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A M A Z O N
I N N O VAT O R O R D E S T R O Y E R ?
( O R B O T H ? )
2003/12/31 2005/3/31 2006/6/30 2007/9/28 2008/12/31 2010/3/31 2011/6/30 2012/9/28 2013/12/30
$0
$40
$80
$120
$160
$200
$240
$280
$320
$360
$400
-2.50%
-1.25%
0%
1.25%
2.50%
3.75%
5.00%
A M A Z O N ’ S P E R F O R M A N C E
MarketCapitalization
NetProfitMargin
Why the sudden decline?
Yet Market Cap kept rising
“We seek to offer the Earth's Biggest Selection and to be the
Earth's most customer-centric company, where customers can
find and discover anything they may want to buy online.”
Amazon Timeline
A m a z o n
d e b u t s o n
t h e w e b
1995 20132000 2005 2010
A m a z o n g o e s
p u b l i c . H i t s
1 M M c u s t o m e r s
A d d s m u s i c
a n d v i d e o
A d d s t o y s ,
e l e c t ro n i c s ,
t o o l s , h a rd w a re
R e p o r t s f i r s t
n e t p ro f i t
F o c u s o n a d d i n g
c o n t e n t a n d
p ro p e r t i e s
O r i g i n a l
K i n d l e
l a u n c h
A n n o u n c e
K i n d l e F i re
Ta b l e t
P r i m e A i r
a n n o u n c e d
B e g i n i n v e s t i n g i n
t e c h n o l o g y
( A 9 , L a b 1 2 6 )
L a u n c h A m a z o n
F re s h , g ro c e r y
d e l i v e r y s e r v i c e
M a j o r
Wa r e h o u s e
E x p a n s i o n
A m a z o n
P r i m e
Four key investments
$0
$40
$80
$120
$160
$200
$240
$280
$320
$360
$400
2003/12/31 2005/3/31 2006/6/30 2007/9/28 2008/12/31 2010/3/31 2011/6/30 2012/9/28 2013/12/30
-2.50%
-1.25%
0%
1.25%
2.50%
3.75%
5.00%
M a j o r
Wa r e h o u s e
E x p a n s i o n
B e g i n i n v e s t i n g i n
t e c h n o l o g y
( A 9 , L a b 1 2 6 )
L a u n c h A m a z o n
F re s h , g ro c e r y
d e l i v e r y s e r v i c e
A m a z o n
P r i m e
Software Hardware
Building a foundation
Prime
Establishing a habit
P O W E R E D B Y A C O M P L E X D ATA B A S E W I T H A S I M P L E P H I L O S O P H Y
“Chaotic Storage System”
Compare Fulfillment Costs
B Y 2 0 1 5 , E S T I M AT E A C C E S S T O 5 0 % O F P O P U L AT I O N
Amazon Fulfillment Centers
Automation: 80% of shipments, within 30 minutes of order
Technology + Scale + Ecosystem + Storage + Fullfillment = Defacto Distribution System
So what does all this mean?
R E TA I L E R S S H O U L D B E S C A R E D S H * T L E S S
Possible Retail Scenarios
Ubiquitous Home Delivery
Selective Home Delivery
High Touch Environment
Low Touch Environment
Possible Retail Scenarios
Ubiquitous Home Delivery
Selective Home Delivery
High Touch Environment
Low Touch Environment
• Consumers want to get out
• Less about product selection
• More about entertainment
• Don’t desire to transport goods
• Delivery is reliable and inexpensive
• Retail space is small and hands on
Possible Retail Scenarios
Ubiquitous Home Delivery
Selective Home Delivery
High Touch Environment
Low Touch Environment
Retail as Experience
Possible Retail Scenarios
Ubiquitous Home Delivery
Selective Home Delivery
High Touch Environment
Low Touch Environment
Retail as Experience
• Consumers want to be efficient
• More about product mixes
• More about context
• Don’t desire to transport goods
• Delivery is reliable and inexpensive
• Retail space is larger and themed
Possible Retail Scenarios
Ubiquitous Home Delivery
Selective Home Delivery
High Touch Environment
Low Touch Environment
Retail as Experience
Retail as Showroom
Possible Retail Scenarios
Ubiquitous Home Delivery
Selective Home Delivery
High Touch Environment
Low Touch Environment
Retail as Experience
Retail as Showroom
• Consumers want to be efficient
• All about the product options
• More about efficiency and price
• Have to transport many goods
• Delivery is fragmented/costly
• Retail space is large and stacked
Possible Retail Scenarios
Ubiquitous Home Delivery
Selective Home Delivery
High Touch Environment
Low Touch Environment
Retail as Experience
Retail as ShowroomRetail as Warehouse
Possible Retail Scenarios
Ubiquitous Home Delivery
Selective Home Delivery
High Touch Environment
Low Touch Environment
Retail as Experience
Retail as ShowroomRetail as Warehouse
• Consumers want to get out
• Curated product selection
• More about service
• Have to transport select goods
• Delivery is bundled in price
• Retail space is a blend
Possible Retail Scenarios
Ubiquitous Home Delivery
Selective Home Delivery
High Touch Environment
Low Touch Environment
Retail as ExperienceRetail as Service
Retail as ShowroomRetail as Warehouse
Possible Retail Scenarios
Ubiquitous Home Delivery
Selective Home Delivery
High Touch Environment
Low Touch Environment
Retail as ExperienceRetail as Service
Retail as ShowroomRetail as Warehouse
D I R E C T O R O F S T R AT E G I C P L A N N I N G
C A L L A H A N C R E E K
Kent Stones
kstones@callahancreek.com
@KentStones
913-948-1210

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Amazon: Innovator or Destroyer? (Or Both?)

