How Amazon Used Data Valuation and Data Commercialisation in its Growth

Being one of the multi-billion companies around the world, Amazon continues to grow exponentially. Among the huge arrays of strategic tools and assets at our disposal, one tool proves to be contributing success to the company: data valuation. So, how does data valuation helped the company rise to the top of the SEC firms list?

The Database as a Negotiating Tool

Being the powerhouse online retailer that Amazon is, this company amassed data and information from its consumers over the past decades of its operation. Now, Amazon has a well-defined database of information that competes with social media giants despite being a retail-based company.

Amazon’s database system is undoubtedly one of the largest databases of consumer information across all industries. It’s that size of the database that majorly contributes to Amazon’s overall asset worth. Thus, data valuation helps Amazon by assigning a monetary value to its database. With the empirical value from its information systems, Amazon’s databases are now Bezos’ negotiating tool with his investors. This helps implore investors to invest in the company.

Information Consumption for Data-Driven Policies

Information is power in today’s context, and Amazon is an online company that has an outstanding system of informatics. Here’s how the company became one of the players in information consumption and data commercialisation.

Amazon is adept at utilizing information to its advantage. Its technique focuses on treating users’ online activity as immediate feedback where they can exploit marketing strategies. Algorithms take in consumer behaviors through what they click, search, and what their mouse hovers. After which, the algorithm recommends more relevant shopping items in hopes for buyers to increase their interest and potentially purchase goods. Amazon also uses data to procure policies that make customers definitive in giving out favorable responses.

Acquisition and Subsidiary Evaluation

Taking over a company or a firm had become a normal business occurrence. This is a strategy that many entrepreneurs have used since the rise of capitalism and entities like corporations. Thus, it’s not surprising that Amazon will use the same strategy to put leverage on itself.

The earliest trace of a major takeover of Amazon.com Inc. is when it acquired Zappos, leading shoe retail, last 2009 for one billion dollars. Amazon shows its keen interest in retails, owning Pillpack Inc. in 2018 and Whole Foods Market last 2017. The company also bought Twitch, which is a live streaming platform for 970 million, and even MGM Holdings Inc. and Studio.

With Amazon’s continuous streak of acquiring businesses, all of these hold important databases with contributing values. However, all of this information system will hold no monetary value without the data valuation process.

Data as a Trading Asset

Apart from the online retail store that everyone knows Amazon for, the company also invests in cloud computing and other informatics systems. Cloud computing allows storage of data, as well as interaction with the data on various devices. The same service also accounts for the startup of websites and other IT services related to it.

Such databases are Amazon’s subject to data retailing which is an industry of its own. Companies like Amazon are actively engaging in data trading, which is the buying and selling of consumer data. The sale of any database will only be possible if such an information system has undergone data valuation.

Feature Image by Gerd Altmann from Pixabay

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