AMITY SCHOOL OF BUSINESS

NTCC Term Paper 2022

WEEKLY PROGRESS REPORT (WPR) – 2

Enrolment Number- A3906421235

Program- BBA
Batch- 2021-2024
Student name-Sneha Sharma
Faculty Guide’s Name- Prof. Mona Chaudhary
For the Week: 27/06/2022- 03/07/2022
 HOLISTIC STUDY OF amazon

1. Market Analysis (STP analysis) of Amazon

Amazon segmentation, targeting, and positioning are a set of activities

that aim to identify specific groups of people as customers and
develop products and services that are appealing to this group.

Segmentation of Amazon
Amazon's division depends on genuine buy conduct: what individuals did, not
what they communicated interest in. Amazon's micro-level segmentation
addresses each customer individually, enabling the company to convert visitors
into long-term, high-value customers.

E-commerce segmentation frequently entails creating personas who will buy in

a specific way and with specific products. Similarly, Amazon caters to the
middle and upper classes who have hands-on experience with basic technology
but lack time or prefer convenience over shopping from physical outlets.

Targeting of Amazon
As of 2022, Amazon's target market is middle and upper-class consumers
(equally split between genders) with home computers or smart devices aged 18-
44. Furthermore, 60 percent of Amazon's target market is from the United
States, where people prefer to shop online for convenience, quick delivery, and
low prices.

Amazon is attempting to target a customer base that has access to and

frequently visits the internet, making younger generations the ideal Amazon
customer. Furthermore, the majority of Amazon Prime subscribers are between
the ages of 35 and 44. Amazon Prime members receive even more discounts,
exclusive deals, and additional savings than non-Prime members.

However, with the internet's increasing popularity, Amazon's target age now
includes people of all ages. Amazon's target market can be found anywhere
there is internet access.

Now that Amazon has an international presence, the retailer has a large global
customer base. Despite the fact that Amazon is a global company, the United
States has the most consumers and the most products purchased.

As a result, the United States accounts for more than 60% of Amazon's total
internet traffic. Furthermore, Amazon customers in the United States frequently
purchase products from Amazon.

For example, 48% of US consumers visit Amazon more than once per week. In
addition, 89 percent of US consumers visit Amazon at least once a month.

With these staggering figures, it is clear that the United States is Amazon's
primary target market.

Amazon's user-friendly e-commerce platform and quick shipping times cater to

upper and middle-class social groups with $51k average salaries. To save time,
this group prefers to shop online rather than in-person (and money).

Positioning of Amazon
Customer satisfaction is central to Amazon's brand. It aspires to be known as the
world's most customer-friendly company. This implies that Amazon wishes to
position itself as the most convenient company, with the lowest prices and the
best customer service available.

Amazon largely achieves this goal, and as a result, it has developed a strong
brand. According to a 2019 survey of 2,000 US shoppers, 89 percent prefer to
buy products from Amazon over other e-commerce sites. According to the same
survey, Amazon was indispensable throughout the customer journey,
particularly when it came to reviews.
As per Forbes' Kiri Masters, 66% of respondents (66%) frequently start their
quest for new items on Amazon, while one-fifth (20%) start on a web crawler
like Google... At the point when customers are prepared to purchase a particular
item, 74% go directly to Amazon.

2. Financial Analysis (refer to the Balance sheets and

P&L accounts)

The report will now concentrate on Amazon's financial statement. How

successfully the organisation performs year after year. The report will examine
Amazon's ups and downs between 2016 and 2019.

Table 1: Financial Data

Item/Year 2019 2018 2017 2016

Current Assets 96,334,000 75,101,000 60,197,000 45,781,000

Current 87,812,000 68,391,000 57,883,000 43,816,000

Liabilities
Inventories 20,497,000 17,174,000 16,047,000 11,461,000

Cash 55,021,000 41,250,000 30,986,000 25,981,000

Receivables 20,816,000 16,677,000 13,164,000 8,339,000

Total Assets 225,248,000 162,648,000 131,310,000 83,402,000

Total 163,188,000 119,099,000 103,601,000 64,117,000

Liabilities
Total Equity 62,060,000 43,549,000 27,709,000 19,285,000

Sales 280,522,000 232,887,000 177,866,000 135,987,000

Cost of Goods 205,768,000 173,183,000 137,183,000 105,884,000
Sold
EBIT 14,541,000 12,421,000 4,106,000 4,186,000
Interest 1,600,000 1,417,000 848,000 484,000
Net Income 11,588,000 10,073,000 3,033,000 2,371,000
The income statement and balance sheet both contained all of the entries in
Table 1. As you can see, every aspect and item has risen from one year to the
next. The graph depicts Amazon's year-over-year increase. However, despite the
fact that the asset in each year is significant, the net income is surprisingly low.
Amazon has a poor net income since it has a large amount of debt and
obligation. They also spent a lot of money on acquiring firms and producing
large productions. This prompted many individuals to question if Amazon is
profitable.

