A Business with Deferred Revenue (Chosen Business the Amazon)

            Before giving brief details on Amazon and its deferred revenue business, first it is important to introduce the concept briefly. A company is earning deferred revenue which receives payment for its good or services, before delivering it to the customer. It means that customers make advance payment for the product, they are purchasing, and once purchase is made, then the company starts the delivery process. The amount received in this whole process is deferred revenue for the company.

            This is how the online business of Amazon works. The customers visit their online store, they purchase a product by following certain steps, and then payment is made through their credit cards or bank accounts. For instance, if someone purchases a mobile from Amazon, the customer will complete the purchasing process, and in payment options, customers can pay advance or cash on delivery, so when customer opts for making advance payments and wait for his/her product to be delivered later, it means that Amazon has earned deferred revenue. The amount of deferred revenue is huge for Amazon as it is operating worldwide and hundreds of customers purchase products from Amazon, and make advance payments for their products. Amazon also earns deferred revenue through its Prime Fee and subscription as prime customers have to pay $99 annual fee in advance (Kim 2016)

Reference of Chosen Business the Amazon

Kim, Eugene. 2016. An overlooked part of Amazon will be in the spotlight when the company reports earnings. Accessed October 17, 2018. https://www.businessinsider.com/amazon-unearned-revenue-growth-shows-why-it-spent-more-on-shipping-last-quarter-2016-4.