon.com (United States), Amazon.co.uk (United Kingdom), etc. Even better, Amazon Marketplace gives you access to multiple languages support, you need not worry about how to create product descriptions, listings, and support in the language of the target audience.

3. Makes ordering easy and convenient : starting an Amazon business makes ordering easy and convenient, especially for your customers. Amazon has a user-friendly interface that makes it easier for shoppers to browse through the catalog of products and place orders with ease. The user-friendly interface makes it convenient for customers to find whatever products they are looking for in just a few clicks. With Amazon you can provide your customers with the necessary information they need on the products they want to purchase, this includes the product description, specifications, benefits, value, reviews, and virtual representation of the products.

This information helps the customer to know the kind of product they want to buy and also creates a picture of what the products look like and how it will benefit them in their mind.

 4. Payment options : you can choose which payment option is best for you. Shared or individual payments are available for you or another administrator of your Amazon Business account. Debit cards, credit cards, and the Amazon corporate credit line are the three types of shared payment options. The payment method may be utilized by any authorized user of your business account to make purchases on your behalf. While the card you add can be used by any authorized account users, just the last four numbers are visible to them to increase security.

Your user and management options are enhanced as a result of the Amazon corporate credit line. You can approve several buyers on a single account, get reports on your transaction history, and use a purchase order as payment. It has simple-to-comprehend statements and doesn't charge annual fees. Account administrators can control payment methods, including both private and shared ones, as well as delivery addresses, making ordering straightforward for all customers in your business.

5. Advertising support: There are various advertising opportunities in the Amazon marketplace. Amazon's advertising options include Sponsored Products and Sponsored Brands, which promote specific products in search results, increasing their discoverability and generating more sales. 

Amazon advertising allows sellers to increase their visibility, especially in a very competitive market, with sponsored products and brands, sellers can put their products on the front to appear in search results thereby increasing the chance of their products being seen by potential customers.

Smarter advertising helps sellers to target your ads based on factors like interest, demographics, location, age, keyword and more, ensuring your messages reach the most relevant people.

Access to Amazon tools and programs : Starting an Amazon business gives you access to many exclusive tools and programs. For example, the inventory management tool helps sellers effectively manage their stock, making sure that products are always available and avoiding stock-outs.

A+ content (also known as enhanced content) uses high-quality images, engaging videos and detailed descriptions to effectively communicate your product features, benefits, value, specifications, etc.

Other extras include a host of promotional opportunities such as Lightning Deals, Coupons, and Deal of the Day, ideal to increase customer engagement and boost sales.

Before starting an Amazon business there are things you need to know that will help you in your journey.

Here are factors you need to consider before starting an Amazon business.

Amazon seller account types: Before starting an Amazon business you should understand the types of Amazon sellers account, and think about which one is best for you. These are your two options.

Individual sellers account: this account is suitable for beginners and sellers that have low sales volume with less than 40 sales units per month. Here are some features:

1. Sellers pay per item fee for each product sold, therefore there isn't a monthly subscription fee for sellers in this account.

2. Access to tools and features is limited, unlike sellers in professional accounts.

3. Sellers that choose an individual selling account may not be eligible for certain programs and also may be restricted from using advanced selling tools.

Amazon individual sellers are charged $0.99 for each item sold. One disadvantage of an individual seller's account is that you cannot offer free shipping to customers to lure them to your store and you can't sell on Amazon restricted categories like personal care, grocery, clothing, health, footwear, watches, beauty items, etc. and also Amazon decides the shipping rate for you.

Professional sellers account: This is an ideal account for individuals who want to make huge sales on Amazon, and individuals who plan on making more than 40 sales each month. Here are some of the features of professional sellers' accounts:

1. It includes a monthly subscription plan of $39.99,

2. With this account, you have access to advanced tools to help in the management of your store,

3. There is an inventory listing tool that lets you create a listing page for your products.

4. It also gives you access to promotional opportunities and inventory management (but these may require paying extra fees.)

5. People using professional seller's accounts have access to restricted categories and Amazon APIs for integration.

Competitive analysis:  As a seller, you need to know who your competitors are on Amazon, how they list and market their products, how they market their products, their pricing strategies, and the feedback they get in customer reviews. Identify your competitor's weaknesses and strength, for clues on how to differentiate your business from theirs. 

Performing a competitive analysis serves as a guide to your path of business success, allowing you to identify market opportunities and gaps. It helps you to know the areas with less competition, and how you can position your business for greater success. 

It's just as important to learn who your customers are, and what they are looking for (you can't sell to people you know nothing about.)

Analyzing your direct competitors' reviews, pricing strategies and product offerings gives you insights on what your customers are after. Knowledge of this helps you understand how to channel your marketing strategy, pricing, and customer experience to serve your customers better and meet their expectations.

It's important to learn from your competitor's strengths and weaknesses. Analyzing their customers' feedback and reviews gives you insights between your customers' pain points, needs, issues, and products. By carefully studying these areas you can identify ways you can provide better customer service to your audience, and also avoid mistakes competitors may have made.

Conduct product research and selection: before starting an Amazon business you need to conduct thorough research on products to identify those with low competition, and high market demand. Conduct an analysis to know the trends, search volumes, and customers' preferences for a product before deciding your next move. 

To know how profitable a specific target market can be, thorough research is needed. You need to know the production costs of a product, pricing, Amazon fees, and profit margins to enable you to estimate the profitability of selling a particular product. Consider issues like seasonality, too: collecting this kind of detail is a vital part of identifying profitable and in-demand products, and ensuring the long-term success or your business.

Fulfilment method: you need to decide if it's best to use Amazon FBA (fulfilment by Amazon) or to use your fulfilment (FBM, or fulfilment by merchant). Although FBA comes with additional fees, it can have a lot of advantages for your business. 

Difference between FBA and FBM:

a) With FBA your logistics are insured. FBA takes care of your logistics including storage, packaging, and shipping while with FBM the seller is responsible for the logistics.

b) FBA provides customer service and support on behalf of the seller; with FBM, the seller handles the customer service and customer support.

c) FBA allows sellers to offer prime-eligible products to customers, because of its fast shipping and prime membership perks it attracts more customers. While with FBM, sellers can also offer prime eligible products to customers, but they have to be specific and offer products within timeframes.

d) With FBA sellers pay for storage, packing, and shipping service provided by Amazon. FBM sellers are more in control of their costs, since they handle fulfilment themselves, but they must still pay for their own warehousing, packaging material, and shipping costs.

Advantages of using FBA for sellers

Some of the benefits or advantages of using FBA for sellers include:

1. Prime eligibility: prime-eligible products bring customers fast to your doorstep. FBA allows sellers to offer prime eligible products to customers, which is of huge benefit to customers. Prime members prefer prime-eligible products because of their fast shipping benefits and free shipping. This is a huge benefit to sellers because it increases visibility, conversion rate and improves customer satisfaction.

2. Expanded customer reach: FBA has a huge advantage over sellers. By utilizing FBA sellers can reach thousands of customers worldwide. With FBA you can access Amazon shipping and delivery.

3. Trust and customer confidence: with FBA you can earn the trust and confidence of your customers. Amazon has made a name for itself worldwide and with its reputation your store can easily earn the trust and confidence of customers, especially with its fast and free shipping benefits.

4. Multi-channel fulfilment : FBA offers multi-channel fulfilment capabilities. Assuming you have an online marketplace or another channel apart from Amazon, with FBA you can fulfil orders from other channels, providing you with the ability to scale your business on different platforms. 

There are legal requirements that should be met if you don't want to lose your business when run into some legal or financial situations. Before setting up your business you need to decide on the business structure.

Determine the business structure

Your business structure is an important legal consideration which greatly influence how you manage your finances, pay tax and more. 

These are the two most widely recognized business types.

Sole proprietorship : This type of business managed by one person alone. This is the most common type of business structure and very simple to set up, all you need is to start selling something, and boom! You are already operating as a sole proprietorship. 

One huge advantage of a sole proprietorship is total control, you have authority over every affair of the business, and you don't need to consult anyone like shareholders, partners, etc. A sole proprietorship business is very easy. 

The problem is that you, as the sole proprietor, are personally liable for any debts, lawsuits or other legal issues your business may encounter. There's no legal protection.

Limited Liability Company (LLC): An LLC (Limited Liability Company) is a US legal structure that shields owners from financial obligations and other responsibilities. An LLC legally separates the owner(s) from the business, in contrast to a sole proprietorship. This means that any debts or legal actions that your company may face will be handled by the LLC, not you personally.

Unlike sole proprietorships, LLCs are allowed to have more than one member. 

You must submit documentation to the secretary of state of the state where you intend to conduct business to establish an LLC. If your firm is medium- or high-risk, you want to preserve your assets, or you want to pay less tax than you would with a corporation, this structure may be a good choice for you.

The main difference between the two is how much more security you have with an LLC. An LLC is a legal entity that can be used to run a business, open a bank account, borrow money, sue, and be sued. Real estate can also be bought and sold through it. 

If your LLC business is sued or incurs debts, then unlike a sole proprietorship, you are not personally responsible. Creditors of your firm cannot seize any funds or property that are not owned by the LLC, such as your house or personal savings.

Register your business and obtain the necessary permits and licenses

You don't need to register your business to start selling on Amazon marketplace, neither do you need a seller's permit, but your state government might want you to register your business. It's very important to comply with the legal requirements of your state or country which might include registration of your business and obtaining necessary permits and licenses. 

To register your business it's best you contact the legal and local business authorities to ensure you comply with the laws and regulations.  

Typically, you'll visit the appropriate government agency or website that is in charge of registering businesses in your country or region. This usually involves paying a fee and filling out some necessary documents. Moreover, you also need to provide some necessary information about your business like your business name, details, address, contact details, etc.

Getting a tax identification number usually depends on your location. For instance, in the US, the Internal Revenue Service (IRS) would require you to request an Employer Identification Number (EIN).

After obtaining a tax identification number depending on your location, you need to check i.e. conduct some necessary research to know the permits and licenses required to sell specific products in your region or country for example these licenses or permits can include basic business licenses, licenses for collecting sales taxes, permits for health and safety, or customized permissions for particular items. Consult the appropriate government authorities on this. Also if your region or country requires you to collect sales tax, then you need to set up a sales tax system to collect tax.

Set up a separate bank account and payment system

Setting up a separate bank account and payment system for your business is very important as there are a lot of advantages that come with it.

These advantages include:

1. Financial organization: if you separate your business bank account from your personal account it helps you to be more organized. It helps you track your profits, revenue, and all business expenses correctly, and makes your financial analysis much easier.

2. Legal and liability protection: it's very important you maintain a clear distinction between your business and personal bank accounts. This will help you separate and protect your personal account in case of any legal issues or disputes. 

3. Simplified bookkeeping: separation of your account simplifies your bookkeeping process. It helps you understand how your money is coming in, where it's coming from, and where it's going. The clarity separation of your account provides makes it possible to avoid unnecessary financial and bookkeeping errors.

4. Improved financial insights: This enables you to gain clarity and better visibility and understanding of your business. Separation of your account helps you effectively monitor cash flows, revenues, and expenses, and better understand the profitability of your business.

How much do you think you need to start selling on Amazon? Amazon ecommerce experts Jungle Scout reports that most sellers (69%) had an initial investment of around $5,000, but 32% started with less than $1,000, and 16% got started with $500  (or even less.)

Whatever your budget, it's important to consider the other outlays you might encounter when you're selling on Amazon.

1. Required costs: the necessary money you need to pay to start selling on Amazon.

2. Inventory cost: customers will expect you to deliver goods quickly, so you'll have to keep a stock of products to ensure they're immediately available. 

If you're just starting out selling on Amazon, you might be hesitant to invest a lot of money in inventory as you don't know for sure which products will be popular. Keep your spending low at first, until you know which products sell best and what your stock levels need to be.

3. Extra costs: You can see these as costs that you need to boost your business early. This includes Advertising costs (advertising on Amazon is less expensive. The current average cost per click on Amazon is $0.35).

