April 7, 2022

The importance of cross-selling in the Amazon business model

Cross-selling is the sales strategy popularized by Amazon where products or services are displayed next to the product your customer is interested in buying.

It is an excellent way to increase customer loyalty. This strategy makes cross-selling an ideal to foster the growth of a digital business.

Implementing the suggestive offer helps to increase sales, as there are features in different products that relate to the ones your customers went to buy. This way, taking advantage of promotions and quantity discounts, they finally buy several related or complementary products.

For example, if a consumer enters the process of buying a TV, the chosen product appears on the screen, and others, such as wall brackets or tables with the measurements for that TV added to the cart.

Although is a pioneer in this model, many e-commerce platforms currently offer to cross-sell: Mercado Libre, Tienda Nube, Diggit, and many others.

Amazon attributes the cross-selling technique to 35% of its sales today.

This action is a commercial strategy to obtain customers that want to buy other products and spend more. Just by logging on to the site and clicking on any product, the other tempting options unfold.

The intelligence of Bezos, the founder of Amazon, to implement cross-selling in a business that offers such varied products has allowed him to obtain millionaire profits over his competitors, taking advantage of the emotion of the customers' purchase.

How Amazon has become the World's largest e-commerce Platform

It has established itself as one of the world's most profitable and popular e-commerce companies for entertainment and various products, along with Netflix, who until now had almost no rivals within the streaming after Blockbuster closed its doors for good. (Read the article on Netflix)

Amazon's rise as a cloud platform is due to its entertainment service and products for sale, such as software, video games, music, books, clothing, furniture, etcetera.

It is gaining millions of followers with content and making great audiovisual productions for series lovers, which it broadcasts via streaming, just like Netflix.

The History of Amazon

It was founded in 1994 by Jeff Bezos. Previously, he had resigned as vice president of D. E. Shaw & Co, a Wall Street company, and moved to Seattle, where he began working on a business plan, which would eventually become Amazon.com.
Bezos chose the name Amazon for his e-commerce business from the meaning of the term "Amazon," linked to the exotic Brazilian region and the river that bears the same name, which is the largest in the world, as he planned to make his company the largest in the world as well.

He drew up a list of 20 products online, of which only five remained: CDs, computers, software, videos, and books. Among this smaller list, the founder decided to sell books online due to the worldwide demand for literature.

The reduced prices for books and a long list of titles brought Amazon success, so it became a recognized online platform to sell digital books.

Amazon's business plan was risky, as it expected to get benefits on its initial investment within five years, which could go very well or badly.

However, luck was on their side because while many companies ended up melting down due to the expansion of the internet in the early 2000s, Amazon stuck with it and started to grow, making huge profits that proved the success of their ambitious plan.

Amazon launched a new marketing strategy called Amazon Prime Day

The company offered the opportunity to its Prime customers to get flash deals on millions of products during 'Prime Day'. However, in 2019 taking into account the success of the previous Prime Day launch, Amazon decided to increase the offers from 24 to 48 hours.

The Amazon case is another evidence that growth does not necessarily have to be short-term, but focusing on the strategy makes the difference too.

Companies like Apple, Google, Coca-Cola, Lay's, and Netflix themselves achieved a position in the market by creating products or services designed to meet the demand of a large audience. Amazon is one of the most profitable companies in recent years and probably the second in e-commerce.

Learn about success stories in online business by reading our articles and in our networks.

Javier Stagnetto
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