Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
December 12, 2016
Business 100 – AB6 Investor Group
University of the Fraser Valley
33844 King Road
Abbotsford, BC V2S 7M8...
2016 Amazon.com, Inc.
Investors Analysis
_____________________________________________________________________________
___...
Executive Summary i
This report was created upon request of an analytical document providing company
information in regard...
ii
learning from their mistakes, Amazon has cut down dramatically on expenses associated with
“offline” advertising. Condu...
Table of Contents
Executive Summary​…………………………………………………………………..……...​i
1. ​Introduction​…………………………………………………………………….…..…….....
List of Figures
Figure 1: Amazon.com, Inc. Company Logo…………………………………………………​1
Figure 2: Amazon.com, Inc. SWOT Analysis …………...
1. Introduction p.1
This report has been conducted in response to a request of a detailed analysis of Amazon.com,
Inc., wh...
p.2
$32.7 billion in the third quarter of 2016, compared with $25.4 billion in third quarter of 2015
(Amazon, 2016). Durin...
p.3
JJST Consulting has analyzed the internal and external forces that drive Amazon.com, Inc. By
compiling our professiona...
p.4
3.2 Critical Issues
Under scrutiny, we have gathered that Amazon has critical issues that are affecting the
company as...
p.5
have suffered from cancer, miscarriages and other crises reported that they had been evaluated
unfairly rather than gi...
p.6
around US,” (Statt, 2016). With Amazon surpassing the limits of e-commerce, customers will soon
be able to visit Amazo...
letter addressed to shareholders and investors alike, Amazon displays evidence of growth toward
attaining
p.7
their goal o...
increases. An increase in demand requires expansion. In today’s market, costs of manufacturing and
developing goods and se...
board members, including Bezos. These board members are derived from various backgrounds and
perspectives. 9 out of 10 boa...
p.10
5.4 CEO Compensation Comparison
Compensation Comparison
USD Jeff Bezos (CEO Amazon) Douglas McMillon (CEO Wal-Mart
St...
(Amazon.com, 2016e). These companies pay Amazon to advertise their products on many different
sites around the world. They...
Value Package Features:
Amazon.com caters to all
customers by offering an
extensive product list, as well
as great value. ...
Promotions:
Amazon relies on their
product retailers’ money to
promote their own products.
Amazon is the middle man,
havin...
Distribution
Channels
Amazon is an electronic
retailer that markets their
own products as well as from
third-party busines...
7. Financial Performance p.15
7.1 Three Year Trend
Amazon.com, Inc.: Three Year Trend
(USD) 2016 2015 2014 Growth
Revenue ...
p.16
that it has been increasing annually. In retrospect, the years 2014 and 2015 produced an increase of
$332.52 in the s...
p.17
Figure 6. Comparative analysis between Amazon.com, Inc and Ebay, Inc.
Comparing these two companies in the same marke...
p.18
and continue to climb. Christmas is around the corner, predicting an increase in the traffic to
Amazon.com, increasin...
p.19
Taking the gathered data into heavy consideration, a long-term investment would be
profitable to investor groups and ...
References p.20
Amazon.com Inc. (2016a). 8-K Annual Report 2016. Retrieved from
https://www.sec.gov/Archives/edgar/data/10...
p.21
Bariso , J. (2015). Here’s how Jeff Bezos can fix amazon’s culture. Retrieved from
www.inc.com/justin-bariso/the -rea...
p.22
Forbes. (2016). ​Forbes 400. Retrieved from http://www.forbes.com/profile/jeff-bezos/
Forbes. (2016). The World’s Mos...
p.23
Jurevicius, O. (2013). Mission statement of Amazon. Retrieved from
http://www.investopedia.com/ask/answers/120314/who...
p.24
Kafka, P. (2016). Amazon is having checkout problems on prime day, one of its biggest days of the
year. Retrieved fro...
p.25
Statt, N. (2016). Amazon is expanding its retail operation to 100 pop-up stores around the US.
Retrieved from
http://...
10. Appendix p.27
10.1 Appendix A - SWOT Analysis
Strengths
Amazon’s low costs for products can be attributed to internati...
p.28
(MarketLine, 2016, p.6). According to MarketLine (2016), since the launch in 2007, Amazon has
launched more advanced ...
p.29
that this shift filmed at the Amazon warehouse increased the risk of mental and physical illness
(Maisto, 2013).
Amaz...
p.30
Online shopping is growing faster than ever globally. According to McPherson 2016, the
e-commerce market is to rise t...
p.31
phone, and sends you a code every time you need access your account (Snyder, 2015). This is one
crucial step Amazon h...
10.2 Organizational Chart - Appendix B p.32
Figure 7. Amazon’s organizational chart describing top executives and their co...
10.3 Appendix C - PESTEL Analysis p.33
PESTEL Analysis into Amazon.com, Inc. (2016)
Political Environment: Shipping and re...
10.4 Appendix D - List of Products p.34
Home, Garden & Tools
● Home
● Kitchen & Dining
● Furniture
● Bedding & Bath
● Appl...
p.34
● Artwork
● Stationery & Party Supplies
● Toys & Games
Electronics & Computers
● TV & Video
● Home Audio & Theater
● ...
p.35
● Textbook Rentals
● Kindle Books
● Kindle Unlimited
● Audible Membership
● Audible Audiobooks
● Whispersync for Voic...
p.36
● Camping & Hiking
● Cycling
● Outdoor Clothing
● Scooters, Skateboards & Skates
● Water Sports
● Winter Sports
● Cli...
p.37
Automotive & Industrial
● Automotive Parts & Accessories
● Automotive Tools & Equipment
● Car/Vehicle Electronics & G...
Amazon Investor's Analysis
Upcoming SlideShare
Loading in …5
×

Amazon Investor's Analysis

1,642 views

Published on

  • GIVE HER A BIGGER PACKAGE THIS VALENTINE'S DAY ♣♣♣ http://t.cn/Ai88iYkP
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Comparing VigRX Plus to ED Prescription Drugs ◆◆◆ https://tinyurl.com/yy3nfggr
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • How can I sharpen my memory? How can I improve forgetfulness? find out more... ➤➤ https://bit.ly/2GEWG9T
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Relationship guru Justin Sinclair reveals his secret tactics to help get your Ex back! Learn how  http://t.cn/R50e5nn
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • There are over 16,000 woodworking plans that comes with step-by-step instructions and detailed photos, Click here to take a look ●●● http://tinyurl.com/y3hc8gpw
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here

Amazon Investor's Analysis

  1. 1. December 12, 2016 Business 100 – AB6 Investor Group University of the Fraser Valley 33844 King Road Abbotsford, BC V2S 7M8 Dear Business 100 – AB6 Investors, We are writing to you in regards to your request of an analysis of Amazon.com, Inc. Following this letter includes information about Amazon.com, Inc., including their key corporate activity. Through extensive research, JJST Consulting Ltd. is confident the data presented in this report will assist you to reach a conclusion whether or not to invest in Amazon.com, Inc. The contents of this report include but are not limited to: the company’s history, products and services they provide, an analysis of internal and external factors that impact the company’s profitability and employee turnover, as well as critical issues that affect the overall success of the business. JJST Consulting has reviewed the company’s mission, vision, and value statements, in addition to data determining whether Amazon’s strategies align with their corporate and social goals. While putting Amazon under scrutiny, we have developed a review of their marketing strategy, financial performance, as well as their strategic direction. This enabled us to provide a variety of current and relevant comparisons to other companies, as well as major competitors within the global =market. JJST Consulting has outlined key information including the company’s plan for survival, the current trend, and forecasts of the market. In conclusion, the data that we have compiled has been analyzed to produce a carefully constructed judgement, aiming to develop an up–to–date, unbiased examination of critical data that may aid in reaching an executive decision. JJST Consulting is optimistic that this report will provide you and your team with valuable and beneficial information about Amazon.com. We have utilized our resources to construct a strong and supported recommendation. We hope this will assist you in your decision to invest in the company. Should you or your team require any additional context please do not hesitate to contact us. Best regards, JJST Consulting Services, Ltd.
