“As long as the Coliseum stands, Rome shall stand; when the Coliseum falls, Rome will fall; when Rome falls, the whole world will fall.”
– Venerable Bede
Like the Coliseum to ancient Rome, Amazon’s FBA service and Amazon’s own future are intertwined.
Given that, let’s explore Amazon’s history, its current state, and examine what Amazon is doing now to ensure they’ll still be doing business in the future. Then we can determine if you should be concerned with how long Amazon FBA will last.
The History of Amazon
Amazon was founded by Jeff Bezos in 1994, and it’s come a long way. In the beginning, Amazon was just an online bookstore run out of Bezos’ garage. However, the company quickly began to expand its operations to include items such as electronics, clothing, and food.
Today, Amazon is one of the largest online retailers on Earth, with fulfillment centers all over the US and in many other countries. The company employs well over a million people, and generates billions of dollars in revenue each year.
In addition to being a retailer, Amazon also offers a variety of other services, such as Amazon Prime, Amazon Web Services, and Amazon Fresh. Offering all of these services in one place has transformed the way we shop and consume.
While Amazon has come a long way since its humble beginnings, it is still a relatively young company at 28 years old. In comparison, Walmart is 60 years old, and Target is 120 years old!
Despite its young age, Amazon has had a major impact on the retail industry. One of the consequences of changing the way we shop is that some brick-and-mortar retailers have closed their doors for good.
Looking to the future, it’s clear that Amazon is focused on growth and innovation. They are constantly expanding their product offerings and their reach, and they are always looking for new ways to improve the customer experience.
The Current State of Amazon
There are many reasons why Amazon and it’s FBA program are successful today, and why they will both continue to exist in the future.
First, Amazon is a trusted retailer and has many loyal customers thanks to its Prime program. The service offers free two-day shipping on most items, as well as access to Prime Video, Prime Music, and access to exclusive deals and discounts.
Amazon has continued to add new features to Prime, such as same-day shipping and Prime Now, which offers two-hour delivery on select items. Prime Video is also a huge draw for customers, because they get access to a huge library of movies and TV shows, some of which aren’t available anywhere else. These features have made Prime a must-have for many shoppers.
These features of Prime have been successful in attracting new customers to Amazon because free shipping and other Prime benefits are a great value, and customers who sign up for Prime are often more likely to shop on Amazon more often and spend more money than non-members.
The success of Amazon Prime has led to imitations from other retailers, such as Walmart Plus and Target RedCard, with their own versions of free shipping and other Prime-like benefits. However, Amazon Prime remains the gold standard, and its success has made Amazon one of the most powerful companies in the world.
Second, Amazon has a very efficient and well-run operation that has embraced technology and innovation to provide a superior customer experience. One of the key areas where Amazon excels is its fulfillment network. Amazon has built a vast network of warehouses and distribution centers around the world that allow it to offer quick and reliable shipping to customers. This fulfillment network gives them a logistical advantage over competitors who have fewer warehouses, which is one of the main reasons why Amazon is able to offer such a great customer experience.
Amazon has also developed sophisticated software and robotics to automate their fulfillment process. This gives them a cost advantage over competitors who have not invested as heavily in technology.
Overall, Amazon’s fulfillment network is superior to its competitors due to its larger network of warehouses, its more advanced technology, and its Prime membership program. This gives Amazon a significant advantage in the e-commerce marketplace.
Finally, Amazon FBA has a very strong focus on their customers, calling it a “customer obsession”. Amazon is constantly thinking about ways to make the customer experience better. From their customer-centric return policy to their super-fast shipping, it is clear that Amazon is constantly thinking about new ways to improve the customer experience. This customer obsession is one of the things that makes Amazon so successful.
All of these reasons combined show that Amazon and it’s FBA program are a big success today, but does FBA have a bright future?
The Future of Amazon
When it comes to the future of Amazon, there are a lot of unknowns. Will Amazon continue to dominate the ecommerce landscape? Will they continue to allow 3rd party sellers to use their platform? Will regulations change in a way that affects Amazon’s business model?
Despite all of these potential challenges, Amazon will continue to be a powerful force in the ecommerce world. Here are several reasons why:
- Amazon has built an incredibly efficient fulfillment network.
