Amazon is now a global brand that few have heard of. Its founder, Jeff Bezos, is the richest man in the world and continues to break records for his wealth. Operating since 1994, the online store has achieved enormous success and shows no signs of slowing down, constantly expanding and conquering new markets. How does it work? What's the secret to this success? Is the platform worth using as a buyer or seller? Find out!
What exactly is Amazon?
Amazon is currently the epitome of e-commerce success and a huge brand with a wide range of services. Originally conceived as an online store , it was founded in 1994 – at a time when online shopping was completely new, and perhaps few people imagined it would become so quickly standard. The website was founded by Jeff Bezos – the same man who today commands a fortune that grows by the second by thousands. Initially, Amazon was intended as an online bookstore, and it operated as such for the first few years. Subsequently, its offerings expanded to include more and more sections, until today, it includes the proverbial soap and jam (including books, in several versions: paperback, used, e-book, and audiobook).
Currently, the store combines offers from various sellers and Amazon itself. When selecting a specific item, customers are redirected to a unified product page, where they can access offers from various stores. They can either manually browse through them or choose to add to cart, allowing the algorithm to select the most advantageous offer. Collaboration with external entities is a crucial part of Amazon's business, partially contributing to its uniqueness. This is especially true since each seller must adhere to the platform's strict customer service guidelines . It also boasts an operating model that differs significantly from other popular platforms that operate on a marketplace, or free market, basis – such as eBay, Aliexpress, or even the Polish Allegro.
Today, Amazon is a massive corporation that employs over half a million people in the United States alone (only Walmart is larger). The brand currently employs over 800 people worldwide (including several thousand in Poland, where the store has its fulfillment centers). What's more, it continues to grow. In 2019 alone, it hired 150 new employees—more than the entire workforce of Apple!
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Amazon is not just a store
The company is most often discussed in the context of its online store , but in reality, Amazon is much more than that. The corporation invests heavily in its own brands and new technologies. Examples? Amazon is responsible for the expansion of the e-book market and their popularity among readers – all thanks to the innovative Kindle e-reader , which first appeared on the market in 2007. Today, its next generation is available. Throughout all these years, the Kindle has remained the segment leader (it's the most popular e-reader in the world) and has continued to evolve – since 2012, it has been backlit (in a way that eases eye strain) and waterproof since 2018. The Kindle also offers a Direct Publishing service, allowing anyone to publish their own e-book and sell it on Amazon. This has led to the creation of many bestsellers!
Another important part of Amazon's development is the Echo series of smart speakers equipped with the virtual assistant Alexa. It integrates numerous internet services (providing news, weather, music, articles, and much more), allows you to order a pizza or an Uber ride, and make Skype calls. It also allows you to control smart home devices via voice control and many other functions. In January 2019, an Amazon representative revealed that Alexa-enabled products have sold over 100 million units. They are currently available in 40 countries (including Poland, but only in English). Essentially, only Google devices can compete with them.
The company also created its own streaming platform – Prime Video – which operates similarly to Netflix and HBO GO. It is available to subscribers to the Prime bundle, which offers features such as free, express delivery of ordered products, special promotional offers, and free access to music and books. In some countries, you can also purchase just the service, without any other benefits. Prime Video offers both popular films and TV series, as well as those created specifically for the platform. According to estimates, it has approximately 150 million users.
Amazon is also known for creating its own brands , producing and delivering everything from household appliances to clothing. More and more brands are being added almost daily. One of the newest and most visible brands of this type is Amazon Fresh, a massive online supermarket for purchasing food and basic necessities.
Interestingly, however, according to the company's financial data, it earns the most from the Amazon Web Services internet platform , which offers, among others, hosting, computing power and other similar cloud services.
How does Amazon's pricing policy work?
Amazon's pricing strategy is highly characteristic, and it largely underlies its success. Because the company has multiple sources of revenue, it can compete very effectively on price in certain areas of its business. For example, by selling Kindle e-readers and Prime subscriptions, the company literally loses money. However, this helps it retain customers and acquire new ones. This also captures a significant share of the market, making it even more powerful (despite already controlling half of the entire e-commerce market in the United States).