  2. 2. 2016 Amazon.com, Inc. Investors Analysis _____________________________________________________________________________ ______________________________________________________________________________ November 30th, 2016 Mr. J. Bennett, Mr. J. Pappas, Mr, S, Pannu, Mr. T. Pollard
  3. 3. Executive Summary i This report was created upon request of an analytical document providing company information in regards to Amazon.com, Inc. By utilizing an extensive variety of resources, including University of the Fraser Valley databases, as well as academic reports, JJST Consulting has constructed this report to aid you in reaching an investment decision. Amazon.com, Inc. is one of the largest Internet-based retailers around the globe. Founded in 1994, 30-year-old Jeff Bezos initially funded Amazon.com as an online bookstore. Bezos’ and his team have since incorporated products from categories such as DVD, Blu-ray, home video, music, television, software, electronics, apparel, furniture, toys, and jewelry. Many of these products were integrated following May 15, 1997 ​when Amazon.com went public. Amazon dawned an initial IPO price of $18.00 USD that later diminished to $1.50 USD in account of a posted stock split that followed on June 2, 1998. Amazon.com has been a BBB ​Accredited company as of August 1st, 1996 and has since been awarded a number of honours and patents. ​Personifying entrepreneurship, Bezos’ commitment and endurance to Amazon in its early stages resulted in exponential growth. Within the first 2 months, Amazon was generating $20,000 a week in sales. ​Subsequent to July of 1994, it remains credible that Amazon.com continues to embody a competitive spirit and a customer-​centric position. Amazon.com communicates its objectives to “​become Earth’s most customer centric company,” frequently and candidly. Current objectives include maintaining low product costs, offering substantial savings, advancing in computing and networking technologies, and expediting development into Amazon Prime and Amazon Web Services (AWS). Amazon.com hosts a flat organizational structure with a vast radius of control. With Amazon dominating the online retail industry with the lead of CEO Jeff Bezos, its efforts are now dedicated to the benefit of the customers and shareholders alike. Consequently, Amazon’s level of dedication toward its customers and shareholders exceeds that of the competition. Amazon has obsessed enormously over serving the customer and the shareholder in the most efficient way possible. Its marketing strategies focus primarily on the “six pillars,” outlined in the content of this report. Amazon.com markets a near immeasurable amount of products and services. Regrettably, i​n 1999, Amazon.com spent $80 million in “offline” advertisements during their fourth quarter. Since then,
  4. 4. ii learning from their mistakes, Amazon has cut down dramatically on expenses associated with “offline” advertising. Conducting their focus toward marketing efforts directed at media as well as through social media giants including Twitter, Facebook, and Instagram. Amazon’s marketing strategy is simple: since customers shop online, online is where you will find them. ​In summary, Amazon’s marketing strategy embraces a growing demand for online retail, as well as key products and services from related sectors. Taking into consideration Amazon’s 22 years of complex financial reports, it has resulted in an ample and deep-seated financial analysis. Acknowledging Amazon’s ​three-year trend, its revenue has been on a steady climb at a constant rate. Redeeming an annual 35% revenue increase since 2014. However, in Amazon’s 3rd quarter of 2014, Bezos disappointed Wall Street by posting a massive loss of $437 million. Research into various sources leads us to believe this was due to Amazon depositing large sums money into areas like sortation centers, continual website improvement, and web design. This composed an unfavorable outcome, as Amazon unwisely invested too many resources into fields with lower priority and lesser significance. As of November 25th, 2016 NASDAQ forecasts Amazon to reach earnings 295.09% greater than that of the previous fiscal year. In addition, Amazon’s earnings are also anticipated to peak at a remarkable 91.78% over a preceding forecast of this year. Data retrieved from various other sources also conclude that earnings are expected to grow at an annual rate of 33.36% over the next 5 years. Corresponding conclusions have been formed based on this analysis, along with the independent research of our sources. After a comprehensive review of Amazon’s corporate operations, we feel confident in our recommendation to invest in the company. We believe Amazon will continue to maintain its competitive position, while it amasses long-term market share. Amazon’s current corporate situation seems optimal for an investment, although, their stock is volatile, pushing interest away from short term investments. Amazon considers the value of market share greater than the value of short-term profit gains, which substantiates our final recommendation for a long-term investment in Amazon.com, Inc.
  5. 5. Table of Contents Executive Summary​…………………………………………………………………..……...​i 1. ​Introduction​…………………………………………………………………….…..……..​1 2. ​Company Overview​…………………………………………………………...…..……...​1 3. ​Company Situation​………………………………………………………………..……...​2 3.1 Amazon Swot Analysis…………………………………………....….…..……...​2 3.2 Critical Issues……………………………………………………………...……..​4 3.3 Major Implications…………………………………………………….…..……..​4 4. ​Strategic Direction​………………………………………………………………..…..….​5 4.1 Mission and Value Statement……………………………………....….…..……..​5 4.2 Long-term Objectives………………………………………………….….……...​7 4.3 Key Strategies………………………………………………………….….……...​7 5. ​Organizational Structure​………………………………………………………………...​8 5.1 Organization…………………………………………………..….………………​8 5.2 Board of Directors………………………………………………….….….………​8 5.3 CEO – Jeff Bezos……………………………………………….….….….……….​9 5.4 CEO Comparison…………………………………………………………………​10 6. ​Marketing Strategy​………………………………………………………….….….……..​10 6.1 Overall Marketing Strategy…………………………………………….….….….​10 6.2 Product Analysis…………………………………………………….….….….….​11 7. ​Financial Performance​……………………………………………………….….….…....​15 7.1 Three Year Trend………………………………………………………………....​15 7.2 Comparative Analysis……………………………………………………………​16 7.3 Sources of Capital………………………………………………………...……...​17 8. ​Company Outlook​………………………………………………………….……...……...​17 8.1 Our Forecast………………………………………………………………...……..​17 8.2 Analysts Forecast…………………………………………………………...……...​18 9. ​Recommendation​…………………………………………………………….……...……...​18 10. ​Appendix​………………………………………………………….……….……...………..​27
  6. 6. List of Figures Figure 1: Amazon.com, Inc. Company Logo…………………………………………………​1 Figure 2: Amazon.com, Inc. SWOT Analysis ………………………………………………..​2 Figure 3: CEO Financial Comparisons (Jeff Bezos and John Donahoe)………………….​10 Figure 4: Product Analysis................................................................................................​11 Figure 5: Three Year Trend of Amazon.com………………………………………………..​15 Figure 6: Comparative Financial Analysis in 2016…………………………………………..​16 Figure 7: Organizational Chart………………………………………………………………..​32 Figure 8: PESTEL Analysis…………………………………………………………………..​33 Figure 9: List of Products……………………………………………………………………..​34
  7. 7. 1. Introduction p.1 This report has been conducted in response to a request of a detailed analysis of Amazon.com, Inc., where our findings aim to assist in a decision of an investment in the company. Extensive research, with assistance from sources including the Internet and the University of the Fraser Valley’s databases, has granted sufficient information to propose a recommendation of investment into Amazon.com. In this report, we have provided an overview of the most important information leading to a detailed and supported recommendation. The goal of this report is to bring attention to key factors that may influence your decision to invest, such as Amazon’s present, current, and forecasted situation, and their general operations. This report first contains an overview of Amazon.com, including its history and the extent of its products and services offered. In succession, a thorough investigation into its critical issues, major implications, and a detailed SWOT analysis have also been provided to further support our findings. Our report next examines Amazon’s mission and value statements, in addition to a critical breakdown of its current strategies. Within this section we also take into account, Amazon’s long-term objectives and whether or not they are reflective of Amazon’s initiatives. Finally, this report manages to break down Amazon’s organizational structure, coupled with its financial situation and marketing strategies. In order to endorse a strong recommendation, we have also included our forecast of Amazon’s finance projected into the next 3 years. In conclusion, this report is intended to justify a recommendation of investment into Amazon.com, while highlighting and disclosing key factors that may alter your initial judgements. 2. Company Overview: Amazon.com, Inc. is one of the largest Internet-based retailers in the world. Founded in 1994 in Seattle, Washington, by a wall street professional named Jeff Bezos. Amazon.com began as an online bookstore, later incorporating products such as DVDs, Blu-rays, CDs, video downloads and streaming, audiobook downloads, software, video games, electronics, apparel, furniture, food, toys and jewelry (Amazon.com, 2016c). According to Forbes.com, Amazon provides their services to four main customer groups: sellers, consumers, enterprises, and content creators (Forbes, 2016). Amazon has created programs designed to assist third-parties with sales and order fulfillment. For a fee, third-party businesses can use these services on Amazon.com or on their own e-commerce website. Amazon Web Services also provides developers and enterprises of all sizes, access to technology infrastructure which encourages autonomy for any type of business. Amazon employs approximately 268,900 people, as of July 1​st​ , 2016 (Amazon, 2016). In the last year, Amazon’s revenue has increased 20.25% to $107.01 Billion. Net sales increased 29% to
