Amazon pursued an aggressive growth strategy from 2007-2010 through expanding its core business, constant innovation, strategic acquisitions, and logistics management. It invested heavily in new technologies, partnerships, and warehouses to improve the customer experience and access to products. Going forward, Amazon will need to balance its high investment strategy with improving profitability as technological advantages diminish and competition increases.

1. STRATEGY
Case Study: AMAZON.COM
TD7, Groupe 1:
Benjamin DEUNET, Firdaous FARTAT, Julien
EMONIDES, Guillaume GALLI, Orianne GAMBINO

2. 1) Amazon.com’s Stragey during the
period 2007 to early 2010
Expansion of the core Business (physical media):
• Development of the Digital contents (MP3 Music Store, language
software products).
• The widest selection of products (shoes, handbags, Jewellery,
Motorcycle Store)
• BtB ( shopping for start up and growing businesses)

3. 1) Amazon.com’s Stragey during the
period 2007 to early 2010
With a constant strategy of Innovation and
Investment
• Building new technologies (Kindle, Kindle 2, Amazon Web Services,
Amazon Elastic Block Store, )
• Virtual salesperson and personalized services…
• …In order to offer a better customer experience.
• Lowering operating costs => lower prices

4. 1) Amazon.com’s Stragey during the
period 2007 to early 2010
Acquisitions and Partners, a key of success:
• Relationships with Publishers (Christian Publishers, Simon&Schuster)
• Partnership with suppliers (Warner Music, Sony Music Entertainment)
• Acquisition with online store ( Fabric.com, Abebooks)
• And PC game distributor (Reflexive Entertainment)

5. 1) Amazon.com’s Stragey during the
period 2007 to early 2010
Logistical management
• New Warehouses (Opening of a new 600000 square feet
fulfilment centre in Hazleton 2008)
• 19,7 million square feet of properties all over the world

6. 2) Amazon.com’s Strategic capabilities
Resources
Competencies
o
Technology infrastructure
o
Competitive prices
o
Bezos Jeff
o
Quick delivery
o
Strategic implementation
o
wide choice
o
Develop accessibility
o
Customers centric
o
Strategic approach to recruitment
o
Customer experience
o
Strategic acquisition
o
Strategy of scope

7. 2) Amazon.com’s Strategic capabilities
Competencies:
• Competitive prices and Cost leadership strategy:( Economies of
scale) Amazon provides the widest range of products to achieve the
economies of scale and benefit from the low costs of displaying those
products on its online marketplace
• Superior quality services and products: Amazon delivers the best
quality services and offers one of the lowest and fastest shipping..
•
• Wide selection of goods and services : Amazon offered the widest
selection of product from its vast selection of retail products to
amazon’s software and cloud computing offerings

8. 2) Amazon.com’s Strategic capabilities
• Convenience: amazon continually strived to please its customers.
Amazon has a brand reputation for great customer service
• Strategic acquisitions. Amazon has been successfully acquiring
new firms to bring the new products, services, capabilities, assets and
skills to the business. Amazon is today capable of offering cloud
services, can develop its information management and customer
relationship
• Costumer experience: with its advanced technology Amazon found
new ways to improve costumer experience.

9. 2) Amazon.com’s Strategic capabilities
Resources:
• Strategic approach to recruitment : Amazon recruits qualified labor:
• Amazon recruit a former Wal-Mart vice president
• Amazon is located in Seattle as there was a large supply of computer
software available
• Jeff Bezos expertise and personality

10. 2) Amazon.com’s Strategic capabilities
• Technology infrastructure: amazon invests heavily in innovation to
improve efficiency, lowering operating costs and enabling the
company to offer lower prices to customers.
• Amazon web services and digital contents
• Efficient
logistics
and
distribution:
(Accessibility
development) Amazon has a number of fulfillment warehouses in
each market it operates thereby the goods could be distributed faster
and with lower cost.

11. 2) Amazon.com’s Strategic capabilities
Efficient logistics and distribution: (Logistic, Speed
and innovation)
• V: it provides competitive advantage to Amazon because the competitors do
not currently have. Besides the cost allows amazon to make the returns
expected
• R: efficient logistics and distribution (access to innovation and speed ) are
rare and uniquely possessed by few companies
• I: Other companies find that very difficult to imitate and obtain because it’s
really complex to have a huge number of warehouses and it’s really hard to
access to innovation. It needs a massive investment
• N:Non substitutable

12. 3) Evaluate Amazon’s diversification
strategy
• Amazon was at the beginning only an online bookstore
but they rapidly diversify their activities by acquire others
companies or launch news systems.
• They have a huge technology improvement policy and
invest a lot in that sector in order to launch new concept
such as kindle in 2007 or the cloud computing. They want
to personalise every consumers experience and to invent
new consumption models.
• Beside they try to increment the range of the offer with
new sites for mode or multimedia services for example.

13. 3) Evaluate Amazon’s diversification
strategy
That is a good policy because:
• Diversify their activities and their customers (BtoB and BtoC) secure
their cash flows face to crisis.
• Book industry is in a period of restructuration because, like the music
sectors, digital books will replace effective books.
• Operating advantage by controlling the software they used
(investments)
• But theses huge amount of investments can put the company in
jeopardy because compared to their competitors (ebay) they have a
very low profit margin and a reduction of the sales would have an
impact on cash flows and for instance on the investments in new
technology.

14. 4) Strategy for Amazon going forward
• The last figures shows that net incomes has decreased
from 1 152 millions to -39 during the 2010-2012 period.
The reason could be the high level of Investment compare
to the low profit margin.
• The technological advantage is no longer sufficient. The
solution could be the reduction of Investment in order to
favor cash flows.
• Continue the diversification (market and services)