Other factors which can affect your Amazon selling costs include:

1. Monthly subscription fees: For individuals that choose a professional seller account, you need to pay a monthly subscription fee of $39.99. then individuals who sell less than 40 units of products each month have to pay $0.99 for each product sold.

2. FBA fees: The prices you pay may vary per order if you're selling through Amazon FBA. For instance, you will be required to pay Amazon extra to complete a larger order.

There is a monthly storage fee associated with FBA, as you're using space in Amazon's warehouses. From January to September, you'll pay $0.69 per cubic foot, and from October to December, $2.40 per cubic foot.

3. FBM fees: Sellers using Amazon's Fulfilled by Merchant (FBM) program are in charge of fulfilling their own products, in contrast to FBA. Reduced fees are one of its key benefits as compared to FBA.

Amazon Professional selling plan members that use FBM can choose their shipping costs.

4. Referral fees : You must pay a referral fee of 6% to 20% for each item you sell on Amazon. The kind of products you sell in your Amazon store determines the referral fee.

For instance, you might anticipate paying an 8% fee if you sell any electronics in your store. On the other hand, if you're selling clothing, you'll be spending about 17%.

5. Customer returns fees: As a seller, there will be times when a customer will return a product either because it's defective or they are not satisfied with the product. You will be in charge of covering those costs. 

The best type of business to do on Amazon depends on your interest, market demand, and resources. Here are the types of businesses you can start on Amazon.

Private label

A private label is a type of business that involves getting a product from a third-party manufacturer, rebranding is as your own, and selling it at a higher price. This can be lucrative if you choose your products wisely and negotiate a good price, but you need to have experience in branding and marketing to make it a success.

Drop shipping

This is a very popular type of business and is commonly used by individuals who want a simpler way to start in ecommerce. Dropshipping is very easy to start and manage since you don't need to worry about inventory management, shipping, and packaging the products. All of these are handled by your supplier. 

Essentially, being a drop shipper on Amazon means you're selling a product on behalf of the supplier. Once a customer purchases from your store, you notify the supplier, who handles everything necessary to get the products delivered. 

It's essential to get a supplier you trust before going for drop shipping. If your supplier delivers poor quality products, or maybe runs out of stock and doesn't deliver at all, these can cost you the loyalty and trust of your customers.

Retail arbitrage

This involves finding products from physical stores and then selling them on Amazon for a higher price. This is a very popular model for entry-level business models. By purchasing items in quantity at a discount and raising the cost to sell on Amazon, the business model enables sellers to profit from in-demand products. It is a straightforward idea that, as you accumulate an inventory and learn which product lines offer the most sales prospects, can help you produce a sizable stream of income over time.

You must take into account the initial price of your product and the amount you are selling it for, less the typical Amazon fees, to determine the profits made via retail arbitrage. Make sure you conduct a lot of competitor research to discover what other merchants' price points are so you don't go too high or cheap.

Online Arbitrage

This is similar to retail arbitrage but here instead of products being sourced from physical stores, products are sourced from online retailers. Comparing prices online can be easier than doing it in physical stores. To find possibilities and determine whether each potential purchase is profitable, you can immediately compare prices with Amazon.

It's a surprisingly simple process, and there are more opportunities appearing all the time. Every day, more ecommerce websites are created, allowing you to find tiny or emerging businesses that might provide their goods for less money.

Handmade Products

This business is perfect for you if you are skilled in crafts. You can decide to open a store that sells unique handmade products.

Not every vendor has the ability to begin producing their goods from scratch. Even if you've the skills, you may not have a proper workshop, or the time to manufacture the goods. But this approach can be very successful if you're able to produce an in-demand product which can't be found anywhere else.

For the moment you have been waiting for? In this section, we'll give you a step-by-step guide on how to set up your Amazon seller account.

Choose the appropriate seller plan (individual or professional)

Before setting up your business you need to choose the appropriate seller plan that is right for your business.

Also, remember the plan you choose depends on what you want to use your account and do, but for serious sellers, we recommend choosing a professional seller's plan.

Individual sellers plan

This plan requires you to pay a fee of $0.99 for each product sold. This plan is for individuals that sell less than 40 units of products per month. It's ideal for individuals who aren't quite sure what they want to sell yet, but want to try out Amazon business to see if it works for them.

Professional sellers plan

This is a perfect plan for serious sellers who aim to sell more than 40 products each month. This plan costs $39.99 a month, which gets you benefits like shipping, brand registry, Amazon advertising options, free shipping, promotions etc.

Sign up for an Amazon Seller Central account

To get started with Amazon business, visit sellercentral.amazon.com and click on the SignUp button.

Choose a password, then provide and confirm your email address.

Read Amazon's signup instructions carefully, to make sure you know exactly what Amazon expects from you, and what you can expect from Amazon.

Finally, provide information about your business, such as its location and business type. Whatever choice you make affects the status of your account, so choose carefully.

To get your product found you need to optimize your product listings online. Amazon's algorithm to prioritize their product suggestions is based on seller conversion metrics, like price, performance, customer satisfaction & sales history. To optimize your product follow the steps below 

Create compelling product listings with high-quality images and descriptions

Create a rich product listing with detailed information about the products you are listing. Talk about the product's features, benefits and value, and include all the most relevant specifications in the product description. Always use clear and descriptive language.

When choosing images for your products, avoid low-quality blurry shots. We'd recommend high quality 500x500 or 1000x1000 images, where the product occupies 85% of the frame, and there's little or no unnecessary background to get in the way. Show the item from multiple angles if that would help others understand its attributes and benefits. If necessary, hire a professional photographer: it's an extra cost, but could pay dividends later.

Utilize relevant keywords for better search visibility

Effectively utilizing relevant keywords paves the way for your business success. To search for the right keywords to use for your product you don't need to go for another tool, Amazon has a mega power keyword tool that you can use to search for products, get insights on the best keywords to use for your product, and understand the search queries your customers are using to search for products.

To begin your keyword analysis, follow these steps.

  • Fill out the Amazon search bar with a range of words and phrases. Check out the drop-down choices after that, and begin constructing a list of pertinent keywords for comparable postings
  • As a beginning point for your listings, use competitor results. Try comparable searches on Amazon.com to see what is currently available. compare product search keywords next
  • For further inspiration, look through the Amazon-related and suggested item categories
  • Consider both long-tail (very specific, but low traffic) and short-tail keywords (very general and high-traffic) while making your list

Optimize pricing strategies to maximize profits

The price you set for your products is a huge influence on your sales growth and conversion rate. To optimize your pricing strategies, research what your competitors are doing, and look at how you can develop a compelling price for your niche.

This is a constantly moving target as sellers change their individual strategies, but Amazon has a pricing tool can help you automatically adjust your price.

Don't forget to include your shipping costs. For example, if a product costs $5- $8 and you charge $6 for shipping, customers may run off to what looks like a better deal.

Implement product reviews and feedback management strategies

Use Amazon's Review Automation tool to automatically request a review from buyers between 4 and 30 days after a product is delivered.

Positive reviews are ideal, and can go a long way to persuade potential customers that you're running a quality business.

Negative feedback and reviews aren't as much fun, but it's vital that you pay them very close attention. Some negative reviews will be unfair, but others could be giving you very important information that you really need to understand and address.

We will be looking at ways you can market and promote your product on Amazon.

Develop a marketing plan to increase product visibility

To effectively market your products you need to develop a marketing plan and its implementation tactics. What do you want to achieve with your marketing strategy and efforts? Write down what marketing plans you have and the tactics you intend to use to promote your product. Your marketing plan could include a mixture of traditional marketing, influencer marketing, social media marketing, email marketing, digital marketing, etc.

Utilize Amazon advertising tools (sponsored products, brand Registry, etc.)

Amazon has a list of advertising tools such as sponsored products, brand registries, etc. Amazon advertising works as a pay-per-click advertising model. Sellers only pay for the ad when a customer clicks on the ad, it doesn't matter if the product sells or not. Amazon advertising tools help to improve your brand awareness, it also teaches you the best way to reach your targeted audience, and how you can acquire customers at a given time.

Amazon-sponsored products use a type of Amazon advertising tool that appears on the product details page Oland on search results. It is a pay-per-click marketing model. To measure your sponsored products ads we recommend you use a reporting tool that displays your ads' clicks, and advertising cost of sales.

Another type of Amazon ads is Sponsored brand campaigns , this enables you to promote keywords targeted for multiple products. With this, you can direct customers to your store on Amazon. It's also a pay-per-click advertising model. We also have Product display Ads, this type of ads focuses more on upselling or cross-sell to your customers. This type of ad is available to all advertisers, not only to sellers on the platform. Unlike the first two types of ads mentioned, they are only available to advertisers on the platform. To measure the performance of your product's display Ads you can use reporting tools that show you details on your marketing campaigns' clicks, sales,  advertising cost of sales, detailed page views, average cost-per-click, etc.

There are other types of Amazon advertising tools like video ads, Amazon native ads, and Amazon stores.

Implement off-platform marketing strategies (social media, influencer collaborations)

Apart from Amazon advertising, you should implement off-platform marketing strategies like social media marketing, and influencer collaborations. Promote your business and product listings on social media platforms, websites, or blogs. Create compelling content on your social media platforms.

Influencer marketing is a very effective method to market your products. Collaborate with influencers in a similar niche like you who have enough followers and engagement on social media platforms like TikTok, Instagram, Facebook, YouTube , etc. This will help increase brand awareness, and generate more sales.

Monitor and analyze marketing performance to optimize campaigns

It's important to regularly monitor and analyze your marketing performance to optimize campaigns using Amazon's Seller Central or third-party analytics tools. Monitor your sales performance, clicks, and metrics. This will enable you to know how your marketing strategy is performing, it also gives you insights on the areas to make adjustments, based on feedback and data you received, you will improve your products performance.

Keep records of the key performance of your marketing activities such as traffic, conversion rates, sales figures, and customer feedback.

Providing excellent customer service can help you excel in a specific niche and also earn you the trust and loyalty of your customers. Every customer wants to be heard, they want to feel special and need to be treated that way. However, providing excellent customer service depends on your relationship with your customers. You need to build strong relationships with your audience if you want to earn their loyalty. In this section, we will be talking about how and why you should provide excellent customer service to your audience.

Be friendly: Sounds simple? This is the number one most important rule of providing excellent customer service to your audience. You have to be friendly to your customers when providing services to them. Sound friendly, use friendly emojis when talking to your customers online, and make them feel they are speaking with a human and not a bot. You need to be kind and show them you understand whatever might be going on in their mind, whatever issue they have on a particular product, don't scare them away, but rather embrace the issue and provide a solution.

Friendly customer service has a huge impact on your customers both on existing customers and potential customers. One of the worst things you can do to a customer is to ignore them when they need you and also sound rude to them.

Provide excellent customer service to enhance customer experience: According to statistics, 68% of customers will likely tell their families of any bad experience they had with a brand and also post it on social media. The way you carry your customers will determine if they will remain loyal or even be loyal. One thing about your customers you should know is that the way you treat your customers will affect your business either positively or negatively. When a customer receives poor customer service from you, they will likely tell the public, and post it on social media platforms, therefore, ruining your brand's reputation. To enhance your customer service and customer experience, you need to listen to them. Evaluate the kind of issues they have, and what they share with you and find out ways how to provide better service and solve their issues.

Monitor and respond to customer inquiries and feedback promptly

When attending to customer's queries be prompt. they won't want to wait forever to be attended to. In today's market, the quality of customer service you render is very important in determining the loyalty of your customers. The customer's unique experience cannot always be fully recorded and analyzed, but when combined with customer satisfaction surveys, this data, such as call recordings in contact centers, emails from customers, and interactions on social media, can help an organization better understand the customer experience. With the use of these data, businesses will be able to enhance customer happiness and boost brand loyalty by better serving clients and precisely tailoring items to their needs.

