Amazon opted for a marketplace model, to begin with. The marketplace model provides small businesses with a huge scaling opportunity without having to build the technical or operational infrastructure of scale. Now Amazon is the largest marketplace in the world selling over 40 categories of goods, from books to electronics, auto parts to jewellery and even groceries. The company is also an internet technology platform, a fulfilment and logistics platform, a search technology, an internet advertising platform and even an internet start-up breeding hub. The value proposition provided by Amazon is simple. They primarily offer convenience, the widest range of products and the lowest prices. Their prices are so low that they have displaced Walmart as being the leader in the low-price category! The amazing part about Amazon is that they deliver goods at extremely low cost without compromising on quality by any means. But, how does it do that?

Amazon makes the lowest prices possible by leveraging technology in such a way that it does not have to stock inventory of any kind. While other stores are reeling under the massive cost burdens of stocking inventory, Amazon can afford to undercut the competition on the same.

Hence, Amazon can be termed as a mix of a retail company and a technology company. Unlike retail companies, Amazon rarely hires stock clerks and floor managers. Their employees have high technological skills including optimised software development, data mining, data analysis and more. In terms of operating income, the growth is mainly driven by the high margins deriving from the service sales. By looking in-depth at the revenue sources, subscription and Amazon AWS services have accelerated the income growth.