1. Seraj A. Farooqui
Business Marketing & Logistics 751
March 2012

2. All Departments Agenda
Brief Introduction
Segment and Customer Analysis
Competitor Analysis
Market and Environmental Analysis
Internal Analysis
Proposed Strategy and Future Outlook

3. Brief Introduction
• Founded in 1994
– Seattle, WA
– Jeff Bezos, Chief Executive
• Expanded to Music and Video Segments in 1998
• Strategic partnerships and acquisitions to expand product
bredth, absorb competition, and enhance distribution
efficiencies.
• Released Kindle (1st Generation) in 2007
– Kindle Fire release in 2011
• International Growth

4. Segment Analysis
Electronics and Other
Media Other
General Merchandise
North America: $7,959 North America: $17,315 North America: $1,431
International: $9,820 International: $11,397 International: $155
All electronics/computers, home
All books, movies, music, digital and garden, toys, grocery, apparel, Cloud services, web services,
downloads, software and video jewelry, health and beauty, sporting marketing/promotional agreements,
games (includes consoles). and outdoor equipment, tools, co-branded credit card agreements.
automotive, etc.
Notes:
*Market Figures are calculated in millions, and based on Q4 2011 Press Release, http://bit.ly/ymMsOY

5. List of Customer Motivations Analysis
• Convenience
– One-stop shopping, Across retail segments
– Product comparisons and reviews
• Promotions
– Competitive pricing
– FREE Super Saver Shipping (Orders over $25.00)
– Amazon Prime Membership Programs
– Partner-discounts (Discover Card, etc.)
• Differentiation
– Brand reputation
– Dependable fulfillment; Pro-active communication
– Customer Service / Returns Management
– Personalized recommendations

6. List of Customer Motivations Analysis
• Cost Leadership
– Low-Price Guarantee
– “Refund the difference” Initiatives
• Segment Differentiation
– FREE Enhanced Delivery (White-glove)
– Schedulable Delivery Time
• Online Experience
– Transactional Security
– Order Status Monitoring
– Order Management

7. Unmet Needs Analysis
• Tangibility of product offerings
• Returns Management
• Continuous innovation
• Consistency of Customer Service level
• Maintaining a “personal” shopping experience
• Regulating Third-Party Sellers
• Low International Scalability

8. Competitor Analysis
Direct Indirect
Competitors Competitors
• Target • Google
• Walmart • Brick and mortar store
• Overstock.com • Third-Party Wholesale
• Barnes and Noble
• Apple (Media)
• Samsung (Media)
• Ebay
• Netflix (Media)

9. Media Segment
KSFs/Competitors
Brand
Recognition
Breadth of
Products
Quality
Perception/Value
Breadth of
Channel Coverage Scale Indicator
Geographic Very
Coverage Strong
Strong
Financial
Average
Performance
(POA/ROI), Weak
Profitability

10. Electronics/General Merchandise Segment
KSFs/Competitors
Brand
Recognition
Breadth of
Products
Quality
Perception/Value
Breadth of
Channel Coverage Scale Indicator
Geographic Very
Coverage Strong
Strong
Financial
Performance Average
(POA/ROI),
Weak
Profitability

11. Other Segment
KSFs/Competitors
Brand Recognition
Breadth of
Products
Quality
Perception/Value
Breadth of Channel
Coverage Scale Indicator
Geographic Very
Coverage Strong
Strong
Financial
Performance(ROA Average
or ROI), Profitability Weak

12. Competitor Strength Grid
ASSETS AND
COMPETENCIES: Apple Netflix Target Walmart eBay Overstock Amazon
Name Recognition
Breadth of
Product Line
Breadth of
Channel Coverage
Specialty
Financial
Resources
Cost Structure
Geographic
Coverage:
US
International
Key:
Strong Average Weak
Below
Above Normal Normal

13. Domestic Market Analysis
Electronic and
Media other General Other
Merchandises
16% 57% 73%
Notes:
*Market Figures are calculated in millions, and based on Q4 2011 Press Release, http://bit.ly/ymMsOY

14. International Market Analysis
Electronic and
Media other General Other
Merchandises
23% 55% 24%
Notes:
*Market Figures are calculated in millions, and based on Q4 2011 Press Release, http://bit.ly/ymMsOY

