Market Success Story Syndicate Group No.6 November 2007

Agenda Who are Amazon? Interesting facts to keep you awake How they achieved success? But… vulnerabilities Conclusion

Who are Amazon?

Interesting facts to keep you awake

How they achieved success?

But… vulnerabilities

Conclusion

Who are Amazon? Amazon.com (NASDAQ: AMZN), a Fortune 500 company based in Seattle, Washington USA. It was one of the first major companies to sell goods over the Internet and was one of the iconic stocks of the dot-com bubble. Since its creation in 1995 when Amazon began as an online bookstore, they have significantly expanded the product offerings, international sites, and worldwide network of fulfillment and customer-service centers. A blend of traditional retail principles and innovative application of marketing practices Now after twelve years, Amazon has $11 billion USD

Amazon.com (NASDAQ: AMZN), a Fortune 500 company based in Seattle, Washington USA. It was one of the first major companies to sell goods over the Internet and was one of the iconic stocks of the dot-com bubble.

Since its creation in 1995 when Amazon began as an online bookstore, they have significantly expanded the product offerings, international sites, and worldwide network of fulfillment and customer-service centers.

A blend of traditional retail principles and innovative application of marketing practices

Now after twelve years, Amazon has $11 billion USD

Financial Performance <WHICH GRAPH?>

<WHICH GRAPH?>

Amazon Vision ‘‘ Earths most customer centric company - Start with customers and work backwards’’ -Jeff Bezos, Founder

‘‘ Earths most customer centric company

- Start with customers and work backwards’’

Interesting facts to keep you awake What was the first name for the company (before Amazon)? Cadabra Inc. Where does the ‘Amazon’ name come from? The name reflected the vision of Jeff Bezos, to produce a large scale phenomenon like the Amazon river. How much money has Amazon spent on real state (headquarters, warehouses, etc)? Amazon owns zero real estate! In 2003 Amazon passed the $5 billion sales mark – it took Wal-Mart 20 years to achieve this. Amazon has only 13,900 employees (2006) , Wal-Mart has 1.9 million employees (2007) .

What was the first name for the company (before Amazon)?

Cadabra Inc.

Where does the ‘Amazon’ name come from?

The name reflected the vision of Jeff Bezos, to produce a large scale phenomenon like the Amazon river.

How much money has Amazon spent on real state (headquarters, warehouses, etc)?

Amazon owns zero real estate!

In 2003 Amazon passed the $5 billion sales mark – it took Wal-Mart 20 years to achieve this. Amazon has only 13,900 employees (2006) , Wal-Mart has 1.9 million employees (2007) .

Interesting facts to keep you awake Which does Amazon do with main competitors (big traditional bookstores) ? Create a partnership! Amazon markets and distributes their books online in return for a commission online (Waterstones – UK, Borders – US) <ANYTHING ELSE> ? <ANYTHING ELSE>

Which does Amazon do with main competitors (big traditional bookstores) ?

Create a partnership! Amazon markets and distributes their books online in return for a commission online (Waterstones – UK, Borders – US)

<ANYTHING ELSE> ?

<ANYTHING ELSE>

“ Be afraid of our customers, because those are the folks who have the money. Our competitor are never going to send us money” - Jeff Bezos, Founder.

“ We don’t make money when we sell things; we make money when we help customers make purchase decisions” - Jeff Bezos, Founder.

“ But if your focus is on customers, you keep improving” - Jeff Bezos, Founder.

“ Data is King at Amazon”

“ Today automation replaces intuition”

“ Amazon is not merely a store, but an immense repository of facts”

“ If we can get this to work, it will be big” - Jeff Bezos, Founder.

