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Amazon - Brand Management


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This report is a report on Amazon from the Brand Management perspective. It covers a 360 degree view of the Amazon brand.

This report is a report on Amazon from the Brand Management perspective. It covers a 360 degree view of the Amazon brand.

Published in: Business, Technology
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  • 1. 1 | P a g e AMAZON.COM, INC. BRAND MANAGEMENT A Project Report Submitted by: HET MAVANI 12BSPHH010385 09-Sep-13 Submitted under the guidance of Prof. Sriram Rajann, IBS Hyderabad.
  • 2. 2 | P a g e Contents 1 Introduction ..........................................................................................................................................1 1.1 Origin and Genesis of 1.2 Timeline of events related to 2 Organizational Structure.....................................................................................................................14 2.1 Structure of 2.2 Corporate Management Team of .........................................................................16 2.3 Marketing Managers and Brand Managers at 3 Brand Portfolio....................................................................................................................................18 3.1 Amazon Kindle ............................................................................................................................19 3.2 Amazon Web Services.................................................................................................................23 3.3 Digital Brand Portfolio.................................................................................................................27 3.4 STP Analysis.................................................................................................................................27 4 Strategic Brand Campaigns.................................................................................................................29 4.1 Advertising Agencies...................................................................................................................29 4.2 Campaigns...................................................................................................................................30 5 Marketing Environment......................................................................................................................39 5.1 E-Commerce Industry .................................................................................................................39 5.2 Sector Analysis ............................................................................................................................41 5.3 Key Drivers of Growth for Amazon.............................................................................................44 6 Marketing Strategies...........................................................................................................................46 6.1 BCG Matrix..................................................................................................................................46 6.2 Porter’s Five Forces.....................................................................................................................47 6.3 Strategic Position ........................................................................................................................50 7 Pricing Strategies.................................................................................................................................58 7.1 Cost Leadership...........................................................................................................................58 7.2 Cost Minimization Strategies......................................................................................................59 8 Consumer Behavior Elements.............................................................................................................61 8.1 Consumer Decision-Making Process...........................................................................................61 8.2 Consumer Insights.......................................................................................................................62
  • 3. 3 | P a g e 8.3 Customer Loyalty ........................................................................................................................64 9 Brand Positioning................................................................................................................................66 9.1 Layering of the Brand..................................................................................................................66 9.2 Brand Architecture......................................................................................................................67 9.3 Brand Personality........................................................................................................................68 9.4 Measuring Brand Value...............................................................................................................68 9.5 Brand Identity .............................................................................................................................69 10 Competitor Analysis........................................................................................................................70 10.1 Classification of Competitors......................................................................................................71 10.2 Amazon vs. ebay .........................................................................................................................72 10.3 Amazon vs. Wal-Mart..................................................................................................................73 10.4 SWOT Analysis.............................................................................................................................74 11 Recommendations for ..............................................................................................75 11.1 Recommended Strategies...........................................................................................................75 12 Future of the Brand.........................................................................................................................76 12.1 Short-term Goals.........................................................................................................................76 12.2 Target Company for Acquisition .................................................................................................79 13 References ......................................................................................................................................80
  • 4. 1 | P a g e 1 Introduction, which is branded as ―Earth’s Most Customer-Centric Company‖ and world’s largest online retailer, is an e-commerce multinational company based in Seattle, Washington, USA. Started as an online bookstore, diversified quickly, selling DVDs, VHSs, CDs, software, electronics, video games, apparel, furniture, and many other products. The company also produces consumer electronics—notably the Amazon Kindle e-book reader and the Kindle Fire tablet computer—and is a major provider of cloud computing services. In July 1994, Jeff Bezos, founder and CEO, incorporated the company (as Cadabra) and in 1995, the site went online as The company was renamed after the Amazon River located in South America, which is one of the largest rivers in the world. Amazon has separate retail websites for various countries including 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 and maintains dozens of fulfillment centers around the world which encompass more than 26 million square feet.
  • 5. 2 | P a g e Table 1-1 Range of Amazon Products Unlimited Instant Videos Appstore for Android Electronics & Computers Toys, Kids and Baby MP3s and Cloud Player Digital Games and Software Home, Garden & Tools Clothing, Shoes and Jewelry Amazon Cloud Drive Movies, Music & Games Grocery, Health and Beauty Sports and Outdoors Kindle E-readers Kindle Fire Tablets Books & Audible Automotive and Industrial Table 1-2 Amazon Companies Company Offerings Website 6pm Score deals on fashion brands AbeBooks Rare Books & Text Books Kids’ Sports, Outdoor and Dance Gear AmazonFresh Groceries and More Right to Your Door Amazon Local Great Local Deals in Your City AmazonSupply Business, Industrial and Scientific Supplies AmazonWebServices Scalable Cloud Services Askville Community Answers Audible Download Audio Books Prestige Beauty Delivered Book Depository Books With Free Delivery Worldwide Books For Children Of All Ages Kitchen, Storage & Everything Home CreateSpace Indie Print Publishing Made Easy Everything But The Baby DPReview Digital Photography Fabric Sewing, Quilting & Knitting IMDb Movies, TV and Celebrities Shop Online in India Kindle Direct Publishing Indie Digital Publishing Made Easy Kids’ Clothing and Shoes MYHABIT Private Fashion Designer Sales Shopbop Designer Fashion Brands Health, Beauty and Home Essentials Everything to Live Life Green Everything For Your Pet Woot Never Gonna Give You Up A Happy Place To Shop For Toys Zappos Shoes & Clothing
  • 6. 3 | P a g e 1.1 Origin and Genesis of In May 1994, Jeff Bezos, a 30-year old employee of a major Wal Street firm D.E. Shaw, was sitting at the computer in his39th flooroffice in midtown Manhattan,and hefound a site that purported to measure Netusage while exploring the still immature Internet.To his surprise, the Internetwas growing at a rate of 2,300% a year. The Net had been, until 1994, alargely commerce-freezone, since it was createdby the Defense Department to keep anetwork of computers communicating in case of nuclear attack. This system then evolvedinto a network over which university and government researchers could exchange messages and data across most computer platforms.The government decided to get out of the Internet business and allow private companies to step in and develop it. Bezos felt that he could have a first-mover advantage in e-commerce. Hence, he researchedmail- ordercompanies, thinking that things thatsold well by mail would do well on the internet. He analyzed the top 20 mail-order products and searched for products where he could create value for customers. This ultimately led to the idea of books. A good catalog of books would contain thousands or even millions of listings, which would make it as big as a phone book, which were too expensive to mail. This was perfect for the Internet, which is the ideal platform for such a huge amount of information. So, Bezos finally decided that his new business would sell books online, catering the large world-wide demand for literature and exploiting the low price points for books with huge availability. Table 1-3 - CEO's Current Status Jeff Bezos – CEO, Net Worth $ 25.2 billion (as of March 2013) Age 49 Source of Wealth, self-made Residence Seattle, WA Country of Citizenship United States Education Bachelor of Arts / Science, Princeton University Marital Status Married Children 4 Forbes Billionaire Rank 2013 #19 (Source: 1-1 Amazon Founder Jeff Bezos
  • 7. 4 | P a g e Amazonwas originally founded in the garage of a modest two-bedroom home rented by Bezos in Bellevue, a Seattle suburb in Washington. The company began as an online bookstore and opened its website on July 16, 1995. In the initial days of business, without any press, Amazon sold to all 50 states and over 45 countries. Its sales were up to $20,000/week within two months. While the largest brick and mortar bookstores and mail order catalogs might offer over 200,000 titles, an online bookstore could offer much more, since they had an almost unlimited virtual (not actual) warehouse: those of the actual product makers and suppliers. Bezos wanted a name for his company that began with "A‖, which would make it appear early in an alphabetically arranged directory. He began looking through the dictionary and selected "Amazon" because it was a place that was "exotic and different" just as he planned for his store to be. He also planned to make his store the biggest in the world, just like the river Amazon. In May 1996, Amazon was on the front page of the Wall Street Journal, which resulted in two things: it introduced Amazon to a whole new stream of customers, and it captured the attention of rivals like Barnes & Noble and Borders Group, which were yet to move online. appeared a year later just before Amazon's IPO (Initial Public Offering), which went off at a modest $18 a share. The celebrated venture capital firm Kleiner Perkins Caufield & Byers was its biggest institutional investor before the IPO. Some of the Wall Street companies were afraid of the threat posed by the giant Barnes & Noble, which looked unbeatable with a national network of bookstores. But did nothing to stall Amazon's amazing sales. Since 2000, Amazon's logo has been featured as a curved arrow (shaped like a smile) leading from A to Z, indicating that they carry every product from A to Z, and they intend to serve with a smile.