  8. 8. p.2 $32.7 billion in the third quarter of 2016, compared with $25.4 billion in third quarter of 2015 (Amazon, 2016). During the holiday season in 2015, Amazon generated 55% of the total U.S. e-commerce growth, followed by 41.2% in the first quarter of 2016 (Kam, 2016). Followed by Wal-Mart Stores Inc., in second place at 10% (Wahba, 2016). We found that Amazon is ahead of its competition with expertise in e-commerce. Forrester Research estimates that United States e-commerce sales will grow to more than $530 billion by the year 2020 (Wahba, 2016). If online sales reach that level, Amazon’s sales are projected to increase nearly 93% from its current 9-month total of $92.3 billion to $178 billion (Amazon, 2016). This is assuming that Amazon only generates 41.2% of the United States e-commerce sales, excluding the holiday season. Based on their recent initiatives, we trust Amazon’s capability to generate far beyond 41.2% of the e-commerce sales by the year 2020. 3. Company Situation 3.1 SWOT Analysis Figure 2. Strengths: ● Low costs (MarketLine, 2015, p.4 ● One of the largest online retailers in the world (MarketLine, 2015, p.4) ● Wide variety of items ● Efficient delivery network (Amazon.com) ● Kindle top competitor in eBooks market (MarketLine, 2015, p.6) Weaknesses: ● Always competing with other retailers (Datamonitor, 2011, p.7) ● No physical presence ● Criticisms over working conditions (Maisto, 2013) ● Patent infringement issues (Datamonitor, 2011, p7) Opportunities: ● Expansion around the world ● Third party retailers (Music Trades, 2012) ● E-commerce market growth (McPherson, 2016) ● Online display advertising (Young & Page 2014) Threats ● Government regulations (FRPT Research, 2016, p.27) ● Risk of data breaches (Snyder, 2015) ● Increasing pressure to collect sales tax (MarketLine, 2015, p.10) ● Other companies such as eBay ● The decline in international buyers due to the US Dollar
  9. 9. p.3 JJST Consulting has analyzed the internal and external forces that drive Amazon.com, Inc. By compiling our professional knowledge of the company as well as in-depth research, we have constructed a SWOT analysis to support our recommendation of Amazon.com, Inc. (For a full analytical evaluation refer to Appendix A) Many key strengths of Amazon include the low cost of products, a wide variety of products, a fast and efficient network for delivering, and the availability of their products is also very common which results in high inventory turnover (MarketLine, 2015, p.4). Amazon is one of the largest online retailers in the world allowing them to be heavily dominant in their market (MarketLine, 2015, p.4). They also have their own brands and patents including the Kindle Fire, which has a strong presence within the eReader market (MarketLine, 2015, p.4). In contrast, Amazon has some weaknesses. One of Amazon’s key weaknesses is that they are always competing with other retailers. Every brick and mortar store in the world is considered their competition (Datamonitor, 2013, p.7). Some competitors have physical storefronts as well as an online stores, for example, Walmart. This leads to a stronger presence. Additionally, there has been reports of working conditions not being up to standards, long hours, and not enough breaks (Maisto, 2013). Amazon has a number of great opportunities. With the e-commerce market growing every day, Amazon has the ability to expand globally. Amazon has the opportunity to increase their number of third-party retailers, which will lead to increased profits. This contributes by motivating smaller retailers trying to get their product onto the market. Amazon.com also has the opportunity to start displaying advertisements on their websites to generate higher levels of internet traffic and profit (Young & Page, 2014). There are several threats that could harm Amazon as a business. Government regulations may restrict Amazon from expanding globally due to different laws in foreign countries. Such laws may prohibit the use and/or shipment of certain products within its country’s borders (FRPT Research, 2016, p.27). Data breaches are also a lingering threat to Amazon and its customers as they provide their personal information, including confidential credit card information used for online transactions (Snyder, 2015).
  10. 10. p.4 3.2 Critical Issues Under scrutiny, we have gathered that Amazon has critical issues that are affecting the company as it operates. One of the major issues impacting Amazon currently is the satisfaction of their employees. The employees are “unhappy” due to the level of their input with minimal recognition (Bariso, 2015). Advisor Gregori shows that Amazon’s working environment is “intolerable” (Bariso, 2015). The working conditions are so intense, which has caused to drive employees stressed and exhausted (Kalai, 2016). Another critical issue is that some workers who have suffered from cancer, miscarriages and other crises reported that they had been evaluated unfairly rather than given enough time to recover. (Bariso, 2015). It has been indicated that Amazon treats their employees poorly when they inform managers of an illness or injury, resulting in employees given inadequate time to recover. This is unreasonable for the employees, and indicates that corporate Amazon employees don’t take their equality policy into consideration; this tends to lead to unmotivated and dissatisfied employees. Another critical issue currently affecting the company is that Amazon’s “Prime Day” has grown bigger than previous Black Fridays. Amazon’s “Prime Day” allowed consumers to buy large quantities of merchandise with a sizeable discount. However, Amazon’s online servers and employees shared abundant problems keeping up with orders resulting in customers experiencing complications with the online checkouts (Kafka, 2016). 3.3 Implications Under scrutiny, we have gathered that Amazon has critical issues that are affecting the company as it operates. One of the major issues impacting Amazon currently is the satisfaction of their employees. The employees are “unhappy” due to the level of their input with minimal recognition (Bariso, 2015). Advisor Gregori shows that Amazon’s working environment is “intolerable” (Bariso, 2015). The working conditions are so intense, which has caused to drive employees stressed and exhausted (Kalai, 2016). Another critical issue is that some workers who
  11. 11. p.5 have suffered from cancer, miscarriages and other crises reported that they had been evaluated unfairly rather than given enough time to recover. (Bariso, 2015). It has been indicated that Amazon treats their employees poorly when they inform managers of an illness or injury, resulting in employees given inadequate time to recover. This is unreasonable for the employees, and indicates that corporate Amazon employees don’t take their equality policy into consideration; this tends to lead to unmotivated and dissatisfied employees. Another critical issue currently affecting the company is that Amazon’s “Prime Day” has grown bigger than previous Black Fridays. Amazon’s “Prime Day” allowed consumers to buy large quantities of merchandise with a sizeable discount. However, Amazon’s online servers and employees shared abundant problems keeping up with orders resulting in customers experiencing complications with the online checkouts (Kafka, 2016). 4. Strategic Direction 4.1 Vision and Mission Statement “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.” (forbes.com) Amazon’s mission statement clearly states what the company aspires to be. It includes aspects such as loyalty toward customers, the desired market, and the company philosophy (​Jurevicius​, 2013). However, it neglects to mention aspects such as technology, a concern for survival, a concern for public image, as well as a general concern for its employees (Jurevicius, 2013). Amazon’s mission statement also doubles as the business’s vision statement (​Jurevicius​, 2013). Having a shared mission and vision statement makes the vision less valuable and harder to communicate the specifics of the firm’s future aspirations (Jurevicius, 2013). Communicating a powerful mission statement to all employees, including first-line managers can impact decision making even in higher levels of management. After all, Amazon’s mission and vision statement remains powerful, effective, and enduring. With Amazon’s interest in expansion, Amazon is following its vision of becoming “earth’s most customer-centric company,” (Hull, 2012). Sources including Business Insider and Bloomberg.com report that Amazon has plans to expand its retail operation to “100 pop-up stores
  12. 12. p.6 around US,” (Statt, 2016). With Amazon surpassing the limits of e-commerce, customers will soon be able to visit Amazon stores in person throughout the United States (Statt, 2016). Amazon’s approach toward meeting their long term goals have stayed consistent. They projected forecasts and are meeting the firm’s quotas to accomplish their desired goals (Anders, 2012). Outlined in a letter to Amazon’s shareholders, long term goals include growth of Amazon Prime, Amazon Web Services, and other services and features (Bezos, 2013). Amazon has grown their two day delivery on 1 million items to over 30 million, and added new features including sunday delivery, and free same-day delivery (Kline, 2016). In 2014, Amazon also set a long term goal of using 100% renewable energy across their AWS (Amazon Web Service) infrastructure (Bezos, 2013). In consideration of setting the goal, Amazon has since announced four “significant” wind and solar farms that will deliver, “1.6 million megawatt hours per year and have so far reached 25% renewable energy,” which indicates a steady movement toward achieving 40% renewable energy this upcoming year (Bezos, 2013). Amazon’s plans to open solar and wind farms to harvest renewable energy and power their databases as well as their fulfilment centers is outlined in a letter to the shareholders (Amazon.com, 2016c). Amazon vows to keep expanding their efforts in areas including packaging. They have introduced what they call “frustration-free” packaging that ensures easy open packages for its customers, it also reduces waste and cuts down on shipping costs, although only 19 products were included during the initial launch. Amazon’s “frustration-free” packaging has now grown to incorporate over 400,000 products that are shipped globally (Bezos, 2013). With services such as Career Choice, Amazon is making it simple and affordable for employees to take academic courses that teach in-demand, current skills. According to Jeff Bezos, CEO and Founder of Amazon, he discloses that Career Choice continues to pioneer and pre-pay 95% of tuition for all current Amazon employees. Services such as Career Choice lead to a sense of employee fulfilment, allowing Amazon employees to work in an environment they enjoy. Upon the opening of new solar and wind farms, development of new techniques toward a smaller carbon footprint, and presenting clear evidence of growth, it becomes evident that Amazon’s strategies toward a better environment are likely to become reality. Each year, enclosed within a
