Amazon.com Inc is the leading internet retailer in the US and worldwide. In 2011, it had net sales of $21.9 billion and a 16.9% share of the US internet retailing market. Amazon launched its Kindle e-reader in 2007 and has since expanded its private label offerings to include electronics accessories and home goods. While facing competition from retailers like Walmart and Barnes & Noble, Amazon maintains its leading position through continuous innovation, expanding product selection, and customer-centric services like free shipping.

1. AMAZON.COM INC IN RETAILING
(USA)
Euromonitor International
April 2012

2. AMAZON.COM INC IN RETAILING (USA) Passport I
LIST OF CONTENTS AND TABLES
Strategic Direction ........................................................................................................................ 1
Key Facts ..................................................................................................................................... 1
Summary 1 Amazon.com Inc: Key Facts ......................................................................... 1
Summary 2 Amazon.com Inc: Operational Indicators ...................................................... 1
Company Background .................................................................................................................. 2
Private Label ................................................................................................................................ 2
Summary 3 Amazon.com Inc: Private Label Portfolio...................................................... 3
Competitive Positioning ................................................................................................................ 3
Summary 4 Amazon.com Inc: Competitive Position 2011 ............................................... 4
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3. AMAZON.COM INC IN RETAILING (USA) Passport 1
AMAZON.COM INC
STRATEGIC DIRECTION
 Amazon.com Inc continued to be the leading internet retailer in 2011, by providing consumers
with a wealth of items in a wide range of product categories through its feature-rich content,
consumer-friendly website and free shipping programmes. The company continues to expand
it product portfolio, and in 2011 introduced the next generation of Kindle products, including
the best-selling Kindle Fire, and heavily promoted its related ecosystem of digital content and
accessories.
 The company also began testing Amazon lockers at select physical locations for customers to
pick up online orders instead of home delivery and may begin to test operating its own retail
stores in 2012. The expansion of sales tax collection for internet retailers is removing one
significant barrier to Amazon operating physical stores, and with dedicated boutiques,
Amazon can showroom its own products and provide a high level of customer service as its
competitors do.
KEY FACTS
Summary 1 Amazon.com Inc: Key Facts
Full name of company: Amazon.com Inc
Address: 410 Terry Avenue North, Seattle, WA 98109-
5210, USA
Tel: +1 206 266 1000
Fax: +1 206 266 1821
www: www.amazon.com
Channels of operation: Internet retailing
Retailing brands: Amazon
Source: Euromonitor International from company reports, trade press
Summary 2 Amazon.com Inc: Operational Indicators
2010 2011
Year end December December
Net sales US$15,848.4 million US$21,897.9 million
Operating profit n/a n/a
Outlets n/a n/a
Selling space („000 sq m) n/a n/a
Sales of grocery (%) n/a n/a
Source: Euromonitor International from company reports, trade press
© Euromonitor International

4. AMAZON.COM INC IN RETAILING (USA) Passport 2
COMPANY BACKGROUND
 Amazon.com, a publicly-held company, is the largest internet retailer in the US and in the
world. The company, which began as an online bookseller in 1994, has since diversified
considerably, now offering over 40 product categories, including books, music, toys and
games, consumer electronics, housewares, health and beauty products, apparel and
accessories, and food.
 Key features of the Amazon website include editorial and customer reviews, manufacturer
product information, wish lists, 1-click shopping, extensive search capabilities and the ability
to tailor web pages to individual preferences. Purchase orders are fulfilled promptly and
customer support, which includes package tracking information, is readily available. Amazon
Prime, its membership service, has become increasingly popular. It provides unlimited 2-day
shipping as well as video streaming and e-book borrowing for an annual fee of US$79.
 The company continues to experience considerable success and growth through its eight
international operations in Canada, China, France, Germany, Italy, Japan, Spain, and the UK.
Sales from outside the US represent approximately half of the company‟s total net sales.
 In 2011, Amazon and the state of California came to an agreement that Amazon would start
collecting sales tax in the state starting in the autumn of 2012 after a prolonged battle.
Negotiations with many other states to begin enforcing state sales tax collection within the
next few years are ongoing. In other states, the battle continues, with Amazon threatening to
cut off ties with affiliates and governments being equally firm in their positions. The
Marketplace Fairness Act, introduced in Congress in 2011, has a strong chance of finally
enacting a national sales tax applicable to all retailers, including all online retailers.
 In November 2007, Amazon introduced its own electronic book reader, called Kindle. This
wireless device allows a customer to purchase books and have them delivered electronically.
In 2011, Amazon reported that sales of e-books surpassed sales of physical books for the first
time as the trend towards digital media solidifies.
 Amazon purchased internet retailer Quidsi Inc, which operated the popular sites Diapers.com,
Soap.com, and Beautybar.com, in 2011. In addition to mastering the business of selling low-
margin, hard-to-ship products, the culture and dedication to customer service at Quidsi
appeared to offer an exceptional fit with Amazon. It has since expanded from baby products,
everyday essentials, and luxury beauty products into pet products and toys with the launch of
Wag.com and Yoyo.com, and all its sites conveniently share a common shopping cart.
PRIVATE LABEL
 The Kindle line of devices is Amazon‟s first and primary foray into private label products, as it
is still principally a retailer of branded products. The first Kindle was introduced in November
2007 and sold out in only a few hours. According to CEO Jeff Bezos, the Kindle was a 3-year
development project and is a key part of the company‟s growth strategy. It originally retailed
for US$359 and only worked in the US due to wireless network limitations. While there were
other e-book reader options offered by other companies, such as Sony, the Kindle was unique
in that it functioned wirelessly and also could offer magazines and newspapers in digital form.
Additionally, thanks to its native Amazon connection, the Kindle provided the largest selection
of books by a wide margin over its competitors and twice the memory space.
 In February 2009, Amazon.com launched the Kindle 2, with a text-to-speech function, to read
the text aloud, and 2GB of internal memory. The Kindle 2 was slimmer than the original
Kindle. In October 2009, Amazon stopped selling the original Kindle 2 in favour of an
international version it had introduced earlier in the month. The Kindle 2‟s original price was
US$389. Due to criticism, the company reduced the price in July 2009 to US$299. In October
© Euromonitor International