  • 8. 5 | P a g e 1.2 Timeline of events related to 1994 July Company Incorporated 1995 July 16th The website was put online. July Sells First Book, "Fluid Concepts & Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought" 1996 July Launches Associates Program 1997 May Announces IPO, Begins Trading on NASDAQ Under "AMZN" September Introduces 1-Click™ Shopping November Opens Fulfillment Center in New Castle, Delaware 1998 February Launches Advantage Program April Acquires Internet Movie Database June Opens Music Store October Launches First International Sites - (UK) and (Germany) November Opens DVD/Video Store 1999 January Opens Fulfillment Center in Fernley, Nevada March Launches Auctions April Opens Fulfillment Center in Coffeyville, Kansas May Opens Fulfillment Centers in Campbellsville and Lexington, Kentucky June Acquires Alexa Internet July Opens Consumer Electronics, and Toys & Games Stores September Launches zShops October Opens Customer Service Center in Tacoma, Washington Acquires Tool Crib of the North's Online and Catalog Sales Division November Opens Home Improvement, Software, Video Games and Gift Ideas Stores December Jeff Bezos Named Time Magazine "Person Of The Year" 2000 January Opens Customer Service Center in Huntington, West Virginia May Opens Kitchen Store August Announces Toys "R" Us Alliance Launches (France) October Opens Camera & Photo Store November Launches (Japan) Launches Marketplace Introduces First Free Super Saver Shipping Offer (Orders Over $100) 2001 April Announces Borders Group Alliance August Introduces In-Store Pick Up September Announces Target Stores Alliance October Introduces Look Inside The Book™ 2002 June Launches (Canada) July Launches Amazon Web Services August Lowers Free Super Saver Shipping Threshold to $25
  • 9. 6 | P a g e September Opens Office Products Store November Opens Apparel & Accessories Store 2003 April Announces National Basketball Association Alliance June Launches Amazon Services, Inc. Subsidiary September Opens Sports & Outdoor Store October Introduces Search Inside The Book™ Launches, Inc. Subsidiary November Opens Gourmet Food Store December Opens Health & Personal Care Store 2004 January Introduces Presidential Candidates Feature April Opens Jewelry Store May Announces The Bombay Company Alliance June Opens Software Development Center in Scotland September Acquires Limited Launches Paris Hilton Jewelry Line Exclusively on Subsidiary Launches New Web Site and A9 Toolbar October Amazon Web Services Offerings Give Developers Unprecedented Access to Amazon Product Data and Technology, and First-Ever Access to Data Compiled by Alexa Internet Launches Beauty Store November Introduces Toolbar for MozillaFirefox Launches Amazon Theater December Announces Opportunity to Contribute to American Red Cross Tsunami Disaster Relief Efforts on Reports Busiest Holiday Season Ever 2005 January Announces Diane Von Furstenberg Alliance Launches Yellow Pages February Introduces Amazon Prime Announces Nonprofit Innovation Award April Acquires BookSurge LLC May Introduces Amazon Wedding June Celebrates 10th Anniversary with Employee Event Featuring Performances by Bob Dylan, Norah Jones and Bill Maher Announces Second Short-Film Competition July Launches Special Deliveries with Select Celebrities and UPS Acquires CustomFlix Labs, Inc. August Launches Maps Launches Amazon Shorts Launches the First The O.C. –Branded Women's Fashion Collection September Launches The Hollywood Prescription Opens Customer Service Center in Kennewick, Washington October Alexa Web Information Service Launches on Amazon Web Services Web Site
  • 10. 7 | P a g e Announces Fulfillment Agreement with November Launches New Gifting Experience Announces Record-Breaking Watch Sales Subsidiary Honored with Customer Care Award Announces Partnership with Celebrities to Raise Money for Hurricane Victims During Holiday Shopping Season December Announces Customers Ordered over 108 Million Items Worldwide During 11th Holiday Season 2006 January Announces it is the Largest Chinese Bookstore in the World Announces Alexa Top Sites Web Service for Developers Announces Amazon Fishbowl with Bill Maher February Launches Amazon Connect Announces Jewelry Sales Up More Than 100 Percent in Fourth Quarter 2005 Acquires March Launches Amazon Simple Storage Service (S3) April Announces Partnership Between Timex and Amazon Services Announces Partnership Between Benefit Cosmetics and Amazon Services Announces Partnership Between CustomFlix for DVD Distribution Launches the Media Gateway Program with CustomFlix May Announces Jewelry and Watch Sales Up More Than 100 Percent in First Quarter 2006 June Amazon Fishbowl with Bill Maher Premieres on Gateway Launches Emergency Preparedness Store to Offer Preparation and Recovery Products for Hurricane Season Unveils Exclusive The Devil Wears Prada Boutique in Apparel & Accessories Store Launches New Toy and Baby Stores with Largest Selection Ever July Launches Grocery Store Amazon Enterprise Solutions Extend E- Commerce Agreement with Target Corporation to 2010 Announces 22% Sales Growth Fueled by Lower Prices, Free Shipping Amazon Web Services Announces "Alexa Site Thumbnail" Now Available for Developers Announces Library Processing for Public and Academic Libraries Across the United States September Launches Amazon UnboxTM, a Digital Video Download Service with DVD-Quality Picture CustomFlix and Launch CD on Demand Service Launches WebStore and Fulfillment by Amazon for Small and Medium-Sized Businesses October Jewelry and Watches Sales up More Than 100% in Third
  • 11. 8 | P a g e Quarter 2006 November Voted #1 in Customer Service According to National Retail Survey Consumer Electronics Store Announces New Interest-Free Financing, Click-to-Call and Premium Delivery on Select Electronics Lets "Customers Vote" for Extraordinary Holiday Deals December CustomFlix Announces Support for Amazon Unbox Announces 12th Holiday Season is Best Ever 2007 January Launches, a shoe and handbag website that offers over 15,000 styles and free overnight shipping on all products February Announces Fourth Quarter Sales up 34%; Media Grows 25%; Electronics and Other General Merchandise Grows 55% Announces Jewelry and Watches Sales up More Than 100% in Fourth Quarter 2006 March "Amazon Unbox on TiVo" Available, Offering Over 1.5 Million Broadband-Ready TiVo Subscribers Access to Thousands of Movies and TV Shows Launches Classical Music Blowout Store April Launches "Go Indie" Music Store Announces First Quarter Sales Surpass $3 Billion, up 32% Year over Year -- Operating Profit Grows 38% -- Raises Financial Guidance May Announces Jewelry and Watch Sales Are Up More Than 100 Percent in First Quarter 2007 June becomes ―Joyo/Amazon‖ with a New Look and New Features July TiVo Subscribers Can Now Browse, Purchase and Rent Amazon Unbox Videos Directly From Their TiVo Box Announces Falls Church, Va., as the ''Harry-est Town'' in America Announces Second Quarter Sales up 35% Year over Year Thousands of National Archives Films to be Made Available Through CustomFlix Labs August Launches Jewelry & Watches Stores Internationally Announces Tuition & Textbooks Sweepstakes Grand Prize -- One Year of Tuition September Launches Public Beta of Amazon MP3 October Announces Plans to Open New Fulfillment Center in Munster, Indiana Announces Third Quarter Sales up 41% Year over Year November Amazon Web Services Offers European Storage for Amazon S3 Launches New Customer Video Reviews Launches The Holiday Toy List Amazon Web Services Offers European Storage for Amazon S3 Announces Amazon Customers Vote returns Launches Amazon Kindle Launches
  • 12. 9 | P a g e December Enhances Payment Options with Bill Me Later purchases J.K. Rowling's "The Tales of Beedle the Bard" Announces Its 13th Holiday Season is Best Ever 2008 January Announces Fourth Quarter Sales up 42% to $5.7 Billion Announces LOVEFiLM will Acquire Amazon's UK and German DVD Rental Business February Board of Directors Authorizes Debt and Stock Repurchase Programs Jewelry Store Retail Diamond Sales up More Than 100% in Fourth Quarter 2007 Launches Amazon Currency Converter March Amazon Launches New Applications on Facebook(R) Platform-- ''Amazon Giver'' and ''Amazon Grapevine'' Completes Acquisition of Audible Amazon Web Services Launches ''Elastic IPs'' April Launches "Amazon TextBuyIt" Announces First Quarter Sales up 37% to $4.1 Billion May Announces Jewelry Store Retail Diamond Sales up More Than 100% in First Quarter 2008 Announces Rhiannon D. as the Winner of the ''Amazon Beedle the Bard Ballad Writing Contest'' June Announces New Fulfillment Center in Goodyear, AZ Launches Office Supplies Store Acquires July Announces Second Quarter Sales up 41% to $4.06 Billion August Acquires AbeBooks Exclusively Offers Collector's Edition of "The Tales of Beedle the Bard" Amazon Web Services Launches Amazon Elastic Block Store for Amazon EC2 September Launches Election 2008 Store Launches Motorcycle & ATV Store Opens New TV Show Stores October Announces Third Quarter Sales up 31% to $4.26 Billion Amazon Web Services Launches Amazon EC2 for Windows November Announces Beginning of Multi-Year Frustration-Free Packaging Initiative Unveils 2008 Holiday Toy List Powered by Amazon Windowshop Announces Daily Deal Text Alerts Amazon Web Services Launches Amazon CloudFront Announces First-Ever Holiday Customer Review Team Internet Movie Database launches the German speaking December Amazon Web Services Launches "Public Data Sets on AWS" Announces 14th Holiday Season Is Best Ever
  • 13. 10 | P a g e 2009 January Announces Fourth Quarter Sales up 18% to $6.70 Billion Launches Inauguration Store February Introduces Amazon Kindle 2 March Introduces Kindle Application for iPhone and iPod Touch April Launches Xbox LIVE Store May Introduces Kindle DX Introduces AmazonEncore June Introduces Tom Douglas by Pinzon July Announces Second Quarter Sales up 14% to $4.65 Billion acquires Introduces AmazonWireless Launches Outdoor Recreation Store August Launches new free shopping application for Android September Introduces AmazonBasics October Announces Third Quarter Sales up 28% to $5.45 Billion Announces Kindle is for sale in more than 100 countries Announces Amazon Wish List's 10th Anniversary Launches Local Express Delivery Introduces Kindle for PC November Announces expansion of Amazon Web Services into Asia Launches Frustration-Free Packaging Certification Program Announces Kindle is available to customers in Canada Announces Susan Boyle's "I Dreamed a Dream" is largest global CD pre-order Announces Kindle breaks record for sales in a single month during November December Announces Textbooks Trade-In Program Announces Kindle breaks monthly sales record Announces Kindle is the most gifted item ever Launches the Bestsellers Archive 2010 January Introduces Kindle DX with global wireless Announces Fourth Quarter Sales up 42% to $9.5 Billion February Announces Kindle for BlackBerry March Introduces Kindle for Mac April Announces Kindle App for iPad Announces First Quarter Sales up 46% to $7.13 Billion May Announces Shopping App for iPad Introduces Kindle for Android Launches Amazon WebStore June Launches Wheels Store Announces IMDB Everywhere initiative July Announces Second Quarter Sales up $41% to $6.57 Billion Announces new generation Kindle
  • 14. 11 | P a g e August Announces "Your Kindle Commercial Contest" September Introduces Amazon Mom Program Launches Kindle for the Web October Announces Third Quarter Sales up 39% to $7.56 Billion Acquires Introduces Heidi Klum for New Balance Collection Launches Jewelry Category November Launches Amazon Studios Introduces Price Check by Amazon Launches (Italy) December Announces $175 Million Investment in LivingSocial Announces Kindle for the Web 2011 January Announces Fourth Quarter Sales up 36% to $12.95 Billion Announces Amazon Deals App Acquires LOVEFiLM International Limited February Announces Prime Instant Videos, a New Benefit for Prime Members Amazon Web Services Introduces AWS CloudFormation March Introduces Amazon Appstore for Android Introduces Amazon Cloud Drive, Amazon Cloud Player for Web and Amazon Cloud Player for Android April May Announces MYHABIT.COM Now Selling More Kindle Books Than Print Books June Launches AmazonLocal John Locke Becomes First Independently Published Author to Join the "Kindle Million Club" July Announces Second Quarter Sales up 51% to $9.91 Billion Announces International Shipping to over 50 Countries Worldwide AT&T to Sponsor Kindle 3G August Amazon Web Services Announces Global Rollout of Amazon Virtual Private Cloud (Amazon VPC) Introduces Kindle Cloud Reader September Introduces Amazon Silk Introduces Kindle Fire, Kindle Touch and Kindle Touch 3G Kindle Books Available at Thousands of Local Libraries October Announces Third Quarter Sales up 44% to $10.88 Billion November Introduces The Kindle Owners’ Lending Library December Amazon Web Services Launches Brazil Datacenters for Its Cloud Computing Platform Introduces KDP Select Amazon Publishing to Acquire Marshall Cavendish US Children’s Books Titles
  • 15. 12 | P a g e 2012 January Announces Fourth Quarter Sales up 35% to $17.43 Billion Amazon Web Services Launches Amazon DynamoDB February Launches Sports Collectibles Store March Acquires Kiva Systems, Inc. April Announces First Quarter Sales up 34% to $13.18 Billion Introduces AmazonSupply Amazon Web Services Introduces AWS Marketplace Introduces eBooks Kindle en Español May Amazon Studios to Develop Original Comedy and Children’s Series for Amazon Instant Video Amazon Web Services Launches Dynamic Content Support in Amazon CloudFront Amazon Web Services Announces First Global Customer and Partner Conference: AWS re: Invent June Opens Portal for International Mobile App Distribution Amazon Publishing Acquires Avalon Books July Announces Second Quarter Sales up 29% to $12.83 Billion Amazon Web Services Introduces New Amazon EC2 High I/O Instance Type Introduces GameCircle Introduces Game Connect August Amazon Web Services Announces Amazon Glacier Launches Textbook Rental September Amazon Web Services Launches Reserved Instance Marketplace Introduces ―X-Ray for Movies‖ Amazon Publishing Introduces Kindle Serials Introduces the New Kindle Fire HD Family Introduces the New Kindle Paperwhite October Announces Third Quarter Sales up 27% to $13.81 Billion Introduces ―Kindle for Windows 8‖ Announces Whispercast for Kindle Amazon Studios Options First Novel November Amazon Web Services Announces Amazon Redshift Announces Worldwide Kindle Device Sales More Than Double Last Year’s Record Over Holiday Shopping Weekend Launches Video Gift Cards Introduces Amazon Wine December Announces For the Eighth Consecutive Year, Amazon Ranks #1 in Customer Satisfaction During the Holiday Shopping Season Amazon Web Services Introduces New Amazon EC2 High Storage Instance Family Prime Instant Video Greenlights Six Original Series Pilots for Production Announces Kindle Available From Livrariada Vila And
  • 16. 13 | P a g e Announces Fulfillment Center in DuPont Launches Friends & Family Gifting Introduces ―Kindle FreeTime Unlimited‖ AWS Marketplace Announces Support for Software Running on Microsoft Windows® 2013 January Announces Three Fulfillment Centers in Texas Announces Fourth Quarter Sales up 22% to $21.27 Billion Announces Acquisition of IVONA Software Announces its Third Fulfillment Center in California Amazon MP3 Store Makes 22-Million Song Catalog Available to iPhone and iPod touch Users for the First Time Introduces ―Amazon AutoRip‖ Opens Fulfillment Center in Robbinsville February Introduces Amazon Coins Amazon Cloud Player Available in Ford SYNC Applink-equipped Vehicles March  Announces Entertainment Collectibles Store
  • 17. 14 | P a g e 2 Organizational Structure Amazon consists of a divisional organizational structure due to a large number of products and services under it. A divisional structure consists of different departments for different products and services, which allow the department heads to appropriately focus their resources and results, and also monitor the organization’s performance. Such a structure is best for such a large organization because it is the most flexible. 2.1 Structure of Amazon's organizational structure consists of CEO and founder Jeffery Bezos and an eight- member board of directors, wherein the CEO oversees the Chief Financial Officer (CFO), the Chief Technology Officer and the following 8 departments: Business Development, eCommerce Platform, International Retail, North America Retail, Web Services, Digital Media, Legal & Secretary, and Kindle. The CFO oversees the Real Estate and Control department. International Retail oversees three separate departments of the company: China, Europe and India. North America Retail oversees the following five departments: Seller Services, Operations, Toys, Sports & Home Improvement, Amazon Publishing and Music & Video. The Web Services department oversees Amazon S3 and Database Services. Other departments include: Product Development & Studios, Europe Operations, Global Advertising Sales, Computing Services, and Global Customer Fulfillment.