  13. 13. letter addressed to shareholders and investors alike, Amazon displays evidence of growth toward attaining p.7 their goal of using 100% renewable energy (Bezos, 2013). With Mr. Bezos providing a transparent review of the progress achieved during the previous fiscal year, we are optimistic that Amazon is pointed in the right direction, and they will continue to fulfill their short term goals. 4.2 Long-term Objectives Amazon’s primary objective is to keep product price fairly low in comparison to competition, which satisfies the customer. This strategy also invites customers to visit more frequently. (Bhasin, 2016). Amazon demonstrates an objective to advance computing and networking technologies that will lead to lower costs, rather than paying employees to complete extensive paperwork. Allowing Amazon to offer low prices encourages growth and profitability. E-commerce service provides outside of the United States share that there will be efforts in international expansion (Smithson, 2016). This will direct Amazon’s growth on the global online market (Smithson, 2016). Amazon’s aim is to make no mistakes as they adapt Amazon Prime into an appealing service for everyone. Upgrading from a free trial to Amazon Prime will enable consumers to get a premium discounts on merchandise by paying $99 per year for the membership program (Bishop, 2016). 4.3 Key Strategies Amazon’s objective is to try to export goods to their consumers more quickly by improving their distribution lines. They will execute this by incorporating Amazon into new areas of specialization, which will bring in new customers, reduce the cost of delivery, and offer more free shipping options to nearby locations (Bhasin, 2016). Smithson also indicates that market development is Amazon’s primary focus with an intensive growth strategy. Developing in new countries exhilarates growth within their firm. A key strategy for Amazon reaching its goal of creating new websites that incorporate different countries and regions that relate to their unique markets, involve development of Amazon Services. The end result of development into Amazon’s services generates an increase in popularity, usefulness of the service, as well as a market demand for the variety of services they offer. With services that are bug-free, inexpensive, and easy to use, the likelihood of meeting a consumer's needs
  14. 14. increases. An increase in demand requires expansion. In today’s market, costs of manufacturing and developing goods and services abroad are much more appealing to executives than manufacturing p.8 and developing in the company’s home country. With this in account, more and more executives are moving their companies factories to lesser regulated and taxed regions, resulting in many cases: outsourcing to a multitude of Asian and Eastern Asian countries. Indicated in an article titled “Amazon.com Inc.’s Generic Strategy, Intensive Growth Strategies,” written by N. Smithson, market penetration in regions where Amazon is prominent will allow them to gain increasing amounts of revenue. Customers’ growing interest in online retail will continue to make Amazon a household name (Smithson 2016). 5 Organizational Structure 5.1 Organization Amazon’s organizational structure is very complex. Although Amazon would not be able to function without its thousands of employees working in the sortation, packing, and shipping facilities, however, they rely on members of the firm to direct and influence operations around the world (Meyer, 2016). According to Meyer, (2016) “An evolving corporate structure could even benefit Amazon as the company adds more products and gradually diversifies its business”. Amazon’s success has not only led to increasingly high revenue, but global reach with its foot in many countries around the world. Amazon’s geographic divisions is key for Amazon to thrive as a business. Amazon uses geographic divisions to make it easier to manage the different laws and regulations surrounding e-commerce business around the world (Meyer, 2016). This is key to have because it provides Amazon with opportunities to address concerns and issues that are relevant to each geographic region (Meyer, 2016). Another organizational function for Amazon includes global hierarchy. Meyer (2016) explains this as “such characteristics is expressed in terms of a global system of vertical lines of command and authority that influence the online retail firm”. This is used for managers having control of Amazon’s entire organization all over the globe. 5.2 Board of Directors A company with such a large scale such as Amazon requires its board members to serve as a collective unit while each contributing unique insight from their respected fields. Amazon has 10
  15. 15. board members, including Bezos. These board members are derived from various backgrounds and perspectives. 9 out of 10 board members associate directly with companies outside of Amazon, p.9 leaving Bezos as the only board member primarily involved with Amazon.com. Members of the board range from age 57 - 77 (Bloomberg, 2016), leaving Amazon’s top executives at a deliberately diverse position. Combined with their experience in primary companies such as the Bill and Melinda Gates Foundation and Cornell Tech University (Bloomberg, 2016), each elected member provides beneficial insight into various industries that may impact Internet-retail. For a complete organizational chart including the board of directors please consult Appendix B. 5.3 CEO Profile Jeff Bezos is an American technology entrepreneur, investor, and philanthropist. He is the founder, chairman, and chief executive officer of Amazon.com. He also owns “The Washington Post,” (Amazon, 2016). According to (Bezos, 2001), Jeff Bezos showed an early love of how things work and spent his childhood summers fixing ranch equipment on his grandfather’s ranch. It was in high school where he developed his passion for computers, he carried this passion on to Princeton University where he earned two Bachelor of Arts and Science degrees in computer science and electrical engineering. After graduation he worked on Wall Street, and in 1990 he became the youngest senior vice president at the investment firm D.E. Shaw. Four years later, he quit his well-paid job to start Amazon.com with the simple idea to sell books via the Internet. Now Amazon sells practically everything a consumer could want. As of November 2016, Bezos' personal wealth is estimated at US $64 billion, then classifying him as the second richest person in the United States and the third richest person in the world (Forbes, 2016). Considering the stock weighted compensation across Amazon, we can conclude that a large part of Bezos’ leadership style is transactional by nature. Bezos’ ultimate goal is, “to sell anything that can be sold to every single person on earth,” (Bezos, 2001). It’s Jeff Bezos’ determination to push the limits of what’s possible that have helped Amazon gain and maintain its rank as the largest and most successful Internet retail company in the world. Visionaries like Jeff Bezos see the world as a laboratory. They persistently seek to answer those “what-if” questions as they search for new solutions (Gregersen, 2015).
  16. 16. p.10 5.4 CEO Compensation Comparison Compensation Comparison USD Jeff Bezos (CEO Amazon) Douglas McMillon (CEO Wal-Mart Stores Inc. Yearly Salary $81,840 $1,263,231 Bonus $0 $3,406,971 Awarded as Stock $0 $14,270,786 Other Compensation $1,600,000 $463,054 Total Compensation $1,681,840 (Salary.com, 2015) $19,404,042 (Salary.com, 2015) Median Employee Pay $114,352 (15/1 to that of CEO) (GlassDoor Team, 2015) $22,591 (1,133/1 to that of CEO) (GlassDoor Team, 2015) Figure 3. CEO compensation comparison. For a complete reference please consult Appendix A. Upon Comparing Jeff Bezos and Douglas McMillon, it is clear that Douglas McMillon of Walmart has the greater benefits due to his salary, bonus, stock awards, and all other compensation is much higher than Jeff Bezos’. Douglas’ salary and total compensation is greater than Jeff’s, however this is not justified, because Amazon has a much greater net income. Jeff Bezos is much more modest when it comes to his compensation compared to Douglas McMillon. 6. Marketing Strategy 6.1 Overall Marketing Strategy The strategy that Amazon used for marketing is not out of the ordinary. As Amazon sells almost every product you can think of, their target market is extensive. They sell their products to individuals mostly, but a lot of Amazon’s software is sold to large businesses (B2B). Amazon advertises mostly through advertisements over the internet. They have advertisements playing before and in the middle of YouTube videos. Although, they do not sell many of their own products, they have some of their own. However, they rely on other companies to use their website as a retailer
  17. 17. (Amazon.com, 2016e). These companies pay Amazon to advertise their products on many different sites around the world. They reportedly spent $157.7 million US dollars on the Unites States search p.11 ads in Google in 2013 (Smith, 2013). They payed Google for when people search certain keywords, their advertisements come up first in the list. Amazon also records what you are searching for, and the next time you’re on their site, they will have suggested items for you based on this search history (Halligan, 2011). Amazon does affect the price of products, they can price products low, there-for selling large quantities because of high traffic on their website. They are an ecommerce business and reaching out to people over the internet is the most beneficial because that’s where their “store” in located. Amazon is known for its low prices, and that helps attract business to their website. 6.2 Product Analysis Most of Amazon’s attempts in regards to their marketing mix is found in the promotion section. Amazon relies heavily on advertisements to get their products into the public eye. They also depend mostly on social media, as that is the quickest and most efficient way of reaching their target market. With Amazon being an online retailer, it’s list of products is ceaseless. Amazon sells everything from software, clothes, to groceries that are delivered to your door. To provide a further example, CBS news stated in an article regarding Amazon’s vision of the future, that its goal is to sell everything to everyone (CBS, 2013). Please consult ​figure ​3 provided below. Product Analysis Electronics (Computers, TV’s, Video Games, eBooks etc.) Software Clothing, Shoes, & Jewelry Target Market Amazon is targeting the younger spectrum of the market, as they are generally more technologically inclined than the previous generation. Electronics are marketed to younger customers, due to its affordability, as well as business professionals that may not define the criteria of their target market. Amazon’s software market was intended for the purpose of commercial use. Having said this, a large number of businesses and organizations have been key demographics, as well as smaller entrepreneurs. The necessity of these items allows Amazon to broaden its target market. Customer, despite their age, sex, marital status, and other aspects, are included in the marketing strategy of Amazon’s apparel category. Upon closer inspection, different styles of apparel are aimed at a more defined markets.