- Amazon is constantly innovating and expanding their business.
- Amazon has a massive customer base that continues to grow.
- Amazon gets more than half its sales from 3rd party sellers.
- Amazon is a trusted brand that customers know and love.
- Amazon has a proven track record of success.
Let’s examine each of these in detail.
Amazon Has an Incredibly Efficient Fulfillment Network
Amazon has built a large and efficient fulfillment network that other retailers are trying to duplicate, but have not been able to match. The scale of this fulfillment network is a major reason why Amazon is so successful. Their network allows them to offer their customers a high level of convenience and satisfaction. Other retailers may be similar to Amazon in terms of website design or customer experience, but they have yet to match Amazon’s fulfillment network.
Amazon is Constantly Innovating and Expanding Their Business
Amazon is a company that is always looking for new ways to grow and innovate. One of their most impactful innovations is Amazon Prime. Amazon Prime is a membership program that gives customers free two-day shipping on millions of items, as well as access to streaming TV shows and movies, along with several other benefits.
The streaming aspect of Prime gives Amazon a major competitive advantage over its competitors. While any company can offer free 2-day shipping, almost no other company is large enough to invest the billions of dollars of capital required to acquire and maintain a huge library of streaming content.
Amazon Web Services, also known as AWS, is another major competitive advantage for Amazon. AWS is also referred to “cloud computing” and allows customers to rent computing resources from Amazon at competitive rates.
Why is AWS such an advantage for Amazon? AWS is Amazon’s most profitable division, and it allows Amazon to lose money in its retail division but stay profitable as a company overall. Most other companies don’t have divisions that can subsidize other money-losing divisions like this.
Amazon Has a Massive Customer Base That Continues to Grow
Amazon has a huge customer base that continues to grow every year. With over 300 million active customer accounts and over $450 billion in annual sales, Amazon is dominating the US ecommerce market. Equally impressive is the fact that Amazon’s growth is expected to continue.
Amazon gets more than half its sales from 3rd party sellers
More than half of Amazon’s sales come from 3rd party sellers. In the 3rd quarter of 2022, 58% of Amazon’s unit sales volume is attributable to its 3rd party sellers. Having this many independent sellers on their platform allows Amazon to grow their top-line sales more than they could achieve as a company alone.
Amazon is a Trusted Brand Customers Know and Love
According to a recent report, 90% of consumers are satisfied with Amazon’s customer service. People appreciate being able to shop on Amazon for just about anything they need, knowing that they can find good deals and reliable products. Additionally, Amazon’s aforementioned return policy ensures customers can count on the company to take care of them if they have any problems with their orders.
Since customers know and trust Amazon, it’s not surprising that Amazon’s website is one of the most visited sites in the world, that customers find engaging and dynamic.
In short, Amazon is a trusted brand that customers know and love because it provides them with what they need and want. The company’s convenience and website are excellent, and people can rely on Amazon to deliver.
Amazon Has a Proven Track Record of Success
Amazon has consistently found success with new programs and features, such as one-click buying and Prime shipping, which have made the customer shopping experience even more convenient.
While Amazon embraced e-commerce innovations, it’s innovated beyond ecommerce to include Amazon Web Services (AWS), Kindle, and Alexa. This willingness to experiment and take risks has been a key driver of its success.
Finally, Amazon’s approach to investing in itself has paid off. The company has reinvested a significant portion of its profits back into its business, providing the capital to build out its unmatched fulfillment network and offer services like AWS. This has helped Amazon become a market leader in ecommerce and cloud computing.
Will Amazon FBA Last?
The rise of Amazon has been meteoric. It’s hard to imagine a world without Amazon, and, for those of us who make our living selling on Amazon, even harder to imagine a world without Amazon FBA.
While it’s hard to say exactly what the future holds for Amazon, there is no doubt Amazon has revolutionized the way people shop, and has also revolutionized how people sell online. Given the facts listed above, Amazon FBA is here to stay, and will be around for a long time to come.
Now that you know Amazon FBA will be around a long time, check out the tools you need if you’re interested in selling on Amazon yourself!
Want to see what an Amazon fulfillment center looks like on the inside? See this page to take a video tour or for info on how to sign up for an in-person tour!