  • 18. 15 | P a g e CEO, President, Chairman of the Board (Jeffrey Bezos) CFO (Thomas Szkutak) Global Public Policy (VP) Real Estate (VP) Contro (VP)lCTO Business Development (SVP) Consumer Business (SVP) Seller Services (SVP) Hardlines (VP) eCommerce Platform (SVP) International Consumer Business (SVP) China (Country Manager) Europe Consumer Business (VP) India (VP) Web Services (SVP) Database Services (VP) Worldwide Digital Media (SVP) Mobile (VP) Special Project (Director) General Councel & Secretary (VP) Kindle (VP) Kindle (VP) Director (Tom Alberg) Director (John Brown) Director (William Gordon) Director (Jamie Gorelick) Director (Alain Monie) Director (Jonathan Rubinstein) Director (Thomas Ryder) Director (Patricia Stonesifer)
  • 19. 16 | P a g e 2.2 Corporate Management Team of  Jeff Bezos – Chairman, President & CEO Jeffrey Blackburn – SVP, Business Development  Sam Wheeler – Director, Advertising & Partnerships  Russell Baker – Director, Worldwide Business Development for Kindle Tom Skzutak – SVP and Chief Financial Officer (CFO)  Mark Peek – VP and Chief Accounting Officer  Tim Stone – VP Kindle Finance Jeffrey Wilke – Senior Vice President of North America Retail Steven Kessell – SVP, Worldwide Digital Media  Neil Roseman – VP Engineering Brent Wood – Area VP, Consumer Media Ian Freed – VP, Digital/Kindle o Gregg Zehr – President & CEO, Lab 126 David Limp – VP Kindle  Bill Carr – VP Digital Media Marc Onetto – SVP, Worldwide Operations and Customer Service  Tom Weiland – VP, World-Wide Customer Service ShiviShankaran – Director Worldwide Customer Returns o Greg Walsh – GM of Warehouse Facility Mike Gathright – Director Customer Service Mark Honeycutt – Director Global Customer Service Outsourcing  Dave Clark – VP of North America Operations Mike Roth – VP North America Supply Chain and Transportation Operations o Tim Collins – Regional Director of Operations o AkashChauhan – Regional Director of Operations o Michael Passales – Regional Director, North American Fulfillment  GirishLakshman – Worldwide Strategy and Technology  Nadia Shouraboura – Technology VP, WW Operations (Packaging) Doug Herrington – VP of Consumables (Packaging) Andrew Jassy – SVP, Web Services Werner Vogels – VP & Chief Technology Officer (CTO)
  • 20. 17 | P a g e 2.3 Marketing Managers and Brand Managers at Neil Lindsay •Vice President, Marketing •, Seattle (USA) Keith Robertshaw •Senior Marketing Manager (Kindle) •, Guildford (UK) Ryan Murkins •Senior Manager, Marketing - Kindle Fire •, Seattle (USA) Shipla Taneja •Marketing Manager - Digital •Amazon, New Delhi (India) Tara Kriese •Product Marketing, Digital Products •Amazon, Seattle (USA) Leigh K. •Senior Marketing Manager •Alexa Internet, San Fransico (USA) Tristan Leach •New Business and Brand Manager •Amazon, Seattle (USA) Calum R. •Partner Marketing Manager •Amazon Web Services, New York (USA) Manisha Rana •Senior Online Marketing Manager - Kindle •Amazon, Bengaluru (India) Matthew T •Senior Vertical Product Manager - Advertising Analytics •Amazon, Seattle (USA) Jason I. •Head of Marketing, Prime Instant Video •Amazon, Seattle (USA)
  • 21. 18 | P a g e 3 Brand Portfolio
  • 22. 19 | P a g e 3.1 Amazon Kindle The Amazon Kindle is a series of e-book readers designed and marketed by Amazon Kindle devices enable users to shop for, download, browse, and read e-books, newspapers, magazines, blogs, and other digital media via wireless networking. The hardware platform, developed by subsidiary Lab126, began as a single device and now comprises a range of devices – most using an E-Ink electronic paper display capable of rendering 16 tones to simulate reading on paper while minimizing power consumption. Kindle hardware has evolved from the original Kindle introduced in 2007 and a Kindle DX line (with a larger screen) introduced in 2009. Announced in September 2011, the range now includes devices with keyboards (Kindle Keyboard), devices with touch sensitive screens (Kindle Touch), a tablet computer with a reader app and a color display (Kindle Fire) and a low-priced model with an on-screen keyboard (Kindle). Amazon has also introduced Kindle software for use on various devices and platforms, including Microsoft Windows, iOS, BlackBerry, Mac OS X (10.5 or later, Intel processor only), Android, webOS, and Windows Phone (not available in many parts of Europe). Amazon also has a "cloud" reader to allow users to read, and purchase, Kindle books from a web browser. Content for the Kindle can be purchased online and downloaded wirelessly in some countries, using either standard Wi-Fi or Amazon's 3G "Whispernet" network. Whispernet is accessible without any monthly fee or wireless subscription, although fees can be incurred for the delivery of periodicals and other content when roaming internationally beyond the customer's home country. Through a service called "Whispersync," customers can synchronize reading progress, bookmarks and other information across Kindle hardware devices and other mobile devices.
  • 23. 20 | P a g e Generation Model Release Date Price (USD) First Generation Kindle 19th November 2007 399 Second Generation Kindle 2 23rd February 2009 259-359 Kindle 2 (International) 19th October 2009 189-279 Kindle DX 10th June 2009 Kindle DX (International) 19th January 2010 Kindle DX Graphite 1st July 2010 379-489 Third Generation Kindle Keyboard (Wi-Fi) 27th August 2010 99-139 Kindle Keyboard (3G/Wi-Fi) 139-189 Fourth Generation Kindle 4 28th September 2011 79-109 Kindle Touch (Wi-Fi) 28th September 2011 99-139 Kindle Touch (3G/Wi-Fi) 28th September 2011 149-189 Fifth Generation Kindle 5 1st October 2012 69-89 Kindle Paperwhite (Wi-Fi) 1st October 2012 119-139 Kindle Paperwhite (3G/Wi-Fi) 1st October 2012 179-199 Sixth Generation Kindle Paperwhite – Next Gen 3rd September 2013 119-139 Android Devices Kindle Fire 28th September 2011 159-199 Kindle Fire HD 7‖ 14th September 2012 199-299 Kindle Fire HD 8.9‖ 20th November 2012 269-314 Kindle Fire HD 8.9‖ 4G LTE 399-514 Kindle (First Generation) Kindle 2 (Second Generation)
  • 24. 21 | P a g e Kindle 2 and Kindle DX (Second Generation) Kindle DX Graphite (Second Generation) Kindle Keyboard (Third Generation)
  • 25. 22 | P a g e Kindle 4 (Fourth Generation) Kindle Touch (Fourth Generation) Kindle 5 (Fifth Generation) Kindle Paperwhite (Fifth Generation)
  • 26. 23 | P a g e 3.2 Amazon Web Services Amazon Web Services (AWS) is a collection of remote computing services (also called web services) that together make up a cloud computing platform, offered over the Internet by The most central and well-known of these services are Amazon EC2 and Amazon S3. The service is advertised as providing a large computing capacity (potentially many servers) much faster and cheaper than building a physical server farm. Architecture AWS is located in 9 geographical 'Regions': US East (Northern Virginia), US West (Northern California), US West (Oregon), AWS GovCloud (US) Region, São Paulo (Brazil), Ireland, Singapore, Tokyo and Sydney. There is also a "GovCloud" in the USA provided for US Government customers. Each Region is wholly contained within a single country and all of its data and services stay within the designated Region. Each Region has multiple 'Availability Zones', which are distinct data centers providing AWS services. Availability Zones are isolated from each other to prevent outages from spreading between Zones. Several services operate across Availability Zones (e.g. S3, DynamoDB) while others can be configured to replicate across Zones to spread demand and avoid downtime from failures. AWS Products Compute Amazon Elastic Compute Cloud (EC2) Provides scalable virtual private servers using Xen. Amazon Elastic MapReduce (EMR) Allows businesses, researchers, data analysts, and developers to easily and cheaply process vast amounts of data. It uses a hosted Hadoop framework running on the web-scale infrastructure of EC2 and Amazon S3. Networking Amazon Route 53 Provides a highly available and scalable Domain Name System (DNS) web service. Amazon Virtual Private Cloud (VPC) Creates a logically isolated set of Amazon EC2 instances which can be connected to an existing network using a VPN connection. AWS Direct Connect Provides dedicated network connections into AWS data centers, providing faster and cheaper data throughput.
  • 27. 24 | P a g e Storage & Content Delivery Amazon CloudFront A content delivery network (CDN) for distributing objects to so-called "edge locations" near the requester. Amazon Simple Storage Service (S3) Provides Web Service based storage. Amazon Glacier Provides a very low cost long-term storage option (when compared to its S3 service). High redundancy and availability, but low-frequent access times. Ideal for archiving data. AWS Storage Gateway An iSCSI block storage virtual appliance with cloud-based backup. Amazon Elastic Block Store (EBS) Provides persistent block-level storage volumes for EC2. AWS Import/Export Accelerates moving large amounts of data into and out of AWS using portable storage devices for transport. Database Amazon DynamoDB Provides a scalable, low-latency NoSQL online Database Service backed by SSDs. Amazon ElastiCache Provides in-memory caching for web applications. This is Amazon's implementation of Memcached. Amazon Relational Database Service (RDS) Provides a scalable database server with MySQL, Informix, Oracle, and SQL Server support. Amazon Redshift Provides petabyte-scale data warehousing with column-based storage and multi-node compute. Amazon SimpleDB Allows developers to run queries on structured data. It operates in concert with EC2 and S3 to provide "the core functionality of a database. AWS Data Pipeline Provides reliable service for data transfer between different AWS compute and storage services (e.g. Amazon S3, Amazon RDS, Amazon DynamoDB, Amazon EMR.). In other words this service is simply a data-driven workload management system, which provides a simple management APIs to managing and monitoring of data-driven workloads in cloud applications.
