Presented By:

Ikram Ahmed Khan, Mohit Thakur, Jackie Kiarie,

Spencer Masenda, Youngsam Kang
Amazon.com A Step Ahead
Founded in 1994 28,300 Global leader in
in Seattle, USA employees e-commerce

Worldwide
Wide range of Mass
network of
products customisation
fulfilment

Customer
Affiliations Stickiness
experience
 Mission, Vision & Values
Mission
• ‘To leverage technology and the expertise of our invaluable employees to
provide our customers with the best shopping experience on the
Internet.’

Vision
• ‘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.’

Values
• Customer Obsession
• Innovation
• Bias for Action
• Ownership
• High Hiring Bar
• Frugality
Record Growth
Amazon facing claims and investigations due
to their Transfer Pricing Strategy
Fulfilment Procedure
 Key Products
• Books & E-Books
• Movie, Music and Games
• Kindle
• Electronics
• Home And Garden
• Computer And Office
 Amazon’s Revolution
“eBooks & Kindle”
Amazon reported 80% >450 000 books
of eBook market available for
download

Kindle eBooks add Newspapers,

35% to a physical magazines and
book’s sale on blogs subscription
Amazon

eBooks downloaded Amazon keeps 65%

from Amazon not of the revenue from
exclusive to Kindle all eBook sales for
Kindle

"Our vision is to have every book ever printed, in any

language, all available in tinder 60 seconds.“
Jeff Bezos, Amazon.com CEO
 PESTEL Analysis
PESTEL Key point Relevance to Amazon
Factors
Political Government regulations of e-commerce and other International policies impede Amazon’s plan for further
services. expansion internationally.
Laws and policies in different jurisdictions affecting
trade and foreign investments.
Economic Currency fluctuations can cause issues when selling Amazon holds cash equivalents and marketable securities
multimedia over the internet since the company uses primarily in different currencies. Therefore, if the U.S. Dollar
US dollars strengthens compared to these currencies, when translated,
may be materially less than expected and vice versa

Social Increase in the internet growth rate Amazon have got an opportunity to increase their market share

Technological Innovations and development of high-speed internet Amazon as an online retailer is forced to surpass its
services (broadband) has increased usage of media competitors in terms of innovation.
applications
Environmental Global Warming Amazon offers cloud storage and cloud computing which can
eliminate the need for hardware and storage devices for the
general public
Legal No uniform regulations governing e-commerce Amazon should be aware of both the domestic and
covering all the countries international laws
Competitors of Amazon can be classified into

Category Example O Amazon Inc being a multinational e-

1 online mass retailers Ebay.com commerce company and due to its
presence over various e-commerce
2 Online specialized retailers Apple.com, categories have a lot of competitors in
Dell.com.
various categories
Staples.com
3 book retailers (As this is the main Barnes and O For example rottentomatoes.com is a
revenue source of amazon.cm) Nobles, Half Price
competitor for IMDB.com and Google
books
App Engine is a competitor for Amazon
4 Brick and Mortar retailers Wal-Mart, Sears Web Services. These two in actual
5 E-book readers (As kindle is a Kobo e-reader, becomes competitor for Amazon Inc but
main revenue generator for Apple i-pad, not amazon.com
Amazon.com through both its Barnes and Nobles
own sales and induced e-book Cybook O Here we are considering only the
downloads) online retailing/retailing division of
6 Social buying sites Groupon, deal Amazon.com and have classified the
map competitors accordingly
 Porter’s 5 Forces Model
Bargaining power of suppliers
Low - Amazon has more power over its suppliers since it influence on costs and features to
improve the products. In addition, because of the highly trained experts in the departments of
development, market research and marketing, it is well informed about the suppliers market
thus Amazon has more power over the suppliers.
High - it is possible that Amazon’s suppliers can individually or allied supply products
directly to their customers.

Threat of new entrants

Low - in the e-commerce business. This Threat of substitutes
Rivalry among competing firms High - Major substitutes to goods
is because e-commerce is a fast
High - from companies like Barnes and and services provided by Amazon
technologically driven industry and
Noble, Google, Wal-Mart, EBay etc. Some will be bookshops, electronic
Amazon invests in the best technology to
of Amazon’s current and potential shops, accessories shops, health
be the leader in the market. It would be
competitors have greater resources, longer and personal care shops that are
virtually impossible for a new company
histories, more customers, and greater physically located in different
to reach the magnitude of inventory and
brand recognition. They may secure better cities. Also books can be
status that Amazon.com
terms from suppliers, adopt more purchased at Barnes and Noble
maintains. Moreover, brand loyalty is
aggressive pricing, and devote more Books, Books-A-million, and Half
fundamental when competing in any
resources to technology, infrastructure and Price Books can also be borrowed
industry. Amazon has established a high
marketing. Other companies also may enter for free at university libraries,
standard trademark in the market and has
into business combinations or alliances that music can also be purchased at
a greater percentage of customers loyal to
strengthen their competitive positions. discount retailers.
them thus a new entrant in the market
will face stiff competition to win loyal
Amazon customers.

