C a s e 12

Amazon.com, Inc.
RETAILING GIANT TO HIGH-TECH PLAYER?

Resume oleh
I Wayan Purna
51811518
 Overview
• Founded by Jeff Bezos in July, 1994
• quickly grew from, online bookstore to the
world’s largest online retailer
• greatly expanding product and services
offerings through a series of acquisitions, alli-
ances, partnerships, and exclusivity
agreements.
 Overview
• financial objective: to achieve long-term
sustainable growth and profitability.
• How?
– Maintain a lean culture,
– increasing its operating income,
– efficiently managing working capital and capital
expenditures,
– tightly managing operating costs.
 Vision
• founder Jeff Bezos:
• “Amazon” as a huge natural phenomenon, like
the longest river in the world.
• He envisioned the company to be the largest
online marketplace on earth someday.
 Amazon Corporate Governance
• The Chairman of the Board and CEO: Jeff Bezos
(owns 19.4% of company).
• Amazon has three board committees :
1. the audit committee.
2. the governance committee.
3. the Leadership Development and Compensation
Committee. (“monitors and periodically assesses
the continuity of capable management,
including succession plans for executive
officers.”)
Retail Operations/Amazon’s Superior Website

• Increase people shopping online  Amazon

developed website to get advantage of
internet traffic.
• Key to success: continual website
improvement.
• Utilize internet information targeted
marketing
 Retail Operations/Amazon’s Superior Website

• distinctive features: the community created

based on the ratings/reviews provided by
private individuals to help others make more
informed purchasing decisions.
• Further target potential customers:
retargeting with email base on previous
purchase
Retail Operations/Amazon’s Superior
Website
• To round out its customer care  expedited
shipping by strategically locating its fulfillment
centers near airports cheaper rent: quick and
low cost
• In some countries Amazone offers subscribers to
Amazon Prime free express shipping
• The overarching objective : to offer low prices,
convenience, and a wide selection of
merchandise, a pared down, yet widereaching
strategy.
 Diversified Product Offerings
• In 2007, lauched the Kindle, its $79 e-book
reader, offered users more than one million
reasonably priced books and newspapers easily
accessed on its handheld device.
• Compete against Apple iPad, Amazon quickly
developed its own low-cost tablet, the Kindle
Fire, an Android-based tablet with a color
touchscreen priced at $199, more than $300
lower than the iPad, sacrificing profit margins in
search of sales volume and market-share gains.
 Diversified Product Offerings
• By 2010, 43% net sales were from media: books,
music, DVDs/ video products, magazine
subscriptions, digital downloads, and video
games.
• More than half of all sales came from computers,
mobile devices including the Kindle, Kindle Fire,
and Kindle Touch, and other electronics, as well
as general merchandise from home and garden
supplies to groceries, apparel, jewelry, health and
beauty products, sports and outdoor equipment,
tools, and auto and industrial supplies.
 Partnerships
• Amazon leveraged its expertise in online order
taking and order fulfillment
• developed partnerships with many retailers
whose websites it hosted and managed,
including (currently or in the past) Target,
Sears Canada, Bebe Stores, Timex
Corporation, and Marks & Spencer.
 Partnerships
• Amazon Marketplace allowed independent
retailers and third-party sellers to sell their
products on Amazon by placing links on their
websites to Amazon. com or to specific
Amazon products.
 Web Services
• Amazon developed a number of web services,
including ecom-merce, database, payment
and billing, web traffic, and computing.
• In 2012, announced a cloud storage solution
(Amazon Glacier) from Amazon Web Services
(AWS), a low-cost solution for data archiving,
backups, and other long-term storage
projects.
• By 2012, Amazon Web Services were a crucial
facet of Amazon’s profit base,
• Amazon was one of the lead players in the
fast-growing retail ecommerce market.
• Amazon decided to expand Amazon Web
Services (AWS) internationally and invested
heavily in technology infrastructure.
Amazon’s Acquisition of Zappos, Quidsi, Living
Social, and Lovefilm
• July 22, 2009, Amazon acquired Zappos
• November 8, 2010, Amazon acquired Quidsi
• December 2, 2010, Amazon acquired
LivingSocial
• January 20, 2011, Amazon acquired Lovefilm
 Competitors
• Amazon’s Kindle vs Apple’s iPad
• competitors in the service sector included
other e-commerce and Web service providers:
as eBay, Apple, Barnes & Noble, Overstock.
com, MediaBay, Priceline.com, PCMall.com,
and RedEnvelope.com.
 Competitors
• compete with companies that provided their
own products or services, sites that sold or
distributed digital conten: as iTunes and
Netflix, and media companies such as The
New York Times.
 Frustration-Free Packaging
• Recyclable Frustration Free Packaging
• Came without excess packaging materials such
as hard plastic enclosures or wire twists
• Designed to be opened by hand without a
scissors or a knife
 Financial Operations
• Amazon sales doubled from 2009 to 2011,
growing from $24,509 million (2009) to
$48,077 million (2011)
• The significant increase from 2009 to 2010
was due in large part to aggressive net sales
growth and a large portion of its expenses and
investments being fixed
 Challenges for Amazon
• From its inception, Amazon was not required
to collect state or local sales or use taxes, but .
in 2012, states began to consider superseding
the Supreme Court decision.
• 2012, making deals to collect sales tax in all 50
states  easier to open warehouses neaar
population centers and make quick delivery.
 Challenges for Amazon
• had to grapple with the threat of customer
preference for instant gratification, the
customer’s desire to get a product
immediately in the store, rather than waiting
several days for the product to be shipped to
them.
 Challenges for Amazon
• Breaches of security from outside parties
trying to gain access to its information or data
were a continual threat for Amazon
• more media products were sold in digital
formats, no longer provided the same com-
petitive advantages
 Challenges for Amazon
• Amazon had to contend with absorbing losses
from its unsuccessful ventures such as its A9
search engine, Amazon Auctions, and Unbox,
Amazon’s original video-on-demand service.
• Planned to developed Smartphone 
wouldn’t have made sense for Amazon to
enter into the already crowded smartphone
arena
 Challenges for Amazon
• In 2012, Amazon was at a crossroads
– should invest in the infrastructure for same-day
delivery, and take on local retailers?
– invest in high- technology and compete at a
deeper level with Sony, Apple, and Samsung?
THANK YOU