  • 28. 25 | P a g e Deployment Amazon CloudFormation Provides a file based interface for provisioning other AWS resources. AWS Elastic Beanstalk Provides quick deployment and management of applications in the cloud. AWS OpsWorks For configuration of EC2 services using Chef. Management Amazon Identity and Access Management (IAM) An implicit service, the authentication infrastructure used to authenticate access to the various services. Amazon CloudWatch Provides monitoring for AWS cloud resources and applications, starting with EC2. AWS Management Console (AWS Console) A web-based point and click interface to manage and monitor the Amazon infrastructure suite including (but not limited to) EC2, EBS, S3, SQS, Amazon Elastic MapReduce, and Amazon CloudFront. Amazon also makes available a mobile application for the Android which has support for some of the management features from the console. App Services Amazon CloudSearch Provides basic full text search and indexing of textual content. Amazon DevPay Currently in limited beta version, it is a billing and account management system for applications that developers have built atop Amazon Web Services. Amazon Elastic Transcoder (ETS) Provides video transcoding of S3 hosted videos, marketed primarily as a way to convert source files into mobile-ready versions. Amazon Flexible Payments Service (FPS) Provides an interface for micropayments. Amazon Simple Email Service (SES) Provides bulk and transactional email sending. Amazon Simple Queue Service (SQS) Provides a hosted message queue for web applications. Amazon Simple Notification Service (SNS) Provides a hosted multiprotocol "push" messaging for applications. Amazon Simple Workflow (SWF) It is a workflow service for building scalable, resilient applications.
  • 29. 26 | P a g e Miscellaneous Amazon Fulfillment Web Service Provides a programmatic web service for sellers to ship items to and from Amazon using Fulfillment by Amazon. This service will no longer be supported by Amazon. All of the functionality of this service is now transferred to Amazon marketplace Web service. Amazon Historical Pricing Provides access to Amazon's historical sales data from its affiliates. (It appears that this service has been discontinued.) Amazon Mechanical Turk (Mturk) Manages small units of work distributed among many persons. Amazon Product Advertising API Formerly known as Amazon Associates Web Service (A2S) and Amazon E-Commerce Service (ECS), it provides access to Amazon's product data and electronic commerce functionality. Amazon Gift Code on Demand (AGCOD) for Corporate Customers Enables companies to distribute Amazon gift cards (gift codes) instantly in any denomination, integrating Amazon's gift-card technology into customer loyalty, employee incentive and payment disbursement platforms. AWS Partner Network (APN Provides technology partners and consulting partners with the technical information and sales and marketing support to increase business opportunities through AWS and with businesses using AWS. Launched in April 2012, the APN is made up of Technology Partners including Independent Software Vendors (ISVs), tools providers, platform providers, and others. Consulting Partners include System Integrators (SIs), agencies, consultancies, Managed Service Providers (MSPs), and others. Potential Technology and Consulting Partners must meet technical and non-technical training requirements set by AWS.
  • 30. 27 | P a g e 3.3 Digital Brand Portfolio 3.4 STP Analysis Market Segmentation Demographic segmentation 1. For those who have access to internet 2. When income increases, so does the number of online purchases (E&Y Study). 3. 41 percent of online shoppers between the ages of 35 and 49. 55 percent male and 49 percent female internet users prefer for online purchases 4. Recently increased focus to younger class (20- 30 year old) Geographic segmentation 1. Appeals to customers all over the world 2. Sell digital products where their merchandise sales are difficult (e books) 3. US still main revenue generator. 4. Has seven international websites for Japan, China, Canada, UK, Germany, France and US 5. Have not started direct sales in India. Uses sending which adds extra charges to customers Psychographic segmentation 1. Focuses on personalization and customer loyalty 2. Keep a modern and dynamic image by renovating site design frequently. 3. Quality customer service department to build long term relationships with customers 4. Helps customers find and recommend things they enjoy, rather than push products Situation segmentation 1. Most online purchases done for convenience 2. Keeps on adding categories for catching every customer and every situation 3. Sale inducing gold box deals everyday 4. Attractive offers with video on demand 5. Low pricing also an encouraging factor for online purchases
  • 31. 28 | P a g e Targeting The major target groups of Amazon include: Internet users – Primarily those who are comfortable with e-commerce All internet users. Almost all internet users are in one way or other a paid or non paid customer of Amazon. For different customer segments different products have been launched. Ex. IMDB, Alexa, A9, fabric, Zappos, instavideo etc Both male and female, mostly in the age group 35 – 49. More importance to females as they are the predominant customers for Amazon. Amazon’s acquisition of Zappos was also for getting detailed insights about young woman as an online customer From all over the world. Amazon is a global company and looks for customers all around the world. They have got tie-ups with third party sellers for international coverage. Tech Savvy users and early technology adopters. Separately designed products like Amazon mp3, Amazon kindle, Amazon Appstore for them. Those who yearn on convenience shopping Seller customers. Amazon’s primary objective is to bring maximum number of reliable sellers under it. App developers. New TG. Started targeting through Amazon Appstore. Positioning When started, it sold only books and its positioning statement was: ―To people who like to read, is the online bookstore that is the best place to purchase books because of its selection” But with huge diversification, the current vision statement of Amazon is: “Our vision is to be earth's most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.” Positioning itself as the most customer-centric company, Amazon differentiates itself and claims to cater to the customer’s needs rather than the suppliers’ needs. Amazon claims to provide the best customer service at the lowest price with high margin.
  • 32. 29 | P a g e 4 Strategic Brand Campaigns 4.1 Advertising Agencies Wong, Doody, Crandall, Wiener (WDCW, formerly WONGDOODY) is a full-service marketing-ideas agency with offices in Los Angeles and Seattle. WDCW builds cultural capital and provides strategic, creative and analytic services for such clients as Alaska Airlines, Epson, ESPN, Hitachi, Holland America Line, Microsoft, T-Mobile and VIZIO. Founded in 1993, they provide fully integrated capabilities for traditional, digital and social-media communications. Eyeball is a creative strategic design agency that shapes brands through powerful storytelling, stunning design and insightful problem solving. By embracing client collaboration, the award-winning collective of thinkers, writers, artists and musicians efficiently translate brand ethos into engaging narratives and meaningful consumer dialogue, consistently generating quantifiable and powerful results. With 20 years of broadcast and ad agency experience, eyeball executes across a media spectrum that includes live action, design, animation, audio and experiential production, and has recently expanded from New York City to Chicago, Los Angeles and Seattle.
  • 33. 30 | P a g e 4.2 Campaigns Kindle Campaign by WDCW: WDCW TV campaign for Amazon was the first true branding effort in the advertising agency's history. o Spot No. 1, "Reinventors," tells of technological advances so large that they have fundamentally changed how we live our lives. Amazon has reinvented "normal." The campaign launched with a high-profile network buy and ran globally in seven countries across North America, Europe and Asia. o Spot No. 2, "Human Eye," shows consumers that the technological differences between an iPad and a Kindle Fire HD can, in some instances, be hard to see. But the difference in price tag is not. Advanced technology at an affordable price is the new normal. o Subsequent work for Amazon includes new product launches for the new Kindle Fire HD (Spot No. 3) and Kindle Paperwhite e-reader (Spot No. 4).
  • 34. 31 | P a g e Kindle Launch Campaign by Eyeball o Since the debut of Kindle Fire, Eyeball has supported Amazon on the launch of every new Kindle product at all stages, from online to print to primetime TV ads. The launch of Kindle Fire required a starkly different message from its competition. While similar devices were focusing largely on features, usability and heralding the arrival of a new era, they borrowed a strategy from the original Kindle: there's nothing new about storytelling. Kindle Fire naturally became a story container, filled not only with books but all media. To create the cinematic launch spot, they incorporated live action elements into CG on a journey from the pen to the printing press and finally to moving image. o To launch Kindle Paperwhite, their series of short films revealed the human aspects at the core of each device, from Kindle owners to Kindle makers. For the avid readers, Eyeball created an environment where they could express their appreciation for the role Kindle plays in their lives. For the product design team, their goal was to convey the intricacy of the process instead of the complexity of the technology. These videos broaden the stories surrounding the Kindle, making clear how the users' love for the device mirrors the ambition with which it was built. They reflect the belief that brand identity derives its substance from the passion of those who sustain it. o Eyeball’s Role: Everything.
  • 35. 32 | P a g e Kindle Kids Campaign by Eyeball o Cultivating a love of reading and having access to books are both critical aspects of children's growth and development. After working on Amazon Kindle advertising for the past few years, Eyeball saw an opportunity to evolve the brand and tell their story in a new way. To communicate the power of the Kindle in kids' lives, they gathered a diverse group of children and spent time getting to know them. They asked about their favorite books and their thoughts on reading while capturing every moment on camera. o The result was a documentary style of storytelling that focuses on real moments and conversations, creating a relatable yet emotional spot. They presented the idea to the Amazon team who fell in love with the interviews as much as they had, so much that many of the kids from the original test shoot made it into the final spot on air. They are currently working on extending the documentary storytelling style into further Kindle campaigns. In addition to the TV ad, they created a digital campaign extension. The banners shown here wrapped Hulu content with a media buy aimed at programming for kids and moms. o Eyeball’s Role: Strategy, Live Action Direction, Editorial, Digital
  • 36. 33 | P a g e Kindle Lifestyle Campaign by Eyeball o When Kindle dropped the price down to $139, the value concept of "it's so affordable, you don't need to be precious with it" was born. Eyeball took that idea a step further, demonstrating the way Kindle seamlessly fits into your lifestyle. The high energy, infectious ―Kindle Zest‖ quickly became the highest performing Kindle spot ever. Consumers related to the diversity of the cast, realism of the scenarios, and the energy of the music. The defining voice for Kindle was established and each new ad showcased a different way to bring your library with you, wherever you go. o Kindle's early foray into television advertising centered on passion for reading and the emotional sense of escape that comes with a great book. Eyeball’s goal was to make the technology all but disappear and become secondary to getting lost in the story. They developed this one-shot concept as a way to move past the product and capture that special moment of reading. As the camera cranes out from the device, they were able to establish a relaxed environment that inherently illustrates just how easy and uncomplicated your life becomes with Kindle. o Eyeball’s Role: Strategy, Design, Live Action Direction, Editorial, Animation, Music Supervision
  • 37. 34 | P a g e Kindle Stories Campaign by Eyeball o Eyeball began with a simple idea: Kindle e- ink works perfectly in direct sunlight and is so affordable that it costs less than a pair of designer sunglasses. Their first spot, "Pool," received 1M hits after only a few days on air and became one of the week's top performing viral videos. Building on its success and continued memorability in consumer research, they've created several follow-up spots highlighting differentiating factors of the Kindle. When the Kindle Paperwhite launched, they produced "Husbands," which casually features a gay couple. The spot was lauded by the Human Rights Campaign as an example of inclusive advertising. o With growing competition in the marketplace, Kindle needed a series of commercials focusing on differentiation, functionality and ease of use. Keeping true to the realistic scenarios that have been a proven success for the brand, the "Friends" campaign unfolds as a series of real life conversations which could happen anywhere. The chemistry between the actors was critical,
  • 38. 35 | P a g e especially when keeping the location abstract. This campaign performed well in the memorability and brand linkage tests conducted and it was expanded for use in the UK market where they had the opportunity to shoot a separate campaign and cast unique British actors for these roles. o While experimenting with its brand voice, Kindle had them test a strategy that was less about the functionality of the product and instead promoted reading. Their team created "Grandma," a spot that aimed to illustrate the powerful emotional impact of giving the gift of reading. While tugging at the heartstrings, the relevant message and affordable price point struck a cord with consumers. The national media buy ran during the holidays and the spot remains one of the top performing Kindle ads of all time. o Eyeball’s Role: Everything.