To improve your customers' experience keep an eye on interactions, you may hear from your customers. This is where analytics for the contact center is useful. Text analytics locates emails and chat conversations that need to be monitored, while speech analytics locates calls that are important for review.

Record every avenue of client feedback. Apply the same quality standard to text-based interactions like email and chat that are used for calls.

What does your customer think? Asking your customers what they thought of their experience will yield better results than utilizing your company's own metrics to assess the quality of a conversation.

Encourage customers to leave reviews and provide feedback

You can do this simply by asking, although, it can be tricky to get customers to leave feedback on a particular product purchased. Most customers don't like the idea of telling you if they are satisfied with your service or not, but does that mean you shouldn't try? Of course not, customer reviews are important for your store's search engine optimization . You either encourage customers to leave reviews and provide feedback by either asking directly or indirectly but using both methods can be the best. The best time to ask your customers is to ask shortly after a purchase, allow them to use the products first before asking. You can also ask after a repeated purchase. You can also ask for feedback and reviews by including review links in receipt and shipping emails. You could also ask for reviews in the delivery email (as it's ideal to do so after the product has been received).

Another way you can ask your customers for reviews and feedback is by reminding your customers how reviews and feedback help your business to grow. Customers who are happy with your products and services will likely be happy to leave a review and also be happy to promote your product to their friends and families. You can also encourage customers to provide feedback and reviews by giving them multiple ways they can leave a review either on Amazon, social media platforms, or email.

It's one thing to start up a business on Amazon, it's another thing to be successful in your niche. In this section, we will be providing you with 6 tips on how to be successful in the Amazon business.

6 tips on how to be successful in Amazon business.

1. Know what you need to sell: you need to determine what you want to sell. The niche you are interested in. This is the first step to success in Amazon. If you find the best niche you want to focus on then you can have a more specific audience. Choose a product that has high demand but low competition, and don't enter an already saturated market. Carefully research the niche or products you want to focus on, evaluate the pricing strategies of your competitors in that niche, read reviews of what customers think of the products they bought, and also it's important to check the seasonality of the products. Know which time of the month, holidays, or season the products experience more sales.

Once you know the products you want to sell, you need to know who the products appeal to. Who are your target audience, carefully define your audience, know who they are, their pain points, demographics, locations, etc.

2. High-quality products: to be successful in the Amazon business, you must sell high-quality products. Sell products that are of good quality. This will enable you to earn the trust of your customers. Make sure the product descriptions, specifications, and benefits you provide on the platform are what your customers will see when they make purchases. Keep them satisfied and come back for more.

3. Choose your sales channel: choose the place or channel you will market your products. There are many marketing channels, you can market your products on social media platforms, or through influencer marketing, traditional marketing, affiliate marketing, website, etc.

Social media can be a great marketing site for your products. If your audience is on Facebook or Instagram for example then you should leverage the power of these platforms to increase your brand awareness, and increase sales. You can also decide to run ads on these platforms, for example running ads on Facebook is very cheap, and you can run ads on the products you want to sell. In case you want to drive customers to your store, then you can run some ads, to increase your store traffic.  

Another channel you can utilize to market your product is influencer marketing. Influencer marketing is a type of social media marketing in which a brand collaborates with a social media influencer to sell or market its products to its followers. These influencers are not literally celebrities, they can be anyone with a large audience or followers on social media. Choose a marketing channel wisely.

4. Optimize your product listings: As I said earlier, optimize your product listings by creating informative, and compelling product descriptions, also high-quality photos. Optimize keywords effectively, and use relevant keywords on your site. 

Use the Amazon search toolbar to effectively search for popular keywords for a particular product. When creating an image for your product, go for high-quality photos. Avoid posting blurry images of your products, it's a big turnoff for your customers. Use 500 x 500 or 1000 x 1,000 pixels to increase listing quality. The ideal number of photos is thought to be 5 to 6.

5. Work on your Amazon SEO. You need to know the Amazon search algorithm to be able to be successful in your business. Amazon might have a similar SEO with Google but the difference is that Amazon is a buying platform and not a search engine. 

To work on your Amazon SEO you need to conduct keyword research to identify high and most-used search terms for your product. Make sure your keywords are incorporated into your product title. Another way you can work on your Amazon SEO is by writing compelling and informative product descriptions. Make sure you highlight the features, specifications, and benefits of the products. Use bullet points to highlight the features of your products and also include relevant information. Remember it's important to stay updated with the latest change in Amazon's algorithm.

6. Stay organized in bookkeeping and accounting:

Being organized especially in your bookkeeping is a very important step if you want to successfully run a business on Amazon. Accurate financial records allow you to keep track of your finances, expenses, assets, liabilities, and revenues. Keep your finances healthy by keeping accurate financial records. Staying organized in your bookkeeping gives you insights into your company's financial performance, it enables you to effectively evaluate your business performance. You will be able to know if you are headed down the drain or on the right track. With accurate and organized bookkeeping, you will be able to generate the profit and loss statement of your company, the balance sheets, and cash flow insights.

Products selection and sourcing:  To make your Amazon business profitable you need to select products that are in high demand and have good profit margins. To select products that have high demand, you need to conduct thorough research to identify the profitable niche you can venture into.

Streamline operational costs: You need to identify the areas where you can reduce some operational costs. Improve packaging and shipping procedures, negotiate with suppliers for lower prices, and look at less expensive fulfillment options like Amazon FBA (Fulfillment by Amazon). Pay attention to expenditures for shipping, storage, advertising, and other overhead charges.

Build your own brand : Although creating your own brand requires work and money, it can result in devoted customers. Amazon also provides brand owners with a wide range of resources and advantages. Enroll in Brand Registry if you're ready to take the plunge or if you already have a brand in place to have access to automated label protections and more brand management resources.

Enhance product listings: Your product listings should be optimized to increase conversion rates. Make use of crisp product photos, persuading copy, bullet points, and precise product information. Use relevant keywords to increase your search presence. An optimized listing can increase revenue by luring more customers.

Be competitive and know your competition : Monitoring what your competitors are doing is very important to the success of your business. Examine their product pricing, marketing strategy, method of presentation, method of product description, and frequency of new product offerings. Maintaining a competitive edge and remaining profitable requires keeping up with the market. 

Conclusion  

Starting a business on Amazon is quite easy, you just have to follow the steps and instructions in this article. Before you can succeed in business you need to outline your business plan, understand the market competition, know your competitors, and map out some business success tactics. 

However, starting a business on Amazon is very beneficial as Amazon is a platform that is widely recognized around the world. People from different countries come to buy from this platform because of its reputation, your business or brand can gain from this already-built reputation. With Amazon, your business can gain access to many potential customers, as most people prefer to shop on Amazon. Small businesses have the opportunity to boost their sales with Amazon because of millions of buyers that purchase the platform.

With Amazon Prime membership you can have access to free shipping on eligible items, deals, and other features. Follow these guides, conduct your research on the niche you want to enter, and make sure you don't enter an over-saturated market. 

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Kenneth C. Nzeogu

Kenneth is a freelance tech writer who's been in the sector for three years. He loves writing about new technology, focusing on web hosting, streaming, cybersecurity, and how it can benefit people's lives.

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Amazon FBA Business Plan Template

Written by Dave Lavinsky

Amazon logo with green background

Amazon FBA Business Plan

Over the past 20+ years, we have helped over 1,000 entrepreneurs and business owners create business plans to start and grow their Amazon FBA businesses. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through an Amazon FBA (Fulfillment by Amazon) business plan template step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What Is a Business Plan?

A business plan provides a snapshot of your Amazon FBA business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes target market research to support your plans.

Why You Need a Business Plan

If you’re looking to start an Amazon FBA business, or grow your established business, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your Amazon FBA business in order to improve your chances of success. Your business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Amazon FBA Businesses

With regards to funding, the main sources of funding for an Amazon FBA business are personal savings, credit cards, bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.

Personal savings is the other most common form of funding for an Amazon FBA business. Venture capitalists will usually not fund an Amazon FBA business. This is because most venture capitalists are looking for millions of dollars in return when they make an investment, and an individual Amazon FBA could never achieve such results.  With that said, personal savings and bank loans are the most common funding paths for Amazon FBA businesses.

Finish Your Business Plan Today!

How to write a business plan for an amazon fba business.

If you want to start an Amazon FBA business or expand your current one, you need a business plan. In the following Amazon business plan template, we detail what should be included in each section of your own business plan.

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of Amazon FBA business you are operating and the status. For example, are you a startup, do you have an Amazon FBA business that you would like to grow, or are you operating multiple Amazon FBA businesses or storefronts?

Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the Amazon FBA industry. Discuss the type of Amazon FBA business you are operating. Detail your direct competitors. Give an overview of your target market. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.  

Company Analysis

In your company analysis, you will detail the type of business you are operating.

For example, you might operate one of the following types of Amazon FBA businesses:

  • Reseller : this type of business finds products from other businesses to resell on Amazon.
  • Private Label: this type of business buys existing products and rebrands them to sell on Amazon.
  • Proprietary: this type of business is where a business creates a unique product to sell on Amazon.

In addition to explaining the type of Amazon FBA business you will operate, the Company Analysis section of your Amazon FBA business plan needs to provide background on the business.

Include answers to question such as:

  • When and why did you start the business?
  • What milestones have you achieved to date? Milestones could include the number of customers served, number of positive reviews, growth in product line, etc.
  • Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry analysis, you need to provide an overview of the Amazon FBA industry.

industry growth outlook

While this may seem unnecessary, it serves multiple purposes.

First, researching the industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your strategy, particularly if your research identifies market trends.

The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section:

  • How big is the Amazon FBA industry (in dollars)?
  • Is the market declining or increasing?
  • Who are the key competitors in the market?
  • Who are the key suppliers in the market?
  • What trends are affecting the industry?
  • What is the industry’s growth forecast over the next 5 – 10 years?
  • What is the relevant market size? That is, how big is the potential market for your Amazon FBA business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: Millennials, Generation X, and Baby Boomers.

As you can imagine, the customer segments you choose will have a great impact on the type of Amazon FBA business you operate. Clearly, Baby Boomers would respond to different marketing promotions than Millennials, for example.

Try to break out your target market in terms of their demographic and psychographic profiles. With regards to demographics, the customer segments may include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Such demographic information is easy to find on government websites.

Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.

Finish Your Amazon FBA Business Plan in 1 Day!

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With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!

Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other Amazon sellers.

Indirect competitors are other options that customers have to purchase from that aren’t direct competitors. This includes traditional brick and mortar stores, branded websites, or people who make their own product at home. You need to mention such competition as well.

competition

  • What types of customers do they serve?
  • What types of products do they sell?
  • What is their pricing (premium, low, etc.)?
  • What are they good at?
  • What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

  • Will you provide a broader range or higher quality product line?
  • Will you provide services that your competitors don’t offer?
  • Will you provide better customer service?
  • Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For an Amazon FBA business, your marketing plan should include the following:

Product : In the product section, you should reiterate the type of Amazon FBA company that you documented in your Company Analysis. Then, detail the specific products you will be offering. For example, in addition to your core product line, will you provide customization, or warranties, or any other services?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the products or services you offer and their prices.

Place : Place refers to the location of your Amazon FBA company. Document your location and mention how the location will impact your success. For example, if you are offering a proprietary product, is your production facility located near an Amazon distribution facility, or near suppliers of the inputs needed to make the product, etc. Discuss how your location might be the ideal location to minimize order fulfillment time.

Promotions : The final part of your marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:

  • Digital Advertising
  • Partnering with applicable websites
  • Social media marketing
  • Amazon PPC ads

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your business, including managing, tracking, and restocking inventory, and customer service.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to sell your 1,000 th product, or when you hope to reach $X in revenue. It could also be when you expect to expand your business to a new product line.  

Management Team

To demonstrate your Amazon FBA business’ ability to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally you and/or your team members have direct experience in supply chain management or managing Amazon FBA businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing ecommerce shops or successfully running small businesses.  

Financial Plan

Your financial model should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.

