amazon.

com
C O M PA N Y R E P O R T
P R E PA R E D B Y - M O H A M M A D FA R H A N U D D I N ( 2 0 2 - 0 0 1 2 - 0 0 1 )
Company Overview

Amazon.com Inc. is an American based multinational electronic

commerce company founded in 1994 by Jeff Bezos.
Headquarters: Seattle, United States
Sales: 88.988 bln $
Employees: 154 100
Main business:
-Online retail (E-commerce)
-Internet Services (Web hosting, Content distribution)
-Kindle Ecosystem
Operation markets:
- North America
- International: UK, Germany, France, China, Japan, Italy, Spain, Brazil, Australia, India, Mexico
Performance in the market

Market structure: Oligopolistic (e-commerce, content distribution, innovative devices)

◦ Monopolistic (Web hosting)

Market change: Amazon market share US e-commerce

40%
37%
35%
33%
30% 29%
25% 25%
20% 21%

15% 16%
12%
10% 10%
5%
0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
AMAZON CORE BUSINESS
PROCESS
AMAZON’s FINANCIALS
AMAZON BUSINESS SEGMENTS
DEVELOPMENT OF TRANSPORTS
INCREASE IN NUMBER OF WAREHOUSES
Competition & international markets

Sales growth 2011 2012 2013

Overall Sales 21% 27% 41%
growth
North America 28% 30% 43%
sales growth
International 14% 23% 43%
sales growth

Main competitors:
Wal-Mart, Best Buy, Toy-R-US, E-bay, Alibaba Group, Shopify, Bigcommerce,
Overstock, Google,
Blue Nile, Costco, Macy’s, Nordstorm, Williams Sonoma, Urban Outfitters, Under
Armour, Asos, MercadoLibre, Rakuten, Belle, Intime, Sun Art
Amazon’s main strengths

 Pioneer of the market

 Huge number of customers (270 mln/Statista.com)
 Knows preferences and buying patterns of target groups
 Technology
 Customer relations management
 Strong brand image
 Extensive number of low priced products
 Effective logistics and distribution systems
 High customer loyalty
Comparison with competitor’s products

VS ($2.163 billion revenue in 2014- 17.8% growth)

VS (Apple’s 18,063 mln $ of sales, VS Amazon’s

22,505mln)

VS ($95 annual membership VS Amazon’s $299)

VS ( both are free)

VS (1.4 million customers in China)

Customer’s loyalty
 Highest Customer Satisfaction Index in US and UK (88; 86)
Amazon was the first commercial site to use “collaborative filtering”, “1-click ordering”,
“shopping cart”, “purchase circles”, “friends and favorites”, “book review”, “hard-to-
find books” and “recommendation center”.
Is Amazon Business Prime a good
deal?

Many businesses find value in the subscription, but it's not always the cheapest way to shop.
The value of free shipping on selected items from Amazon is impacted largely by local prices
and availability, bulk prices for business shoppers, and order scheduling. For example, if you
own a restaurant and typically order from Restaurant Depot a few times a year, you should do
a price comparison; you may already be getting the best deal possible. On the other hand, if
you live in a remote area where little in-store shopping is available or delivery costs are often
very high, Prime may be worth it.
AMAZON MARKETING PLAN
CONTENTS

Search engine optimization (SEO) ...

Video marketing. ...
Web design. ...
Conversion rate optimization (CRO) ...
User-generated content. ...
User data. ...
PPC advertising. ...
User-generated content.
Amazon’s new products

 Amazon’s Echo is $199, or $149 for Prime members

 MayDay button - average response time is 9.75 seconds, and 75% of questions from
Kindle Fire customers come in through Mayday
 FirePhone initially 449$, now 189$
 Amazon Cloud Drive / 11,99$ photo storage, 59,99$ all files
 Amazon Dash button
Market entry and cost advantages

 High entry barriers, the market consists of few very large businesses with high
customer loyalty

Cost advantages:
 no physical stores; no sales taxes
 has wide and seamless distribution network
 automatized fulfilment – Kiva robots save 50% of time and human resources
 well-known brand
Weaknesses

 Amazon’s outbound shipping costs caused them $8, 71 billion in 2014

 New unsuccessful products damage the reputation of Amazon and cause high losses.
For example, Fire phone resulted in writing off of $ 170 mln
 technical problems may also cause them high losses - , in 2012 Amazon website went
down for 49 minutes what caused them 5.7 mln of sales losses; load slowdown of just
one second could cost it $1.6 billion in sales each year.
 Amazon’s high expansion leads the company to loss of control and poor quality of
service
 Switching costs within the industry are very low, so the risk of losing a customer are
very high
Price Discrimination
Second degree price discrimination.
◦ AMAZON offers prime membership program. –Amazon Mom, Amazon Student, Amazon Fresh
◦ Amazon Prime, an annual membership program that includes unlimited free shipping on millions of
items, access to unlimited instant streaming of thousands of movies and TV episodes, and access to
hundreds of thousands of books to borrow and read for free on a Kindle device .

 
Stock price evolution

Stock price evolution

450
400

350

300
250
200

150
100

50

0
10/28/1995 7/24/1998 4/19/2001 1/14/2004 10/10/2006 7/6/2009 4/1/2012 12/27/2014 9/22/2017
Opportunities & threats

Opportunities
Collaborations with public sector and wholesalers
Joint ventures with store group like Toys-R-Us, NBA,
Marks & Spencer, Target
Increases in sales

 Threats

Brand competition (e.g. Kindle vs. Ipad) Tax legislation

Poor publicity Alliances against Amazon

Foreign exchange fluctuations Alternative risks

Cultural diversity Switching cost is low

Security issues Amazon predatory pricing technique may raise concerns about abuse
of dominant position which may lead to huge loss.
References

• World Payments Report 2014/ Capgemini &RBS

• Amazon Inc. 10-K Annual report 2014
• Apple Inc. 10-K Annual report 2014
• Ebay Inc. Annual Report for the fiscal year ended December 31, 2014
• Critical success factors for business–to-Consumer E-business: Lessons from Amazon and Dell/
Le Kha
• www.statista.com
• http://www.wired.com/2015/03/alibaba-us-cloud/
THANK YOU!