  • 39. 36 | P a g e Amazon Studios Campaign by Eyeball o Changing the way TV shows are brought to life, Amazon Studios asked Eyeball to develop an integrated campaign for the launch of their pilot season. As part of the overall branding strategy, Eyeball drove the creative development and audio branding for Amazon Original Series and Amazon Studios logos. These logos will play on every original TV show or theatrical release produced through them. They also created online marketing banners in support of the original comedies and kids programs. To further promote the original kid programs, they conceptualized, filmed, edited and fully finished 7 promotional videos for use in both the US and UK markets. o Eyeball’s Role: Everything.
  • 40. 37 | P a g e Amazon Mobile App Campaign by Eyeball o Building on Eyeball’s proven success with the Kindle campaigns; Amazon tasked them with creating their first brand commercial in over ten years. Their goal was to showcase a new way to shop anytime, anywhere. They quickly identified the simple connection for the audience: instant gratification for simpler living. By creating real world scenarios that demonstrated how the technology comfortably fits into their lives, they delivered the message loud and clear. The successful commercial ran only in select regional markets, where it increased app downloads and generated traffic and spiked sales. o Eyeball’s Role: Strategy, Design, Live Action Direction, Editorial, Animation
  • 41. 38 | P a g e Amazon Endless Campaign by Eyeball o For Amazon’s designer clearance store, they matched the premium aesthetic of the brands they sell with a high-end fashion sensibility. They focused on enticing consumers’ excitement for accessible trends by capturing the pulsing energy of a runway show and glossy style of a fashion magazine. Planning for the store’s inventory fluctuations was crucial to the success of the campaign concept. To keep ongoing production flowing smoothly, Eyeball even developed a system that allowed for late product swaps and last minute promotions. o Eyeball’s Role: Strategy, Design, Live Action Direction, Editorial, Animation.
  • 42. 39 | P a g e 5 Marketing Environment 5.1 E-Commerce Industry The e-Commerce Industry is comprised of companies that produce and sell software to businesses and corporations of all sizes. The wide range of products and services offered work to improve and expand customers’ information technology (IT) capabilities, by enhancing such internal tasks as inventory management, tracking purchases, and operations management. Thanks to convenience and increasing internet penetration, consumers are readily turning to online shopping, which has been fuelling the retail market in developed countries. The world B2C e-commerce industry generated between $400 billion and $600 billion in 2010, according to, which estimates the market will generate somewhere from $700 billion and $950 billion in 2015. There were over 2 billion internet users worldwide in 2011, and it is forecast this number will exceed 3 billion by 2015. Profit from B2C e-commerce represents less than 10% of overall retail revenue in established markets like the UK and France, which are expected to rise above the 10% mark in coming years. This figure falls to under 3% in less well-established B2C e- commerce markets. This vast base of Internet users encourages businesses to innovate in order to offer an ever-evolving array of online services. Sectors that are growing very rapidly online include the sale of entertainment, event tickets, apparel, travel, and consumer electronics. The most powerful trends on the Internet include access via wireless devices, migration of entertainment to the web and cloud-based software as a service. Social media continues to fuel the B2B e-commerce market, which aims to boost electronic business process efficiency, reports T Systems. E-commerce is being considered as a separate, profitable field of business, and intermediary actors are updating their B2B business models, while embracing aspects of social media. Today, as a result of the recent recession, consumers are more focused than ever on finding the best prices. Consequently, e-commerce firms that offer high value at low prices are well positioned to prosper. The standout winner in e-commerce continues to be Amazon, where sales have soared thanks to aggressive discount pricing, free shipping for its ―Prime‖ members and an ever-growing variety of merchandise categories. Amazon’s revenues rose by 27% in 2012 to $61.0 billion. Books, movies, music and other media now account for the minority of Amazon’s sales, while electronics and general merchandise bring in the largest share by far. Amazon’s sales outside of North America are booming as well. Clearly, there is growing adoption of online consumer purchases throughout the world’s major economies, and the soaring number of broadband users is paving the way. Analysts at eMarketer reported American e-commerce sales in 2012 of an estimated $343 billion. This figure includes online retail sales, travel sales ($119 billion) and digital downloads,
  • 43. 40 | P a g e but not sales of tickets to events or online gambling. Global Internet retail sales exceeded $1 trillion for the first time in 2012, up 21.1% from 2011. For 2013, the Asia-Pacific region is expected to see 30% growth in online sales, reaching $433 billion. China alone is expected to be the second largest e-commerce market in the world with $181 billion (up 65% from 2012) behind the U.S., which should hit $384 billion in 2013. Plunkett Research estimates global travel sales online at $320 billion for 2012. Online advertising in 2012 in the U.S. reached $37.3 billion, according to eMarketer, accounting for 24% of all advertising spending in America. Online advertising leader Google’s recent results are a good indicator of the strong growth in online advertising. The firm saw revenues soar 21.3% in fiscal 2012, to $46.0 billion (not including its acquisition of Motorola’s mobile division). Growth in broadband subscriptions worldwide continues at a strong pace. The number of American homes and businesses with broadband access capabilities topped 90 million by the end of 2012, thanks in part to modest monthly fees at Internet service providers. This number does not include mobile broadband users, estimated at another 180 million. A significant evolution is taking place in the world of business, as more and more telecommunications move to the Internet. VOIP continues to grow in popularity. Meanwhile, the concept of ―unified communications‖ threatens to completely revolutionize business communications by combining all communications into one screen on the desktop, including phone, fax, e-mail, instant messaging, voice mail and teleconferencing. Voice communications will be digitized and archived, just as e-mail is today. A user’s communications tools will move seamlessly from the desktop to the mobile device.
  • 44. 41 | P a g e 5.2 Sector Analysis Introduction The expansion of globalization has led to the emergence of the digital economy. New concepts have emerged, such as electronic business (e-Business) or electronic commerce (e-Commerce), as the electronic alternative to the traditional way of doing business or trade. Operating in a highly competitive economy based on information technologies and telecommunication, required firms to adopt new business models. Under these conditions, e-commerce became a reality in today's business world and the prerogative of obtaining success in the market for any company. E-commerce has known during the last decades a significant growth, becoming more and more important for the companies worldwide. Nowadays due to globalization, technology is evolving at a very fast speed, forcing all the companies to adopt new technologies. E-commerce plays and it will play a key role in the economy in the future, and more and more companies will have to change their business strategies. The e-commerce industry contains important retailers, e.g. and eBay, information service companies, e.g. Google and Yahoo, online versions of traditional brick-and-mortar stores. In 2004 Amazon was on top in what online service meant with: 6 website servers, 32 million customers in 150 different countries, 900,000 associate programs linked with Amazon or having contents of Amazon. Because of his tremendous importance in the e-commerce industry, Amazon has the power to influence the entire industry, but it can also be influenced. PESTEL Analysis Cheaper access to internet, a growing number of internet users, faster and better internet, rapid expansion into new markets through acquisitions, all of them represent the political and legal factors that may, or may not influence Amazon’s organization. Hence, is expanding more and more abroad, and that is why they have to pay attention to domestic and international legislation. Once they entered on a foreign market, they have to accept and the respect the legislation of that country. From an economic point of view, because of the crisis severity companies like were forced to lay-off employees and more than that even to downsize. As a reaction to all that, the unemployment rate increased, which lead to a reduction in consumer spending. Moreover, during and after the crisis companies like had problems with the shipping costs because of the oil price increased. For companies like or eBay the shipping costs are vital, given the fact that they cannot avoid dealing with them. The social factors also put their mark on companies from the e-commerce industry. Figure 1 underlines that the population that uses internet has grown at a very fast speed in recent years. Clearly the population will continue to increase, and that means that more and more people will
  • 45. 42 | P a g e use internet, which will lead to an increased chance for online shopping. This exponential population growth is good for all the industry, hence the bigger markets. Figure 2 shows the number of internet users, Asia being on top with 922, 3 million users. United States of America is on 3rd place with 272, 1 million users, and it is also the region where people are likely to trust more e-commerce. The problem of confidence in online shopping is one of the most severe, consumers having doubts about the security of their activities online.
  • 46. 43 | P a g e As we can see, the number of Internet users increased, mostly because customers started to use it on their mobile devices. Technology is one of the most important factors in e-commerce industry, and has and it will change and improve in the future. As we can see, the number of Internet users increased and will increase furthermore, because customers started to use it on their mobile devices. Environmental factors are concerned with the ―green world‖. More and more companies have started to have a personal signature, like ―Please consider the environment before printing‖ when sending emails. Another example of environmental factors is the diminishing car use, because while they shop online they do not need to use their cars anymore.
  • 47. 44 | P a g e 5.3 Key Drivers of Growth for Amazon Third party or seller business is a key driver of growth for Amazon. It allows Amazon to increase selection and grow faster. It also helps push down prices on Amazon as third parties fight for buyers. Another key driver of growth is Amazon Prime - Amazon's program that gives annual free two-day shipping for a $79 subscription. The graph shows that Prime is driving significant growth internationally (primarily Europe).
  • 48. 45 | P a g e Shipping costs have increased over the years and in Q2 of 2011, the shipping cost was 4.9%. This could mean that more users might register for Amazon Prime. The e-commerce market is growing at 14% and every Amazon segment is growing faster. Electronics and General Merchandise market in US is growing five times the US e-commerce market.
  • 49. 46 | P a g e 6 Marketing Strategies 6.1 BCG Matrix Stars Amazon Kindle, Amazon Fresh,,, Instant Video are high-growth, high-share businesses. These businesses need heavy investments to finance their rapid growth. Cash Cows IMDb, Alexa,, Createspace are low-growth, high-share businesses. These established and successful SBUs need less investment to hold their market share. Thus they produce a lot of cash that the company uses to support other SBUs that need investment. Question Marks,, Amazon Web Services are low-share business units in high-growth markets. They require a lot of cash to hold their share and increase it. Amazon Web Services is likely to turn into Star within a few years. Dogs Amazon mp3, Amazon Cloud, are low-growth, low-share businesses. They generate enough cash to maintain them but do not promise to be large sources of cash.
