Challenges and growth: a look into Amazon’s journey

Challenges and growth: a look into Amazon's journey
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Founded in 1994 as an online store specializing in selling consumer goods, nowadays Amazon is one of the largest companies in the world offering a wide range of products including electronics, household appliances, books, music albums, video games, and more.

The company boasts more than 400 million active users worldwide and is a leading player in e-commerce. Its business model revolves around on online commerce, where customers can buy goods through the Amazon website or mobile app. The company also provides home delivery services and subscription services to various services such as Amazon Prime and Amazon Music.

A key aspect of Amazon is its efficient inventory management system, enabling the company to swiftly respond to changes in demand and ensure prompt delivery to customers. In addition, the company actively invests in research and development of new technologies, allowing it to remain at the top of the market and offer its customers cutting-edge products.

This unique approach helps Amazon balance between large suppliers and small entrepreneurs selling their goods on the platform. As a result, investor confidence continues to grow, resulting in a market capitalization exceeding $1 trillion.

For instance, in 2018, Amazon acquired Whole Foods, expanding its product range to include fresh and organic products. In 2020, the company also acquired Twitch, enhancing its presence in the streaming services market and establishing a new content brand called Amazon Originals.

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In the latest important news on the economic front, the US Federal Trade Commission (FTC) has filed a lawsuit against Amazon. The regulator alleges that the company violated consumer protection laws, as it manipulated users for its own benefit, misleading them and forcing them to lose significant amounts of money.

According to the FTC, Amazon deliberately forced customers to subscribe to its paid Prime service for an annual fee of $139. This subscription grants access to express delivery, video streaming, and a library of 100 million songs. While multiple Prime subscription options were presented on the purchase completion page, the process of opting out of the service required clarification. Consequently, users needed assistance in understanding that they were agreeing to a subscription with recurring payments.

The lawsuit also asserts that Amazon made it cumbersome to unsubscribe, requiring unnecessary steps. Furthermore, the company bombarded customers with special offers in an attempt to make them reconsider their decision. The FTC claims that Amazon had the means to modify the pages to ensure user comprehension but failed to take advantage of that.

The potential amount of the fine has not been disclosed. However, in December 2022, Epic Games paid $520 million in a similar lawsuit.

Interesting enough, that following this news, Amazon stock price surged.

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It is highly likely that the previous peak of $145 will be surpassed in future trading. And perhaps it will reach $170. Nonetheless, it is premature to state this with absolute certainty. One thing is evident: prices show no signs of declining.

Amazon’s expansion of operations in Europe and the Asia-Pacific region is attracting increasing attention. The company plans to open new stores and improve its logistics infrastructure to enhance product delivery in these regions. It also intends to establish additional offices and stores, expanding its logistics network. Moreover, Amazon continues to invest in the development of its online services and applications.

A major challenge for Amazon is competition from other companies like Walmart (NYSE: WMT) and eBay (NASDAQ: EBAY). This competition necessitates constant improvement of Amazon’s products and services to maintain its position as the market leader. After all, healthy competition fuels innovation.

Another issue is the high cost of goods delivery. Amazon allocates significant resources to shipping products worldwide, which can result in higher prices for buyers. Rumors suggest that the company plans to establish a separate transportation division to compete with other delivery services.

Furthermore, Amazon faces a shortage of qualified employees. The company requires a substantial workforce to support its operations. It has been actively incorporating robots into its warehouses to streamline processes and reduce production costs.

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Lastly, Amazon needs to enhance the security of its data. Safeguarding information from hackers and other threats is essential. Unfortunately, the company has been reluctant to disclose the exact number of affected individuals.

Let’s now turn our attention to more positive developments that will contribute to stock growth without substantial corrections.

Two of the world’s largest technology corporations, Google and Amazon, have announced their intention to significantly increase investments in the Indian domestic market. Google plans to invest $10 billion, while Amazon aims to invest $15 billion.

Amazon’s CEO, Andrew Jesse, stated that the company has already invested $11 billion in the Indian market, positioning it as one of the leading investors with plans for future growth.

In the world of trading, it is crucial to keep in mind the significance of conducting thorough research before making any trading decisions. While there are various trading tools available, such as the economic calendar or stock screener. By utilizing these resources alongside your own expertise, you can enhance your market analysis and make well-informed trading choices.

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