Amazon’s Network Effect is in Full Swing

ARTICLE BY LITAL MAROM

Amazon is the best example of how platforms are eating the world. Amazon continues to expand exponentially, far and beyond one specific industry.

When we look at Amazon marketplace, more than half of Amazon’s $10B in sales come through its millions of third-party sellers. Now these vendors are being bought and sold for millions, for as much as 23x their monthly profits. Amazon isn’t just an online retailer and marketplace, but also a media company and a brick-and-mortar grocery store. In the personal gadgets space, Amazon Echo is becoming the centrepiece of connected homes. 

This is exactly what happens when you run a platform business model. The boundaries of your business start to blur, while you leverage your data in order to tap into entire new industries. Where the network effects fuel your growth exponentially, as more users join then more value is created.

Amazon’s network effect is in full swing, out of the four tech giants - Amazon - has the best chance to reach $1 trillion in market capitalization first. That means more than doubling its present value of $478 billion and leaping past Apple, Google and Facebook, which investors now value more highly. 

More about the platforms economy and the power of network effects here.