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Economic Profits of Amazon.com

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The Internet has become an extremely popular place for small businesses and firms to advertise and sell their products. Although this is a very easy and popular way to sell, it all depends on how well you use your marketing ideas. One firm that is widely known across the country and famous for having grown so fast since its online creation is Amazon.com. It opened a whole new market for competitive business in the specialty industries on the computer and has proven to be a successful company on the Net.

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Amazon.com is a corporation, a retail industry in which many shareholders own stock. Stock ownership is what helped to expand business and allowed for more capital investments. Amazon.com is known on a global scale. Since it is an online Internet company, people from anywhere may access the site and use it as long as they have an Internet connection. It was originally started in July of 1995, by Jeff P.

Bezos, at his home in Seattle, Washington along with his wife. Bezos graduated from Princeton University. He lived and worked in both Miami and Houston and is currently 34 years old.

What began as a small business selling books over the Internet exploded into a giant corporation making millions of dollars and satisfying customers with popular products that are easy to order. Although Bezos is the main CEO and originally the brain behind the company, parts of Amazon.com is owned by stockholders, which is one advantage. Another advantage that Amazon.com has by being a corporation is that the stockholders are not held accountable for business failure. However, a disadvantage to the corporation is that Amazon.com is regulated by the government. Also, the company’s rapid expansion is causing operating expenses to rise at nearly 25% a year. As with any corporation, Amazon.com has major competition including such well known businesses as Barnes ; Nobles, CdNow.com, and Ebay.com. Barnes ; Nobles is a popular book and music store, which was sued by Amazon.com at one point for copying market ideas. It is perhaps their largest competitor. CdNow.com is an online music store that sells music through the Internet like Amazon.com, and is similar in that stock shares are available to the public as well, making it a like corporation. They have a much smaller business range though. Ebay.com is also on the Internet and it is much larger than Amazon.com and offers live auctions and bidding for customers.

The primary products of Amazon.com include books, music, electronics, software, and home improvement products (lawn and garden supplies, etc.). The number of employees is currently around 7,500 and is continually growing. Amazon.com is not currently down sizing (cutting back personnel to respond to poor economic conditions), but is increasing the number of employees. Amazon.com is also a nonunionized corporation and will most likely continue to stay that way. In the NASDAQ stock market, the ticker name for Amazon.com is AMZN.

Amazon.com has also expanded its business through new web sites. The Internet Movie Database (www.imd.com), LiveBid.com, and PlanetAll.com all became subsidiaries to the online retail business. They were either bought out by Amazon.com, or were created as a result of the company. Pets.com, Ashford.com, and Gear.com were all conglomerate mergers with Amazon.com. These are considered conglomerate because Pets.com is an online pet store, Ashford.com sells watches and other collectibles, and Gears.com sells sporting goods. None of the sites are similar to Amazon.com in the products they sell, only in that they are an online retail business. 1st Stock Price (April 3rd, 2000): $63.5625Last Stock Price (April 14th, 2000): $46.875Analysis: Amazon.com experienced a significant price drop in its shares over the ten day period. There was a loss of nearly $20 per share.

1)Economic Profits- where the total revenue is higher than the total cost.

2)Normal Rate of Return- where the total revenue is equal to the total cost.

3)Negative Profits- where the total costs are higher than the total revenue.

The type of profits that Amazon.com earns are economic profits, because they actually make much more than it takes to pay for the resources and staff combined. It is one of the most successful and popular online businesses in the worldThe top four firms for specialty retail:1: Home Depot- $38,434,000,000 (revenues)2: Costco Wholesale- $27,456,000,000 (revenues)3: Lowe’s- $15,906,000,000 (revenues)4: Toys ‘r Us- $11,862,000,000 (revenues) (Note: Amazon.com is #35 on this Fortune 500 list for Specialty Retailers, with a revenue of $1,640,000,000)Market Structure Formula: Concentration ratio: a + b + c + d . ($ 93,658,000,000) = 0.3557 = 35% (Differentiated Competition)Total sales in your industry ($263,306,000,000) 100Amazon.com, through its online services and expansion throughout cyberspace, has created a whole new market for book, magazine, CD, and other product sales. Its success is due to its availability and easy access, and the vast expanse of products it offers through the click of a button. It is led to the creation of countless other competitive businesses in the online retail industry, thus making a good market for the consumer to choose from. Internet retail business is a very new market, and the rules and regulations of business have to be changed and adapted to fit the needs of the new industry. In the years to come, the Internet will undoubtedly have many more companies like Amazon.com, and they will continue to forge new paths to customer satisfaction.Bibliography:WORKS CITEDAmazon.com 14 April 2000..

Booked Solid. People 7 September 1998Excite.com 3 April 2000..

Fortune 500 Company Profiles. 3 April 2000. .

Hoovers Online.com 3 April 2000..

McCarthy, Michael. Virtual Reality. Adweek-Eastern Edition 14 June 1999: 30.Cd Rom.SIRS.Researcher.

Meyer, Michael. Going Shopping.cont Newsweek 17 August 1998: 45.CD ROM.SIRS.Researcher.

Quicken. 3 April 2000. .

UEHS Library Cornorate Business Resources Web Page. 3 April 2000. .

Cite this Economic Profits of Amazon.com

Economic Profits of Amazon.com. (2018, Dec 29). Retrieved from https://graduateway.com/economic-profits-of-amazon-com/

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