Google and Amazon are two dominant companies with successful business strategies. They continually change and grow while maintaining their principles. The success of Google and Amazon is dependent upon their unique business models and goods and services. Even, though they are both very successful, Google is more profitable.
Google’s business model is revolutionary. Raking in 10,604.92 Million dollars a year Google is very profitable. Google’s business model is successful due to two key components; customer-oriented business and innovation. They remain true to their customers by offering free open-source programs. Services such as G-mail, Youtube, and Google Maps keep customers dedicated to Google. Most of Google’s revenue actually comes from two rather marginal means, online ads and selling search tools to companies.
Amazon’s success relies on customer-oriented services and simplicity. Customer’s pages are customized as products are offered to them based on their purchases. Customers can write reviews, lists, and guides for products. This is helpful for the company who does not have the time to maintain all the vast number of products properly updated. Customers trust their fellow consumer ratings more than the manufacture’s reviews. In recent years Amazon has revamped their business model. They have begun to offer web-based services in addition to their current services.
Amazon revenues are higher than that of Google’s, 10,711.00 Million dollars. However, their net profit is only at 1.77 percent. Google’s net profit is at 29.02 percent. This is due to the nature of the two companies’ products and services. Nearly all of Google’s products and services are web-based and as a result they have very little cost. Amazon is a product company and that incurs very high costs. The company is trying to transition from being a product company to a service company. Amazon’s shipping costs, inventory costs, and production costs devour their profits.
Google has a larger market capitalization, 210 billion dollars. Amazon has a market capitalization of a mere 37 billion dollars. This indicates that the public feels that the value of Google’s equity is greater than that of Amazon’s. Market capitalization is an estimate that the market has of a company’s value. The value is based on forecasts of the company’s future and economic conditions. The market feels that Google is more stable and profitable than Amazon. This is most likely due to the greater percentage of profit that Google has compared to Amazon.
Google and Amazon are both very successful companies. They both have business models that involve customer-oriented services and innovation. Google however is more profitable and has a larger market capitalization than Amazon. This is due to the different nature of Google’s products and services. Amazon is revamping their business model to increase their profit and market capitalization.
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