Shulou(Shulou.com)05/31 Report--

Amazon turns 25 this week. In the 1/4 century of its existence, it created about $1 trillion in shareholder value. Amazon dominates e-commerce, has the largest cloud computing infrastructure product, and leads the home assistant market through its Alexa technology. In addition, it has a booming online advertising business and has become a force in Hollywood through its streaming video division. Last year, total sales rose 31% to $232.9 billion.

Tomford of David Davidson, one of Amazon's most prominent analysts in Washington, said in a report on Friday that the company had developed a series of strategies for others to learn or even emulate. This is his layout and some concrete examples.

Focus on customers, not competitors: chief executive Jeff Bezos has been obsessed with customers since he founded the company as an online bookseller in 1994. According to Forte, this is Amazon's most important lasting quality. Focus on customers, not competition.

A recent example is its own brand business. Amazon sees what customers want most and tries to offer it at the lowest price by creating its own brand version.

Iteration: Amazon attaches importance to iteration and "keeps improving to increase the level of effort."

Example: Kindle e-readers are evolving to keep up with the pace of ordinary tablets, and Echo has changed from a basic voice assistant to a platform for developers to provide all kinds of help to customers.

Build flywheel: focus on the lowest price, the biggest choice, the fastest delivery, customers will continue to come back. This number of customers attracts suppliers and other partners, which in turn increases competition in these areas. Price, selection and delivery speed-which in turn attract more customers, and so on.

A recent example is Amazon's one-day delivery service for its Prime customers. Although this increases Amazon's costs in the short term, a recent survey by the Royal Bank of Canada shows that when they receive this extra allowance, they will spend more money and become more loyal.

Embrace change: this is the core value of Zappos, an online footwear company acquired by Amazon in 2009.

Example: Amazon web Services has proved that as technology changes, it can provide the software developers need. With the development of consumer behavior, the company has made important acquisitions in the smart home market, such as smart doorbell maker Ring.

Losing money is a strategy: Forte calls it LmaS and says Amazon perfects it. Investors subsidize the company for 20 years to enable it to survive at the lowest profit margins while continuing to invest, making shopping easier, cheaper and faster, and developing other more profitable businesses. Thanks to AWS and its advertising business, Amazon ended up showing real profits, but margins were still lower than those of other tech giants such as Alphabet, Facebook, Apple and Microsoft.

"there was Amazon before Uber, Pinterest and all the other new IPO, as well as Roku, Shopify and Wayfair," Ford wrote. " The company is either the first party, or at least the best first-party retail business to gain market share. Its ability to develop other more profitable companies (such as third-party retail, cloud computing, recent advertising) has further enhanced its ability to operate a first-party retail business in the balance of payments (if not worse). This is one of the main reasons why it is so destructive in the retail industry. "

In the report, Forte highlighted two important areas in which Amazon failed: smartphones and e-commerce. The latter, he said, was Amazon's "biggest failure, and no matter how many times it failed, it must continue to look for a successful strategy."

Over the next 25 years, he also saw four major risks facing Amazon, including finding out who would replace Bezos, "generations of founders and CEO", and responding to intervention by regulators and lawmakers. Forte highlighted these issues in a report in May.

In the short term at least, Forte clearly wants Amazon to meet these challenges. His target price is $2550, which means he has earned 31% of his income and a market capitalization of $1.26 trillion. Of the 40 price target analysts tracked by Fact, only two had higher forecasts, with an average target price of $2249.73.

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