By creating its own brands, Amazon often sets prices below its profit threshold, effectively and consistently undercutting other sellers – even those operating on its own platform. Therefore, using Amazon's offer guarantees the best price for many products sold online. The profits effectively flow into other areas of the business. It's a long-term strategy that works perfectly. It's essentially impossible to compete with this type of policy – especially given Amazon's vast resources. Other sellers also lose out from the start because the store can position its products arbitrarily, reserving the most visible spots on the website for them.
These resources include not only money and contacts, but also data. Thanks to its massive scale, Amazon can monitor buyer behavior and precisely understand what is most popular. This allows it to target precisely where it's most profitable. Developing its own brand and product is, after all, no problem for such a giant. An example is the ever-expanding Amazon Basics division, which sells many popular products produced on its own platform—from batteries and chargers to kitchen appliances, bedding, sports equipment, and pet supplies.
Amazon – a guarantee of the highest standard of customer service
Jeff Bezos himself admitted in an interview that his commitment to a positive customer experience is downright obsessive. The store prioritizes affordable prices and convenience. This is why, among other things, its extensive distribution network allows it to offer same-day delivery in many areas . In this way, Amazon accustoms its customers to a standard they are increasingly reluctant to compromise on. It also demands this same standard from third-party sellers, so that the brand can be associated exclusively with reliability and excellent service. As a result, a growing number of people equate online shopping with Amazon and can no longer imagine life without this virtual platform.
The same applies to Amazon's returns and complaints policy – it's unrivaled. Simply inform the seller of any concerns about the product and they'll immediately receive a replacement. Importantly, there's no need to prove fault or defect, send photographic evidence, etc. Defective merchandise can be returned only after receiving the new one, using a method convenient for you – of course, Amazon also offers a full refund guarantee. Sometimes, for example, if the shipping cost exceeds the product's value, returning it is simply unnecessary. This is how the store wins the hearts of so many customers.
How Amazon works – shopping on the site
Due to all the reasons mentioned above, shopping on Amazon is, in the vast majority of cases, a real pleasure. The site is very intuitive and user-friendly. All you need to do is create an account. The process takes just a few moments and requires only an email address. Next, you need to provide your shipping details (multiple addresses can be set and saved) and, ideally, your credit card information. This gives you access to so-called one-click purchases – a lightning-fast process that doesn't require any additional payment steps. Incidentally, this type of service first appeared on Amazon, although it's now available on many other sites. Linking a payment card to your account also allows you to use subscription services, such as Prime.
The Amazon.pl website isn't live yet, although rumors of its launch have been circulating for some time. For Polish customers, the website recommends using the German version of the site – Amazon.de. This recommendation is worth taking advantage of for at least several reasons. Amazon Germany offers:
- Polish language version of the store,
- short delivery times – 3 to 5 business days with the option of paying extra for faster order processing,
- the ability to deliver almost all products from the offer to Poland,
- free delivery available for orders over 39 euros,
- payment methods for goods addressed to Polish customers – including via the Przelewy24 service.
However, it's also possible to use other versions, including the British or American ones, although shipping to Poland may be severely limited. Prices are always displayed and billed in local currency, and when paying by Polish card or bank transfer, they are converted to Polish złoty using a conversion rate determined by Amazon.
While Amazon.pl is down, the .de domain is the best place for Poles to shop. Thanks to the website's Polish translation and its intuitive design, shopping is incredibly convenient. Residents of Poland can also enjoy Amazon's characteristically friendly returns and complaints policy.
How Amazon Works – Selling on the Platform
Poles can also cooperate with Amazon as sellers . A special Polish-language service has even been launched for Polish entrepreneurs. It allows them to review the sales terms and conditions and create an account. This is a gateway to hundreds of millions of customers. This is because Polish sellers can present their offers on all European platforms, including:
- German Amazon.de,
- British Amazon.co.uk,
- French Amazon.fr,
- Italian Amazon.it,
- Spanish Amazon.es.
You can independently decide which pages to list your products on, or you can list them wholesale on all platforms simultaneously. The platform is available to established entrepreneurs who create an account on the website, committing to its terms and conditions, and paying for a selected sales plan (membership subscription).
Two subscriptions are available:
- individual – intended for sale of up to 35 products per month,
- professional – intended for the sale of more than 35 products per month.
In the first one, you pay for each product sold – a fixed amount of £0,75 plus a commission.
In the second, you pay a monthly fee of £25. A commission is charged for each product sold.
