Amazon’s Three Major Lines of Business

30 Pages Posted: 19 Jul 2022 Last revised: 22 Jul 2022

See all articles by Edward A. Snyder

Edward A. Snyder

Yale University

Jason Canaday

Bates College

Marley Hughes

Yale University - Department of Computer Science

Date Written: July 13, 2022

Abstract

Since its founding in 1995 Amazon has become a leader in eCommerce, cloud computing services, and interactive devices for individuals and homes. In this study, we document the critical steps in Amazon’s development in each line of business. Our review yields insights on (i) how Amazon responded to changes in demand, (ii) the importance of economies of scale, economies of scope, and network effects in Amazon’s efforts to build out its lines of business, and (iii) interrelationships among these three apparently distinct commercial operations. This case study thereby provides insights how Amazon’s Firm Specific Advantages (FSAs) contributed to its successes within and across lines of business. Our analysis further suggests that Amazon developed Dynamic Capabilities (DCs) capabilities that contributed to Amazon’s superior performance. Our analysis is, however, necessarily interim in nature. Given changing market and regulatory conditions, whether Amazon will be able to sustain its performance in which lines of business and in which countries is uncertain.

Keywords: entrepreneurship and business strategy; transaction cost economics; market entry; market power; dynamic capabilities; firm specific advantages

JEL Classification: L26, L7, L86, M21

Suggested Citation

Snyder, Edward (Ted) A. and Canaday, Jason and Hughes, Marley, Amazon’s Three Major Lines of Business (July 13, 2022). George J. Stigler Center for the Study of the Economy & the State Working Paper No. 319, Available at SSRN: https://ssrn.com/abstract=4162112 or http://dx.doi.org/10.2139/ssrn.4162112

Edward (Ted) A. Snyder (Contact Author)

Yale University ( email )

New Haven, CT 06520
United States

Jason Canaday

Bates College

204 Lane Hall
2 Andrews Road
Lewiston, ME 04240
United States

Marley Hughes

Yale University - Department of Computer Science

Box 208285
New Haven, CT 06520-8285
United States

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