Today begins the Amazon Prime Day. It is a good time to take a look at the strategies that the e-commerce giant is implementing to gradually eat into the pie that, until recently, was dominated by Google and Facebook.
If Amazon's weak point today was its profits, the reality is that in the last two years, they have been more consistent and higher. In fact, with respect to the same period of the previous year, they have doubled its net income during the first quarter of 2019, 3.56 billion, reaching the not inconsiderable figure of US$3.56 billion.[1].
Most of these profits come from online sales through its website. Another good percentage comes from its platform for third parties to whom it charges a fee plus a percentage of sales. The reality is that in recent times Amazon is diversifying and obtaining revenue from new channels. One of them is Amazon Web Services, The company has become a leader in cloud computing services and has already been able to offer accounts for half of Amazon's profits[2].
With the exception of China, where Alibaba is the marketplace of reference, Amazon's penetration rate continues to grow worldwide.[3].
Given this data, it makes sense that Amazon is trying to monetize its dominant position even more. It is from here that Amazon is starting to claim its share of the pie from Google and Facebook. That's why Amazon is boosting advertising within its own platform. As of today, Amazon Ads only accounts for 4.3 % of Amazon's revenue. However, by 2020 it will account for 10% of the advertising pie that until now was shared by Google and Facebook.
Facebook officially recognizes Amazon as a threat.
In fact, Facebook has officially recognized Amazon's advertising business as a threat.[4]. In the last quarter of the year, Amazon increased its advertising revenues by 95% over the previous year.. Not surprisingly, Amazon already ranks above Apple as the company with the highest brand value.
For its part, Google, In the face of the unstoppable threat, it has decided to take a step forward in its expansion strategy and has begun to compete directly with Amazon. In France, for example, Google has turned Google Shopping into a marketplace.[5]. It seems foreseeable that Google will expand the model to the rest of the markets in an attempt to slow down Jeff Bezos' company.
Considering that Bezos is building his own airports, it looks like Amazon's world domination is just around the corner.
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[1] https://www.expansion.com/economia-digital/companias/2019/04/25/5cc218f6268e3ea92b8b45aa.html
[2] https://www.muycanal.com/2019/04/26/amazon-crecimiento-beneficio
[3] https://es.statista.com/grafico/18609/uso-de-amazon-por-paises/
[5] https://ecommercenews.eu/googles-new-marketplace-to-compete-with-amazon-in-france/