Income Statement

expected sales figures

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your Amazon FBA business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

In developing your Income Statement and Balance Sheets be sure to include several of the key fixed and variable expenses needed in starting or growing an Amazon FBA business:

  • Production facility build-out including design fees, construction, etc.
  • Cost of equipment and supplies
  • Payroll or salaries paid to staff
  • Business insurance
  • Taxes and permits
  • Legal expenses

business costs

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your product line description or your branding portfolio.

Putting together a business plan for your Amazon FBA business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the Amazon FBA industry, your competition, and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful Amazon FBA business.  

Amazon FBA Business Plan FAQs

What is the easiest way to complete my amazon fba business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily complete your Amazon Business Plan.

How Do You Start an Amazon FBA Business?

Starting an Amazon FBA business is easy with these 13 steps:

  • Choose the Name for Your Amazon FBA Business
  • Create Your Amazon FBA Business Plan pdf or doc
  • Choose the Legal Structure for Your Amazon FBA Business
  • Secure Startup Funding for Your Amazon FBA Business (If Needed)
  • Register Your Amazon FBA Business with the IRS
  • Open a Business Bank Account
  • Get a Business Credit Card
  • Get the Required Business Licenses and Permits
  • Get Business Insurance for Your Amazon FBA Business
  • Buy or Lease the Right Amazon FBA Business Equipment
  • Develop Your Amazon FBA Business Marketing Materials
  • Purchase and Setup the Software Needed to Run Your Amazon FBA Business
  • Open for Business

Learn more about how to start an Amazon FBA business .

Don’t you wish there was a faster, easier way to finish your Amazon FBA business plan?

OR, Let Us Develop Your Plan For You

Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.  

Click here to see how Growthink’s professional business plan consulting services can create your business plan for you.

Other Helpful Business Plan Articles & Templates

Business Plan Template & Guide For Small Businesses

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Amazon FBA Business Plan Template

Written by Dave Lavinsky

Amazon FBA Business Plan

You’ve come to the right place to create your Amazon FBA business plan.

We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Amazon FBA businesses.

Amazon Business Plan Template

Below is a template to help you create each section of your Amazon seller business plan.

Executive Summary

Business overview.

Smith & Lopez is a personal care company headquartered in San Francisco, California. The company provides numerous personal care products for all ages and genders. Some of these products include lotions, perfumes, bath bombs, hair care products, and skincare products.

Smith & Lopez is a Fulfillment by Amazon (FBA) company and will provide its products primarily on Amazon. The personal care products will be manufactured at a warehouse and sent directly to Amazon warehouses nationwide. When customers order our products online, Amazon will take care of all the packing, shipping, and customer service, ensuring a smoother and positive experience for the consumer.

Smith & Lopez is founded by Maria Smith and Hector Lopez. Both are committed to providing high-quality personal care items and utilizing the strength of Amazon’s business model. Maria has a background in marketing, and therefore will take care of the marketing aspects of the business. Hector has extensive experience in the personal care industry and is familiar with the FBA business model, so he will run most of the operations.

Product Offering

Smith & Lopez manufactures and sells a variety of personal care items that appeal to all demographics. Some of our product offerings include:

  • Hair care products
  • Skincare products

As an Amazon FBA company, Smith & Lopez will have Amazon handle all the packing, shipping, customer service, and returns aspects of the business.

Customer Focus

Smith & Lopez creates products that can appeal to all demographics. However, we expect females in the 18 – 40 age range will be our largest demographic. Traditionally, this demographic invests more in high-quality personal care items than any other, so we will primarily target them in our marketing efforts.

Though we are headquartered in San Francisco, we expect to reach the rest of the United States through the FBA business model. Through Fulfillment by Amazon, we will reach a much larger customer base than we would through a stand-alone e-commerce site. As an FBA seller, Smith & Lopez has access to millions of potential customers across 180 countries worldwide.

Management Team

Smith & Lopez is founded and run by Maria Smith and Hector Lopez. Both have been passionate about high-quality personal care items and used their passion to fuel their ideas for their own business.

Maria Smith will be a co-founder and the Vice President of the company. However, she has a background as a Marketing Specialist and a bachelor’s degree in Marketing. Therefore, she will handle all the marketing and advertising efforts until there is a need to hire a marketing team.

Hector will be a co-founder and the President of the company. He has an extensive history in the personal care industry and experience with the Amazon FBA program. He also has an MBA from UCLA. Therefore, he will handle all the operations side of the business.

Success Factors

Smith & Lopez will be able to achieve success by offering the following competitive advantages:

  • Built-In Customer Service: With Amazon’s built-in customer service network, there’s someone available around the clock to offer support to customers, a perk that’s free being in the Amazon FBA business.
  • Convenient shopping experience: Amazon’s website makes shopping quick, easy, and convenient for millions of consumers around the world. When consumers buy our products from Amazon, they will have a convenient experience that can’t be matched by other e-commerce sites.
  • Fast shipping: Amazon’s two day shipping is legendary. Amazon Prime customers can take advantage of this perk when they buy our personal care items from Amazon.

Financial Highlights

Smith & Lopez is currently seeking $230,000 to launch its Amazon FBA business. The capital will be used for funding startup costs, staffing, marketing expenses, and working capital.

Specifically, these funds will be used as follows:

  • Build-out and startup costs: $40,000
  • Three months of overhead expenses (payroll, rent, utilities): $120,000
  • Marketing costs: $40,000
  • Working capital: $30,000

The following graph below outlines the pro forma financial projections for Smith & Lopez.

amazon us business plan

Company Overview

Who is smith & lopez, smith & lopez history.

Maria Smith and Hector Lopez have been passionate about high-quality personal care products for years. Over the past few years, they have designed and tested their unique personal care product ideas they were inspired to sell. After years of research and testing, Maria and Hector finally incorporated their company on April 3rd, 2022.

Since incorporation, the company has achieved the following milestones:

  • Found an office location and signed a Letter of Intent to lease it
  • Developed the logo and website for the company
  • Finalized list of products the company will be able to provide
  • Created an Amazon seller account
  • Determined the office equipment and inventory requirements
  • Found a manufacturer who will make the personal care products
  • Began recruiting key employees

Smith & Lopez Products

Industry analysis.

The Fulfillment by Amazon business model is quickly becoming the most popular business model for small businesses in the United States. Globally, Amazon operates more than 175 fulfillment centers with over 150 million square feet of space. The company is also continuously hiring workers for these centers so that millions of products continue to ship out on time throughout the world. Therefore, Amazon has the structure and resources to help small businesses thrive so that these businesses don’t have to do everything on their own.

Furthermore, there are numerous perks to taking advantage of this program and many businesses have seen great success because of it. According to Amazon, nearly half of all American selling partners took advantage of FBA in 2020. These businesses reduced their shipping costs by an average of 30% and increased their sales by an average of 20-25%. In fact, small businesses who sell on Amazon are 2.5 times more likely to see revenue growth of 25% or more in a given year than businesses who don’t use Amazon. It’s clear that the FBA program is highly successful and will continue to be in the future. Therefore, this is a perfect time to take advantage of this rapidly growing industry and business model.

Customer Analysis

Demographic profile of target market.

Smith & Lopez will primarily serve U.S. consumers who shop for products on Amazon. Since females under the age of 40 are traditionally the target demographic for the personal care industry, we expect most of our sales to come from this demographic.

The precise demographics of individuals living in the U.S. are as follows:

Customer Segmentation

Smith & Lopez will primarily target the following customer profiles:

  • Consumers under 40
  • Customers who buy personal care items on Amazon

Competitive Analysis

Direct and indirect competitors.

Smith & Lopez will face competition from other companies with similar business profiles. A description of each competitor company is below.

Thea’s is a personal care brand that sells natural and organic skincare and other personal care items. They are particularly famous for their toners and moisturizers, which leave the skin looking youthful and glowing. Thea’s has been a major e-commerce personal care company for over a decade with millions of dollars of sales every year. However, Thea’s solely relies on their own e-commerce site and does not utilize FBA.

Miller & Miller

Miller & Miller has been a household personal care brand for generations, producing everything from skincare and moisturizers to toothbrushes and floss. Anything you need to stay healthy and looking good can be found in the MIller & Miller brand. Though Miller & Miller is a giant corporation that sells well through their e-commerce site and in stores, the company still utilizes Amazon and sells their best selling products on the site.

California Glow

California Glow is a new online personal care brand that sells lotions, makeups, and other personal care products. Like Smith & Lopez, they are a purely online brand and headquartered in San Francisco. They sell similar products and utilize FBA in addition to their e-commerce site. However, they sell far fewer products and are currently only a minor competitor.

Competitive Advantage

Marketing plan, brand & value proposition.

Smith & Lopez seeks to position itself as a respectable, upper-middle-market competitor in the personal care category of FBA sellers.

The Smith & Lopez brand will focus on the company’s unique value proposition:

  • Offering unique and high-quality personal care products
  • Offering a wide variety of products that appeal to all demographics
  • Providing excellent customer service on a 24/7 basis through Amazon

Promotions Strategy

Smith & Lopez expects its target market to be online shoppers. The company’s promotions strategy to reach its targeted audience includes:

Amazon Advertising

Smith & Lopez will utilize the Amazon Advertising program provided by Amazon. This marketing program allows small businesses to advertise directly to Amazon consumers by purchasing sponsored ads. The program is highly effective. According to Amazon, the program reaches about 96% of consumers in the 25-54 age group every month. Since this is the majority of our target market, this will be an invaluable marketing and advertising tool.

Social Media Marketing

Social media is one of the most cost-effective and practical marketing methods for improving brand visibility. The company will use social media to develop engaging content that will increase audience awareness and loyalty. Engaging with prospective clients and business partners on social media platforms like Facebook, Instagram, Twitter, and LinkedIn will also help understand changing customer needs.

Word of Mouth Marketing/Amazon Reviews

Smith & Lopez will encourage customers to post reviews to give honest feedback about our products. Amazon reviews can be incredibly effective and help us gain numerous new customers with little effort on our part. The company will use reviews and recommendations to grow its customer base through the network of its existing customers.

Website/SEO Marketing

Smith & Lopez has a website that is well-organized and informative and lists all our available products. The website also lists the company’s contact information and has links to our Amazon store.  We will utilize SEO marketing tactics so that anytime someone types in the Google or Bing search engine “San Francisco personal care” or “California personal care products,” Smith & Lopez will be listed at the top of the search results.

Smith & Lopez’s pricing will be moderate, so customers will feel that they receive great product value. We will set our prices based on similar FBA sellers in the personal care category.

Operations Plan

The following will be the operations plan for Smith & Lopez.

Operation Functions:

  • Hector Lopez will be a co-founder and the President of Smith & Lopez. His extensive background in the personal care industry (as well as his experience with Amazon FBA program) will help him run the general operations of the company.
  • Maria Smith will be a co-founder and Vice President of the company. In addition to helping Hector run and maintain the general operations of the company, Maria will use her extensive marketing background to handle all the marketing efforts.
  • John Smith will be the Procurement Manager and ensure that our products are always in stock at Amazon warehouses.
  • Sheila Martinez will be the Accountant and handle all general accounting, tax payments, and monthly financial reporting.
  • Kyle Martin will be the Administrative Assistant. He will assist Hector and Maria with all general administrative tasks.

Milestones:

Smith & Lopez expects to achieve the following milestones in the following six months:

06/202X          Finalize lease agreement

07/202X          Design and build out

08/202X          Hire and train initial staff

09/202X          Kickoff of promotional campaign

10/202X          Launch Smith & Lopez

12/202X          Reach break-even

Financial Plan

Key revenue & costs.

Smith & Lopez’s revenues will come from selling products on Amazon. The major costs for the company will be the cost of supplies and salaries of the staff. In the initial years, the company’s marketing spending will be high to establish itself in the market. Moreover, FBA membership and selling fees are also one of the notable cost drivers for Smith & Lopez.

Funding Requirements and Use of Funds

Key assumptions.

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.

