revenue = quantity * prices (direct sale by amazon)
revenue = quantity * prices * commission % (hybrid / marketplace model)
we can either increase prices or quantity of items in various categories or we can increase commission from sellers
now we will identify segments/categories in which amazon operates
1. Electronics
2. Mobile Phones and Laptops
3. Fashion/clothing
4. Groceries
5. Sports
now we will segments categories by customers and their willingness to pay
E.g. Groceries - > low margin -> commodity products -> low winningness to pay
Sports -> hobby/leisure -> branded goods -> high willingness to pay
once we decide which product prices we can increase, we will perform
elasticity of prices analysis on them (using economic elasticity)
Goods to change prices
1. price to be raised for least elastic goods
2. price to be reduced for highly elastic goods to maximize absolute profit due to higher quantity sold
Other strategies
1. Commision from sellers based on quantity of goods sold (higher the sales lower the % making them sale more)
2. more new user acquision
3. coupons to retained users to get more sales
4. flash sales of limited quantity products to attract masses as well as free publicity
5. prime membership for ecosystem (1 day delivery/same day delivery)
6. services sale from e-commerce where physical delivery is not required (category extension) eg songs/videos
