Jeff Bezos built Amazon into the empire that it is today because he understood that one of the keys to building a successful business lies in having a streamlined process. Bezos knows that Amazon is not too big to fail, and this is what Amazon sellers must also understand in turn. Nobody is immune to inefficiencies. Amazon is home to millions of sellers. Interestingly, only 20,000 of them were able to successfully build profitable businesses. While the data can sound discouraging, this doesn’t mean that the problem lies in Amazon’s business model. In fact, it is among the most efficient you can find today. Amazon continues to build, buy, and partner with other successful companies.
The Success Story of Amazon
Let’s look at Amazon’s business plan in more detail:
Amazon currently has four unique brands to date. AmazonBasics is one of the most popular, and it carries all of Amazon’s own electronics products like the Kindle and Kindle Fire. Amazon also has Amazon Fresh, a grocery selling and delivery platform, which has exponentially grown in recent months due to the COVID-19 pandemic. On the entertainment side of things, Amazon operates the television series and movie production subsidiary Amazon Studios. Lastly, the tech giant also owns Amazon Warehouse Deals, which deals with refurbished products they sell at huge discounts.
Amazon has already bought close to 30 companies in the three decades they have been in the business. In case you don’t know, Amazon is also the owner of Pets.com and Zappos. Amazon is also notable for fostering partnerships. They collaborate with other companies to share what they do best – selling online.
Given these facts, it shows that Amazon’s diversified business model has enabled them to rake in $280 billion in revenues and over $11.5 billion in net profits. And yet, Bezos thinks that they are not too big to fail. Perhaps it is the secret recipe that allowed them to sustain this enormous amount of growth through the years — looking forward to what the future will bring. This has a lot to do with the process.
Amazon sellers fail to put their money in key areas that will foster growth. They may have wild ideas for getting the best products to their buyers. However, they are often inefficient spenders. Most Amazon sellers live in debt. They may have the buyers, but they would often not have the money to fulfill the orders, especially during peak times when they need to shell out money to make down payments on purchasing their inventories. Where are they spending the money on, then?
Why Most Amazon Sellers Fail
The main reason why most Amazon sellers fail is that they do not plan on where they will put their money. For far too often, they will take up a loan to augment their inventory stock, but then they fail to do research and end up getting more stock than necessary. What will happen is that these supplies will end up eating their revenues. They are lucky if the loan they took for their warehouse is from Axiom Mortgage Solutions, which will allow them to negotiate terms. If not, then they may end up going under within the first year of their operations.
Starting a business can be tough. You have to think about your staffing and hiring the right people, scaling, and other things in between, including billing. You also have to factor in proper budget management so you can increase your bottom line closer to your goals. Thanks to Axiom for consulting