Plans differ not only in fees but also in features. Professional plan subscribers can list products in categories requiring Amazon approval and gain access to numerous advanced tools, including the ability to set up promotions and advertise on the site. The platform also provides sales reports and other features that can be helpful in building a business and increasing sales.
How much are the commissions mentioned above? This is a rather complicated matter, as their amount depends primarily on the product category. The highest commission (45%) applies to accessories for Amazon devices (e.g., Kindle cases). However, for most products, a 15% fee applies, calculated on the gross product price, including shipping costs. The lowest commissions (7-8%) apply to items such as electronics, tires, toys, beauty products, and food (for amounts under €10).
Shipping and Customer Service Policy
It's worth noting that Amazon sellers have quite strict rules regarding, among other things, shipping. Each platform partner commits to ensuring that at least 90% of their products ship within two days (or less) . Failure to meet this guarantee may result in Amazon deactivating their account. Certain standards regarding packaging and, of course, returns and complaints must also be met – customer service must be impeccable. Meeting all these requirements can be challenging, but in this regard, Amazon turns its back not only on its customers but also on its partners by offering its Fulfillment service.
Fulfilment by Amazon is a very interesting service that allows sellers to avoid the direct handling of product shipments. The obvious and greatest benefits of this solution include the elimination of the need to maintain a warehouse and a significantly greater ease of doing business. By partnering with Fulfilment by Amazon, simply ship your listed goods to one of the e-commerce giant's own warehouses. From then on, you don't have to worry about a thing. Once the customer completes the order, Amazon employees will quickly pick, pack, and ship it. Of course, the service comes with an additional commission for the platform, but using it is usually very profitable. Above all, it helps reduce the workload and stress associated with complying with seller guidelines. It's worth noting, however, that stores using Fulfilment by Amazon can also count on additional privileges , including improved listing positioning . They are also included in the Prime program, which offers subscribers free shipping—which usually translates into more orders.
Investing in Amazon – yes or no?
Is it worth selling on Amazon? Is selling through Amazon difficult? Opinions vary when it comes to investing in Amazon. The site itself is intuitive and shouldn't pose any problems. Registration takes a while, in part because of the need to verify the seller's credibility, but it's also not complicated. What can be challenging is the intense competition on the platform. Virtually every product is offered by numerous sellers, making it difficult to break through, especially with something unoriginal. The store can be an excellent opportunity for producers of unique goods, including handicrafts, opening them up to vast new markets. Advertising on Amazon can also be a significant advantage, although—similar to Allegro Ads —it requires careful calculation.
Amazon FAQs
Amazon is the world's largest e-commerce marketplace. It allows independent, third-party sellers to list their products in a global product catalog and reach millions of customers worldwide in exchange for recurring subscription fees and sales commissions.
These are the two basic ways to process orders on the platform:
- FBM (Fulfillment by Merchant): The seller is solely responsible for the storage of goods, their packaging, shipping and full after-sales service and returns.
- FBA (Fulfillment by Amazon): The seller ships batches of their goods directly to Amazon's fulfillment centers. Once a customer places an order, Amazon handles the picking, packaging, shipping, and any returns and customer service.
The Buy Box is a distinctive section on the right side of a product card with "Add to Cart" and "Buy Now" buttons. Because multiple sellers on Amazon subscribe to a single product, an algorithm must decide whose listing will be displayed in this main window. Earning the Buy Box is crucial, as it generates the vast majority of all sales for a given item on the platform.
Amazon's algorithm doesn't permanently award the Buy Box, but rather rotates it dynamically, favoring the best offers. Key factors include: use of FBA logistics (which almost immediately increases credibility), the lowest final price (including shipping costs), high buyer ratings, rapid response times, and adequate inventory levels.
Yes, organic competition is fierce, which is why the platform offers its own, extensive advertising system – Amazon Ads. It operates on a PPC model (you only pay per click on an ad) and allows you to launch campaigns like Sponsored Products (sponsored products in search results) or Sponsored Brands (promoting an entire brand and its portfolio), which significantly helps new listings build a sales history.
Summary
The above article covers the following topics:
- Amazon is a global online retailer founded in 1994, connecting sellers, employing over 800 people, and developing technologies (Kindle, Echo with Alexa, Prime Video, AWS).
- Amazon applies a below-profit pricing policy, offers unrivaled service and returns, and for Polish sellers, access to European markets through subscription plans with the Fulfilment service.
