Amazon, we’ve all heard about it, we’ve all probably at least used it once in our lives and it’s also one of the best-performing stocks globally. Over just 10 years the company has gained a whopping 1,340% increase which results in 7 times more than the world-renowned S&P 500 with just a 176% increase during the same period of time.
It would seem that Amazon is at its peak and many wonder if it’s still a good investment. We are here to give you 10 reasons why we believe Amazon is a great asset to hold.
1) Jeff Bezos Owns Stake
Yes, Jeff Bezos is the founder and yes he indeed holds a stake in the company. In fact, Jeff Bezos owns a nice 11.7% of the company which doesn’t sound like much but they add up to a worth of $102.6 billion!
Having over $100 billion to lose, including your very own company, is a lot of incentive to make decisions that will greatly increase the company’s stock, especially in the long term. This is great if you’re looking to invest in Amazon . Although it’s not a guarantee that the company will have super increases in value, investors can sleep well knowing that Bezos himself also has a lot to lose if the company doesn’t go well.
2) Amazon Is Still Being Led By A Founder
So why exactly is this good news? Well, a great number of studies would prove that founder-led companies usually tend to outperform companies on the market that aren’t.
Bezos founded the company in 1994 and has since then spearheaded the business to new heights, at just 55 years of age it’s safe to say that Bezos probably still has a few years at the captain’s seat.
The studies show that founder-based companies tend to perform around an average of 3 times better than non-founder-led companies.
3) Amazon Takes Care Of Its Customers
Unlike most big businesses these days, amazon has made it its mission to be “Earth’s most customer-centric company”. For the most part, Amazon rarely gets it wrong with its customers, constantly increasing services and adding possibilities for faster deliveries they sure seem to get it right when it comes to customer needs.
Businesses that take care of their customers are more likely to be used again and shared between families and friends. A happy customer is a bragging customer!
4) Fulfilment Network Centres
Although Amazon does have a number of competitive strengths, its the fulfilment centre network that provides the widest and broadest barrier to keep rivals at distance. These fulfilment centres allow amazon to deliver items globally at an incredibly fast rate to customers using amazon prime.
Not only do these fulfilment centres mean fast deliveries for their customer but is also extremely cost-effective for Amazon making it super hard for competitors to breach the market. With Amazon prime, customers are guaranteed one to two days free delivery and it’s slowly upgrading to guaranteed one-day delivery.
Per logistics expert MWPVL International, Amazon already operates 159 fulfilment facilities in the United States alone, with plans to add 41 more. These facilities are roughly 13 times the size of a football field having about 741,000 square feet each!
Globally Amazon has another 189 additional centres outside of the US, including 51 in India, 30 In the UK and 25 in Germany. This has created an enormous price barrier for any competitors trying to provide the same service.
Even when it comes to efficiency amazon is one of the first ever companies to include advanced robotics in their facilities. The facilities also hold another secret superpower for Amazon and that’s FBA shipping.
Amazon enjoys its role as top dog and understands that if it wants to retain its crown it must also help those looking to have similar business strategies. In fact, what Amazon FBA does is allow vendors to ship their goods to amazon facilities and even provide the shipping services and logistics for the vendors for a sweet cut of the profits.
Essentially Amazon has created a space for vendors to increase what the site has to offer without sacrificing the convenience amazon customers have gotten accustomed to.
5) Amazon Prime Is A Great Business Model
Turning our attention to Amazon’s wildly popular Prime membership programme, we’ll see how it fits into the company’s overall strategy. To put it another way, Prime helps Amazon create strong, long-term ties with its consumers.
On par with the free two-day shipping which is currently in development to become one-day free shipping, Prime subscribers have access to the Prime tv services which access to several tv shows, movies, music and other perks too for the same price as Netflix.
In December, Consumer Intelligence Research Partners (CIPR) projected that Amazon had over 100 million Prime subscribers in the United States. There aren’t any specific numbers on the number of Prime subscribers in any nation, although the business stated in 2018 that there were over 100 million worldwide.
6) Winning Strategy For Expansion Funding
Historically Amazons Web Services (AWS) which is the cloud computing service offered by the company has been extremely profitable. The corporation has leveraged the profits of AWS to expand its business. Having a lucrative and rapidly expanding business sector is a massive advantage over other e-commerce competitors like Walmart.
During the 2nd quarter, AWS revenue rose 37 per cent year over year, accounting for little over 13 per cent of Amazon’s entire revenues, but accounting for 68 per cent of Amazon’s entire operating profitability and as of currently is the dominating provider for cloud computing services.
7) Online Shopping Has Plenty To Grow In The US
Online shopping in the US is still in its early days, in fact, in 2019 alone only 11.4 % of all U.S. retail sales were done online. This is great news for investors looking to invest in companies such as amazon which has a lot of retail sales it needs to convert into online sales.
Although unlikely e-commerce will ever hit 100% of all retail sales it sure does have a lot of room for growth.
8) E-Commerce Has A Lot To Grow Internationally
Just like the US market, internationally the whole sector has a lot of space to grow. It’s estimated that the market share from 2019’s 14.1% of online retail sales is expected to grow to 22% by next year in 2023.
9) It’s Constantly Expanding To New Sectors
Amazon is constantly investing in different sectors of business. In fact as unlikely as it sounds for an e-commerce business, Amazon has invested in the first ever supermarket without checkout lines! That’s right Amazon invested in a brick-and-mortar supermarket and has quite a few other unconventional investments, such as in healthcare and smart home markets.
10) Increasing Its Efficiency
Amazon has also been investing heavily in autonomous vehicles and other methods to provide deliveries. Investors can be sure that amazon will be the first to adopt any new form of technology that can improve the costs and efficiency of their delivery service.
The company has even tested out drones for lighter deliveries from its fulfilment centres and is constantly trying to improve the way they conduct business.