Amazon’s Network Effect
https://finance.yahoo.com/news/amazons-network-effect-strengthens-shares-013500336.html
Amazon had a huge increase in 3rd quarter earnings. After buying Whole Foods in June of 2017 for 13.4 billion dollars, Amazon was projected to do well, and it did. Their revenue increase came mainly from 3 different sources: the shift from Prime acquisition to engagement via new products and services in the US; the jump in Prime international and the lifetime value potential; and continued monetization of AWS. They also experienced growth from Prime Day, where they had tons of deals that, while not extremely profitable individually, the volume of which gained Amazon a lot of revenue.
Obviously, there is a network effect in Amazon’s business model, but it is slightly different than normal. In this network, people don’t buy Prime because they see other people buying Prime, but they actually buy Prime because Prime has gotten better because more people now have Prime. Because more people have Prime, Amazon has more warehouses and more distribution centers, so they can get people their items faster. This has also spread internationally, and it is the same process, so the more people that have Prime, the better it is, which is a network effect.