  18. 18. Value Package Features: Amazon.com caters to all customers by offering an extensive product list, as well as great value. All Amazon products are either sold or purchased by all aspects of the general public, with recent focus aimed at businesses. Amazon provides a third-party means of shipping, and offers affordable prices for its different levels of service. Benefits: The broad spectrum of Amazon’s products allow its customers to benefit from a “one-stop-shop” website. Customers purchase Amazon’s products knowing they are of fine quality, usually supported with a warranty. Features: Amazon.com caters to all customers by offering an extensive product list, as well as great value. All Amazon products are either sold or purchased by all aspects of the general public, with recent focus aimed at businesses. Amazon provides a third-party means of shipping, and offers affordable prices for its different levels of service. Benefits: The broad spectrum of Amazon’s products allow its customers to benefit from a “one-stop-shop” website. Customers purchase Amazon’s products knowing they are of fine quality, usually supported with a warranty. Features: Amazon.com caters to all customers by offering an extensive product list, as well as great value. All Amazon products are either sold or purchased by all aspects of the general public, with recent focus aimed at businesses. Amazon provides a third-party means of shipping, and offers affordable prices for its different levels of service. Benefits: The broad spectrum of Amazon’s products allow its customers to benefit from a “one-stop-shop” website. Customers purchase Amazon’s products knowing they are of fine quality, usually supported with a warranty. Promotional Mix Public Relations: Amazon relies on public relations because people are putting their private information, including credit cards, address, and full names on Amazon’s servers. Amazon requires the most up-to-date software to keep their customers information safe. Public Relations: Software and public relations go hand in hand because Amazon sells their own e commerce software, and their customers know it is a reliable product. Also having quick and easy customer service when you are having problems Public Relations: Amazon relies on public relations when customers are interested in purchasing clothing, shoes, and jewelry because when dealing with apparel, a lot of the time people are returning their items because they do not fit properly, and that is where
  19. 19. Promotions: Amazon relies on their product retailers’ money to promote their own products. Amazon is the middle man, having the brand name show up makes the product more reputable. Advertising: Amazon is reliant on advertising mainly on the internet. It is beneficial as well because their target market is mostly people who surf the web daily. Social media plays a huge part in the advertising portion for Amazon’s marketing strategy because it is the quickest way to get information to your customers. is very beneficial. Promotions: Amazon sells their own software, as well as other engineers’ software. Amazon relies on other software retailers to want to sell their product on Amazon because of how much customer traffic they have on their website every day. Advertising: Amazon advertises mainly on the internet through advertisements on the side of highly trafficked websites, before and after YouTube videos, and sometimes on television. Amazon’s great customer service comes into play. Once more people are satisfied with the customer service that Amazon offers, the more publicity they will get from word of mouth advertisements. Promotions: Amazon relies on other retailers to want to sell their products on Amazon platform. Advertising: If companies want their product advertised, they have to pay Amazon. One they do so, Amazon will do what is necessary to get traffic to their product. Paying Google to have their information come up first when certain keywords are typed into the search bar is a perfect example of what Amazon does to advertise and promote their products. Pricing Objectives Amazon strives to offer the price as low as possible. Taking into consideration the customers want for quality, without giving the perception of cheap materials and low quality. To make the price as competitive as possible as Amazon tries to reduce clients switching to the competition. Normally, attempting to keep prices fairly competitive, means a low price, attracting consumers at the expense of revenue. Amazon stays consistent with its objectives to always offer the lowest price. While maintaining the quality of materials used to manufacture its products. The inclusion of apparel, including clothing, shoes, and jewelry is no exception.
  20. 20. Distribution Channels Amazon is an electronic retailer that markets their own products as well as from third-party businesses. They rely on third party shipping services, through organizations such as UPS or Canada Post. Currently, Amazon are striving for their own means of exportation, no longer requiring assistance of outside entities. Amazon serves as an independant software distributor selling to all different businesses, despite size, that are in need of beneficial software. With Amazon acting as the central hub for online retail, Amazon distributes to all aspects of the market, including sales to other organizations and individuals. Positioning Amazon positions itself within the interests of their target market. Gaining a key insight to trends, concerns, or events that may affect the sale of certain products. Amazon markets its own software knowing that they are contributing to the success of their clients. Resulting in additional interest which then leads to increased competition as popularity grows. Amazon positions itself within the interests of the apparel market. Getting key information from each customers searches and adding suggested search options to get the customer to look at more products and potentially buy them. Marketing Strategy Strengths: Amazon offers lower product cost and high availability for products in their marketplace. Weaknesses: Amazon relies on having the product in stock, if it is not in stock, customers might be discouraged and shop for the specific product elsewhere. Amazon also relies heavily on other companies wanting them to sell their product. Strengths: Amazon's marketing strategy strengths is software is that it has the leading ecommerce website, and they are selling their software making it available to everyone. Weaknesses: Only targeting a small variety of businesses and organizations who are in need of software is a weakness to Amazon’s marketing strategy for software, because many companies hire software engineers. Strengths: Amazon's market strategy targeting many different customers from all ages, and genders is perfect for our society becoming a non-discriminatory business. Weaknesses: When selling apparel that requires a perfect fitment, it is going to always be challenging for customers to be happy with what they purchased. A lot of returns will be happening, and that could lead to unsatisfied customers Figure 4. Detailing Amazon’s approach to marketing key products.