  • Average number of items sold per month: 500
  • Average sales per month: $20,000
  • Retail space lease per year: $100,000

Financial Projections

Income statement, balance sheet, cash flow statement, amazon fba business plan faqs, what is an amazon fba business plan.

An Amazon FBA business plan is a plan to start and/or grow your Amazon FBA business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your Amazon FBA business plan using our Amazon FBA Business Plan Template here .

What are the Main Types of Amazon FBA businesses?

There are a number of different kinds of Amazon FBA businesses , some examples include: Reseller, Private Label, and Proprietary.

How Do You Get Funding for Your Amazon FBA Business Plan?

Amazon FBA businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

What are the Steps To Start an Amazon FBA Business?

Starting an Amazon FBA business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop An Amazon FBA Business Plan - The first step in starting a business is to create a detailed business plan for Amazon FBA  that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.  

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your Amazon FBA business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your Amazon FBA business is in compliance with local laws.

3. Register Your Amazon FBA Business - Once you have chosen a legal structure, the next step is to register your Amazon FBA business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws. 

4. Identify Financing Options - It’s likely that you’ll need some capital to start your Amazon FBA business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms. 

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations. 

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events. 

7. Acquire Necessary Amazon FBA Equipment & Supplies - In order to start your Amazon FBA business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your Amazon FBA business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising. 

Learn more about how to start a successful Amazon FBA business:

  • How to Start an Amazon FBA Business

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Top 10 Amazon Business Plan Templates with Examples and Samples (Editable Word Doc, Excel, and PDF Included)

Top 10 Amazon Business Plan Templates with Examples and Samples (Editable Word Doc, Excel, and PDF Included)

Deepika Dhaka

author-user

Amazon, originally known as an online retail giant, has expanded beyond just eCommerce. With the introduction of Amazon Business, a dedicated division catering to businesses, Amazon has revolutionized the way organizations, governments, and businesses procure and purchase. In this blog, we will explore the key elements of the Amazon Business Plan and discover how it has reshaped the landscape of B2B transactions. Get ready to discover how Amazon Business empowers businesses, streamlines operations, and drives growth and success in today's modern marketplace.

Welcome to SlideTeam's presentation on the Amazon Business Plan, where we look at how this global powerhouse has achieved remarkable success. In this presentation, we will analyze Amazon's journey and learn about the secrets to its growth. We will also explore the exciting opportunities that this unparalleled retail and e-commerce platform presents. It empowers you to start and grow your own business, which is, of course, the one major benefit. Get ready to delve into the world of Amazon and discover how it has become the number-one choice for businesses worldwide. 

Let’s begin

Table of contents

  • Executive Summary
  • Company Overview
  • Industry Analysis
  • Growth potential Analysis
  • Competitive Analysis
  • Customer Analysis
  • Marketing Strategy
  • Operational Plan
  • Financial Plan
  • Management Summary

A quick heads-up! This Business Plan Template contains 65 well-researched content-ready pages you can customize or personalize. Our comprehensive package incorporates top-notch graphics and visuals, such as tables, charts, bar graphs, flowcharts, and pie charts, designed to present complex information in a clear and concise manner. We, however, will walk you through the 10 slides just to give you a teaser of why this document is the top resource to understand Amazon inside and out.

You will get the 65-page Doc, PDF, and XLS Files on a download.

1. Executive Summary

The executive summary section of the Amazon Business Plan includes a summary of the company's rich history, detailing its growth and evolution over the years. This section also includes a quick pitch, providing essential information about the current state of Amazon's business, the US market, and potential opportunities. Additionally, the plan offers a brief overview of Amazon as an entity , including information such as web address, location, incorporation date, and products and services provided. However, the most informative section of the business plan discusses Amazon's products and services in detail. Below is a comprehensive list of the products and services covered:  

Products: Amazon Echo, Amazon Fire TV, Amazon Kindle, Amazon Fresh, Amazon Fashion, Amazon Gift Cards

Services: Amazon Prime, Amazon Music, Amazon Web Services, Amazon Pay.

Executive Summary

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Amazon business Plan

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2. Company Overview

The Company Overview section encompasses the company's vision, mission, and core values . It additionally provides insights into Amazon's financial summary , highlighting key metrics such as financial results and performance. Within this section, you will discover the four primary pillars underpinning Amazon's growth and profitability: Customer Centricity, Innovation, Operational Excellence, and Corporate Responsibility. You will also delve into Amazon's future initiatives, which prioritize expanding its current business ventures and investing in emerging technologies to enhance operational efficiency and elevate customer experiences. These initiatives are:

  •  Expansion of Amazon Prime
  • Continued investment in AI (Artificial Intelligence) and Machine Learning
  • Expansion of Amazon Go stores
  • Investment in renewable energy
  • Expansion of Amazon Web Services (AWS)

The section also covers Market Gaps and Business statements on security & privacy, supply chain disruptions, competition, regulatory compliance, and customer service.

Company Overview

3. Industry Analysis

The next component of this business plan is Amazon’s industry analysis, defining four main parameters: Growth drivers, market analysis, market trends, and major challenges.

The growth drivers include factors like e-commerce adoption, expansion into new product categories, prime membership and fulfillment network, and innovation & technology. This section elucidates how these factors propel Amazon's remarkable growth.

Within the market analysis segment, you will encounter informative graphics and visuals that present a wealth of data and insights about the global technology industry and global e-commerce industry, the US technology industry, and the US e-commerce industry.

Amazon's examination of market trends entails pivotal points that have been instrumental in shaping its strategies. A few of these notable trends are :

  • Continued growth of e-commerce
  • Increased focus on sustainability 
  • Expansion into healthcare 
  • Growing importance of third-party sellers
  • Increased competition from retailers and marketplaces
  • Advancements in artificial intelligence and machine learning 
  • Continued expansion of Amazon Web Services (AWS)

In our last analysis, we also study the major challenges this expansive organization faces. Here, we study competition, counterfeit products, regulatory challenges, logistics and supply chain management, cybersecurity, environmental impact, and consumers’ trust. However, Amazon's track record of innovation, customer-centric approach, and adaptability have helped it overcome challenges in the past. Also, the business landscape is dynamic, and the company's ability to overcome challenges depends on its ongoing efforts to address these issues, adapt to changing circumstances, and maintain its competitive edge.

Industry Analysis

Learn how Amazon generates global revenue in this content-ready PowerPoint Presentation. You can download it by clicking here .

Amazon Revenue Generation

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4. Growth Potential Analysis

Amazon’s growth potential analysis is showcased in this business plan using PESTEL Analysis, SWOT Analysis, Porter’s Five Forces Framework, and VRIO Analysis.

PESTEL analysis is a planning tool to identify the external factors that may affect a business's operations and decision-making. 

Continuing in the SWOT Analysis section, you will discover a comprehensive assessment of Amazon's strengths and weaknesses and the opportunities and threats that propel the company forward by mitigating potential challenges.

Michael Porter's five forces model classifies the most significant external factors and forces that influence business development. This model identifies & studies the five forces shaping Amazon in the US. Five forces analysis also helps determine industry weaknesses and strengths and further leverages the company to structure its corporate strategy.

Next, this section showcases the primary competencies of Amazon built on organizational capabilities and business resources that meet all VRIO requirements (value, rarity, inimitability, and organization). This business plan includes the non-core and core competencies of Amazon outlined in the easy-to-understand VRIO table.

Growth Potential Analysis

5. Competitive Analysis

This part highlights a robust competitive analysis, showcasing Amazon’s positioning against major industry players. This analysis includes an attribute comparison table , clearly representing Amazon's strengths and weaknesses relative to its key competitors. It serves as a strategic roadmap, helping Amazon identify areas where it excels and areas that require attention to maintain its competitive edge in the market. This data-driven approach enables Amazon to make informed decisions and adapt swiftly to evolving market dynamics, ensuring its continued success. 

Competitive Analysis

6. Customer Analysis

Within this Amazon Business Plan PDF, comprehensive customer analysis is unveiled, shedding light on the company's deep understanding of its audience. This analysis encompasses detailed buyer personas on demographics, key concerns and pain points, spending habits, personality traits, and more.

 It also outlines the precise contours of Amazon's target market , delineating the segments and demographics the company strategically focuses on, such as consumers, small businesses, enterprise customers, students, low-income households, gamers, etc.

Moreover, the plan delves into market sizing , providing valuable insights into the scale and potential of the markets in which Amazon operates. It is categorized into Total Available Market (TAM), Serviceable Available Market(SAM), and Serviceable Obtainable Market (SOM). This data-driven customer analysis empowers Amazon to tailor its products, services, and marketing efforts to meet the needs and preferences of its vast and varied customer base, driving sustained growth and customer satisfaction.

Customer Analysis

7. Marketing Strategy

In this section, you will delve into Amazon’s marketing strategy , focused on delivering a convenient, customer-focused experience that offers products and services to customers. Amazon's market mix includes components that contribute to its marketing strategy. They are: Product, price, place, promotion, people, process, and physical evidence.

This PDF covers critical components such as sales and distribution , elucidating how Amazon reaches its customers. The promotional strategy documents reveal the methods Amazon employs to market its products and services. In addition, the pricing strategy documents shed light on Amazon's pricing mechanisms , which are crucial in its competitive landscape. Lastly, the sales funnel documents detail Amazon's step-by-step process to convert potential customers into loyal ones, showcasing the company's acquisition and retention strategies.

Marketing Strategy

8. Operational Plan

The Operational Plan section within Amazon's Business Plan provides a comprehensive blueprint for the company's day-to-day operations and long-term growth. This section is enriched with tables that outline Amazon's Business Model, elucidating how it generates revenue and delivers value to its customers and partners. These tables offer a visual representation of the intricate web of activities and relationships that underpin Amazon's operations. The plan also includes a detailed milestone table, which showcases the significant achievements and progress markers that Amazon has reached over time. These milestones serve as indicators of Amazon's successful execution of its strategies and its ability to adapt and evolve in a dynamic market, reinforcing its position as an industry leader.

Operational Plan

9. Financial Plan

The Financial Plan is a cornerstone of the company's strategic vision, providing a framework for financial management and growth. This section is replete with tables offering crucial data and insights. The Financial Assumptions table outlines the assumptions underpinning Amazon's financial forecasts, including revenue projections, cost structures, and growth rates. The Projected Profit and Loss provides a detailed breakdown of expected revenues and expenses, offering a clear picture of profitability over time. The Projected Cash Flow Statement highlights Amazon's anticipated cash inflows and outflows, ensuring the company's liquidity and financial health. The Projected Balance Sheet presents a snapshot of Amazon's financial position, showcasing its assets, liabilities, and equity projections. 

Furthermore, the Scenario Analysis offers insights into how Amazon's financials might evolve under market conditions, enhancing the company's risk management strategies. Finally, the DCF Valuation Analysis employs discounted cash flow techniques to assess the intrinsic value of Amazon's business, aiding in strategic decision-making and investment planning. Together, these insights in the Financial Plan section empower Amazon to make informed financial decisions and navigate the complex world of corporate finance with confidence.

Financial Plan

10. Management Summary

The Management Summary is a pivotal component that provides a comprehensive overview of the company's leadership and management structure. It offers a visual representation of how key roles and responsibilities are organized within the company. The Professional Summary presents profiles of Amazon's top executives, highlighting their qualifications, experience, and contributions to the company's success. Additionally, the section delineates job roles and responsibilities across departments, ensuring clarity and alignment in the company's leadership. This segment serves as a roadmap for Amazon's organizational hierarchy, offering insights into the expertise and leadership that drive the company's growth and innovation.

