The document outlines Amazon's evolution from an online bookstore in 1995 to a global retail giant with a diverse product range and customer-centric strategies. It details the company's operational and marketing strategies, including cost leadership, customer differentiation, and technological innovation. Despite facing challenges, Amazon continues to prioritize innovation and customer experience while expanding its international presence.

1. Business Strategy – A Success Story Raghu Kasturi April 2009

2. Agenda Who are Amazon? Interesting facts about Amazon How they achieved success? Business Strategies of Amazon Conclusion

3. Who are Amazon? Amazon.com (NASDAQ: AMZN), a Fortune 500 company based in Seattle, Washington USA. It was one of the first major companies to sell goods over the Internet and was one of the iconic stocks of the dot-com bubble. Since its creation in 1995 when Amazon began as an online bookstore, they have significantly expanded the product offerings, international sites, and worldwide network of fulfillment and customer-service centers. A blend of traditional retail principles and innovative application of marketing practices. Now after thirteen years, Amazon has a revenue of 19 billion USD.

4. Financial Performance

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

6. “ Data is King at Amazon” – Jeff Bezos, Founder & CEO

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

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

9. Amazon's first gateway page

10. Amazon's Today’s page

11. Amazon's first office building

12. Seattle headquarters building

13. Strategy Source: Amazon, 2009

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

15. Amazon’s Strategy [Strategy Cont…] Three Customer Sets Consumers, Sellers and Developers Consumers : Who buy products on Amazon (including Amazon’s products). Sellers : Who want to sell products on Amazon (including Amazon) Developers : Who want to use Amazon’s developing services like Developing websites/portals, Hosting, Web Services, S3 (Storage), Checkout Services, etc.

16. Consumers 84 Million Active Customers as ‘08

17. Kindle

18. Music Downloads

19. On Demand Videos

20. Over 1.5MM Active Sellers, Up 18% Y/Y Selling On Amazon

21. Selling on Amazon Source: Amazon.com

22. Fulfillment By Amazon (FBA) Available in US, UK, DE & JP; Beta in FR

23. Amazon Enterprise Solutions

24. Checkout By Amazon

25. [Strategy Cont…] Customer is the King – Create an experience for him ‘ Culture of Metrics ’ Customer’s each ‘click’ on website is recorded- a valuable asset for Amazon Allows clear sensing of customer needs & preferences Formation of ‘ S Team ’ to address strategy issues Customer is the key at all levels in the Organisation Customer Loyalty and repeat purchase Amazon do not over emphasise competitors – It has turned some of them like Borders in to collaborators

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

28. Expansion

29. Global

30. International

31. International

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

33. Convenience – Amazon Prime

34. Objective “ Amazon’s objective is not to discount a small number of products for a limited period of time, but to offer low prices everyday and apply them broadly across our entire product range.” – Amazon, 2009

35. Operational Strategy Cost-Leadership – Low and Fixed Prices, Bundle Discounts, Future Discounts. Customer Differentiation – Personalization, Convenience, Quality. Focus Strategy – Takes one of the above applies to a market niche a specialized area within a customer group.

36. Relationships matter [Strategy Cont…] Customers Effective Process management Satisfied Customer Low costs Competitors Turn them into collaborators Superior Technology Platform – value for competitors to use the platform, advantage for Amazon to offer wider choice Collaborators Amazon Marketplace – Customers and retailers can sell their new and old items Amazon Merchants – Larger third party Merchants Amazon Affiliate Programme- Amazon Associates – Advertising Amazon’s Products on website.

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

38. Technology Source www.amazon.com

39. Comparing Technology Source : http:// i.zdnet.com/blogs/comparingpaas.png

40. Corporate Responsibility Amazon.com's green idea is brown

41. Amazon’s Environment “ Amazon's evolution from Web site to e-commerce partner to development platform is driven by the spirit of innovation that is part of the company's DNA. The world's brightest technology minds come to Amazon.com to research and develop technology that improves the lives of shoppers and sellers around the world.” (Amazon, 2009)

42. Usage Source: Google Trends

43. SWOT Analysis Limited financial resources Limited experience in merchandising non-core retail products like pharmaceuticals, sport equipment etc. Substantially smaller retail sales volume limits ability to exploit. Limited financial resources Limited name recognition in selected markets like consumer electronics Retail management depth Inadequate warehousing and inventory management systems to support rapid sales growth Weaknesses Fulfillment infrastructure for selected products like books. Information technology infrastructure Convenient online order entry system Extensive experience in online marketing, advertising and fulfillment like satisfying customer orders. Brand recognition Wall-Mart, Best Buy, Costco, etc are increasing their presence on the Internet To be perceived by Internet users as the performed online “department store” to exploit accelerating online retail sales Strengths Threat Opportunity

44. Competition in Home Entertainment System Source: WikiInvest.com

45. Cooperative Strategy Partnerships : Drugstore.com, Living.com, Pets.com, Wineshopper.com, HomeGrocer.com, Sothebys.com(auction) ,Kozmo.com etc - Amazoning a sector Alliances : Amazon formed alliances with many portals, internet search engines and Internet Service Providers (ISP’s) Acquisitions : The first acquisition started in 1998 from Bookpages ( one of the largest online bookstores in the United Kingdom ), Telebook ( operating through its ABC Bücherdienst subsidiary, was Germany’s number one online bookstore ) and Internet Movie Database (largest repository for information on movies and television) on April 27, 1998. Recent acquisition was in August 2008 AbeBooks,

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

47. Conclusion Amazon’s online business model is very successful and advantageous to the company. Though facing many challenges and opportunities they are constantly improving customer experience, investing in the existing platform and focusing on optimizing free cash flow. “ Innovation is the Foundation of Everything We Do” – Amazon, 2009

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49. Questions Any Questions ???