  21. 21. 7. Financial Performance p.15 7.1 Three Year Trend Amazon.com, Inc.: Three Year Trend (USD) 2016 2015 2014 Growth Revenue $92.246 billion $71.259 billion $59.659 billion 35.17% Net Profit $2.105 billion -328,000,000 $-3.872 billion - Stock Price $785.33 $667.94 $335.42 - Earnings per share $3.43 $0.24 $0.99 - Return on Equity % 11.83% -2.63% -3.74% - Current Ratio 1.06 1.05 0.89 - Debt over Equity Ratio 2.52 2.86 2.91 - Profit Margin Ratio % 3.17% 0.88% -0.9% - Figure 5. Chart describing Amazon.com’s Three Year Trend. For a complete reference please consult Appendix A. From this three-year trend, we can clearly determine that Amazon’s revenue has been increasing annually at a constant rate, with a 35% growth since 2014. However, in 2014 and 2015, Amazon took a hit with a net loss. They redeemed themselves in 2016 with a net profit of $2.1 ​billion and a revenue of a breathtaking $92.2 billion. In 2014, Amazon posted a loss in the Q3 2014 of -3.872 billion, this was due to Amazon putting more money into sortation centers and better web services for their website (Preimesberger, 2015). As for the stock price, evidence has been shown
  22. 22. p.16 that it has been increasing annually. In retrospect, the years 2014 and 2015 produced an increase of $332.52 in the stock price in just one year. Through heavy research into Amazon’s current ratio, we can recognise that Amazon has a greater number of current assets spanning through 2015 first quarter of 2016. In contrast, the year 2014 exhibited Amazon to have a greater number of liabilities, although not a substantial difference in comparison to the previous two years. Additionally, Amazon’s debt to equity ratio reveals that Amazon acquired most of their funding from debt as opposed to equity, which could be problematic looking to the future as it may cause problems with liquidity to arise. Through analyzation of Amazon’s profit margin, we detected that Amazon took a hard hit in 2014 but has recovered to 3.17% in 2016, and is only projected to rise. A higher profit margin ratio encourages investors and individuals who are contemplating an investment to act with quickly and with confidence. 7.2 Comparative Analysis in 2016 Amazon has vast competition around the world. However, we decided to show a comparison to Amazon.com, Inc. and eBay, Inc., who is a direct competitor as well as a strong force in the e-commerce market. USD Amazon (2016) eBay (2016) Revenue $92.246 billion $6.584 billion Net Profit $2.105 billion $1.330 billion Stock Price $785.33 $29.06 Earnings per Share $3.43 $1.16 Return on Equity % 11.83% 11.36% Current Ratio 1.06 0.71 Debt over Equity Ratio 2.52 2.0 Profit Margin Ratio % 3.17% 0.77%
  23. 23. p.17 Figure 6. Comparative analysis between Amazon.com, Inc and Ebay, Inc. Comparing these two companies in the same market based on their financial reports from 2016, it becomes evident which company is enjoying a larger profitability. Amazon’s net profit is currently $775 million more than eBay’s $1.33 billion profit in 2016 (fig. 3). Amazon’s earning per share is higher than that of eBay, although eBay's stock price is substantially lower, making it even more attractive to smaller investor groups as well as independent investors. Both companies operate both similar and dissimilar, making them highly competitive which has resulted in increased efforts in areas like innovation as they strive to surpass their competition. 7.3 Sources of Capital Amazon has short term as well as long term sources of capital. Amazon’s short term capital includes the day to day transactions made on their website. Due to the vast variety of products that Amazon offers, it fulfills everyone’s needs and increases the probability of a sale (MarketLine, 2015, p.2). Amazon’s long term sources include the sale of their platform software, where third-party businesses can create their own e-commerce websites (Amazon.com). They also offer software programs for each aspect of the business spectrum which requires payment of a subscription fee, either paid monthly or annually. Amazon Prime is another strong example of one of Amazon’s long term sources of capital. Amazon Prime is a subscription service that members pay for annually, in exchange they receive a variety of “upgrades” including a two-day shipping option for their purchases as well as a number of other discounts and promotions (Amazon.com). In summary, Amazon’s success with day-to-day sales, Amazon Prime, and expansion in platform software, all provide a clear explanation of the company’s major sources of short-term and long-term capital. 8. Company Outlook 8.1 Our Forecast Using the in-depth information from our research, we forecast that over the next three years Amazon’s revenue, net profit, and stock price will continue to increase steadily. A major factor contributing to our forecast is that the e-commerce market is only growing, and there will always be a demand to buy and sell products over the internet. Amazon as a brand will continue to innovate and bring new concepts to the e-commerce market further expanding their reach into foreign countries. Although Amazon’s stock price is currently dropping, we believe that it will bounce back
  24. 24. p.18 and continue to climb. Christmas is around the corner, predicting an increase in the traffic to Amazon.com, increasing probability of sales and revenue. 8.2 Analyst Forecast Using our research and our forecast, we compared it with Reuters Estimates. The large majority of analysts predict that Amazon is at a current stock price that is attractive to buy right now. As for investors, it was a “sell” type of week. Said analysts recommended this because Amazon’s stock fell 4.5% one morning in late October. We also compared our forecast with Nasdaq stock analysts. Of the 30 analysts we reviewed, 24 of them recommended that Amazon is a strong buy right now, 4 recommended to buy, 2 were set on holding, and only one analyst recommended to sell. Not one analyst suggested that Amazon would underperform. With each forecast, we compared our research with predictions that Amazon’s stock was only valued to rise. A reflection of similar findings indicates certainty in our forecast provided by JJST Consulting Services, Ltd. 9. Recommendation JJST Consulting has reached final a verdict to recommend a long term investment into Amazon.com, Inc. Through a penetrating investigation, we have observed that Amazon’s corporate situation and sensitivity toward corporate growth creates viable grounds for a long-term investment. Amazon supports a colossal hub of third-party businesses and loyal customers, establishing firm wants and needs for Amazon’s products and services. Consequently, Amazon has preserved its status as the world’s largest online retailer, which is reflected in their recent financial reports. Amazon managed to make a successful conversion of 2015s ​-$328 million loss to 2016s current profit of $2.1 billion USD. Resulting in an $117.39 increase in Amazon’s stock price, currently valued at $766.77 USD. With Amazon being a leader in its industry, it continues its technological advancement of their services as well as expansion into other popular fields. Amazon’s executives consider its market share to hold more value than their short-term profit gains. This alone provides evidence of profitability in a long-term investment. However, Amazon’s stock remains volatile, driving interest away from short-term investments. As a result of erratic stock, an increase in risk makes it harder for investors looking to time the market. Demonstrating a unique marketing strategy, Amazon has begun investing most of their focus into online advertising. A summary of Amazon’s marketing strategy is clear: since customers shop online, online is where they will be found. Amazon’s success ties in closely with strategies developed by executives and other members of high level management Under the direction of Jeff Bezos, positive impacts on Amazon’s success can be traced back to a strong sense of leadership. Embodying a flat organizational structure with a large radius of control, Amazon’s innovative, modern, and effective ways to manage its business contribute directly to satisfactory customer experiences as well as overall company productivity.
  25. 25. p.19 Taking the gathered data into heavy consideration, a long-term investment would be profitable to investor groups and individuals alike. Serving as a strong contribution to the economy and our quality of life, Amazon’s lifespan seems interminable. The extensive analysis of Amazon’s its profitability, financial reports, and reviews of key policies, provided JJST Consulting with enough data to endorse a long-term investment into Amazon.com, Inc.
  26. 26. References p.20 Amazon.com Inc. (2016a). 8-K Annual Report 2016. Retrieved from https://www.sec.gov/Archives/edgar/data/1018724/000101872416000322/0001018724-16-00 0322-index.htm Amazon.com, Inc. SWOT Analysis. (2015). Amazon.com, Inc. SWOT Analysis. Retrieved from Business Source Complete. Amazon & eBay and their impact on the industry. (2016). ​Music Trades, 164(10), 62-70. Amazon raises “referral fees” for third party retailers by 25%. (2012). ​Music Trades, 160(5), 48-2 Amazon in discussions with government on e-commerce rules; seeks clause allowing promotion: (2016). ​FRPT- ​Retail Snapshot, 27-28. Amazon.com, Inc. (2016b). Annual financials for Amazon.com Inc. Retrieved from http://www.marketwatch.com/investing/stock/amzn/financials Amazon.com, Inc. (2016c). Investor relations FAQ. Retrieved from http://phx.corporate-ir.net/: http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-faq#6986 Amazon.com, Inc. (2016d). Quarterly Report​. Delaware: Securities and Exchange Commission. Amazon.com, Inc. (2016e). Start selling online - fast. Retrieved from https://services.amazon.com/services/soa-approval-category.htm Bezos, J. P. (2001). Jeff Bezos Interview. Retrieved from http://www.achievement.org/autodoc/page/bez0int-2
  27. 27. p.21 Bariso , J. (2015). Here’s how Jeff Bezos can fix amazon’s culture. Retrieved from www.inc.com/justin-bariso/the -real-problem-with-amazon.html Bezos, J. (2013). Letter to shareholders. Retrieved from https://www.sec.gov/Archives/edgar/data/1018724/000119312513151836/d511111dex991.ht m Bhasin, H. (2016). Marketing strategy of Amazon-Amazon marketing strategy. Retrieved from http://www.marketing91.com/marketing-strategy-of-amazon/ Bishop, T. (2016). Jeff Bezos: Amazon’s goal is to make it ‘irresponsible to not be a Prime member. Retrieved from http://www.geekwire.com/2016/annual-meeting-jeff-bezos-touts-amazons-3-pillars-prime-aw s-marketplace/ Bloomberg.com (2016). Company overview of Amazon.com, Inc. Retrieved from http://www.bloomberg.com/Research/stocks/private/board.asp?privcapId=18749 Bloomberg.com (2016). Company overview of Amazon.com, Inc. Retrieved from http://www.bloomberg.com/Research/stocks/private/board.asp?privcapId=18749 DATAMONITOR: Amazon.com, Inc (2011). Amazon.com, Inc SWOT Analysis. Retrieved from Business Source Complete. eBay Inc. (2016). 8-K Annual Report 2016. Retrieved from https://www.sec.gov/Archives/edgar/data/1065088/000106508816000328/0001065088-16-00 0328-index.htm