What makes Amazon successful Copy Chart from Darren’s Presentation

Copy Chart from Darren’s Presentation

Who is clicking…..? ’Be afraid of the customers, because those are the folks who have money. Our competitors are never going to send us money’’ – Jeff Bezos Customer is the King – Create an experience for him ‘ Culture of Metrics’ Customer’s each ‘click’ on website is recorded- a valuable asset for Amazon Allows clear sensing of customer needs & preferences Formation of ‘S Team’ to address strategy issues Customer is the key at all levels in the Organisation Customer Loyalty and repeat purchase Amazon do not over emphasise competitors – It has turned some of them like Borders in to collaborators

Customer is the King – Create an experience for him

‘ Culture of Metrics’ Customer’s each ‘click’ on website is recorded- a valuable asset for Amazon

Allows clear sensing of customer needs & preferences

Formation of ‘S Team’ to address strategy issues

Customer is the key at all levels in the Organisation

Customer Loyalty and repeat purchase

Amazon do not over emphasise competitors – It has turned some of them like Borders in to collaborators

Whole World is market place….. Strategic change in vision from being an online bookstore in 1995 to becoming world’s largest online store Leveraged on the strength of brand value and business model Very low fixed costs Geographical expansion in Canada, Western Europe, Japan & most recently China.

Strategic change in vision from being an online bookstore in 1995 to becoming world’s largest online store

Leveraged on the strength of brand value and business model

Very low fixed costs

Geographical expansion in Canada, Western Europe, Japan & most recently China.

Amazon’s three pillars of innovation ’Relentlessly focus on customer experience by offering low prices, convenience and a wide selection of merchandise’ – Jeff Bezos Add Picture from Darren’s presentation

Add Picture from Darren’s presentation

Amazon …an experience Selection Wide product range Books, videos, many more …and they have a category ‘Crazy Things’ under Toys & Games ! Convenience Selection available on your screen Various price ranges – New & Used Delivery in shortest possible time Prices Prices revised daily Many times Free Shipping ‘ Goldbox’ – Discounts on new categories

Selection

Wide product range

Books, videos, many more …and they have a category ‘Crazy Things’ under Toys & Games !

Convenience

Selection available on your screen

Various price ranges – New & Used

Delivery in shortest possible time

Prices

Prices revised daily

Many times Free Shipping

‘ Goldbox’ – Discounts on new categories

Relationships matter Customers Effective Process management Satisfied Customer Low costs Competitors Turn them into collaborators Superior Technology Platform – value for competitors to use the platform, advantage for Amazon to offer wider choice Collaborators Amazon Marketplace – Customers and retailers can sell their new and old items Amazon Merchants – Larger third party Merchants Amazon Affiliate Programme- Link on Amazon site – fees to Amazon

Customers

Effective Process management

Satisfied Customer

Low costs

Competitors

Turn them into collaborators

Superior Technology Platform – value for competitors to use the platform, advantage for Amazon to offer wider choice

Collaborators

Amazon Marketplace – Customers and retailers can sell their new and old items

Amazon Merchants – Larger third party Merchants

Amazon Affiliate Programme- Link on Amazon site – fees to Amazon

Difficult terrain for The Mighty River Presence in new markets- Lack of local knowledge and practices Better known local brands Too many new categories may result in loosing focus Pace of change in technology and high level of investment required to upgrade- may impact customer service levels Impact on image – service levels of associates Strain on operational, management & financial resources

Presence in new markets- Lack of local knowledge and practices

Better known local brands

Too many new categories may result in loosing focus

Pace of change in technology and high level of investment required to upgrade- may impact customer service levels

Impact on image – service levels of associates

Strain on operational, management & financial resources

Conclusion Amazon – Certainly a success story Customer at heart of everything they do A model for innovative implementation of Marketing Strategic Pathway Not just big ….spectacular Needs to optimise growth to avoid ‘overexpansion’ Dependency on collaborators is high Remember there are ‘Anti Amazon’ sites on WWW

Amazon – Certainly a success story

Customer at heart of everything they do

A model for innovative implementation of Marketing Strategic Pathway

Not just big ….spectacular

Needs to optimise growth to avoid ‘overexpansion’

Dependency on collaborators is high

Remember there are ‘Anti Amazon’ sites on WWW