  • 1. A M A Z O N I N N O VAT O R O R D E S T R O Y E R ? ( O R B O T H ? )
  • 2. 2003/12/31 2005/3/31 2006/6/30 2007/9/28 2008/12/31 2010/3/31 2011/6/30 2012/9/28 2013/12/30 $0 $40 $80 $120 $160 $200 $240 $280 $320 $360 $400 -2.50% -1.25% 0% 1.25% 2.50% 3.75% 5.00% A M A Z O N ’ S P E R F O R M A N C E MarketCapitalization NetProfitMargin Why the sudden decline? Yet Market Cap kept rising
  • 3. “We seek to offer the Earth's Biggest Selection and to be the Earth's most customer-centric company, where customers can find and discover anything they may want to buy online.”
  • 4. Amazon Timeline A m a z o n d e b u t s o n t h e w e b 1995 20132000 2005 2010 A m a z o n g o e s p u b l i c . H i t s 1 M M c u s t o m e r s A d d s m u s i c a n d v i d e o A d d s t o y s , e l e c t ro n i c s , t o o l s , h a rd w a re R e p o r t s f i r s t n e t p ro f i t F o c u s o n a d d i n g c o n t e n t a n d p ro p e r t i e s O r i g i n a l K i n d l e l a u n c h A n n o u n c e K i n d l e F i re Ta b l e t P r i m e A i r a n n o u n c e d B e g i n i n v e s t i n g i n t e c h n o l o g y ( A 9 , L a b 1 2 6 ) L a u n c h A m a z o n F re s h , g ro c e r y d e l i v e r y s e r v i c e M a j o r Wa r e h o u s e E x p a n s i o n A m a z o n P r i m e Four key investments
  • 5. $0 $40 $80 $120 $160 $200 $240 $280 $320 $360 $400 2003/12/31 2005/3/31 2006/6/30 2007/9/28 2008/12/31 2010/3/31 2011/6/30 2012/9/28 2013/12/30 -2.50% -1.25% 0% 1.25% 2.50% 3.75% 5.00% M a j o r Wa r e h o u s e E x p a n s i o n B e g i n i n v e s t i n g i n t e c h n o l o g y ( A 9 , L a b 1 2 6 ) L a u n c h A m a z o n F re s h , g ro c e r y d e l i v e r y s e r v i c e A m a z o n P r i m e
  • 7.
  • 8.
  • 9.
  • 10.
  • 11.
  • 12.
  • 13. Prime
  • 14.
  • 16.
  • 17.
  • 18.
  • 19.
  • 20.
  • 21.
  • 22. P O W E R E D B Y A C O M P L E X D ATA B A S E W I T H A S I M P L E P H I L O S O P H Y “Chaotic Storage System”
  • 24. B Y 2 0 1 5 , E S T I M AT E A C C E S S T O 5 0 % O F P O P U L AT I O N Amazon Fulfillment Centers
  • 25. Automation: 80% of shipments, within 30 minutes of order
  • 26. Technology + Scale + Ecosystem + Storage + Fullfillment = Defacto Distribution System
  • 27. So what does all this mean?
  • 28. R E TA I L E R S S H O U L D B E S C A R E D S H * T L E S S
  • 29. Possible Retail Scenarios Ubiquitous Home Delivery Selective Home Delivery High Touch Environment Low Touch Environment
  • 30. Possible Retail Scenarios Ubiquitous Home Delivery Selective Home Delivery High Touch Environment Low Touch Environment • Consumers want to get out • Less about product selection • More about entertainment • Don’t desire to transport goods • Delivery is reliable and inexpensive • Retail space is small and hands on
  • 31. Possible Retail Scenarios Ubiquitous Home Delivery Selective Home Delivery High Touch Environment Low Touch Environment Retail as Experience
  • 32. Possible Retail Scenarios Ubiquitous Home Delivery Selective Home Delivery High Touch Environment Low Touch Environment Retail as Experience • Consumers want to be efficient • More about product mixes • More about context • Don’t desire to transport goods • Delivery is reliable and inexpensive • Retail space is larger and themed
  • 33. Possible Retail Scenarios Ubiquitous Home Delivery Selective Home Delivery High Touch Environment Low Touch Environment Retail as Experience Retail as Showroom
  • 34. Possible Retail Scenarios Ubiquitous Home Delivery Selective Home Delivery High Touch Environment Low Touch Environment Retail as Experience Retail as Showroom • Consumers want to be efficient • All about the product options • More about efficiency and price • Have to transport many goods • Delivery is fragmented/costly • Retail space is large and stacked
  • 35. Possible Retail Scenarios Ubiquitous Home Delivery Selective Home Delivery High Touch Environment Low Touch Environment Retail as Experience Retail as ShowroomRetail as Warehouse
  • 36. Possible Retail Scenarios Ubiquitous Home Delivery Selective Home Delivery High Touch Environment Low Touch Environment Retail as Experience Retail as ShowroomRetail as Warehouse • Consumers want to get out • Curated product selection • More about service • Have to transport select goods • Delivery is bundled in price • Retail space is a blend
  • 37. Possible Retail Scenarios Ubiquitous Home Delivery Selective Home Delivery High Touch Environment Low Touch Environment Retail as ExperienceRetail as Service Retail as ShowroomRetail as Warehouse
  • 38. Possible Retail Scenarios Ubiquitous Home Delivery Selective Home Delivery High Touch Environment Low Touch Environment Retail as ExperienceRetail as Service Retail as ShowroomRetail as Warehouse
  • 39. D I R E C T O R O F S T R AT E G I C P L A N N I N G C A L L A H A N C R E E K Kent Stones kstones@callahancreek.com @KentStones 913-948-1210