5. AMAZON.COM INC IN RETAILING (USA) Passport 3
2009, Amazon further reduced the price of the Kindle 2 to US$259. The international version
was made available for use in 100 countries. In November 2009, the company launched the
Kindle DX, an even further enhanced version with a larger screen and the ability to support
PDF files. It is positioned to be better suited to view newspaper content and textbooks. The
retail selling price of the Kindle DX was US$489.
 In September 2009, the company launched AmazonBasics, a line of private label consumer
electronics products. The collection includes basic items such as audio video cables and
blank DVD media, with additional accessories and other items to be added at a later date.
 In July 2010, a third generation Kindle with 3G support was announced. Kindle 3 is available
in two versions. One is the Kindle Wi-Fi, which was initially priced at US$139 and connects to
the internet exclusively via public or private Wi-Fi networks. The other version, considered a
replacement for the Kindle 2, is priced at US$189 and includes both 3G and Wi-Fi
connectivity. It is also smaller than the previous Kindle.
 Amazon.com has quickly expanded its private label offerings beyond consumer electronics,
including outdoor furniture and housewares under the Strathwood and Pinzon brands. In June
2010, the company launched a line of private label kitchen utensils designed by chef Tom
Douglas.
 November 2011 saw the release of the fourth generation of Kindle products, with the Kindle,
Kindle Touch, Kindle Touch 3G, and Kindle Fire tablet. Priced aggressively at US$199, the
Fire undercut the competition by a wide margin, threatening to disrupt the entire category,
while the Kindle Touch eliminated the keyboard to run as a touchscreen device. Kindle
devices continue to drive growth for Amazon and dominate the e-reader landscape.
Summary 3 Amazon.com Inc: Private Label Portfolio
Private label brand Category(ies) Notes
Kindle Consumer electronics Portable e-book reader
AmazonBasics Consumer electronics
Source: Euromonitor International from company reports, company research, trade press, trade sources
COMPETITIVE POSITIONING
Amazon is the leading internet retailer in the US, with a 17% share of value sales in 2011.
The company continues to expand its product mix, and operates several service businesses.
Also worthy of note is its growing international operations, which currently contribute as much
combined as do its US operations. Other internet retailers continue to use Amazon as a
benchmark for evaluation of consumer experience, satisfaction and product selection.
Amazon will continue to face strong competition, not only from other internet retailers, but also
from store-based retailers, publishers, and manufacturers. Other retailers are increasingly
honing in on improved websites and lower prices to compete with Amazon, the so-called Wal-
Mart of internet retailing. However, Amazon‟s continued expansion, innovation, and strong
branding will keep the company well positioned over the forecast period.
Stiff competition also exists in the e-reader arena. Barnes & Noble launched its Nook device
in October 2009 while now-defunct Borders introduced the Kobo in May 2010. The Nook and
Kindle continue to be locked in a price war, with each retailer seeking to undercut the other to
attract price-sensitive consumers on the margin. One advantage Barnes & Noble enjoys is the
ability to highlight the Nook and related products in its physical locations while Amazon must
rely on its website and third party retailers such as Target or Best Buy to display the Kindle.
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6. AMAZON.COM INC IN RETAILING (USA) Passport 4
However, if Amazon opens its own boutiques, it can combat this advantage. Furthermore,
Amazon has recently entered the fast-moving space of tablet devices with the introduction of the
Kindle Fire. Barnes & Noble soon followed suit with the Nook Tablet, which retails for more at
US$249. At less than half the price of most other tablets, the Fire is an attractive new entrant,
though it remains to be seen how consumers respond to its supposed lesser functionality
compared with other tablets.
Amazon continues to expand by adding new product categories and acquiring other
companies. It purchased “deal of the day” site Woot.com and Quidsi in 2010. In May 2011, it
launched membership-only flash sale site MyHabit.com to compete with other private sales sites
such as Gilt, HauteLook, and eBay‟s fashion outlet. Also in 2011, Amazon added streaming
features and free e-book rentals to its Prime membership service, giving consumers even more
reason to join and spend more at the site.
One of Amazon‟s strongest competitive advantages is its quick and accurate order fulfilment.
In addition to free shipping for orders that meet a minimum value of US$25, Amazon Prime
members enjoy unlimited 2-day shipping. While absorbing shipping costs negatively impacts
Amazon‟s operating margins, the offer is usually so attractive to consumers that it makes it up in
consumers spending more than they otherwise would. In 2011, Amazon expanded the number
of its distribution centres, allowing it to ship products even faster to consumers.
Summary 4 Amazon.com Inc: Competitive Position 2011
Channel Retail value share Rank
Retailing 0.8% 17
Internet retailing 16.9% 1
Source: Euromonitor International from company reports, trade press, trade interviews
© Euromonitor International