15. Industry Profitability Analysis
• Barrier of entry – Medium
– Kindle Fire vs. Apple iPad
– Kindle Apps vs. Apple Apps
• Potential Entrants– Medium to low
– eBay
• $3.38B in revenue (Dec. 2011), 19.3% of Amazon’s Revenue
• Threat of substitute – Low
– Innovated Service
– High Brand Recognition
– High Customer Satisfaction
– Well Recognized and Trusted Service
• Bargaining power of suppliers – Low
– Sales Medium for Third Party Sellers of books, audio, technology
– Pay suppliers quickly (35 days after item has been sold)
• Bargaining power of customers – Low
– Cost Leadership
– Customer Service

16. Key Successful Factors (KSF)
• Efficient Supply Chain and Logistics
• Product availability, Bredth
• Low prices
• Innovative new offerings
– Kindle, Cloud, Web Services, etc.
• Ease of shopping
• Strategic acquisitions and investments
– Woot.com, IMDB.com, Zappos.com, etc.

17. Performance Analysis
Objective Area Objective Status and Comment
Sales Steadily Increase General merchandise and Kindle sales shows
growth
Profits Improve Profit Margin Taking a hit on profit margin to increase market
share
Quality/service Maintain Customer Fulfillment strong, Improving products
through R&D
Cost Maintain or Raise Lowing price to customers but absorbing costs
New Products Diversify Constant Innovation and new products needed
(Kindle=Success)
Customer Satisfaction Build Brand Loyalty Amazon is continually working to improve
customer satisfaction and build brand loyalty
People Hire Leaders Continue to hire the best, Have drastically
increased # of employees

18. Portfolio Analysis
Problem
Stars
Children
High  E-Book
Market Growth Rate
(Kindle)
 Music
downloads
Cash Cow Dogs
 Online Book  Amazon On
Low
Sales Demand
 Online
consumer
goods
High Low
Competitive Position

19. Portfolio Analysis
• Customer Service • Free shipping
• Diverse Product leads to profit
offerings losses
• Constantly • Possible Brand
Evolving Confusion
Strengths Weaknesses
Threats Opportunities
• Seasonal • Global Expansion
• Brick and Mortar (BRIC)
Stores • Video-On-Demand
• E-Commerce Segment
Maturing • Kindle Segments

20. ROA Trends
Industry Median is 3.6%

21. Competitor ROA

22. Stock Prices (2007-2011)

23. Operating Expense Analysis
2007 2008 2009 2010 2011
SG&A Expense 2.69B 3.45B 4.3B 3.23B 8.84B
Research &
Development 818M 1.03B 1.24B 1.73B 2.91B
Other SG&A 1.87B 2.42B 3.06B 1.5B 5.94B
More
Customers
More Distribution
Low Prices Channels
Large Current Larger Reach
Selection
Strategy
Greater Aquisition
Convenience
More Third
Party Sellers

24. Proposed Strategy
• Increase collaboration with channel partners.
• Enhanced integrated marketing
– Communicate to more clients in the global markets
• Forward-integration
– Promote and manipulate where products and services are
being sold
• Continued focus on R&D
– Innovative strategies and devices to provide a competitive
advantage in the electronics marketplace
• Customer Service

25. Continuous Innovation, 2020+

26. All Departments References
• http://www.bloomberg.com/news/2011-10-25/amazon-profit-plunges-after-new-
products-increase-expenses-shares-tumble.html
• http://www.amazon.com/Values-Careers-
Homepage/b?ie=UTF8&node=239365011
• http://www.phonesreview.co.uk/2012/02/17/amazon-kindle-fire-2-possible-may-
release/
• http://marketingteacher.com/swot/amazon-swot.html
• http://www.smartmoney.com/invest/stocks/jeff-bezos-on-the-future-of-amazon-
com/
• http://www.minyanville.com/businessmarkets/articles/amazon-ebooks-kindle-e-
books-ebook/5/27/2011/id/34815
• http://en.wikipedia.org/wiki/Amazon.com
• http://www.huffingtonpost.com/2012/02/06/amazon-retail-stores-
seattle_n_1258032.html
• http://www.amazonstrategies.com/
• http://mashable.com/2012/01/31/amazon-q4-results/
• http://www.helium.com/items/1901369-amazon-kindle
• http://www.sramanamitra.com/2011/02/02/amazon-aligned-with-multiple-major-
trends/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+
sramanamitra+%28Sramana+Mitra+on+Strategy%29

27. All Departments In Closing
Thank you for listening
Any Questions?