Amazon is the largest online-retailer, with nearly three times the Internet sales revenue of the runner up, Staples, as of January 2010. The online retail format offers its customers product comparison and free order shipping facilities. In addition, the online format also helps Amazon to rotate its inventory rapidly and reduce its inventory management cost thereby offering merchandise at comparatively cheaper price.
Leading market position in online retail format enables Amazon to target a larger customer base and enhance its brand image. Amazon is a huge global brand. More recently in 2010, the Inter brand Design Forum named Amazon as the 10th most valuable US retail brand. It was one of the original dotcoms, and over the last decade it has developed a customer base of around 50 million people. A strong brand image not only provides a competitive advantage but also enhances its bargaining power.
Amazon has built on nits early successes with books, and now has been expanding its offerings over recent years and now sells products in over 40 categories that include music CDs, videotapes and DVDs, software, consumer electronics, kitchen items, tools, lawn and garden items, toys & games, baby products, apparel, sporting goods, gourmet food, jewelry, watches, health and personal-care items, beauty products, musical instruments, clothing, industrial & scientific supplies, groceries, and more.
A wide product and service offering enables the company to provide a greater product choice to its consumer customers. This in turn helps the company to attract additional customers. Amazon recorded strong growth in revenue and profitability FY2009. The company registers revenues of $24,509 million during FY2009, an increase of 27. 90% over 2008.
Furthermore, while most of the retailers recorded a declining of revenue growth during FY2009 and particularly during the Christmas season, Amazon posted revenue growth of 74. 69% in the fourth quarter of FY2008 (ending December 2008) as compared to the same period last year. Strong financial performance, especially critical during the current economic condition, of the company enhances investor’s confidence. Furthermore, strong revenue and profitability ensures high liquidity position to meet its future endeavors.