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Amazon Business Model

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This was done as part of a coursework for the Business Model class at Heriot-Watt University. …

This was done as part of a coursework for the Business Model class at Heriot-Watt University.

It was used only in educational services.

I hope you enjoy it and learn something form it, because we certainly learned a lot.

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  • ASK IF WE SHOULD PUT THIRD PARTY SELLERS IN AUCTION AND Zshop MODEL AND MARKETPLACES AS PARTNERS AS WELL AS CUSTOMERDiscuss about Bait & Hook model for Kindle/eBooks

Transcript

  • 1. Virginia Rosales
    AnabelJuárez
    Jaime Millán
    Vladimir Matović
    October 2010
    Business Models: Themes and Issues
  • 2. - from A to Z
    Company Overview
    Mission, Vision & Values
    Core Value Proposition, Objective & Strategy
    Three Customer Sets
    Attention Economy and e-Trust
    Business Model
    Amazon.com Business Model Evolution
    Business Model Canvas – The 9 Building Blocks
    eBook/Kindle
    Value Capture
    Diversifying Revenue Streams
    Geographical Expansion & Product Range
    Amazon.com Acquisitions and Investments
    Sales
    Conclusion
    Sky is the limit
    References
  • 3. - from A to Z
    Company Overview
    Mission, Vision & Values
    Core Value Proposition, Objective & Strategy
    Three Customer Sets
    Attention Economy and e-Trust
    Business Model
    Amazon.com Business Model Evolution
    Business Model Canvas – The 9 Building Blocks
    eBook/Kindle
    Value Capture
    Diversifying Revenue Streams
    Geographical Expansion & Product Range
    Amazon.com Acquisitions and Investments
    Sales
    Conclusion
    Sky is the limit
    References
  • 4. Company Overview
  • 5.
  • 6.
  • 7. Strategy
    Source: www.amazon.com
  • 8. Three Customer Sets
    Who want to buy products on Amazon
    Consumers
    Who want to use Amazon developing services
    Who want to sell products on Amazon
    Sellers
    Developers
  • 9. - from A to Z
    Company Overview
    Mission, Vision & Values
    Core Value Proposition, Objective & Strategy
    Three Customer Sets
    Attention Economy and e-Trust
    Business Model
    Amazon.com Business Model Evolution
    Business Model Canvas – The 9 Building Blocks
    eBook/Kindle
    Value Capture
    Diversifying Revenue Streams
    Geographical Expansion & Product Range
    Amazon.com Acquisitions and Investments
    Sales
    Conclusion
    Sky is the limit
    References
  • 10. - from A to Z
    Company Overview
    Mission, Vision & Values
    Core Value Proposition, Objective & Strategy
    Three Customer Sets
    Attention Economy and e-Trust
    Business Model
    Amazon.com Business Model Evolution
    Business Model Canvas – The 9 Building Blocks
    eBook/Kindle
    Value Capture
    Diversifying Revenue Streams
    Geographical Expansion & Product Range
    Amazon.com Acquisitions and Investments
    Sales
    Conclusion
    Sky is the limit
    References
  • 11. e-Trust
    Brand Differentiation
    Customer Loyalty
    How long do you stay @ ?
    GOAL:
    Attentionattraction and retention
    Customer’s needs
    Relevant Content
    Frequent Update
    Buying habits
    Reactions to Web site design
    Demographics
    Favorite and least favorite products
    HOW?
    Quality
    Value
    Timeliness
    Appropriateness of Goods & Services
    Business Reputation
    Security in Transactions
  • 12. How long do you stay @ ?
    Stickiness
    Holds customers and keeps them coming back for more!
    Measurement: *Time spent at a website
    *Number of visits per person
    *Number of pages viewed
  • 13. Content
    Products &
    Services
  • 14. Interactivity &
    Production Values
  • 15. Co-Creation &
    Recognition
    Personalization
    Customization
    Ownership &
    Belonging
  • 16. Variety
    2
    Easy
    Navigation
    1
    3
    4
    5
    Speed & Delivery
  • 17. - from A to Z
    Company Overview
    Mission, Vision & Values
    Core Value Proposition, Objective & Strategy
    Three Customer Sets