Management Summary

WELL BEGUN IS HALF DONE

Amazon's Business Plan that SlideTeam offers is an invaluable resource for aspiring entrepreneurs and business enthusiasts looking to begin their business with Amazon. This feature-packed plan offers a comprehensive roadmap, providing insights into every facet of Amazon's operations, strategies, and financial outlook. It offers a wealth of information on marketing, operations, financial planning, and leadership, all of which are instrumental in achieving success in e-commerce. Whether you are considering launching your own business on Amazon's platform or seeking inspiration for your entrepreneurial journey, this Business Plan is the ultimate resource of knowledge and guidance. To harness the full potential of Amazon's insights and strategies, download the PDF today and take a step closer to realizing your business dreams with the world's largest online marketplace. Your journey starts here! Download the PDF now.

PS. If you are looking for Amazon’s marketing strategies to reach customers, here’s a handy guide to the most popular samples and examples.

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Amazon FBA Business Plan in 2023

AUG.21, 2023

Amazon FBA Business Plan

Selling on Amazon through Fulfillment by Amazon (FBA) is a great way to start or grow an e-commerce business these days. The major perk is that Amazon handles most of the tough backend work – warehousing your products, packing and shipping your customer orders, providing customer service, etc. But jumping into Amazon FBA without a solid Amazon FBA Business Plan in place is a recipe for headache and wasted money.

What is Amazon FBA Business Plan?

An e-commerce business plan maps out your strategy to sell products on Amazon using their fulfillment services. The aim is showing a strong strategy and execution plan to launch and grow an effective Amazon FBA business. Following a well-thought-out plan reduces risks and costs while maximizing sales and profits – crucial for any new FBA seller.

Why Do You Need Samples and Templates for Amazon FBA Business Plan?

Writing an Amazon FBA seller business plan from nothing can be tough and time-consuming, especially if Amazon FBA is new to you. Using an e-commerce business plan sample or template makes it much easier. Amazon FBA business plan example gives you a clear structure and guidance on what to cover in each section.

Below, we’ll go through each section of an Amazon FBA business plan template of LuxeNest Creations . We’ll explain what information to provide and how to write it effectively.

Executive Summary

Founded in 2020, LuxeNest Creations is a retailer and online boutique business selling stylish, affordable home decor on Amazon. We offer chic and budget-friendly styles for every room – pillows, rugs, curtains, lamps, wall art and more. We have grown sales over 300% yearly and earned a 4.5-star rating from 1,000+ reviews.

According to a market report published by Market Data Forecast, the home decor market was valued at $727.6 billion in 2022 and is expected to reach $393.7 billion by 2028 at a CAGR of 6.8% from 2023 to 2028. E-commerce accounts for 19% market share and is increasing due to online convenience and variety.

Our target is women homeowners aged 25-54 seeking decor online. We compete through quality products at lower prices than competitors by leveraging Amazon fulfillment and economies of scale. Excellent customer service via email, phone, and social media also sets us apart.

Company Overview

Founded in 2020 by Steve Harvey and Jesicca James, LuxeNest Creations sells affordable, quality home decor on Amazon. Frustrated by the lack of variety online, the founders invested $10K to source products from local suppliers.

Our mission is providing high-quality, affordable decor to transform any space into a beautiful, comfortable home. Our vision is becoming the leading Amazon FBA home decor retailer and expanding globally. We value customer satisfaction, innovation, integrity and sustainability.

Our 3-year objectives are to:

  • Increase SKUs from 100 to 500
  • Achieve 4.8+ star customer rating
  • Grow email list from 5,000 to 50,000
  • Hire 10 more employees
  • Register as an LLC in the US

Currently a sole proprietorship run by the founders, LuxeNest Creations has 2 part-time employees. By the end of 2023, we plan to incorporate as an LLC in the US for asset protection and tax benefits. Our online retail business plan aims to keep growing our product line and customer base to achieve our mission of delivering affordable, beautiful home decor.

Industry Analysis

The home decor industry is booming. According to a report by Allied Market Research, the global home decor market was valued at $616.6 billion in 2019, and is estimated to reach $838.6 billion by 2027, registering a CAGR of 3.9% from 2020 to 2027.

The industry covers a wide range of products. These include furniture, textiles, lighting, wall art and accessories. The report also breaks down the market by product type, distribution channel and region. The following table summarizes some of the key data from the report:

GLOBAL HOME DECOR MARKET SIZE BY PRODUCT TYPE

GLOBAL HOME DECOR MARKET SIZE BY DISTRIBUTION CHANNEL

GLOBAL HOME DECOR MARKET SIZE BY REGION

Key growth drivers of the home decor industry include:

  • Increasing disposable income and urbanization, especially in emerging markets
  • Demand for customized products that reflect personal styles
  • Eco-friendly and sustainable products with less environmental impact
  • E-commerce platforms offering more variety and convenience

Key challenges of the home decor industry include:

  • Highly competitive market with many similar product offerings
  • Fluctuating raw material prices and availability
  • Changing consumer tastes requiring constant innovation
  • Varying legal and regulatory issues across regions

Looking ahead, key trends and innovations in the home decor industry include:

  • Smart technology integration enhancing functionality and convenience
  • Online rental and subscription services providing flexibility and affordability
  • DIY and upcycling projects allowing creative, personalized products
  • Social platforms like Pinterest and Etsy connecting artisans and consumers

In summary, while facing some hurdles, the home decor industry has strong tailwinds thanks to rising incomes, urbanization, sustainability and technology.

amazon us business plan

Customer Analysis

Our target customers are women aged 25-54 looking to buy stylish, affordable home decor online. They earn around $50,000 a year and live in cities or suburbs in North America, Europe, or Asia. They are educated, tech-savvy, and eco-conscious. They want quality, convenience, and variety when shopping for home decor. They also like personalizing their living spaces to suit their style.

We segment customers into three groups:

  • Budget-conscious buyers (40%) seek low prices and discounts. They comparison shop and buy impulsively. Brand loyalty is low.
  • Quality-conscious buyers (30%) pay more for durable, reputable products. They rely on reviews and make rational purchases. Brand loyalty is high.
  • Variety-conscious buyers (30%) want diverse options to change decor frequently. They buy on trends and inspiration. Brand loyalty is moderate.

Our customers need affordable, quality home decor that expresses their style. We offer a wide selection of ethically made pillows, rugs, lamps, etc. on Amazon with fast, free shipping and easy returns.

Customers find us by searching Amazon for relevant keywords such as “home decor”, “pillows”, “rugs”, etc. They browse recommendations, best sellers, and deals. They buy by adding items to their cart and checking out via Amazon. They use our products to decorate their homes. They evaluate products by leaving Amazon ratings and reviews, or contacting us with questions.

Competitive Analysis

LuxeNest Creations’ direct competitors in the home decor industry are other online retailers selling similar products on Amazon, including:

  • Artful Abode Co – A well-established retailer with over 10,000 products and 5,000+ positive reviews on Amazon. They offer free shipping, returns, and a 30-day money-back guarantee. Artful Abode has a strong brand image and loyal customer base.
  • Vintage Vogue Interiors – A new online retailer focused on trendy, affordable home decor like pillows, rugs, lamps, and wall art. They have 1,000+ products and 500+ reviews on Amazon. Vintage Vogue offers free shipping over $50 and 10% off for new buyers. They have a stylish brand image targeting a young, hip audience.

LuxeNest Creations’ also faces indirect competition from other online/offline retailers offering alternatives for customers, such as:

  • Etsy – A leading e-commerce platform with a home decor section featuring products from various sellers/brands. Etsy provides fast, free delivery and an easy payment system. They have a large, diverse customer base and strong brand recognition.
  • The Home Depot – A popular home improvement store with home decor products from various suppliers. The Home Depot offers in-store pickup/delivery and installation services. They have knowledgeable staff and a loyal customer base.

We compare and contrast with our competitors in our Business Plan for Amazon seller using FBA in the following ways:

Our online store business plan shows we have competitive advantages in product quality, pricing, and customer service versus our rivals.

Our strengths include:

  • High-quality products at lower prices by leveraging Amazon’s network and scale efficiencies
  • Fast, friendly customer support via email, phone, and social media

However, we lag in product variety and brand awareness. Our product portfolio is more limited than competitors. Therefore, our market niche and position is being the top value provider of affordable, quality home decor on Amazon FBA. We aim to attract and retain price-conscious customers seeking stylish, comfortable products online.

Moving forward, we will increase product variety and brand awareness. We plan to launch new categories and expand into more countries and platforms.

Marketing Plan

Our key marketing objectives for the next three years are:

  • Increase annual sales revenue from $500,000 in 2023 to $1.5 million by 2026.
  • Grow market share from 1% in 2023 to 3% by 2026.
  • Boost brand awareness from 10% in 2023 to 30% by 2026.
  • Improve customer retention rate from 30% in 2023 to 40% by 2026.

To achieve these goals, our Amazon Seller FBA Business Plan will focus on the fourPs of marketing:

  • Product – Expand our home decor product line on Amazon, adding new categories like bedding, furniture, and accessories to appeal to more customers.
  • Pricing – Use penetration pricing to undercut competitors, along with promotions and dynamic pricing to stimulate demand.
  • Placement – Sell through Amazon FBA as our primary channel, and expand to other major online marketplaces.
  • Promotion – Employ a mix of digital marketing (SEO, PPC, email, social media) to increase awareness, and traditional marketing (flyers, events) to reach local audiences.

Our marketing tactics align with the SMART framework – being specific, measurable, achievable, relevant and time-bound. The following table summarizes some of our marketing tactics:

LuxeNest Creations’ marketing budget for the next three years is $30,000 per year. We will allocate our budget according to the following breakdown:

To monitor and evaluate marketing performance, we will track key metrics including:

  • Sales Revenue – Use Amazon sales reports to track monthly and annual revenue growth targets.
  • Market Share – Estimate quarterly market share using industry research reports like Grand View Research. Goal is to reach 3% share by 2026.
  • Brand Awareness – Conduct annual online surveys to measure brand awareness and recall. Target is increasing to 30% by 2026.
  • Customer Retention – Use Amazon tools to calculate repeat purchase rate and customer lifetime value. Aim to increase retention rate from 30% to 40% by 2026.

Operations Plan

At LuxeNest Creations, our key business activities are:

  • Product sourcing – We source our products from local suppliers who use ethical and eco-friendly materials and methods. We verify the quality and acceptability of products before purchasing.
  • Product listing – We create optimized product listings on Amazon FBA with relevant titles, descriptions, images, etc. to attract customers. We use SEO techniques to improve visibility and traffic.
  • Fulfillment – We ship products to Amazon warehouses using their partnered carriers. We follow Amazon’s packaging and labeling standards for proper storage and tracking.
  • Selling – We sell on Amazon FBA using their secure payment system. We offer fast, free shipping and easy returns to customers. We also provide promotions to encourage repeat purchases.
  • Customer service – We respond to customer queries and feedback timely via email, phone, and social media. We also request product reviews and address any issues through Amazon’s resolution programs.

Our key business systems are:

  • Amazon FBA – For online sales, inventory, order fulfillment, payments, and customer service.
  • Shopify – For our branded ecommerce store with tools for site design, shopping cart, marketing, and analytics.
  • QuickBooks – For accounting, invoicing, expense tracking, reporting, and taxes.
  • Mailchimp – For email marketing campaigns, customer communications, and analytics.
  • Hootsuite – For managing our social media presence and activities.

Our key business resources are:

  • Physical – Our products, packaging, office equipment, and workspace.
  • Human – Our founders, employees, and contractors/suppliers.
  • Financial – Capital, revenue, expenses, profits.
  • Intangible – Our brand name, logo, slogan, domain, trademarks, patents, and customer data.

Our key operational risks are:

  • Supplier risk – Issues with product quality, pricing, delivery, or availability.
  • Inventory risk – Inefficient inventory management leading to excess or shortage.
  • Shipping risk – Problems with carriers, packaging, labeling, or delivery.
  • Sales risk – Low demand, high competition, discoverability issues impacting sales.
  • Customer service risk – Inability to address customer complaints or disputes.

Organization and Management

LuxeNest Creations is currently owned and operated by co-founders Steve Harvey and Jesicca James. They manage all business operations, finance, marketing, and product development. Two part-time employees assist with order fulfillment.

