Amazon.com Business Case Presentation

Qibin Xiong

Marketing 476

Amazon’s Overview and History

• The world's largest online retailer.• Product and Service: Retail goods, Consumer

electronics, Digital content, Amazon Prime, Private labels and exclusive marketing arrangements, Computing services, Content production and Donations

• An American multinational electronic commerce company with headquarters in Seattle, Washington, United States.

Amazon.com, Inc

Amazon’s Overview and History

• Amazon.com was established in July 1994 and the site went online as Amazon.com in 1995.

• The company began as an online bookstore. In the first two months of business, Amazon sold to all 50 states and over 45 countries. Within two months, Amazon's sales were up to $20,000/week.

• Amazon has separate retail websites for United States, Canada, United Kingdom, France, Germany, India, Italy, Spain, Brazil, Japan, and China, with international shipping to certain other countries for some of its products

Amazon’s Decentralization

• Retail goods: Amazon product lines include books, music CDs, videotapes and DVDs, software, consumer electronics, kitchen items, tools, lawn and garden items, toys & games, baby products, apparel, sporting goods, gourmet food, jewelry, watches, health and personal-care items, beauty products, musical instruments, clothing, industrial & scientific supplies, and groceries.

• Amazon Prime: Amazon Prime is a service of free two-day shipping on all eligible purchases, for a flat annual fee, as well as discounted one-day shipping rates.

• Computing services: Amazon launched Amazon Web Services (AWS) in 2002, which provides programmatic access to latent features on its website.

• Etc.

How Amazon works

• Order product• Chooses the most typical means of payment,

by credit card. • Amazon asks the credit-card company to

verify the card and cover the payment. • As soon as payment has been settled, the

order goes to the supplier • Supplier send Amazon a confirmation that the

product is ready• Amazon contacts a logistics company, in this

case FedEx. FedEx delivers the product to the customer.

Amazon’s Key Competitors

• ebay: an American multinational internet consumer-to-consumer corporation, headquartered in San Jose, California.

• Best-Deals.com: Allow customers to compare prices on largest selection of Music, CDs, DVDs, Videos, Electronics, Video Games, Computers, Cell Phones…

• Instant Finder: a global online market place for buyers, sellers and advertisers. As a next-generation marketplace…

Amazon’s Key Partners

• Amazon.com operates retail websites for Sears Canada, bebe Stores, Timex, Marks & Spencer, Mothercare, and Lacoste.

• DC Comics: On October 18, 2011, Amazon.com announced a partnership with DC Comics for the exclusive digital rights to many popular comics

• ToysRUs.com: Until June 30, 2006, typing ToysRUs.com into a browser would bring up Amazon.com's "Toys & Games" tab; however, this relationship was terminated due to a lawsuit.

Amazon’s User Base

• According to Business Week, the retail side of business has around 121 million active users worldwide in 2013.

• Target Users:– People don't want to waste a lot of time shopping

and comparing prices– People who pretty much know what they want. – People who like the safety and security of shopping– People who want to get their item, then move on

with their lives.– For them, the "best price" is the price in the "Buy

Box" on Amazon for the item they want.

Amazon’s Stakeholders

• Amazon's Stakeholder Management Matrix

Amazon’s Decentralized Structure in Eco-System

• The company's ecosystem has been built to last and will allow Amazon to dominate the retail space in the coming years. Amazon's business model is very similar to the razor-and-blade concept investors are familiar with, with the main difference being that once Amazon sells you the razor, it can sell more than just the blades to go along with it. That's something that many of the other dominant players in the technology world can't do.

Amazon’s Assets

• Amazon.com Total Assets: 28.38B for March 31, 2013

• Intangible assets: Acquired intangible assets, included within “Other assets” on Amazon’s consolidated balance sheets, consist of the following (in millions):

Amazon’s Intangible Assets

Amazon’s Funding

• Initially funded by Jeff Bezos, the billionaire founder of Amazon.com.

• Amazon raises big money with debt offering ： Amazon.com said it is offering a whopping $1.25 billion in convertible debt to institutional investors.

• Wall Street analysts speculate that Amazon will use the proceeds to build new highly automated distribution facilities and to fund international expansion.

Amazon’s Unique Features

• Shopping at Amazon.com is fast and safe, incorporating a simple ordering system, secure credit card transactions, e-mail communication with customers and direct shipping worldwide.

• WindowShop: presents some of the store’s newest and most popular movies, books, and video games in a way that makes browsing the online megastore actually fun.

• Single Sign-On: Integrate your own authentication system.• Analytics: Understand the who, what, when and how.• Custom Themes: Create your own look and feel.• Real-time: Enable live conversations.

Amazon’s Personalized Results

• One of the most powerful characteristic of Amazon’s service is the recommendations it gives to customers who are looking for books and other products they purchase.

• Having all sorts of options such as being able to see great photos of products and knowing that shipping is free is nice, but being able to know what other purchased can do the most in helping you decide what product is best for you.

• Birds of a feather do indeed flock together. Although Amazon.com and other retailers have the money to fine tune their personalization recommendations systems these types of services are not out of range.

Amazon’s Revenue Model

• Amazon generates revenue primarily by selling books, videos, electronics, and kitchen equipment on domestic and international Web sites, such as Amazon Marketplace.       

•  Amazon Marketplace is Amazon’s fixed price online marketplace that allows sellers to offer their goods alongside Amazon’s offerings. Buyers can buy new and used items sold directly by a third party through Amazon.com using Amazon Marketplace. 

• Amazon charges a commission rate based on the sale price, a transaction fee, and a variable closing fee. Which are sales revenue model and transaction fee revenue model.

• Amazon.com also generates revenue by Affiliate revenue model. Amazon was one of the first online businesses to set up an affiliate marketing program,  which website owners can use to create an online store on their site. The store does not allow website owners to sell their own products directly.

• The fee structure is currently the same as for the other affiliate links and ranges from 4% to 10% of the product price. 

Amazon’s Intellectual Property

• The United States Patent and Trademark Office (USPTO) issued US 5960411 for this technique to Amazon.com in September 1999.

• Amazon.com also owns the "1-Click" trademark, which is the technique of allowing customers to make online purchases with a single click, with the payment information needed to complete the purchase already entered by the user previously.

Reference List

• http://usatoday30.usatoday.com/tech/news/2009-06-12-amazon-toys_N.htm?csp=27&RM_Exclude=Juno

• http://www.nbcnews.com/id/11641703/ns/business-us_business/t/toys-r-us-wins-suit-against-amazoncom/#.UcJDp6CcuuM

• http://milkmom.blogspot.com/2008/06/revenue-model-for-google-amazoncom-and.html

• http://www.smallbiztechnology.com/archive/2008/08/selling-with-personalization-w.html/

• http://media.corporate-ir.net/media_files/irol/97/97664/reports/123198_10k.pdf

• http://news.cnet.com/Amazon-raises-big-money-with-debt-offering/2100-1017_3-220886.html

• http://www.wikinvest.com/stock/Amazon.com_%28AMZN%29/Data/Total_Assets

• http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-reportsannual