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amazon

In the past we have talked about how different companies use different pricing strategies. Amazon is an internet retail company and it has consistently held the number one spot for top global internet retailer.  The market share that Amazon held in 2015 was 19.4% (provisional results from Euromonitor, 2016) with the company in second position been Alibaba with 14%.

 

The open secret to Amazon’s success is the pricing strategies they use. Predatory pricing is one strategy that they have implemented from the creation of their company. A classic example of this is their involvement in the book industry. Amazon started as a hard book seller, via the internet, but they soon turned their attention to soft copy books using their kindle device.  They kept the prices very low to capture the market very quickly, so profit was not the aim of the game in the short term, market share was. The stock market has not always been comfortable with Amazon’s pursuit of market share over profit but in the last five years the share price has increased from 216.48 USD (4/11/2011) to 769.67USD (3/11/16), so their boldness and innovative approach to business seems to be going well.