Amazon.

com

LOGO
 Contents

1 Information

2 Business Model

3 Analysis

4 Issues & Recommendation

 Information: History

Under what condition could• Issued

Amazon initialso
public offering of
successful, stock to
compare
typical bricks-and-mortar •(B&M)?
As it passed the 1-million-different-
customers-served point, Amazon was
forced to open up a new warehouse and
distribution center
1997: Stock and 2006: product
1998: 45% repeat Earlier 2000s, 2008: Entered the S&P
1995: Foundbusiness
New Warehouse diversification
profitable 100 index
1995 1997 1998 Earlier 2000s 2006 2008
 Macro-Environment Analysis

Political Economic Social Technological

Trading laws They face to the same • New

and condition technolo
free publicity • Economic growth, interest gy
Excellent
rate, exchange rate, inflation • The
rate Environment growth in
• Culture the use
Low sales tax of world
wide web
 Information: Financial Situation

Financial Statement
Financial data in U.S. Dollars
Values in Millions

2009 2008 2007 2006 2005

Total Revenue
24,509.0 19,166.0 14,835.0 10,711.0 8,490.0

Gross Profit 5,531.0 4,270.0 3,353.0 2,456.0 2,039.0

Operating Income 1,129.0 842.0 655.0 389.0 432.0

Net Income 902.0 645.0 476.0 190.0 359.0

 Business Model: The 9 Building Blocks

 Customer segments- who a company offers value to

 Value propositions- company`s offer
 Channels- how a company reaches its customers
 Customer relationships- the relationships a company builds
 Revenue Streams- how a company makes money
 Key resources- what capabilities are required
 Key activities- what activities are required
 Key partners- the partners that leverage the business model
 Cost structure- the cost of a business model
Amazon. com’s Business Model
Business Model and Competitive Advantage

 Shopping convenience
 Ease of purchase
 Speed
 Decision-enabling information
 A wide selection
 Discounted pricing
 Reliability of order fulfillment
- two strong values that are practiced by Amazon.com inc
lude customer satisfaction and operational frugality
 Four Primary Drivers for Growth

1. Product focus
2. Customer focus
3. Technology focus
4. Distribution focus
 Four Primary Drivers for Growth

Product Customer Technology Distribution

focus focus focus focus

Add Your Text Add Your Text Add Your Text Add Your Text

T:
New entrants into internet business
Increasing transportation cost
Fast development in technology
The need to find new revenue streams
SWOT
Complexity of business
Low price competition
Large shipping cost
Unclear brand image
W:
SWOT Analysis
Business with public sector
Exclusive relationship with publishers
Business in other countries
Increase in Alliances and associates
O:
S:
Fast mover
Alliances and associates
CRM & IT
Named in S&P 100
Motivated employees
Direct negotiation with large publishers
Being hurdle for unknown competitors to enter the industry
Diversification in products
 Reference

•
http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?symbol=AMZ
N
• http://www.scribd.com/doc/24991723/Amazon-com-1-Presentation
• http://timkastelle.org/blog/2010/01/amazons-business-model-innovation/
• http://www.innosight.com/blog/discuss/72-amazon-and-business-model-innovation.
html
• http://www.1000advices.com/guru/business_model_new_vk.html
• http://wiki.media-culture.org.au/index.php/Amazon_-_Business_Model
Why the profit in Year 2006 was much lower?

1. Books
2. Movies, music, and games
3. Digital downloads
4. Electronics and computers
5. Home and garden
6. Grocery
7. Health and beauty
8. Sports and outdoors
 S&P 100 Index

 The S&P 100, or S&P 100 Index, is a stock market index of US stoc
ks maintained by Standard & Poor’s.
 Index options on the S&P 100 are traded with the ticker symbol "OE
X". Because of the popularity of these options, investors often refer t
o the index by its ticker.
 The S&P 100, a subset of the S&P 500, includes 100 leading U.S. st
ocks with exchange-listed options. Constituents of the S&P 100 are s
elected for sector balance and represent about 57% of the market ca
pitalization of the S&P 500 and almost 45% of the market capitalizati
on of the U.S. equity markets. The stocks in the S&P 100 tend to be t
he largest and most established companies in the S&P 500. In past y
ears, turnover among stocks in the S&P 100 has been even lower th
an the turnover in the S&P 500.
 Founding Progress

Decision
Decision Vision
Vision Mission
Mission

• Jeffrey Bezos’s
• Customer-friendly To use the
advantage of his • Easy to navigate,
computer science Internet to offer
• Provide buying books “that
background
advice would educate,
• Offer the inform and
broadest possible inspire”
• Virtual marketplace
selection of books
at low prices.
 Issues

 Face intense competition

 Shipping problems
 Timing, effectiveness, and costs of upgrading the system and
infrastructure
 The outcomes of legal proceedings and claims
 Security
 Technical system failures
 Relentless Customer Focus

 55 sd per website on average

 Cart abandonment – 60%
Dealing with Price Competition

Provide EXCLUSIVENESS
 Fulfillment

Optimize fulfillment operations

 Shipping

Number of shipping companies

Stop
keeping
waiting
 Cut Shipping Cost

Economy of Scale
 Meeting Peak Periods

Overstocking vs. Understocking

 Meeting Peak Periods

System failure
 Cannibalization

 Cost of shifting from one to another