“Competitive Advantage is when a firm is able to create more economic value than rival firms.”

Amazon has been able to remarkably sustain a competitive advantage over its brick and mortar competitors i.e. Walmart and Best Buy to name a few. How has Amazon been able to sustain this high level of performance? What makes Amazon tick?

Aggressive Pricing

Amazon has done what other retailers have failed to offer. It offers extremely competitive prices on it’s products and that makes the buying decision easy on the customer. Big box retail stores i.e. Best Buy have now begun to price match Amazon.com because they realize that in order to stay competitive they will need to adjust their business model accordingly.

Business Acquisitions

As of 2018, Amazon has acquired over more than seventy-seven different businesses and expanded its product portfolio offerings. This makes them more diverse and through constant business expandentures their stock prices have remained remarkably high. It is common to see Mercedes vans badged with Amazon Prime roaming the streets of Memphis making deliveries; apparently they are now in the delivery business.

Fast Two Day Shipping

Amazon offers two day shipping on most of its products through a service called Amazon Prime. This allows customers to select free two day shipping once prime membership has been acquired. Amazon frequently offers free one month trials of Prime shipping service in order to entice customers into its business model.