  28. 28. p.22 Forbes. (2016). ​Forbes 400. Retrieved from http://www.forbes.com/profile/jeff-bezos/ Forbes. (2016). The World’s Most Innovative Companies. Retrieved from http://www.forbes.com/companies/amazon/ GlassDoor Team. (2015). Here’s how much more CEO’s earn than their employees. Retrieved from https://www.glassdoor.com/blog/heres-ceos-earn-employee/ GlassDoor.ca. (n.d). Amazon.com benefits. Retrieved from https://www.glassdoor.ca/Benefits/Amazon-com-US-Benefits-EI_IE6036.0,10_IL.11,13_IN1 .htm?countryRedirect=true Gregersen, H. (Director). (2015). Innovator's DNA video series: Experimenting​ [Motion Picture]. United States of America. Gregory, L. (2016). Amazon.com, Inc, vision statement & mission statement. Retrieved from http://panmore.com/amazon-com-inc-vision-statement-mission-statement-analysis Halligan, B. (2011). 3 marketing lessons learned from amazon’s web strategy. Retrieved from http://blog.hubspot.com/blog/tabid/6307/bid/21729/3-Marketing-Lessons-From-Amazon-s-W eb-Strategy.aspx#sm.00001a3oiw5zruf1rrd3ybwu6fvl3 Hull, P. (2013). Be visionary. Think big. Retrieved from http://www.forbes.com/sites/patrickhull/2012/12/19/be-visionary-think-big/#1287be4522f7 Investopedia. (2014). Who are Amazon’s (AMZN) main competitors? Retrieved from http://www.investopedia.com/ask/answers/120314/who-are-amazons-amzn-main-competitors. asp
  29. 29. p.23 Jurevicius, O. (2013). Mission statement of Amazon. Retrieved from http://www.investopedia.com/ask/answers/120314/who-are-amazons-amzn-main-competitors. asp Kam, K. (2016). The market is underestimating amazon. (R. Jacobsen, Producer) Retrieved from http://www.forbes.com/sites/kenkam/2016/05/27/the-market-is-underestimating-amazon/#365 bc4a57995 Kline, D, B. (2016). It makes sense that Jeff Bezos is bullish on Amazon Prime. Retrieved from http://www.fool.com/investing/general/2016/04/17/it-makes-sense-that-jeff-bezos-is-bullish-o n-amazo.aspx Maisto, M. (2013). Amazon disputes criticism about working conditions in one warehouse. ​Eweek, 3. Meyer, P. (2016). Amazon.com, Inc.’s organizational structure characteristics (An analysis). Panmore Institute. Retrieved from http://panmore.com/amazon-com-inc-organizational-structure-characteristics-analysis Nasdaq. (2016). ​Amazon.com, Inc. Common stock quote & summary data read more: http://www.nasdaq.com/symbol/amzn#ixzz4PzA2iuHZ. Retrieved from http://www.nasdaq.com/symbol/amzn Quora.com. (2011). What is the internal culture like at Amazon? Retrieved from https://www.quora.com/What-is-the-internal-culture-like-at-Amazon Rose, C. (2013). Amazon’s Jeff Bezos looks to the future. Retrieved from http://www.cbsnews.com/news/amazons-jeff-bezos-looks-to-the-future/
  30. 30. p.24 Kafka, P. (2016). Amazon is having checkout problems on prime day, one of its biggest days of the year. Retrieved from www.redcode.net/2016/7/12/121591142/amazon-prime-day-checkout-problem Kalai, G. (2016). Amazon is cruel and we are to blame. Retrieved from http://www.huffingtonpost.com/gregoris-kalai/amazon-is-cruel-and-it-is_b_8026824.html McPherson, D. (2016). eMarketer: Worldwide retail e-commerce sales to rise to $3.6 trillion by 2019. Response, 24(10), 6 Salary.com. (2015). Douglas P. McMillon executive compensation. Retrieved from http://www1.salary.com/C-Douglas-McMillon-Salary-Bonus-Stock-Options-for-WAL-MAR T-STORES-INC.html Salary.com. (2015). Jeff P. Bezos executive compensations. Retrieved from http://www1.salary.com/Jeffrey-P-Bezos-Salary-Bonus-Stock-Options-for-Amazon-Com-Inc. html Smith, D. (2014). Chart of the day: Amazon spends a ton of money to advertise itself on Google. Business Insider. Retrieved from http://www.businessinsider.com/chart-of-the-day-amazon-spends-a-ton-of-money-to-advertis e-itself-on-google-2014-9 Smithson, N. (2016). Amazon.com Inc.’s Generic Strategy, Intensive growth strategies. Web. http://panmore.com/amazon-com-inc-generic-strategy-intensive-growth-strategies Snyder, B. (2015). Here’s how Amazon is trying to keep you from getting hacked. ​Fortune.Com, N.PAG.
  31. 31. p.25 Statt, N. (2016). Amazon is expanding its retail operation to 100 pop-up stores around the US. Retrieved from http://www.theverge.com/2016/9/9/12868070/amazon-pop-up-stores-kindle-alexa-echo-retail Wahba, P. (2016). In two charts, how amazon is killing its traditional competitors. (eMarketer, Producer) Retrieved from http://fortune.com/2016/05/11/retailers-stocks/ Young, C., & Page, A. (2014). A model for predicting advertising quality as a key to driving sales growth. ​Journal of Advertising Research, 54(4), 393-397. doi: 10.2501/1AR-54-4-393-397
  32. 32. 10. Appendix p.27 10.1 Appendix A - SWOT Analysis Strengths Amazon’s low costs for products can be attributed to international markets around the world (FRPT Research, 2016, p.26). These international markets help Amazon to rotate their inventory quickly to make the costs of inventory management lower, and that results into Amazon being able to reduce the costs of their products (FRPT Research, 2016, p.26). Having these lower prices attracts more customers, there for their inventory turnover increases and it allows Amazon to pay its suppliers after they have made revenue (MarketLine, 2015, p.4). Largest online retailer Amazon is one of the largest online shopping websites in the world. Amazon reported their third quarter sales for 2016 is up 29% to $32.7 billion (Amazon.com, Inc. 2016) They also reported their 2015 revenue was $107 billion (Music Trades, 2016, p.62). Their competitor in the e-commerce business, eBay reported that their third quarter sales for 2016 is at $2.2 billion, up 6% from the second quarter (eBay, Inc. 2016). eBay’s revenue was only $8.5 billion (Music Trades, 2016, p.62). Amazon is one of the leaders in the world of e-commerce business and will continue to climb higher every quarter (Music Trades, 2016, p.63). Wide variety of merchandise Amazon has a massive inventory. There are more than fifty fulfillment centers, twenty sortation centers and employs over 90,000 full-time employees in The United States alone(Amazon.com). These employees are all for making sure their product gets packaged and shipped to their correct destination. Their massive inventory calls for an overwhelmingly large fulfillment centers to handle the volume of merchandise they offer and sell. Kindle to compete in eBooks market Amazon has entered and is doing very well in the quickly growing electronic book market for the previous years and still is (MarketLine, 2016, p.6). The e-reader device, Kindle reached The United States market in 2007 (MarketLine, 2016, p.6). This product is a portable book, that can download a large number of books, magazines, newspapers, and blogs over wireless connection
  33. 33. p.28 (MarketLine, 2016, p.6). According to MarketLine (2016), since the launch in 2007, Amazon has launched more advanced versions of the Kindle, keeping up-to-date with the new technology and competition (p.6). In the Kindle store, they offer more than 1 million books, and 60% of them are priced at $9.99 or less (MarketLine, 2016, p.6). With Amazon constantly coming out with new Kindle’s which can do more with every new version, they have a competitive advantage over other retailers such as Apple, who make tablets which are similar and perform just as well (Datamonitor, 2011, p.6). Weaknesses Amazon was involved in patent infringement issues in 2009, 2010, 2013, 2014 which could have affected stakeholder confidence in the company (MarketLine, 2015, p.7). In 2009, a company named SpeedTrack filed a complaint against Amazon for patent infringement, because SpeedTrack complained that Amazon’s website technology is infringing on a patent owned by SpeedTrack themselves (Datamonitor, 2011, p.7). In 2010, many more companies named Olympic Developments, Global Sessions, Technology Innovations, Texas OCR Technologies, Site Update Solutions, Stragent, and Sharing Sound all filed patent infringement upon Amazon all for various reasons (Datamonitor, 2011, p.7). Many more companies in 2013, and 2014 have also filed complaints for patent infringement (MarketLine, 2015, p.8). According to MarketLine (2015), these infringement cases have affected Amazon’s image in a negative way and could wear down shareholder confidence (p.7). Criticisms over working conditions Amazon has been ridiculed over their working conditions (Maisto, 2013). A case in Swansea, Wales 2013, where a undercover BBC journalist named Adam Littler was hired as a “picker” for Amazon (Maisto 2013). His task was to collect items in the warehouse and put them in his basket. Adam reported he had to walk the 880,000 square-foot warehouse so many times that he walked eleven miles in a ten-hour shift (Maisto, 2013). Adam also reported that he was on a strict time restriction and if he made a mistake the scanner would beep at him (Maisto, 2013). Adam also recorded when he was working and showed it to a stress expert names Michael Marmot (Maisto, 2013). Michael said
  34. 34. p.29 that this shift filmed at the Amazon warehouse increased the risk of mental and physical illness (Maisto, 2013). Amazon’s biggest weakness is that it has no physical presence. Amazon is a purely online business and it lacks physical presence that other stores like Walmart excel in. Walmart has a physical store and their website that you can purchase merchandise from as well. This presence issue can influence customer spending because of a trust issue with knowing where their product is coming from and if it a trusted website excels in. Walmart has a physical store and their website that you can purchase merchandise from as well. This presence issue can influence customer spending because of a trust issue with knowing where their product is coming from and if it a trusted website. eBay is one of Amazon’s largest competitors in the world of e-commerce (Music Trades, 2016). Amazon will always be competing with every retailer in the world, because they sell almost everything that can be purchased in stores around the world, and ecommerce websites. Opportunities Amazon has the opportunity to expand around the world with their e-commerce business. They already have websites for certain countries already. Amazon has websites in Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Mexico, Netherlands, Spain, United Kingdom, and The United States (Amazon.com, Inc, 2016). There are still many countries that do not have their own website. Amazon already has third party retailers, but as of May 30​, ​ 2012, Amazon increased the referral fees from 12% to 15% (Music Trades, 2012). This increase has made some third-party retailers of Amazon re-think their options and could go to eBay instead for selling their products there as their referral fee is lower (Music Trades 2012). If Amazon were to lower their fees, they may increase their third-party retail partnerships, further increasing their sales.