The company plans to incorporate as an LLC by the end of 2023 to limit personal liability and gain tax advantages.

Key Team Members:

  • Steve Harvey, Co-Founder and CEO: Oversees strategy, sourcing, listings, shipping, and customer service. Has a business degree and 5+ years in e-commerce.
  • Jesicca James, Co-Founder and CMO: Manages marketing, branding, product development/design, and customer relations. Has a marketing degree and 3+ years in digital marketing.
  • Daniel Smith, Part-Time Packer: Responsible for packing and shipping products per Amazon’s standards. Has 2+ years of fulfillment experience.
  • Mary Wilson, Part-Time Packer: Responsible for packing and shipping products per Amazon’s standards. Has 1+ year of fulfillment experience.

Human Resource Needs (Next 3 Years):

  • Hire 10 more staff for customer service, marketing, and operations by Q4 2024.
  • Outsource some sourcing, listing, shipping, and customer service activities to vendors by Q2 2025.
  • Train existing and new staff on Amazon best practices, customer service, marketing, etc. by Q4 2025.

Financial Plan

Our key financial statements in this e-commerce business plan example are:

  • Income statement: Shows revenue, expenses, and profit over time. Measures profitability.
  • Balance sheet: Shows assets, liabilities, and equity at a point in time. Measures liquidity and solvency.
  • Cash flow statement: Shows cash inflows and outflows from operations, investing, and financing over time. Measures cash availability.

Our main financial assumptions are:

  • Revenue growth of 80% in 2024 and 67% in 2025 based on market research and marketing plans.
  • Cost of goods sold at 40% of revenue based on sourcing, listing, and shipping costs.
  • Operating expenses at 40% of revenue in 2023, 30% in 2024, and 35% in 2025 based on product, marketing, and operational costs.
  • 25% flat tax rate on net profit per current tax laws and regulations.
  • No interest expense as we do not plan to take any loans or debts.

Our key financial ratios are:

  • Gross profit margin: Measures revenue kept after cost of goods sold. Indicates pricing and production efficiency.
  • Operating profit margin: Measures revenue kept after operating expenses. Indicates operational efficiency.
  • Net profit margin: Measures revenue kept after all expenses. Indicates overall profitability.
  • Current ratio: Measures ability to cover short-term liabilities with current assets. Indicates liquidity.
  • Return on equity: Measures profitability generated on equity. Indicates profitability and efficiency.

OGSCapital Consultants For Your Amazon FBA Business Plan

At OGSCapital , we go beyond business plan writing. We aim to offer you our years of expertise, experience, and resources so that you get a customized and high-quality business solution. This customized business plan will help you start and grow your business.

As your trusted partners, we help you achieve your business goals and dreams. Our expertise and resources deliver customized, high-quality solutions for starting, growing, or selling your business.

Choose us for your professional business planning needs because:

  • Proven track record since 2006 – Helped over 5,000 clients attract $2.7 billion in financing
  • Results-oriented approach – Tailor plans to your specific needs and objectives
  • Highly qualified team – MBAs from top schools with extensive experience
  • Full customization – Unique plans crafted from scratch for each client
  • Affordable pricing – Reasonable fees, no hidden costs

Learn more about how we can create a winning plan tailored to your business. Visit our website or contact us to get started. Check out our sample business plans to see our quality work. We’re ready to help make your business idea a reality. Reach out today!

Frequently Asked Questions

1. Is Amazon FBA business really profitable?

Yes, Amazon FBA can be highly profitable if you research market demand, source reputable suppliers, and effectively manage pricing, promotion and fulfillment. Many sellers make a full-time income.

2. How do I create an Amazon FBA business plan?

Create an effective business plan for Amazon FBA by researching profitable niches using tools like Jungle Scout, estimating costs with the Amazon FBA calculator, finding suppliers on Alibaba or domestically, and planning your product launch.

3. How much money can Amazon FBA make?

Amazon FBA seller profits vary widely based on factors like product selection, competition, marketing strategy, operational efficiency, and sales volume. Many full-time sellers make $5,000 to $10,000 per month, with some making over $1 million.

4. Can you start an Amazon FBA with little money?

You can launch an Amazon FBA business for as little as $500 to $1000 by starting with just a few small, inexpensive products, minimizing inventory using just-in-time ordering, and reinvesting profits.

5. Is Amazon FBA free?

No, Amazon charges monthly seller fees, referral fees on sales, FBA fulfillment and storage fees, and other fees, so selling on Amazon FBA requires significant investment.

6. How much do I need to start Amazon FBA?

To launch a basic Amazon FBA business, plan for around $1000 to cover LLC registration, initial product inventory, packaging supplies, Amazon seller fees, and other startup costs.

OGSCapital’s team has assisted thousands of entrepreneurs with top-rate business plan development, consultancy and analysis. They’ve helped thousands of SME owners secure more than $1.5 billion in funding, and they can do the same for you.

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Jeff Bezos sells roughly $2 billion of Amazon shares

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EU privacy watchdogs urged to oppose Meta's paid ad-free service

Europe's privacy enforcers should oppose Meta Platforms' no-ads subscription service launched in Europe last November because it requires users to pay a fee to ensure their privacy, a model likely to be copied by other companies, a group of 28 organisations said on Friday.

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Amazon FBA Business Plan

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Value Proposition

ModHome simplifies home supply shopping with handpicked cleaning and cooking bundles that prioritize quality, sustainability, and affordability. You’ll never have to worry about finding the right products for your kitchen because we’ll do it for you. 

The Problem

Consumers looking for cleaning and cooking supplies often face the challenge of purchasing multiple items separately, leading to increased costs and wasted time spent on research.

The Solution

Our Amazon FBA business will focus on providing a variety of bundled cleaning and cooking supplies and equipment, targeting mid-range quality at a moderate price. By offering bundled items, we aim to save customers time, effort, and money, as well as provide a convenient, one-stop shopping experience.

Target Market

Our primary customers will be middle-class working professionals ages 25-45 likely with a growing family who cannot afford to spend time researching common tools and supplies. They value high quality items but don’t always have the budget to splurge on name brand products. This customer archetype can be broken down further into the following segments:

  • Time-conscious shoppers: Busy individuals seeking a convenient, one-stop solution for purchasing curated cleaning and cooking supplies.
  • Home cooks and baking enthusiasts: Customers looking for quality, affordable, and innovative cookware and baking tools to enhance their culinary experience.
  • Budget-conscious buyers: Consumers seeking mid-range quality products at reasonable prices to maximize value.
  • Environmentally-conscious consumers: Individuals prioritizing eco-friendly and sustainable products for their cleaning and cooking needs.

Competitors and Differentiation

Key competitors to consider include:

  • Major physical retailers such as Walmart and Target
  • Online marketplaces outside of Amazon such as eBay and Wayfair
  • Specialty stores that serve an eclectic range of options
  • Other Amazon FBA sellers

ModHome will set itself apart from these options through:

  • A transparent and professional product vetting process
  • Providing bundled options that minimize pricing
  • Competitive shipping and return policies

Our team is made up of highly skilled and experienced researchers who take the time to thoroughly review and test each product before it’s ever offered. Combining such a personalized experience with the fulfillment and distribution capabilities of Amazon will help us hit a positive blend of product quality, speed, and affordability.

Funding Needs

We are seeking an initial investment of $40,000 to cover our initial inventory, Amazon FBA fees, marketing and advertising costs, product research tools, and web development for our external site. This should provide us with enough of a runway to get up and running with the goal of becoming profitable within 6-months.

Sales Channels

Our primary sales channel will be directly selling through Amazon. We will also sell through our own website and test in-person purchases through pop-up shops and potential brick-and-mortar retail partnerships. 

Marketing Activities

We will focus on promoting our products through Amazon’s onsite advertising platform as well as search and social media advertising. Additionally, we will aggressively pursue partnerships with potential influencers to showcase and use the products while promoting them to their followers. 

Financial Projections

These initial projections take into account a 6-month lead-up to profitability along with gradually increasing margins and increased inventory expenses.

  • Year 1: $300,000
  • Year 2: $345,000
  • Year 3: $400,000
  • Year 1: $260,000
  • Year 2: $269,000
  • Year 3: $305,000
  • Year 1: $40,000
  • Year 2: $76,000
  • Year 3: $95,000
  • Identify target market segments and their needs
  • Research and select high-quality, sustainable, and unique products
  • Register the business and obtain necessary licenses and permits
  • Set up tax and legal compliance, such as sales tax collection and business insurance
  • Create an Amazon seller account and enroll in the FBA program
  • Set up payment and shipping options
  • Establish relationships with suppliers and negotiate pricing
  • Purchase initial inventory and ship to Amazon’s fulfillment centers
  • Create product listings with high-quality images, engaging descriptions, and relevant keywords
  • Optimize listings for Amazon search algorithms (SEO)
  • Implement Amazon PPC, social media advertising, and email marketing
  • Leverage influencer marketing or collaborations for brand exposure
  • Reach a stable sales volume and maintain a high seller rating
  • Monitor and respond to customer feedback and reviews
  • Explore selling on other online marketplaces or setting up an e-commerce website
  • Consider wholesale distribution, brick-and-mortar retail, or direct sales channels
  • Reach the break-even point within the 6-month runway
  • Maintain steady growth and profitability through effective inventory management, marketing, and customer service
  • Introduce new, niche-specific bundles or customizable options
  • Develop and launch private-label products

Key Team and Roles

To help achieve profitability the team for this business will be kept very small. Both roles will likely be held by the owner at first with outsourced assistance. 

  • Oversees all aspects of the business
  • Manages finances, legal compliance, and strategic planning
  • Builds relationships with suppliers and negotiates pricing
  • Monitors inventory levels and reorders as necessary
  • Ensures customer satisfaction and addresses any issues

Marketing and Product Specialist

  • Conducts market research and identifies target market segments
  • Researches and selects high-quality, sustainable, and unique products for bundles
  • Creates and optimizes product listings on Amazon
  • Develops and implements marketing and advertising strategies
  • Monitors and analyzes sales performance and adjusts strategies accordingly

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Just Eat, Deliveroo and other delivery rider bags outside a McDonald’s in Ilford.

Thousands of UK Deliveroo and Uber Eats drivers to strike on Valentine’s Day

Takeaway delivery riders say employment status has left many struggling to earn national living wage

Delivery drivers for food-ordering platforms including Deliveroo and Uber Eats are staging a Valentine’s Day strike to demand better pay and conditions.

The stoppage on Wednesday is being organised by a grassroots group, Delivery Job UK, many of whose members are Brazilian. It claims to have more than 3,000 supporters in London and several other cities.

The group hopes to draw attention to the low pay and insecure conditions faced by drivers, many of whom work on several delivery apps in parallel.

App-based delivery drivers are generally classified as self-employed contractors, meaning their employers are not legally obliged to pay them the statutory “national living wage” of £10.42 an hour, due to increase to £11.44 in April .

That status was confirmed by a supreme court ruling in November that found Deliveroo riders were not “workers”, after a long-running battle by the Independent Workers’ Union of Great Britain for the right to unionise and bargain on their behalf.

One of Delivery Job UK’s organisers, who spoke to the Guardian on condition of anonymity, said it was difficult to earn the national living wage – even before costs are taken into account.

The platforms tend to pay a flat-rate minimum a job, plus an additional fee based on distance; but these vary over time and drivers complain it is unclear how they are worked out.

“It’s very random: we don’t know the algorithm, we don’t know how it’s calculated,” said the organiser, who added that he hoped to encourage consumers ordering a takeaway to think about the conditions faced by drivers.

Data from thousands of couriers collected by the app Rodeo, which allows them to compare their earnings across delivery companies, suggested fees were cut in 2022 and 2023, despite high inflation.

Deliveroo is not included, as it has declined to allow drivers to make their details available.

Dr Callum Cant, from Essex Business School at the University of Essex, who studies the sector, said: “The single problem we have had with these apps over the last few years has been the continual reduction in real wages. So over time, things have got worse.”