    Attention Economy and e-Trust
    Business Model
    Amazon.com Business Model Evolution
    Business Model Canvas – The 9 Building Blocks
    eBook/Kindle
    Value Capture
    Diversifying Revenue Streams
    Geographical Expansion & Product Range
    Amazon.com Acquisitions and Investments
    Sales
    Conclusion
    Sky is the limit
    References
  • 18. - from A to Z
    Company Overview
    Mission, Vision & Values
    Core Value Proposition, Objective & Strategy
    Three Customer Sets
    Attention Economy and e-Trust
    Business Model
    Amazon.com Business Model Evolution
    Business Model Canvas – The 9 Building Blocks
    eBook/Kindle
    Value Capture
    Diversifying Revenue Streams
    Geographical Expansion & Product Range
    Amazon.com Acquisitions and Investments
    Sales
    Conclusion
    Sky is the limit
    References
  • 19. 1995
    Business Model Evolution
    1999
    OnLine Book Retailing
    2000
    Auctions & zShops
    Marketplace
    2001
    Partherships
    &
    Logistic Services
    E-commerce Platform/
    Web Services
    2002
    2007
    eBooks/Kindle
    2010
  • 20. Business Model Canvas9 building blocks
    Value Proposition
    (VP)
  • 21. Business Model Canvas
    eBooks/Kindle
    E-commerce Platform/Web Services
    Online Retailing
    Auctions & zShops
    Partnerships and Logistic Service Provider
    Marketplaces
    AUTOMATED SERVICES & CO-CREATION (CUSTOMISED ONLINE PROFILES & RECOMMENDATIONS)
    LOW PRICES
    CONVENIENCE
    WIDE SELECTION
    CUSTOMER EXPERIENCE
    GLOBAL MARKET (CONSUMERS)
    LOGISTIC PARTNERS
    AFFILIATES (PUBLISHERS, AUTHORS, BOOKSTORES…)
    FULFILMENT & IT INFRASTRUCTURE DEVELOPMENT AND MAINTENANCE
    GLOBAL MARKET (SELLERS & CONSUMERS)
    INTERMEDIATION SERVICES
    PRODUCT DEVELOPMENT, AND PROMOTION
    PARTNERSHIPS & ALLIANCES
    SELLERS (COMPANIES & INDIVIDUALS)
    AGGREGATION OF DEMAND (LONGTAIL)
    HARDWARE MANUFACTURERS
    COMPANIES (ONLINE & TRADITIONAL RETAILERS)
    AMAZON.COM (& OVERSEAS SITES)
    AFFILIATES
    FULFILMENT
    IT INFRASTRUCTURE, SOFTWARE & EXPERTS
    GLOBAL FULFILMENT INFRASTRUCTURE
    COMPANIES (ONLINE & TRADITIONAL RETAILERS)
    MASS-CUSTOMISED WEB SERVICES
    DEVELOPERS
    LOGISTICS NETWORK
    PORTABLE DEVICE
    APIs
    MARKETING
    TECHNOLOGY & CONTENT
    FULFILMENT
    SALES MARGINS
    COMMISSIONS
  • 22. eBooks/Kindle
    Amazon reported 80% of eBook market
    >450 000 books available for download
    Kindle eBooks add 35% to a physical book’s sale on Amazon
    Newspapers, magazines and blogs subscription
    eBooks downloaded from Amazon not exclusive to Kindle
    Amazon keeps 65% of the revenue from all eBook sales for Kindle
    "Our vision is to have every book ever printed, in any language, all available in tinder 60 seconds.“
    - Jeff Bezos, Amazon.com CEO
  • 23. Capture Value:transforming earnings into profits
    Maximize Profit Dollars,
    Not Margins
  • 24. - from A to Z
    Company Overview
    Mission, Vision & Values
    Core Value Proposition, Objective & Strategy
    Three Customer Sets
    Attention Economy and e-Trust
    Business Model
    Amazon.com Business Model Evolution
    Business Model Canvas – The 9 Building Blocks
    eBook/Kindle
    Value Capture
    Diversifying Revenue Streams
    Geographical Expansion & Product Range
    Amazon.com Acquisitions and Investments
    Sales
    Conclusion
    Sky is the limit
    References
  • 25. - from A to Z
    Company Overview
    Mission, Vision & Values
    Core Value Proposition, Objective & Strategy
    Three Customer Sets
    Attention Economy and e-Trust
    Business Model
    Amazon.com Business Model Evolution
    Business Model Canvas – The 9 Building Blocks
    eBook/Kindle
    Value Capture
    Diversifying Revenue Streams
    Geographical Expansion & Product Range
    Amazon.com Acquisitions and Investments
    Sales
    Conclusion
    Sky is the limit
    References
  • 26. Source: www.amazon.com
  • 27. Source: www.meettheboss.com
  • 28. z
    Worldwide Sales Mix
    Q4 ’09– Net Sales $24,509 MM
    Q1 ’04 – Net Sales $5,710 MM
    2%
    3%
    22%
    45%
    76%
    52%
    Source: www.amazon.com