Discussion of the Findings

The current, quick, and cash ratios are shown in the table below. The current
ratio displays whether or not a company can pay its debts. Any current ratio
value less than one suggests that the company may struggle to repay its debts.
From 2016 through 2019, Amazon had a current ratio greater than one. While
the fast ratio demonstrates the company's ability to meet its immediate
liabilities without having to sell inventory. The higher the ratio, the better for
the business. The cash ratio indicates whether or not the corporation can
anticipate and meet its short-term obligations, such as salary payments. 0.5 to
1 is the preferred cash ratio. Amazon has showed in the table that it is
between those numbers each year.
Table 2: Liquidity Ratios

Ratio/Year 2019 2018 2017 2016

Current Ratio 1.10 1.10 1.04 1.04

Quick Ratio 0.86 0.85 0.76 0.78

Cash Ratio 0.63 0.60 0.54 0.59

 Figure 1: Current Ratio

Current Rati o
1.12
1.1 1.1 1.1
1.08
1.06
1.04 1.04 1.04
1.02
1
2019 2018 2017 2016

Figure 2: Quick Ratio

Quick Ratio
0.88
0.86 0.86
0.85
0.84
0.82
0.8
0.78 0.78
0.76 0.76
0.74
0.72
0.7
2019 2018 2017 2016

Figure 3: Cash Ratio

Cash Ratio
0.64
0.63
0.62
0.6 0.6
0.59
0.58
0.56
0.54 0.54
0.52
0.5
0.48
2019 2018 2017 2016

As previously stated, these graphs are linked to the ratios. All current ratios
greater than one imply that the corporation is in a good position to repay its
debts. The optimum quick ratio should be 1:1, but Amazon is less than that
every year. Indicating that Amazon may not be able to pay off all of its creditors
in the near future. Whereas they are in decent shape in terms of Cash ratio,
which is between 0.5 and 0.6.
Table 3: Activity Ratios

Ratio/Year 2019 2018 2017 2016

Inventory Turnover 10.0 10.1 8.55 9.23
Receivable Turnover 13.5 14.0 13.5 16.3

Total Asset Turnover 1.25 1.43 1.35 1.63

Figure4 : Inventory Turnover

Inventory Turnover
10.5

10 10 10.1

9.5
9.23
9

8.5 8.55

7.5
2019 2018 2017 2016

Figure 5: Recievable Turnover

Recievable Turnover
18
16 16.3
14 13.5 14 13.5
12
10
8
6
4
2
0
2019 2018 2017 2016

Figure 6: Total
Asset Total Asset Turnover Turnover
1.8
1.6 1.63
1.4 1.43 1.35
1.2 1.25
1
0.8
0.6
0.4
0.2
0
2019 2018 2017 2016
Inventory turnover ratios ranging from 4 to 6 are considered ideal. A company
may be overstocking if the number is less than four. In the instance of Amazon,
they have a high inventory level, which indicates that they have good
management skills. Wilkinson (2013) Receivable turnover indicates how well a
company collects debts. A greater ratio indicates that businesses are collecting
debt more quickly. Amazon's ratio has decreased from 16.3 in 2016 to 13.5 in
2019. Total asset turnover is the integration of a company's assets to create
sales. Amazon's total asset turnover ratio during the last four years.

Table 4: Debt Ratios

Ratio/Year 2019 2018 2017 2016

Debt Ratio 0.72 0.73 0.79 0.77

Times Interest Earned 9.09 8.77 4.84 8.65

Ratio

Figure 7: Debt Ratio

Debt Rati o
0.8
0.79
0.78
0.77
0.76
0.74
0.73
0.72 0.72
 0.68
2019 2018 2017 2016

Figure 8: Times Interest Earned Ratio

Times Interest Earned Rati o

10
9 9.09 8.77 8.65
8
7
6
5 4.84
4
3
2
1
0
2019 2018 2017 2016

Table 5: Profitability Ratios

Ratio/Year 2019 2018 2017 2016

Return on 0.19 0.23 0.11 0.12
Equity
Return on 0.05 0.06 0.02 0.03
Assets

Profit Margin 0.04 0.04 0.02 0.02

Figure 9: Return

on Return on Equity Equity

0.25
0.23
0.2
0.19

0.15
0.12
0.11
0.1

0.05

0
2019 2018 2017 2016
 Figure 10: Return on Total Assets

Return on Assets
0.07

0.06 0.06

0.05 0.05

0.04

0.03 0.03

0.02 0.02

0.01

0
2019 2018 2017 2016

Figure 11: Profit Margin

Profi t Margin
0.045
0.04 0.04 0.04
0.035
0.03
0.025
0.02 0.02 0.02
0.015
0.01
0.005
0
2019 2018 2017 2016

The ability of a corporation to earn money from its equity is referred

to as its return on equity. A ratio of 0.15 to 0.20 is deemed
satisfactory. Amazon achieved this in both 2018 and 2019. Return on
Assets measures how successful a company is based on its assets. The
year 2018 has the highest return on assets, at 6%. When sales income
exceeds production costs, the profit margin is achieved. With
Amazon's expansion, we can observe that the ratio in 2018 and 2019
is larger than in 2016 and 2017.

To summarise, Amazon has been the leading online retailer due to the
effectiveness of their strategy. Amazon has witnessed sustained year-
over-year growth since its online transition. Many people are
concerned about the low net income and growing liabilities. However,
I believe this is due to Amazon's dedication to long-term projects and
large acquisitions. When there are more tasks and responsibilities,
there are more expenses, but Amazon can make up for the predicted
losses in the long run. There is no doubting Amazon's success; with
new project plans in the works and expanded manufacturing
production, Amazon shows no signs of slowing down.