How they do it: The Amazon Kindle e-reader can only bought online through Amazon.com. Same goes for the media and books that can be purchased in the Amazon Kindle shop.
How they do it: Amazon is giving away a free 1-month trial for its premium subscription ”kindleunlimited” which allows the customer unlimited access to media such as e-books, magazines and audio books for a flat fee payable every month. This enables customers to test the service and Amazon to upsell the full subscription to users of the free trial.
Leverage Customer Data
How they do it: Amazon is collecting the individual interests and purchases of its customers to create cross-selling opportunities with individual marketing and targeting (e.g. ”based on your recent search, we want to show you the following products...” or ”e-books that could also be interesting to you”)
How they do it: Amazon Kindle has a library of millions of digital books. A new Kindle e-book is published every five minutes. Amazon Kindle is offering bestsellers and a vast majority of niche publications on its platform while ensuring that they are competitively priced. Hence it allows them to adress a big audience of potential customers through its wide offering and good prices, rather than few high margin products. Individual margins might be low but the sheer majority of transactions add up to a significant revenue.
Razor And Blade
How they do it: The Amazon Kindle e-reader sold through Amazon.com is very competitively priced. Through the offer of e-books and other media formats to be used on the Kindle device, the revenue potential from these is far bigger than the price for the physical device.
How they do it: Amazon offers royalty options for publishers, authors, or other rights holders who want to sell their e-book or other content in the Kindle store. In this model both the rights owner as well as Amazon get parts of the revenue from a sale.
How they do it: Amazon offers a product called ”kindleunlimited” for its Kindle devices and apps. This entitles the costumer to unlimited access to content such as e-books, magazines and audio books for a flat fee payable every month.
How they do it: In the Amazon Kindle store, publishers, authors and other rights-owners can sell their content to Kindle users. Hence, Amazon is just providing the marketplace but does not have to provide the content itself.
How they do it: The Amazon Kindle shop is not only a service for its Kindle customers but also offering the infrastructure for publishers, authors and other right-owners to sell their (digital) content to a broad audience.