Amazon is creating its Own Ecosystem! Here’s why
The Reasons for Amazon creating its Ecosystem
Amazon was founded in 1994 as a retail company and today one of the biggest technology companies on earth with its hands in virtually every pie, Amazon has proven to be one of those companies that even though it is consumer-centric can deliver on its technical aspects as well.
This may be the main reason why the company seems to have their hands in every pie at the same time.
From consumer goods to cloud technology and more recently streaming, the Amazon ecosystem is almost second to none as they seem to have wrapped their presence in everything within the household.
Lest we forget, they are also leaders in two critical information technology areas which people don’t know already is here but will continue to drive internet trends for the next two decades: Artificial intelligence and the Internet of Things (IoT).
These two shall continue to be pillars of technology and Amazon shall continue to be in the thick of things.
Several reasons exist why Amazon is now building its ecosystem which other technology giants have surpassed it in one way or the other.
Amazon Understood the First rule of Success in Business: How to Sell
Amazon perfected its sales processes before it advanced its technology processes.
This gave the much-required insight into human behavior and tendencies that make people want to buy and more importantly what they want to buy.
As such, the retail aspect of Amazon’s business has played a crucial aspect in their current success which didn’t come easily.
This is why they are succeeding in areas that other technology giants are failing at (publishing for instance).
Humans are wired in a certain way.
They respond to certain cues that make them buy without having to be told expressly why they need to buy.
These are the factors that have made Amazon has a successful sales model, no matter how razor-thin the margins are.
Amazon Understood how to Outsource Non-core Components of their Business Model
Jeff Bezos and the guys at Amazon understood that if something doesn’t fit in your business model, it shouldn’t be a part of your core operational costs.
This is why they have come up with programs such as Fulfilled by Amazon (FBA) which have turned out to become a massive success.
Outsourcing non-core components no matter how small the component maybe will turn out to be one of the pillars of success when critical mass (the point at which the business takes off for no real explanation, which is very much like a nuclear explosion) is achieved.
This has helped them in many ways to be able to cut down the costs of the various programs which neither hold potential nor are producing a profit and aren’t central to their central aims.
An example of this is their hardware manufacturing which isn’t done in house which is the same at other companies with a difference: Amazon’s content isn’t produced in-house and they don’t build a whole lot of their platforms in terms of the operating systems!
Amazon has Learned how to Use other Peoples’ Resources
They realized early that a core part of business success is to figure out an ethical way where other peoples’ resources can be harnessed at minimal cost to produce profits.
This they have done time and again with many of the corporately induced participation programs which have enabled both parties to produce a mutual profit.
A perfect example to give in this regard is the kindle e-book publishing program which produces profit for everyone.
Amazon has also featured other manufacturers that have allowed others to be able to make a profit but they also have to put in the time, effort, innovation, and other non-money resources to make money.
This alone makes many people visit Amazon as a trusted authority who has vetted other people.
Since Amazon Understood Sales, they Created a Market for Similar Products and Services
In the early days of trial and error, when many competitors still were trying to figure the e-commerce phenomenon out, Amazon decided to play hardball for the long term and focused on perfecting their marketplace.
This singular act made them stand out from the crowd and to deliver the goods without jeopardizing the quality of either product or service.
As such, they started understanding one fundamental feature of human decisions when purchasing: people don’t buy based on logic. They buy based on emotions.
They learned this and applied every strategy imaginable to make sure that people bought quality stuff based on emotions.
They also kept them coming back and this was a decisive factor in their growth from that point.
Amazon Introduced Alexa as a Tool to Measure Human Emotion
While Alexa exists as a virtual assistant, another feature that gives backend data to amazon is Alexa’s intuitive ability to determine what users are most likely to buy.
Based on this which is quite difficult to measure in other artificial intelligence systems, ads can be offered to individuals on the kinds of purchases to be made after the initial one.
Alexa may appear simple and quite natural on the surface but the complexity of the artificial neural networks which work in the cloud and the deep learning mechanisms employed are one fo the most complex in the world today.
If you add the superfast cloud services off which amazon runs its cloud businesses, you have the perfect tool for taking over the world in every sense of the word.
Amazon has Developed a World-Class Delivery Supply Chain
To keep the feel-good emotions running, Amazon went one step further and has created one of the most complex supply chain systems that work using big data.
So much so that others also gain from this delivery model which delivers everything in record time.
This final act which keeps the customer perfectly satisfied on the retail side combined with the entertainment factor which opens up a whole lot more emotional cues is the perfect reason why Amazon at this time has decided to play hardball and conquer the world one more time with hardware.
They may not follow the smartphone way because Microsoft, Google, and Apple are still slugging it out but they are going to do something about everything ELSE.
Based on the above (and a whole lot more), Amazon is going to be a technology leader for many years to come.
What do you think?
Why is Amazon building an ecosystem now?
Let us know in the comments!