    WW Media (Books, Music, Movies, Video Games and Consoles, Software
    and Digital Downloads)
    WW Electronics & Other General Merchendise (EGM)
    WW Other (Marketing and Promotional Activities, Amazon Web Services, Amazon Enterprise Solutions, & Co-branded Credit Cards)
  • 29. International Sales
    MM
    • 2008 International sales 47% of WW sales, up from 45% in 2007
    • Shipments to over 200 countries
    Source: www.amazon.com
  • 30. - from A to Z
    Company Overview
    Mission, Vision & Values
    Core Value Proposition, Objective & Strategy
    Three Customer Sets
    Attention Economy and e-Trust
    Business Model
    Amazon.com Business Model Evolution
    Business Model Canvas – The 9 Building Blocks
    eBook/Kindle
    Value Capture
    Diversifying Revenue Streams
    Geographical Expansion & Product Range
    Amazon.com Acquisitions and Investments
    Sales
    Conclusion
    Sky is the limit
    References
  • 31. - from A to Z
    Company Overview
    Mission, Vision & Values
    Core Value Proposition, Objective & Strategy
    Three Customer Sets
    Attention Economy and e-Trust
    Business Model
    Amazon.com Business Model Evolution
    Business Model Canvas – The 9 Building Blocks
    eBook/Kindle
    Value Capture
    Diversifying Revenue Streams
    Geographical Expansion & Product Range
    Amazon.com Acquisitions and Investments
    Sales
    Conclusion
    Sky is the limit
    References
  • 32. Conclusion
    How do you explain the BM Evolution
    B2C and B2B
    Amazon’s BM evolution followed a logical path taking advantage of the resources, channels and knowledge previously built to create and/or innovate
    Why Expansion of product range
    Enter different markets, use the strength of the brand to expand,
    “easy” to replication over different products (using same resources) and geographical areas
    Better margins
    Generate revenue and sustainability at its core
    “Earth’s biggest selection”
    How Attention economy explains business model
    Attention = currency, community stickiness tactic
    Trust the company
    Easy to navigate and frequent updates
    3 pilars: Convenience, price & wide selection
    Weaknesses Amazon vs. eBay (Why)
    E-bay had the advantage of the first mover on e-auctions. Customers expected rapid response. Different kind of customers.
  • 33. Conclusion
  • 34. Sky is the limit
  • 35. Thank you!
  • 36. References
    Websites:
    www.amazon.com
    www.youtube.com
    www.charlierose.com
    www.meettheboss.com
    SOLOMON D. 2009. Questions for Jeffrey P. Bezos: Book Learning. Available at:http://www.nytimes.com/2009/12/06/magazine/06fob-q4-t.html " [22.10.2010].
    Articles:
    2006. From Niches to Riches: Anatomy of the Long Tail. MIT Sloan Management Review, 47, 67-71.
    2008. Amazon.com: The Brink of Bankruptcy.
    ANTE, S. E. 2009. HOW AMAZON IS TURNING OPINIONS INTO GOLD. BusinessWeek, 047-048.
    DAVENPORT, T. H. & BECK, J. C. 2000. GETTING the ATTENTION You Need. Harvard Business Review, 78, 118-126.
    HOF, R. D. 2003. Reprogramming Amazon. BusinessWeek, 82-86.
    KIRBY, J. & STEWART, T. A. 2007. The Institutional YES. (cover story). Harvard Business School Publication Corp.
    MUDAMBI, S. M. & SCHUFF, D. 2010. WHAT MAKES A HELPFUL ONLINE REVIEW? A STUDY OF CUSTOMER REVIEWS ON AMAZON.COM. MIS Quarterly, 34, 185-200.
    O'BRIEN, J. M. & SHAMBORA, J. 2009. AMAZON'S NEXT REVOLUTION. (cover story). Fortune, 159, 68-76.
    PENENBERG, A. L. 2009. The Evolution of Amazon. (cover story). Fast Company, 66-74.
    TONKERY, D. 2010. Amazon Versus Ebook Publishers. Searcher, 18, 41-43.
    ZMUDA, N. 2009. AMAZON SAYS 'I DO' TO ZAPPOS. NOW WHAT? Advertising Age, 80, 4-4.
    Books:
    DAVENPORT, T. and BECK, J., 2001. The Attention Economy, Understanding the New Currency of Business. 1st ed. United States of America: Harvard Business School Press
    DEMAIO, H., 2001. B2B and Beyond, New Business Models Built on Trust. 1st ed. United States of America: John Wiley & Sons
    OSTERWALDER A. and PIGNEUR Y., 2010. Business Model Generation, Hoboken: John Wiley & Sons
    SPECTOR, R., 2000. Amazon.com: Get Big Fast. London: Random House Business Books