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Amazon.com Business CasePresentationQibin XiongMarketing 476
Amazon’s Overview and History• The worlds largest online retailer.• Product and Service: Retail goods, Consumerelectronics, Digital content, Amazon Prime, Privatelabels and exclusive marketingarrangements, Computing services, Contentproduction and Donations• An Americanmultinational electroniccommerce companywith headquarters inSeattle, Washington, United States.Amazon.com, Inc
Amazon’s Overview and History• Amazon.com was established inJuly 1994 and the site went onlineas Amazon.com in 1995.• The company began as an onlinebookstore. In the first two monthsof business, Amazon sold to all 50states and over 45 countries.Within two months, Amazonssales were up to $20,000/week.• Amazon has separate retailwebsites for UnitedStates, Canada, UnitedKingdom, France, Germany, India,Italy, Spain, Brazil, Japan, andChina, with international shippingto certain other countries for someof its products
Amazon’s Decentralization• Retail goods: Amazon product linesinclude books, music CDs, videotapes andDVDs, software, consumer electronics,kitchen items, tools, lawn and gardenitems, toys & games, baby products,apparel, sporting goods, gourmet food,jewelry, watches, health and personal-careitems, beauty products, musicalinstruments, clothing, industrial & scientificsupplies, and groceries.• Amazon Prime: Amazon Prime is aservice of free two-day shipping on alleligible purchases, for a flat annual fee, aswell as discounted one-day shipping rates.• Computing services: Amazon launchedAmazon Web Services (AWS) in 2002,which provides programmatic access tolatent features on its website.• Etc.
How Amazon works• Order product• Chooses the most typical means ofpayment, by credit card.• Amazon asks the credit-card company toverify the card and cover the payment.• As soon as payment has been settled, theorder goes to the supplier• Supplier send Amazon a confirmation thatthe product is ready• Amazon contacts a logistics company, inthis case FedEx. FedEx delivers the productto the customer.
Amazon’s Key Competitors• ebay: an American multinationalinternet consumer-to-consumercorporation, headquartered inSan Jose, California.• Best-Deals.com: Allow customersto compare prices on largestselection ofMusic, CDs, DVDs, Videos, Electronics, VideoGames, Computers, CellPhones…• Instant Finder: a global onlinemarket place for buyers, sellersand advertisers. As a next-generation marketplace…
Amazon’s Key Partners• Amazon.com operates retail websitesfor Sears Canada, bebeStores, Timex, Marks &Spencer, Mothercare, and Lacoste.• DC Comics: On October18, 2011, Amazon.com announced apartnership with DC Comics for theexclusive digital rights to manypopular comics• ToysRUs.com: Until June30, 2006, typing ToysRUs.com into abrowser would bring upAmazon.coms "Toys & Games" tab;however, this relationship wasterminated due to a lawsuit.
Amazon’s User Base• According to Business Week, the retail sideof business has around 121 million activeusers worldwide in 2013.• Target Users:– People dont want to waste a lot of time shoppingand comparing prices– People who pretty much know what they want.– People who like the safety and security ofshopping– People who want to get their item, then move onwith their lives.– For them, the "best price" is the price in the "BuyBox" on Amazon for the item they want.
Amazon’s Decentralized Structurein Eco-System• The companys ecosystem has been built tolast and will allow Amazon to dominate theretail space in the coming years. Amazonsbusiness model is very similar to the razor-and-blade concept investors are familiarwith, with the main difference being that onceAmazon sells you the razor, it can sell morethan just the blades to go along with it. Thatssomething that many of the other dominantplayers in the technology world cant do.
Amazon’s Assets• Amazon.com Total Assets: 28.38B for March 31, 2013
• Intangible assets: Acquired intangible assets, includedwithin “Other assets” on Amazon’s consolidatedbalance sheets, consist of the following (in millions):Amazon’s Intangible Assets
Amazon’s Funding• Initially funded by Jeff Bezos, the billionairefounder of Amazon.com.• Amazon raises big money with debt offeringAmazon.com said it is offering a whopping$1.25 billion in convertible debt to institutionalinvestors.• Wall Street analysts speculate that Amazonwill use the proceeds to build new highlyautomated distribution facilities and to fundinternational expansion.
Amazon’s Unique Features• Shopping at Amazon.com is fast andsafe, incorporating a simple ordering system, securecredit card transactions, e-mail communication withcustomers and direct shipping worldwide.• WindowShop: presents some of the store’s newestand most popular movies, books, and video games ina way that makes browsing the online megastoreactually fun.• Single Sign-On: Integrate your own authenticationsystem.• 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’sservice is the recommendations it gives to customerswho are looking for books and other products theypurchase.• Having all sorts of options such as being able to seegreat photos of products and knowing that shipping isfree is nice, but being able to know what otherpurchased can do the most in helping you decide whatproduct is best for you.• Birds of a feather do indeed flock together. AlthoughAmazon.com and other retailers have the money to finetune their personalization recommendations systemsthese 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 internationalWeb sites, such as Amazon Marketplace.• Amazon Marketplace is Amazon’s fixed price online marketplacethat allows sellers to offer their goods alongside Amazon’s offerings. Buyers can buy new and used items sold directly by a thirdparty 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 toAmazon.com in September 1999.• Amazon.com also owns the "1-Click"trademark, which is the technique of allowingcustomers to make online purchases with a singleclick, with the payment information needed tocomplete the purchase already entered by the userpreviously.