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Amazon’s counter intuitive digital strategy

Awesome article in the WSJ about Amazon’s digital strategy. Summary: They are using their high traffic (~100m unique visitors per month) to let other retailers advertise. Kind of counter intuitive if you just think of Amazon as a merchant; less so if you think of them as a ‘marketplace’. Two things that caught my eye:

  • More shoppers go to retailer’s websites than search engines as a first step to find something (i.e. I search on Amazon for that air filter rather than on Google)
  • Although the advertising revenue is just ~1% of its total, the impact on its operating profit is a whopping 10% (margins are much higher on the advertising revenue)

Should be mandatory reading for all those in retail/digital strategy.

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