Power of buyers
High - Amazon.com’s customers have the option of buying the products and
services they desire on the hundreds of thousands of other retail web sites on the
internet. If Amazon.com does not offer low prices to satisfy the customer then the
customer will search the Internet until they find that low price.
 SWOT Analysis
Strengths Weaknesses
1. Cost leadership strategy 1. Only online presence

2. Superior quality services and products 2. Selling at zero margins

3. Strategic acquisitions 3. Negative publicity

4. Strategic alliances

5. Efficient distribution chain and logistics

Opportunities Threats
1. Online payment system 1. Online security

2. Release more its own brand products and 2. Lawsuits

services
3. Strategic alliances
3. Increase services and product portfolio
4. Regional low cost online retailers
through acquisitions

4. Open more online stores in other countries

5. Physical presence

6. Straight-to-consumer model
 Expansion

Amazon to Open First Brick-and-Mortar Site

The New York City Location to Handle Same-Day-Delivery Inventory,
Product Returns
Updated Oct. 9, 2014 8:00 p.m. ET

The Wall Street Journal announced

Amazon would be launching its first
physical retail store in January 2015. This
store was to better service New York
residents unable to take advantage of
Amazon's delivery service.
 Amazon Financials
AMAZON.COM,INC.
CASH FLOW STATEMENTS
Year Ended December 31,
Cash provided by or used in (in millions) 2013 2012 2011
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD $8,084.00 $5,269.00 $3,777.00
Operating activities $5,475.00 $4,180.00 $3,903.00
-
Investing activities $4,276.00 -$3,595.00 -$1,930.00
Financing activities -$539.00 $2,259.00 -$482.00

Foreign-currency effect on cash and cash

equivalents -$86 -$29 $1
Net increase (decrease) in cash and cash
equivalents $574 $2,815 $1,492
CASH AND CASH EQUIVALENTS, END OF
PERIOD $8,658 $8,084 $5,269
 Amazon Financial Statement
AMAZON.COM,INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31,
(in millions) 2013 2012 2011
Net product sales $60,903 $51,733 $42,000
Net services sales $13,549 $9,360 $6,077
Total net sales $74,452 $61,093 $48,077
Operating expenses:
Cost of sales $54,181 $45,971 $37,288
Fulfillment $8,585 $6,419 $4,576
Marketing $3,133 $2,408 $1,630
Technology and content $6,565 $4,564 $2,909
General and administrative $1,129 $896 $658
Other operating expense (income), net $114 $159 $154
Total operating expenses $73,707 $60,417 $47,215
Income from operations $745 $676 $862
Total non-operating income (expense) -$239 -$132 $72
Income before incomes taxes $506 $544 $934
Povision for income taxes -$161 -$428 -$291

Equity-method investment activity, net of tax -$71 -$155 -$12

Net income (loss) $274 -$39 $631
Financial Analysis
Financial Analysis
 Financial Analysis
Profitability 2012-13 2011-12
Net Margin % 1.31 1.11

Asset Turnover (Average) 2.18 2.05

Return on Assets % 2.86 0.75

Return on Equity % 8.63 3.06

Return on Invested Capital % 8.1 2.75

 Balance Scorecard

Dr. Robert Kaplan and Dr. David Norton

 Balance Scorecard
Strategic Objectives Measures Targets Actual
Financial
• Maximize shareholder wealth • Increase share price $460 $307.28
• Increased operating profit • Higher Profit margin 3% 1%
• Reduction in prices • Lowering down the publishing cost 10% 4%
Customer
• Fast Delivery • establishing more distribution centres 3 days 5 days
• Brand loyalty • Customer revisits 38% 28.5%
• User Friendly website • Increased customer ratings by 4.9 4.2
• Investments in site maintenance 200m 154m
Internal business process
• Speed of processing orders • Reduce processing time 2 hrs 3 hrs
• Secure online data processing • Reduction in customer complaints 0 5%

Learning and growth

• Training and employing high expertise staff
• Highly skilled staff No.1- 108m No.1- 79m
• Research and development
• Innovation 2.26 b 1.75 b
Conclusion
• Logical path
Evolution
• Resources &
Channels
• B2C, B2B

• New markets
• Strength of
Expansion Brand
• “Earth’s biggest
selection”

• Community &
Stickiness
Attention
Economy • Trust
• Customer
Experience
Thank you!