  • 50. 47 | P a g e 6.2 Porter’s Five Forces Buyer Power 1. Comparison sites gives price variations in different sites 2. Buyer has complete information 3. Wide buying options available 4. Lot of product review sites 5. With social media, word of mouth becomes an important feedback point. Threat of New Entrants 1. Low barriers to entry 2. New technologies can be disruptive 3. Less brand loyalty towards online shops 4. High probability of new entrants 5. Can utilize economies of scale 6. Can come up with better range of products Threat of Substitutes 1. More choices in online stores and cheaper prices 2. Lack the touch and feel factor 3. Large presence of physical retailers and shops 4. Online shopping becoming increasingly widespread Supplier Power 1. Large number of suppliers 2. Global distribution networks intensifying competition 3. High bargaining power of big shot retailers 4. Less differentiation in product 5. Focus on low prices lead to low customer loyalty Industry Rivalry - High Threat of New Entrants - High Supplier Power - Low Threat of Substitutes- Moderate Buyer Power - High
  • 51. 48 | P a g e delivers various products and services ranging from accessories, shoes, health and personal care, from electronics to books; under new, refurbished and used items categories. There are greater number of distributors, publishers and manufacturers that supply Amazon, hence Amazon has more supply options and choices; and this gives the company more control over its suppliers. Bargaining power of supplier Amazon’s purchases from its suppliers represent a good part of the suppliers’ offer, which means that the company has more power and influence on costs and influence on improving the features of the products. Moreover, because of the highly trained experts in the departments of development, market research and marketing, Amazon is well informed about the suppliers market. Therefore, Amazon has more power over the suppliers. Nevertheless, there is always a possibility that Amazon’s key providers might individually or as an allied enter into the business and sell directly to Amazon’s customers, becoming thereby a direct player. Buyer Power has enough customers around the world, and the lost of one customer does not affect the smooth running of the company. Amazon stands as one of the biggest concentration of goods and services where customers can buy anything they want online and at a reasonable price. The company tends to decrease the power surplus of the purchasers in investing more effort when negotiating for a lower price or to enrich product features. Hence, if Amazon’s customers are satisfied with the services they receive, they will less probably switch to other products. Nevertheless, it is possible that the major buyers could integrate backward in the supply chain, and purchase one of the growing competitors in the e-commerce industry and this could constitute a threat to Amazon. Threat of new entrant The threat of new entrants has interesting twist in the e-commerce business. There are a lot of firms that are trying to enter the industry; but in a fast technologically driven industry, the company with best technology gets the lion’s share. Amazon’s strategy is focused on customer service innovation which is designed to improve the convenience of online shopping experience. Amazon invests heavily on the best technology in order to keep on climbing on the ladder of success within e-commerce industry. Moreover, trademark is fundamental when competing within any industry. Amazon has built a high level of brand standard, and because of that a greater percentage of its customers are loyal to them. Even if, new competitors enter into the business with similar and identical products, they will face a tremendous contest to win over Amazon’s loyal customers.
  • 52. 49 | P a g e Threat of product substitute One of the major substitutes to the goods and services provided by Amazon will be bookshops, electronic shops, accessories shops, health and personal care shops that are physically located in different cities. Online shopping offers among other things: 24/7 services, one click and trustworthy delivery and most of the case at lower prices at a high qualitative level, therefore the threat of substitute is insignificant. Competition is the bottom of the free enterprise structure, and within the e-commerce industry, there is greater number of players and this makes the competition more intense for Amazon. With firm like eBay, tries to remain a pioneer in the e-commerce industry. Amazon will not face serious challenge in the nearest future, since the industry is not stagnant or declining, but it is possible that the growth rate of competitors may exceed that of the company. Industry rivalry As the result of huge and wide presence of competitors for the book business, faces high industry rivalry in their online book business. Established bookstores have the advantage of a larger and well established customer base, brand recognition, awareness and a wider selection of books. The entry of established bookstore into the online arena has further increase industry rivalry in this sector. also faces intense rivalry from their online music sector. For example, Amazon's entry into the online music market has caused CD-Now to take steps in reduce Amazon's threat in the sector. CD-Now has more advantage because they are well established and has more brand recognition in comparison to
  • 53. 50 | P a g e 6.3 McKinsey 7S The model is based on the theory that, for an organization to perform well, these seven elements need to be aligned and mutually reinforcing. So, the model can be used to help identify what needs to be realigned to improve performance, or to maintain alignment (and performance) during other types of change. Strategy: the plan devised to maintain and build competitive advantage over the competition. Structure: the way the organization is structured and who reports to whom. Systems: the daily activities and procedures that staff members engage in to get the job done. Shared Values: called "super ordinate goals" when the model is first developed, these are the core values of the company that are evidenced in the corporate culture and the general work ethic. Style: the style of leadership adopted. Staff: the employees and their general capabilities. Skills: the actual skills and competencies of the employees working for the company. Placing Shared Values in the middle of the model emphasizes that these values are central to the development of all the other critical elements. The company's structure, strategy, systems, style, staff and skills all stem from why the organization was originally created, and what it stands for. The original vision of the company was formed from the values of the creators. As the values change, so do all the other elements.
  • 54. 51 | P a g e Strategy To be built to transform requires the courage to focus on delivering value for the customer first. Identifying value begins by thinking of an important unserved or underserved job that customers want done and then coming up with a well-defined value proposition to address that job, however foreign to your current offerings that may be. "If you want to continuously revitalize the service that you offer to your customers, you cannot stop at what you are good at," says CEO Jeff Bezos. "You have to ask what your customers need and want, and then, no matter how hard it is, you better get good at those things." With a well-defined customer value proposition serving a focused, well-articulated job, business leaders and project teams can work together to design the appropriate profit formulas, key resources, and key processes the company needs to thrive. Defending Amazon’s profit-pinching strategy in the 2013 annual letter to shareholders, Bezos wrote – ―Our business approach is to sell premium hardware at roughly breakeven prices. We want to make money when people use our devices – not when people buy our devices. We think this aligns us better with customers. For example, we don’t need our customers to be on the upgrade treadmill. We can be very happy to see people still using four-year-old Kindles!‖ Amazon’s strategy focuses on capturing all the fronts of the retail sector to minimize the costs and give the customer, the best price in the world.
  • 55. 52 | P a g e Structure
  • 56. 53 | P a g e Amazon has a divisional organizational structure due to a large number of products and services under it. A divisional structure consists of different departments for different products and services, which allow the department heads to appropriately focus their resources and results, and also monitor the organization’s performance. Such a structure is best for such a large organization because it is the most flexible. Amazon's organizational structure consists of CEO and founder Jeffery Bezos and an eight- member board of directors, wherein the CEO oversees the Chief Financial Officer (CFO), the Chief Technology Officer and the following 8 departments: Business Development, eCommerce Platform, International Retail, North America Retail, Web Services, Digital Media, Legal & Secretary, and Kindle. These departments have individual Senior Vice Presidents and Vice Presidents who are responsible for the functioning of the individual departments. Moreover, these departments also integrate to give Amazon strategic advantages over its competitors. integrates with Amazon Web Services to provide the best possible solutions to the customers by improving the user interface and backend capabilities. Use of technological products of AWS also helps in optimizing logistics and operations of Amazon Kindle uses software made specifically for it by Amazon’s technological unit. Such integration minimizes costs and increases profit margins.
  • 57. 54 | P a g e Systems Amazon uses a centralized human resources system by retaining a tight hold within the company’s nation of origin and relies on high-level headquarters staff to supervise local managers. The headquarters managers are responsible for the HQ staff and local managers supervise local staff. Both, local and HQ teams, report to the global executive. The benefit of this system is that maintains strict brand control. Amazon does not yet have stores, yet also adheres to this one- company, one-system method of global operations. No matter where in the world you open an Amazon page, it will have the look and organization that Amazon has made its trademark. A mandate issued by Jeff Bezos in around 2002 about internal rules and processes of the teams: All teams will henceforth expose their data and functionality through service interfaces. Teams must communicate with each other through these interfaces. There will be no other form of inter-process communication allowed: no direct linking, no direct reads of another team’s data store, no shared-memory model, and no back-doors whatsoever. The only communication allowed is via service interface calls over the network. It doesn’t matter what technology they use. All service interfaces, without exception, must be designed from the ground up to be externalizable. That is to say, the team must plan and design to be able to expose the interface to developers in the outside world. No exceptions. The mandate closed with: Anyone who doesn’t do this will be fired. Thank you; have a nice day! Over the next couple of years, Amazon transformed itself internally into a service-oriented architecture (SOA), learning a tremendous amount along the way. Every team within Amazon had to interact with each other using web services. If you were human resources and you needed some numbers from marketing, you had to get them using an API. He was asking every team to decouple, define what resources they had, and make them available through an API. Every team within your company essential becomes a partner of the other.
  • 58. 55 | P a g e Shared Values David Risher, a marketing executive with Microsoft was interviewed by Jeff Bezos, founder of Amazon, in 1996. At the time, Amazon was only one year old and losing money. They were renting space in ―an old brick building on Seattle’s skid row, a dismal block with a needle exchange, a defunct pawnshop, a grocery store with barren shelves, and an outreach service for troubled youths. Bezos was very frugal, refusing to spend money on things that simply were not important. His desk was a wood door from Home Depot with two-by-fours for the legs. Despite the glamour-less looks of Amazon’s headquarters, Bezos had assembled a team of 30 employees. They were just like Bezos – incredibly smart, frugal, risk-takers, and information analyzers. Bezos told Risher, “I’d rather interview fifty people and not hire anyone than hire the wrong person.” Risher accepted a position at Amazon, which stunned his Microsoft colleagues. The two top executives, Bill Gates and Steve Ballmer, tried to convince him to stay. And when he didn’t, they told Risher he was, ―the stupidest guy they ever met‖. Amazon made revenues of $16 million in 1996, which ballooned to $1.6 billion three years later, and reached $8 billion by its 10th anniversary. But as Amazon grew, the company culture stayed the same. Even ten years into its life, with 12,000 employees, you could still find people with desks made out of doors and employees with extraordinary analytical minds. Customer focus is a cultural issue that distinguishes Amazon from other companies, whose chiefs craft strategy in competitive terms. "When they're in the shower in the morning, they're thinking about how they're going to get ahead of one of their top competitors," Bezos says. "Here in the shower, we're thinking about how we are going to invent something on behalf of a customer."
  • 59. 56 | P a g e Style According to industry analysts, the growth and success of could be attributed to the leadership style of Jeffrey Bezos, the CEO of In the late 2000s, Bezos devised a unique strategy for the company which allowed other sellers to put up their products for sale on the site. However, since this move inflicted a risk on the company, of losing its customers to its competitors, most analysts viewed this as a reflection of poor strategy on the part of Bezos. Bezos, however, defended his position by saying that his strategy was aimed at giving the customer a better buying experience. According to him, the customer was more important than the competitor. While some industry experts felt that this was one of Bezos' winning customer-centric strategies, others pointed fingers towards's declining income and questioned the sustainability of Bezos' leadership style. Staff & Skills is currently boosting staff in 17 U.S. warehouses, adding more than 5,000 full-time jobs to meet brisk demand for products sold by the world’s biggest Web retailer. The new hires will join more than 20,000 employees working at Amazon’s more than three dozen U.S. fulfillment centers. Amazon is also hiring 2,000 customer-service staff, including part-time and seasonal workers. The retailer plans to open five more facilities this year, after adding 20 last year. Warehouse expenses have more than doubled during the past three years, as Chief Executive Officer Jeff Bezos opens centers full of products closer to consumers in order to reduce shipping costs and speed up delivery. Higher spending contributed to Amazon’s surprise net loss for the second quarter as the online seller continues to fuel revenue growth at the expense of profits.
  • 60. 57 | P a g e 6.4 Strategic Position Amazon has been able to maintain sustainable competitive advantage based on three operational strategies. These are low cost-leadership, customer differentiation and focus strategies. Low cost-leadership is pursued by Amazon by differentiating itself primarily on the basis of price. They believe that offering low prices to their customers is fundamental to their future success. They seek to partially mitigate the costs of lowering prices over time through achieving higher sales volumes, negotiating better terms with their suppliers, and achieving better operating efficiencies. Amazon makes sure that it offers the same quality products as other companies at a considerably cheaper price. With their customer differentiation strategy, Amazon provides current and prospective customers with differentiation through design, quality or convenience by selecting a strategy that is different among the competitors. The focus strategy takes one of the two other strategies and applies it to a niche within the market. Based on this, Amazon focuses on outstanding customer service as a niche but not the whole market because each niche has its own demand and requirement.