He added: “These workers are so often treated as invisible. And they’re taken for granted.”

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Deliveroo has a voluntary agreement with the GMB trade union, which is meant to ensure they are paid at least the national living wage, plus costs, for the time they are on an order.

A spokesperson for the company said: “Deliveroo aims to provide riders with the flexible work riders tell us they value, attractive earning opportunities and protections.

“Thousands of people apply to work with Deliveroo each month, rider retention rates are high and the overwhelming majority of riders tell us that they are satisfied working with us.”

An Uber Eats spokesperson said: “We offer a flexible way for couriers to earn by using the app when and where they choose. We know that the vast majority of couriers are satisfied with their experience on the app.”

Separately, more than 1,000 Amazon staff are expected to strike at the company’s Coventry warehouse from Tuesday to Thursday, amid a pay dispute .

  • Couriers/delivery industry
  • National living wage
  • Work & careers
  • Employment law

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amazon us business plan

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One in three people in UK had problem with last parcel delivery, research shows

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Deliveroo cuts 350 jobs, mostly in UK, after fall in online orders

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Royal Mail loses 360-year monopoly on delivering parcels from Post Office sites

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  • Why You Should Trust Us

Amazon Business Prime Credit Card Review 2024

Our experts answer readers' credit card questions and write unbiased product reviews ( here's how we assess credit cards ). In some cases, we receive a commission from our partners ; however, our opinions are our own. Terms apply to offers listed on this page.

The information for the following product(s) has been collected independently by Business Insider: Amazon Business Prime Card. The details for these products have not been reviewed or provided by the issuer.

Many small businesses rely on online retailers such as Amazon to stock and maintain their inventory. If you own a small business and already have a Business Prime membership, the Amazon Business Prime Card can be a valuable addition to your financial toolkit. Amex is a Business Insider partner.

Cardholders of this Amazon business credit card can choose between earning up to 5% back or receiving a 90-day grace period of 0% interest on eligible Amazon purchases (then 19.49% - 27.49% variable APR). 

American Express Amazon Business Prime Card

Earn 5% cash back or 90 day terms on select U.S. purchases at Amazon Business, AWS, Amazon.com and Whole Foods Market (terms & cap apply). Earn 2% cash back on U.S. purchases at restaurants, gas stations and wireless phone services purchased directly from service providers. Earn 1% cash back on all other purchases.

19.49% - 27.49% variable

Get a $125 Amazon Gift Card upon approval

  • Check mark icon A check mark. It indicates a confirmation of your intended interaction. Offers 5% cash back on the first $120,000 in U.S. purchases at Amazon Business, AWS, Amazon.com and Whole Foods Market each calendar year, or a 90-day interest-free period for paying off purchases
  • Check mark icon A check mark. It indicates a confirmation of your intended interaction. 2% cash back on various spending categories
  • Check mark icon A check mark. It indicates a confirmation of your intended interaction. No annual fee
  • con icon Two crossed lines that form an 'X'. Not as many perks and travel benefits as other business credit cards

If you own a small business and already have a Business Prime membership, the Business Prime American Express Card can be a valuable addition to your financial toolkit. Cardholders of this Amazon business credit card can choose between earning up to 5% back or receiving a 90-day grace period of 0% interest on eligible Amazon purchases (then the regular APR will take effect).

Amazon Business Prime Card Overview

The Amazon Business Prime Card is ideal for business owners who frequently make Amazon or Whole Foods purchases and already have a Business Prime membership. 

The Amazon Business Prime Card offers generous rewards on eligible purchases, and comes with a $125 Amazon Gift Card upon approval. Combined, these benefits can help offset everyday costs for new or existing small businesses. 

Amazon offers another business card, so don't get confused. The similarly-named Amazon Business American Express Card doesn't require an Amazon Prime membership but only offers up to 3% back on eligible Amazon purchases.

Amazon Business Prime Card Rewards

Welcome offer.

New Amazon Business Prime Card cardholders receive a $125 Amazon Gift Card upon approval, equivalent to the 5% rewards you'd earn from spending $2,500 in eligible Amazon purchases. This gift card can only be used toward Amazon purchases.

While a bonus is always welcome, many of the best business credit cards offer bigger incentives for new cardholders. In the card comparison section below, take a look at two competitor cards that offer welcome bonuses worth at least six times as much, and with a lot more redemption flexibility.

How to Earn Rewards

The Amazon Business Prime Card earns 5% back on Amazon.com, Amazon Web Services (AWS), and Whole Foods purchases, up to $120,000 spent annually.

Instead of earning 5% on eligible purchases, cardholders also have the option of choosing 90 days of 0% interest on eligible Amazon purchases (then 19.49% - 27.49% variable APR). But earning 5% back is usually a better move since many other business cards offer far longer 0% intro APR periods.

The can also be a good fit for day-to-day purchases, as it earns 2% back at U.S. restaurants, gas stations, and wireless phone services purchased directly from service providers. All other eligible purchases on the card earn 1% back. 

How to Use Rewards

Amazon Prime's rewards program is straightforward. Amazon points can be used at checkout or redeemed as a credit card statement credit, and don't expire as long as you keep your card account open. Known as the "Shop With Points" feature, each reward point is worth 1 cent, so earning 10,000 points could be worth $100 off a future Amazon purchase. 

Amazon Business Prime Card Benefits and Features

The Amazon Business Prime Card includes a number of tools designed to simplify small business management. You can also add authorized user cards for employees for no annual fee. Here are some of the other unique qualities of this Amazon business credit card: 

Account Manager

You can designate an employee, accountant, or other trusted individual to manage your Amazon business credit card account. Account managers must be at least 18 years old and have a U.S. Mailing Address and Social Security Number.

Amazon Business Enhanced Data Views

When you purchase Amazon Business products using the Amazon Business Prime Card, you can download your purchases with line-item detail with the Amazon Business Enhanced Data Views feature. 

Amazon Shop With Points

Rewards earned on the Amazon Business Prime Card can be applied toward Amazon purchases using the Shop With Points feature. While your points don't expire, you may forfeit points if your account status changes or you make a late payment.

American Express Early Access and Amex Experiences

Amazon Business Prime Card cardholders can take advantage of Amex Early Access for sporting events, entertainment and other ticketed events as they become available. They can also take advantage of Amex Experiences, which are available in select cities. 

Amex Offers

The Amazon Business Prime Card is an Amex card, so cardholders can receive and redeem Amex Offers that are targeted to this card. Just log into your Amex account online or through the app, and scroll down to find the Offers section and add the ones that appeal to you. 

Connect to QuickBooks

Your Amazon Business Prime Card can be connected to QuickBooks Online for easier bookkeeping.

Travel and Purchase Protections

This version of the Amazon business credit card also offers travel and shopping protections on eligible purchases, purchase protection, extended warranty, baggage insurance plan, and secondary car rental loss and damage insurance. 

Amazon Business Prime Card Annual Fee and Other Costs

The Amazon Business Prime Card card doesn't have an annual fee, but you need a personal or business Amazon Prime membership to be approved. 

A personal Prime membership currently costs $139 a year, the business version can be much more expensive depending on the size of your enterprise, ranging from $179 to more than $10,000 a year.

As with any credit card, you'll want to be vigilant to pay your full monthly statement on time to avoid interest charges or late fees. The Amazon Business Prime Amex Card has a 19.49% - 27.49% variable APR, based on your creditworthiness. 

The Amazon Business Prime card doesn't charge foreign transaction fees, which can be useful for business owners who frequently travel internationally. However, this card only earns 1% back on most purchases made outside the U.S.

Compare the Amazon Business Prime Card

The Amazon Business Prime Card primarily shines on Amazon and Whole Foods purchases. If your business spends most of its money elsewhere, here are some other cards you should consider. 

Amazon Business Prime Card vs. Ink Business Unlimited® Credit Card

If you were intrigued by the Amazon Business Prime Card's 90-day interest-free period, you may want to consider a no-annual-fee business card such as Chase's Ink Business Unlimited® Credit Card. 

This card offers a 0% intro APR on purchases for the first 12 months (followed by a 18.49% - 24.49% Variable APR). You'll also earn 1.5% cash back across all purchases, racking up rewards no matter where you shop. As with the Amazon business credit card, you can add employee cards for authorized users to your Ink Business Unlimited® Credit Card at no additional cost. 

The Ink Business Unlimited® Credit Card comes with a lucrative welcome bonus of $750 bonus cash back after you spend $6,000 on purchases in the first three months from account opening. The spending requirement can be high for some small businesses but can be worth $750, according to Personal Finance Insider's points and miles valuations .

Best of all, you can transfer your Ink Business Unlimited® Credit Card rewards to a personal Chase credit card that earns Ultimate Rewards points, such as the Chase Sapphire Reserve® or the Chase Sapphire Preferred® Card. From there, you can use your points for personal travel with an additional boost in value. 

Learn more about this card in our Chase Ink Business Unlimited credit card review .

Amazon Business Prime Card vs. Ink Business Cash® Credit Card

If you like the idea of earning 5% cash back on office supplies but don't want to buy them from Amazon, take a look at the Ink Business Cash® Credit Card. This card is a close cousin of the Ink Business Unlimited® Credit Card.

Earn 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on internet, cable and phone services each account anniversary year. Earn 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants each account anniversary year. Earn 1% cash back on all other purchases.

Beyond the different reward rates, the two Ink cards compared here are virtually the same. The Ink Business Cash® Credit Card also has a 0% intro APR on purchases for the first 12 months, followed by a 18.49% - 24.49% Variable APR. 

You can also add authorized user cards for free, and transfer your rewards from the Ink Business Cash® Credit Card to an Ultimate Rewards card for additional value.

Learn more about this card in our Chase Ink Business Cash credit card review .

Amazon Business Prime Card Frequently Asked Questions

There's no official credit score requirement, but it's recommended to have a good credit score of 680+ for your best chances of approval for the Amazon Business Prime card. 

You have to have a personal or business Amazon Prime membership to apply for the Amazon Business Prime Card.

You should have a good credit score or higher, defined by FICO as 670 and above, when applying for the Amazon Business Prime Card.

The Amazon Business Prime Card does not charge an annual fee.

Why You Should Trust Us: How We Reviewed the Amazon Business Prime Card

Personal Finance Insider's editorial team reviews business credit cards by evaluating their merits and comparing them against other products available on the market. When looking at the Amazon Business Prime Card, we considered several criteria including:

Rewards — The Amazon Business Prime Card earns 5% back on eligible Amazon Purchases. Several other business credit cards on the market also offer 5% rewards on certain spending categories, and don't limit cardholders to a single store like this Amazon business credit card. 

Flexible payment terms — The Amazon Business Prime Card offers 90 days of no interest on eligible Amazon purchases. But choosing this option will keep you from earning 5% rewards, while plenty of other business credit cards on the market offer both earnings and 0% intro APR.

Annual fee — The Amazon Business Prime Card doesn't charge an annual fee, but does require Amazon Prime membership.

Editorial Note: Any opinions, analyses, reviews, or recommendations expressed in this article are the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any card issuer. Read our editorial standards .

Please note: While the offers mentioned above are accurate at the time of publication, they're subject to change at any time and may have changed, or may no longer be available.

**Enrollment required.

Eligibility and Benefit level varies by Card. Terms, Conditions and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Trip Delay Insurance, Trip Cancellation and Interruption Insurance, and Cell Phone Protection Underwritten by New Hampshire Insurance Company, an AIG Company. Global Assist Hotline Card Members are responsible for the costs charged by third-party service providers. If approved and coordinated by Premium Global Assist Hotline, emergency medical transportation assistance may be provided at no cost. In any other circumstance, Card Members may be responsible for the costs charged by third-party service providers. Extended Warranty, Purchase Protection, and Baggage Insurance Plan Underwritten by AMEX Assurance Company. Car Rental Loss & Damage Insurance Underwritten by AMEX Assurance Company. Car Rental Loss or Damage Coverage is offered through American Express Travel Related Services Company, Inc.

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