  35. 35. p.30 Online shopping is growing faster than ever globally. According to McPherson 2016, the e-commerce market is to rise to $3.6 trillion by the year 2019, and only to keep rising after that (p.6). As the e-commerce market is growing, so will Amazon’s revenue and profits in the coming years. Global retail e-commerce sales made up 7.4 percent of the retail market worldwide in the year 2015 which was $1.6 trillion, by 2019, it is expected to make up 12.8 percent of the total retail market worldwide (McPherson, 2016 p.6) In the past couple years, Amazon has been increasing the focus on their advertising business lately (MarketLine, 2015, p.9). They have been displaying their graphic next to content on web pages, and application advertisements (MarketLine, 2015, p.9). According to Young & Page (2014), they documented a growth of 48% of sales when McDonalds started to advertise quality advertisements (p.397). If Amazon wants to expand and dominate the market, they will continue to advertise as much as they can to see an increase in profits (MarketLine 2015 p.9). Threats Amazon is trying to expand its global market and each country it wants to expand to has regulations put in by their government. These government regulations can have a crucial impact on how Amazon runs its business and what profit they make off the sales of their merchandise. Some countries already have their own similar e-commerce websites and they do not want other competition, preventing Amazon from moving in and taking over their market. Amazon recently came into conflict with India on their rules on e-commerce in their country (FRPT Research, 2016, p.27). Amazon India had discussions with the government on recent clause implemented allowing marketplaces to do their own promotions must be worked in if the sector needs to grow (FRPT Research, 2016, p.27). Amazon is not the only company worried by the threat of data breaches. Every company who does some form of personal accounts, especially with credit cards and sensitive information are extremely worried about their data being breached. With people trying to confiscate your accounts, Amazon has a setting where you can enable two-step authentication, which connects to your cell
  36. 36. p.31 phone, and sends you a code every time you need access your account (Snyder, 2015). This is one crucial step Amazon has taken to make sure that your account is not compromised by someone guessing your password. Amazon is not the first company to implement a two-step authentication, but as the market grows, so does the attraction to get people’s personal information (Snyder, 2015). Imposing sales tax on merchandise sold on not only Amazon, but retail websites has been in recent talks as of 2015 (MarketLine, 2015, p.10). Sales tax has is not being collected on retail websites, except for some products (MarketLine, 2015, p.10). According to MarketLine (2015), Amazon currently collects sales taxes from twenty-five states in The Unites States (p.10). In 2013, the US Senate passed the Marketplace Fairness Act, which requires all online retailers with revenues that are or exceeds $1 million outside their home states to collect sales taxes for the states where they ship merchandise to (MarketLine, 2015, p.10). This steady pressure to collect sales tax from online retailers can affect Amazon because customers will notice the lack of price difference and thus could lead to Amazon’s revenue to be smaller each year (MarketLine, 2015, p.10).
  37. 37. 10.2 Organizational Chart - Appendix B p.32 Figure 7. Amazon’s organizational chart describing top executives and their corresponding departments.
  38. 38. 10.3 Appendix C - PESTEL Analysis p.33 PESTEL Analysis into Amazon.com, Inc. (2016) Political Environment: Shipping and receiving is a huge part of a business that is heavily monitored by the government. Many laws and regulations outline how to ship, and what to ship. The implementation of new laws or regulations could heavily affect the process Amazon uses to get its products to its customers. Ex: Government banning drones will prevent and delay Amazon Prime development. Environmental Environment: ​Environmental factors for a business such as Amazon are limited. With most of their business based entirely online, this means business will carry on steady. Factors such as climate change do not affect Amazon’s e-business, although it may lead to more sales of environmentally friendly products. Social Environment: Social factors can have a huge impact on a company such as Amazon. News travels fast through social media, and new releases from Amazon often make the headlines. The nature of the news can also have a tremendous impact, depending if it clashes with or compliments the customers values. Technological Environment: Amazon is technologically advanced because it uses the internet for everything. The whole basis of Amazon’s operation is run online. From people viewing the website and purchasing goods, to shipping and tracking. Economic Environment: The online business is only growing. Almost everyone in the world is using the internet and that means the average person will have access to Amazon, further growing their business and the economy. Legal Environment: There is ongoing change throughout the world. New laws, sanctions, and treaties throughout countries experiencing such change could prohibit Amazon from selling and/or distributing certain goods within their. Figure 8. A PESTEL analysis of Amazon.com, Inc., illustrating aspects of the business environment and factors that may impact Amazon,com, Inc.
  39. 39. 10.4 Appendix D - List of Products p.34 Home, Garden & Tools ● Home ● Kitchen & Dining ● Furniture ● Bedding & Bath ● Appliances​ Patio, Lawn & Garden ● Fine Art ● Arts, Crafts & Sewing ● Pet Supplies ● Home Improvement ● Power & Hand Tools ● Lamps & Light Fixtures ● Kitchen & Bath Fixtures ● Hardware ● Smart Home ● Amazon Launchpad Clothing, Shoes & Jewelry ● Women ● Men ● Girls ● Boys ● Baby ● Luggage Handmade ● Jewelry ● Handbags & Accessories ● Home Décor
  40. 40. p.34 ● Artwork ● Stationery & Party Supplies ● Toys & Games Electronics & Computers ● TV & Video ● Home Audio & Theater ● Camera, Photo & Video ● Cell Phones & Accessories ● Headphones ● Video Games ● Bluetooth & Wireless Speakers ● Car Electronics ● Musical Instruments ● Internet, TV and Phone Services ● Wearable Technology ● Computers & Tablets ● Monitors ● Accessories ● Networking ​Drives & Storage ● Computer Parts & Components ● Software ● Printers & Ink ● Office & School Supplies Books & Audible ● Books ● Children's Books ● Magazines ● Textbooks
  41. 41. p.35 ● Textbook Rentals ● Kindle Books ● Kindle Unlimited ● Audible Membership ● Audible Audiobooks ● Whispersync for Voice Amazon Video ● All Videos ● Channels ● Rent or Buy ● Free to Watch Fire TV ● Amazon Fire TV ● All-New Fire TV Stick ● Amazon Fire TV Gaming Edition ● Fire TV + HD Antenna Bundle ● Fire TV Family ● Prime Video ● Fire TV Apps & Channels ● Games for Fire TV Sports & Outdoors ● Athletic Clothing ● Exercise & Fitness ● Hunting & Fishing ● Golf ● Leisure Sports & Game Room ● Sports Collectibles ● New Gear Innovations
  42. 42. p.36 ● Camping & Hiking ● Cycling ● Outdoor Clothing ● Scooters, Skateboards & Skates ● Water Sports ● Winter Sports ● Climbing ● Accessories Amazon Music ● Amazon Music ● CDs & Vinyl Echo & Alexa ● Amazon Echo ● All-New Echo Dot ● Amazon Tap ● Alexa App ● Alexa Smart Home Beauty, Health & Grocery ● Luxury Beauty ● Men’s Grooming ● Health, Household & Baby Care ● Vitamins & Dietary Supplements ● Grocery & Gourmet Food ● Specialty Diets ● Wine ● AmazonFresh ● Amazon Launchpad ● Food
  43. 43. p.37 Automotive & Industrial ● Automotive Parts & Accessories ● Automotive Tools & Equipment ● Car/Vehicle Electronics & GPS ● Tires & Wheels ● Motorcycle & Powersports ● Vehicles Appstore for Android ● Underground Apps & Games Home Services ● Home Improvement & Repair ● Yard & Outdoors ● Computer & Electronics ● Assembly ● Cleaning ● Plumbing ● Electrical ● Home Theater Fire Tablets ● Fire ● Fire HD

×