  • 61. 58 | P a g e 7 Pricing Strategies 7.1 Cost Leadership New Opportunities: Revenue opportunities through bundling or products. Amazon prime: Next day shipping > Customer switch from other sites. Average of 5-6% of revenue comes from shipping Strategy • Consistently Lower prices • Maximizing long-term profits by increasing market share • Lowered costs through economies of scale Features • Pre-Order Price Guarantee - For items to be launched recently. • No Post order price match. • No price match with other retailers. • 14 day post order price match for TVs. • Most recent price for items in shopping cart. • Displayed price is the full retail price (excluding shipping)
  • 62. 59 | P a g e 7.2 Cost Minimization Strategies Sharing Cost Centers Insourcing the Value Chain
  • 63. 60 | P a g e Circumventing Distributors In 2012, Amazon has installed metal lockers in grocery, convenience and drugstore outlets that can accept packages for customers for a later pickup. Amazon wants to eliminate the uncertainty of home delivery with its new locker service. Amazon sends you an email with a pickup code, which you enter on a touch screen to open the door of the locker containing your package. By combining same-day delivery and delivery lockers, Amazon is steadily chipping away at reasons to walk into a store at all.
  • 64. 61 | P a g e 8 Consumer Behavior Elements Marketing managers need to understand consumers behavior and their decision making process in order to create a suitable marketing mix in a competitive market environment. 8.1 Consumer Decision-Making Process When buying goods and services consumers usually follow the consumer decision-making process; this is a five step process that encompasses, need recognition, information search, evaluation of alternatives, purchase and post-purchase behavior. Need Recognition The first element in the process is need recognition. In order to recognize need, marketing managers must get consumers to recognize an imbalance between their present status and their preferred state through the stimulus of advertising and promotion. By advertising the convenience of online shopping, Amazon's consumers embrace this form of shopping as their preferred way of making purchases in the market place because it satisfies the need for convenience. Information Search The second element is the search for information. makes it very easy for consumers to research information for products they are interested in through search for a specific item, browsing items by category, and reading reviews from other consumers. Evaluation of Alternatives Third is the evaluation of alternatives, this is where the consumers have to decided whether to buy or not to buy, how to pay for it, where to buy the product from and when to make the purchase. At, the probability of making a purchase is favorable because of the many advantages of making online purchases. Purchase The fourth element is making the purchase, more and more consumers are making their purchases online, and is the leading online retailer and growing. According to lead in online sales. "In 2010, all major merchant categories, including web-only merchants, chain retailers, consumer brand manufacturers and catalog/call center companies, increased sales, but it was the web-only merchants that grew the fastest. Driven by, No. 1 in the Internet Retailer Top 500 Guide, the combined sales of all Top 500 web-only merchants grew 30.6% to about $56.89 billion last year from $43.55 billion in 2009".
  • 65. 62 | P a g e Post-Purchase Behavior The final element in the decision making process is post-purchase behavior. This is where the consumers determine whether their purchases have met their expectations. They have the option to keep or return their purchases after their analysis. has a generous 30-day return policy which gives consumers ample time to make their decision whether to keep their purchases or return. Though not all consumers follow the five-step process in the decision making process, Amazon's customers have made decisions that have pushed to the top of the e-commerce business. 8.2 Consumer Insights Some of the consumer insights that shaped include: Building Trust: When Amazon started they found out that their main issue was the doubtfulness inside the customers towards e-commerce and From this insight Amazon came up with the idea of customer reviews. When people see other people’s review they feel more confident to do the purchase. Increasing Sales: Amazon found out from their database that there is a relation between the next purchase and current purchase. Based on this they developed a recommendation module which suggested a set of customized products to the customer. Faster Process: It was found out that the customers who come to an online shop are there basically because of the ease of shopping. They like the reduced hassle and no-queue process. Based on this insight Amazon developed a process called one-click ordering and patented it. Prime Customers: From the insight that many customers feel that delivery charges are non value adding items and felt looted for paying that Amazon came up with the idea of Amazon prime. For a subscription price the subscriber gets one year free delivery. This also induced brand loyalty.
  • 66. 63 | P a g e SEO: Soon after Google became a leader in online search Amazon identified that many of the potential customers search in Google for landing into a page for online purchase. Amazon strengthened its search engine optimization (SEO). Amazon has 248,000,000 pages stored in Google's index. Each of these pages has the opportunity to rank for any number of keywords in search engines. Affiliate Marketing: Amazon found out that when there is more involvement with the brand, the consumer himself will act as a brand ambassador. Amazon thus started affiliate marketing. People loved to recommend the books they love to others and get an income out of it. Acquisitions: Amazon found out lately that its customers mostly belong to age group of 30-50. So they wanted to get to know more about young customers. Rather than changing the current image they acquired company’s which were targeting youth such as Zappos and Woot. Also they found that customers to digital camera and books go to specified sites and communities to discuss and search products. With this insight they acquired DPReview which is the leading review site on digital camera and Shelfari for book community.
  • 67. 64 | P a g e 8.3 Customer Loyalty Three Main Approaches Recurring Usage Why are sellers still using Amazon? Nonsense to ignore Amazon’s 137 m customers Profit from a reliable and optimized technology It takes time to develop as trusted a brand as Amazon’s (Amazon is the leading retail brand, before Walmart) How is Amazon increasing recurring usage? Creating ecosystems (Kindle and tablet) Storing users’ media library (Instant Video, Kindle) Special offers every day (Amazon Video on Demand) Ever-changing personalized store
  • 68. 65 | P a g e Seamless Integration How does Amazon integrate sellers? Monitor seller ratings posted by customers Expel sellers with bad ratings to ensure quality and protect the Amazon brand Offer its Fulfillment by Amazon program to further improve the customer experience How the user experience is vertically integrated? From the customer point-of-view, sellers are fairly invisible and commoditized On most products, customers can profit from Amazon Prime and Free Super Saver Shipping Lock-in How are sellers locked in? As Amazon puts it, their customers are in fact Amazon’s customers. Third party sellers do not own the customer accounts. Thus their position is very risky. The more business they generate through the Amazon marketplace, the more complicated it will become to ensure the same level of customer experience (building infrastructure, customer service…). How are customers locked in? Digital content: Kindle ebooks proprietary format Amazon Prime program: annual subscription to get free 2- day shipping.
  • 69. 66 | P a g e 9 Brand Positioning When Amazon introduced its Kindle Fire, it positioned it as a direct competition to Apple’s expensive iPad. In a letter published in its landing page, Mr. Bezos drew a clear distinction between Apple’s pricing strategy and Amazon’s pricing strategy. Apple was not explicitly named in the letter, but not hard for all to see who Mr. Bezos was talking about. 9.1 Layering of the Brand Purpose Self Expression Emotional Functional • Quality products at affordable prices • Tech savvy image • Next generation outlook • Reliability and trust • Secure transactions • Lowest prices • Ease of purchase and delivery
  • 70. 67 | P a g e 9.2 Brand Architecture Amazon follows a hybrid structure while developing new brands. It follows a mix of product, source and endorsing brand architecture. It is also a result of unplanned portfolio growth. They used product brand architecture whenever they acquired other internet based firms whose offerings where different from the core offering provided by Amazon. The Amazon Kindle is an e-book reader developed by subsidiary Lab126, which uses wireless connectivity to enable users to shop for, download, browse, and read e-books, newspapers, magazines, blogs, and other digital media. With the Kindle effect, the e-book sales of Amazon surpassed paper book sales for the first time in last quarter of 2010. Due to its technological nature and short life span, Kindle follows a umbrella brand architecture model. Umbrella Brand Architecture Amazon Kindle Kindle 2 Kindle DX Kindle DX Graphite Kindle 3
  • 71. 68 | P a g e 9.3 Brand Personality Aaker’s Model for Brand Personality 9.4 Measuring Brand Value Brand Asset Valuator Model Brand Vitality Brand Structure Differentiation • Measures the uniqueness of the brand • Lowest prices consistently • Easy to use interface • Unique shipping offerings Relevance • Highly diversified product portfolio • Highly relevant products for majority of the target segment • Reduction in savings and shipping options appeals to majority of customers Esteem • Always keeping promise • High quality of service • Most popular online retailer Knowledge • High penetration of brand due to large portfolio • Strong brand identity • Investments in brand building has increased the awareness levels among target market
  • 72. 69 | P a g e 9.5 Brand Identity Aaker’s Brand Identity Planning Model The Brand Identity Prism
  • 73. 70 | P a g e 10 Competitor Analysis Amazon Inc, being a multinational e-commerce company and due to its presence over various e- commerce categories have a lot of competitors in various categories. For example, is a competitor for and Google App Engine is a competitor for Amazon Web Services. These two in actual becomes competitor for Amazon Inc but not Amazon performs exceptionally efficiently measured against revenue per visitor, which is one of the key measures for any commercial website, whether it’s a media site, search engine, social network or a transactional retailer or offers travel or financial services. Of course profit per user would be quite different due to the significantly lower costs of other .coms like Facebook and Google. Note: SEC is the Securities and Exchange Commission (SEC) which is a government agency for which companies have to submit an open evaluation of their business models and marketplace conditions.
  • 74. 71 | P a g e 10.1 Classification of Competitors In 2004, had defined four different types of competitors: brick and mortar retailers, online ecommerce companies and indirect companies. Due to the shift of Amazon`s interest, the company has become the largest online shop. Furthermore, competitors like eBay, nowadays the biggest online auction, have increased their market share. To enter an e-commerce market has become easier, because of the low entry prices and because the business costs caused thousands of small and medium sized companies to establish their own internet shop. Moreover, physical retailers such as Wal-Mart are using nowadays the internet as a distributing channel for their products. Direct competitors stand in a direct competition with Amazon’s core business activity, with the company business model and the product line, e.g. Borders and Barnes & Noble, ―now most major brick and-mortar retail chains maintain an online presence, placing retail chains like Barnes &Noble and Borders in direct competition with Amazon and eBay‖. The second largest e-commerce retailer after Amazon is Germany's Otto Group. The two companies were not direct competitors at the beginning, as Amazon was first and foremost a media products retailer focused on North America, Otto mainly sold clothes across western European markets. However, the expansion strategies have made the two companies to become direct competitors across a wide range of goods, such as shoes, consumer electronics and media products, both being present in the Western European market. Both, Amazon and Otto, compete against each other in the United States of America, where Otto has a significant presence with Crate & Barrel, albeit with a larger presence in physically than online shopping. Recently, eBay has become the most important competitor of even if the business model is different, the customer base and products are overlapping. The eBay advantage is that this company does not stock the goods and behaves as a broker for buyers and sellers; with both models having advantages and disadvantages. E.g.: Amazon has a plus with the customer support, the usability, the lower prices, and the several payment methods, and eBay has wider range of product, provides a solid distribution channel for individuals and small businesses. Indirect Competitors do not stand in a direct competition with Amazon, e.g.: Google (world’s library and as the world’s future source for all video content) or Apple (the most innovative company with iPhone app and with its distribution system, iTunes). Google is the clear leader in search technology and drives that business with a multitude of popular media services including: YouTube, Google Docs, and Google Books, ―The giants in this category, such as Google, continue to thrive as advertisers seek to place targeted ads before millions on Internet surfers.‖ These companies along with Amazon are an important part of the Web and media, and they will shape the web by offering new ways of customer experience in the digital world. In order to compete with Google and Apple, must strongly invest into new technologies and continue to grow, and keep up with innovative competitors. The problem that will encounter in the next years is the one concerning the digitalization of printing media. The time of paper book is coming slowly to an end, undermining Amazon’s core products. Google is investing a lot into digitalization of media, and Apple is delivering the right hardware for the new e-books.
  • 75. 72 | P a g e Considering only the online retailing/retailing division of, we can classify the competitors into: Online Mass Retailers: For example, Online Specialized Retailers: For example,,, Book Retailers: Since this is the main revenue source for For example, Barnes & Noble, Half Price Books, etc. Brick and Mortar Retailers: For example, Wal-Mart, Sears, etc. E-book Readers: Since Kindle is also one of the top revenue generators for, through both its own sales and induced e-book downloads. For example, Kobo e-reader, Apple iPad, Barnes Noble’s Cybook. Social Buying Sites: For example, Groupon, Dealmap E-commerce Retailers in India: These are the major competitors to For example,,,,, etc. 10.2 Amazon vs. ebay Even though the business models of and are different ebay is one of the major competitors for Amazon. 1. Normal retailing model of business 2. Faster search and transaction speed 3. More trusted brand by customers 4. Products are on an average cheaper than any other site 5. Late in global entry and not fully utilized global distribution 6. Best in the industry in customer service 7. Simplicity due to one listing per product 8. More repeat purchase 1. Auction model of retailing 2. More number of sellers and buyers 3. Lesser inventory cost 4. Better reach and global presence (Amazon still doesn’t have a specialized unit in India where as is doing well) 5. Good customer service and very less error rate 6. Multiple listing per product. 7. Better margins for sellers
  • 76. 73 | P a g e 10.3 Amazon vs. Wal-Mart As Wal-Mart has entered into online retailing it poses a major threat to The increasing presence of Amazon in web space was the reason that made Wal-Mart jump into online retailing at the first place. Amazon is supposed to overtake Wal-Mart in total revenues by 2025. 1. Largest online retailer 2. No store presence 3. Online sales of 34 billion in 2010 4. 40% growth in 2010 5. Better prices than Walmart!!! (Cheaper by almost 19 %) 6. Diversified portfolio with futuristic outlook 7. Customer base of 137 million 8. Subsidiaries in 7 countries 9. Customer service ranking is #1 10. 28 acquisitions till date 1. Largest retailer 2. Online sales of 4 billion in 2010 3. Store sales around 400 billion in 2010 4. Better brand value due to store presence 5. 17% growth in 2010 6. Low profit margin 7. Customer base of 200 million 8. Subsidiaries in 14 countries 9. Customer service ranking is #10 10. 14 acquisitions till date
  • 77. 74 | P a g e 10.4 SWOT Analysis Strengths 1. Largest e-retailer with huge share of the e- commerce market. 2. Strong brand position and brand associations. 3. Customer Relationship Management (CRM) and Information Technology (IT) support Amazon's business strategy. 4. Amazon is a huge global brand. It is recognizable for two main reasons: It was one of the original dotcoms, and Over the last decade it has developed a customer base of around 30 million people. 5. Highly effective advertising and marketing. 6. Effective use of technology and partnerships. Weaknesses 1. Loss of focus on core products. 2. Weak economy which could lead to low sales. 3. High advertising and marketing costs due to no brick-and-mortar presence. 4. Lower penetration into international markets compared to its competitors. Opportunities 1. Selling of developed technologies. 2. Extension of brands into new areas. 3. International expansion specifically India and China and other emerging markets. 4. Opportunities with non-competitive businesses for mutual benefit. Threats 1. Unexpected changes in regulatory requirements both in the U.S. and abroad. 2. Legal Issues in patent infringement: 15 court cases. 3. International issues - export and import restrictions, tariffs and other trade barriers, fluctuations in currency rates, political instability, longer payment cycles, adverse tax consequences
  • 78. 75 | P a g e 11 Recommendations for 11.1 Recommended Strategies Survival through Operational Efficiency: The recent financial crisis and Amazon's financial performance in recent years has shown that they have to optimally utilize organizational resources hence to be in better position to handle crisis situation and hence must Reduce Operational Costs. Sales are high but the costs associated with the sales have ranged between 75% -80% of sales in recent years. In order to be more efficient in their operations, they must cut the expenditure by 2 % in the following: o Reducing cost in inventory by usage of cross docking o Research & Development cost projected to be cut by $50 million which is 5 % of the current budget. o Marketing budget projected must be reduced by $10 million. o Put a hold on diversification and acquisitions. A review of existing alliances, diversifications and acquisitions should be done to determine the non-profitable business and decisions should be made about the appropriate strategy to be considered. Legal Dispute Settlement: The sum of $500 million has been set aside to settle the lawsuits pending the court judgments. Analysis is needed to understand why they have so many law suites, and whether it is forming the part of their culture. Improve Kindle Sales: It is clear that the e-reader market is embryonic and has great potential. For the Kindle to survive, Amazon has to adopt a similar strategy to that of Sony, which is to develop alliances with content providers. They can consider cutting Kindle prices based on increase in sales in the future leading to economies of scale which can help boost their profit margin. If this cannot be achieved, in the long-term, should consider selling the Kindle design and patents rights to a third party who has a greater expertise in hardware development.
  • 79. 76 | P a g e 12 Future of the Brand 12.1 Short-term Goals The major short term goal (1-3 years) of Amazon is to attain a market share of 20-30% of Chinese internet retailing sector. Due to its high population density and lower logistics costs, the company is planning to capture a major share of the China market. With the increase in internet retailing sector and less number of players in the market, Amazon can establish favorable brand equity in the minds of the Chinese consumers. Later on, entry into other developing markets like India and other South-Asian countries will play a major role in sustainable growth of the company. Reason for expansion One of the fastest developing countries in the world. Leading and most reliable emerging market. World largest foreign direct investment (FDI) destination country since 2002. Market realization from potentiality due to recent well-ordered economy development, personnel disposable income increasing, infrastructure and transportation investment, rural economy development, speeding-up of foreign invested retailers in China. Market Overview Transaction volumes of online retail in the country reached $18.8 billion in 2008, up 129% from 2007 according to iResearch, a Chinese internet research company. The market is predicted to reach almost $35 billion by the end of 2009 and offers huge potential. The number of online shoppers rose against the economic crisis by nearly 14 million from 74 million to 87.88 million. One out of four Chinese Internet users shops online, while two out of three Internet users in countries with high Internet Penetration like Europe, America and Korea are online shoppers. China's potential of online shopping is yet to be released. Additionally, the government has attached great importance to e-commerce's stimulus to the economy, and has released a series of policies to regularize and guide e-commerce development. Industry e-commerce also grew vigorously, with more e-commerce platforms emerging and more and more farsighted traditional enterprises setting out for e-commerce. Against the general background, e-commerce is expected to maintain fast growth in the coming years.
  • 80. 77 | P a g e PESTEL Analysis for China Political Single party leadership with consistent policies. Unique socio - economic - political model centrally planned economy to a more market- oriented version with a rapidly growing private sector. Good relations with the US, Free Trade agreement with ASEAN (by 2010). Has been able to maintain a stable growth rate of 7-8% in the last few years. Inflation is between 4-5 %. Government focus on equitable growth thru liberalization policies by building good relationship with other countries which lead to a growth in its trade. Have good road, railway, air and shipping links to support the business activities. Economic Maintained strong economic growth over the years, 2003-2008, average GDP growth of 10.3% due to capital inflows, low real-interest rates and free market economy. Unemployment rate is high due to rural-urban shift. Transition shift from agricultural to industrialized country of which the service sector provides secure wages. The reformed IT and telecom policies and focused initiatives for the development of core technologies showcase Chinese plans to build its domestic prowess. By 2020, China will invest around 2.5% of its GDP in R&D. China also wants to raise the contribution of technology to economic growth and limit its dependence on imported technologies. The country has also emerged as one of the main hubs for investments in R&D, IT and ICT services. Socio Cultural Rising population with increase life expectancy and education level. Reduced poverty level by increasing per capital income. In 2008, China's per capita income was $2,770, which is one of the highest in Asia. Social richness prefers to inspect products before purchasing and haggle price for special deals. Online payment is less prevalent due to lack financial service. Banks provide debit card usage on specific stores and geographic areas. Technological Telecoms links are still of questionable quality outside major cities and do not have an expert courier system like DHL of FedEx. At the moment shipment to outside cities will take 3 weeks. Has been focusing on the areas of information and communication technologies (ICT), energy, health and life sciences, bio-technology and agriculture. Network security is non-negligible, and potential safety hazards may restrict the development of transaction applications like e-commerce and online payment.
  • 81. 78 | P a g e Environmental Major environmental problems: air pollution, diminishing biodiversity, land degradation, soil erosion, water pollution and shortage, shortage of resources, China will soon exceed the US in terms of greenhouse emissions. Implemented a 'green strategy', waste management policy (e.g. biogas production), China has accepted and ratified Kyoto protocol, and developed first national plan for climate change. Planning to reduce energy usage by fifth before 2010 and increase the amount of renewable energy. Planning to increase in the use of wind, nuclear and hydro power and increasing the efficiency of coal plants. Legal Weak implementation of intellectual property rights (IPR) laws continues to be problematic and, not surprisingly, receives frequent international attention, causing concern about the situation among international companies. Clear and fast legal procedures have been a major facilitator of foreign direct investment (FDI) in the country. The judicial system in China is plagued by a shortage of judges, particularly in rural areas. Risk Factors The risks envisaged are as follow: Intense competition: There are many new competitors entering the business with greater resources, long histories, more customers and greater brand recognition. They may be able to negotiate better deals and at cheaper costs with the suppliers. Expansion into new products, services, technologies and geographic regions are subjects to additional business, legal, financial and competitive risks: With limited or no experience in new market segments, there is a possibility of customers not adapting to the new product or service offered. Therefore, it would have an effect to the gross profits and could also damage the company's reputation, growth and operating results. Unsuccessful in efforts to expand into international market segments: Little experience in operating in future market segments may not benefit from any first-to-market advantages or otherwise succeed. It is costly to establish, develop and maintain international operations and websites and promote the company's brand internationally. International sales and operations are subject to a number of risks such as local economic and political conditions, government regulation of e-commerce or other online services and restrictive governmental actions Foreign exchange risk: The results of operations and certain inter-company balances associated with international websites are exposed to foreign exchange rate fluctuations. Upon translation, operating results may differ materially from expectations, and will record significant gains or losses on the re-measurement of inter-company balances.
  • 82. 79 | P a g e Payments related risks: Payment options to customers are subject to additional regulations and compliance requirements. Failure to comply with the said rules or requirements will have an adversely affect to the operating results as the company is subject to fines and higher transaction fees. There is also the risk of fraud cases. 12.2 Target Company for Acquisition Inc Sohu is a China based internet media company providing a network of web-properties and community based web 2.0 products which offer an array of choices regarding information, entertainment and communication to the Sohu user community. Sohu's products and services are advertising, aggregated content, e-commerce, communication and community tools, internet access and services, search engines, sponsored search, web-properties, wireless communication, on-line games. The ultimate purchase price will depend on a number of specific factors, including the target's current market value, its intrinsic value, and the value to be gained from any potential synergies between the target and buyer. Approximate costs of acquisitions can be around $700 million. Potential Challenges 1. Small number of credit card users - 75 million credit cards in circulation by 2007. 2. Payment systems are now safer - no longer a technical problem, but a problem of customer confidence. 3. E-commerce logistics: Size and vast distances in China - delivery for most companies limited to major metropolitan areas using couriers Cost as a % of sale price. High delivery cost due to the small scale of some logistics enterprises. 4. Over 70% of all purchases in the B2C market are paid cash-on-delivery. 5. Buying online is a dramatic change from conventional shopping practices: Consumers in China still prefer to look over the goods, determine their quality, and then, if satisfied, pay in cash. On-line commerce, in comparison, is an alien experience that only increases risk.
  • 83. 80 | P a g e 13 References and-business-data shareholders/ organizational-culture.html leadership-style-amazon-com.html