MGMT 4210 Power Point

___________ .
com
Baquerzo, Kong, Li, Lo, Powell, Yau
HKUST November 29, 2011
1
Evolution
Founded in 1994 Incorporated in 1996 IPO in 1997 Person of the Year in 1999
90th most popular website
180,000 customers
1.5 Million Customers
158 Employees
$147.8 Million Revenue
$1,600 Million Revenue
14 Million Customers
Pioneers of the E-Commerce
Pioneers of the E-Reader
Pioneers in the Cloud
.com Bubble in 2001
E-Reader in 2007
The Cloud in 2008
Present:2010 - 2011
25 Million Customers
E-Reader Released, sold out in 51.5 hours
Amazon Fulfillment
Service Oriented Architecture
$94 Billion Market Cap
$34 Billion in Revenue
The Most Client-Centric Company in the World
E-Commerce
Services
Products
Price
Selection
Convenience
3rd Party Vendors
Virtual Shelf Amazon Fulfillment
2-Day Shipping One-Click Shopping Amazon Silk Whispersync Kindle Fire Amazon Prime
True Supply and Demand
E-Commerce natural habitat Electronics Books

Movies
Music
Toys Tools
Groceries
Appliances
GET BI
G FAST
Market share now equals revenue later.
The Fastest Growth in the Internets History So Far
Y/Y Growth for Q1 2011 = + 38% = 3 x growth of the whole e-commerce market
Resources and Capabilities

Focus on R&D
Global Brand
Strong Logistics
Diverse Selection
CustomerCentric Vision
Kindle
AWS
Strategic Location
Valuable + rare + costly to imitate Skilled Applied Sustainable Advantages Workforce

Advanced Technology
Earths Biggest Selection
Classical Value Proposition

High Margin, Lowest Price Limitless Inventory
Customer Care
Foster the model with the Internets specific advantages
Began with books (1995-1997)
From books to music (1998)
Only 3 Main Categories before 2000
First Mover The only bookseller in the worlds top 500 websites
No First-Mover Become the largest online seller of music within 4 months
Books Music DVD/Video
16 Main Categories, Over 100 Sub-categories
Today, 16 Main Categories, Over 100 Sub-Categories
Amazon dominates the US e-commerce sales by introducing new product categories every year
Amazon had been able to offer a massive inventory by

Build Buy Partner In some vertical markets, Amazon offers its technology service and ecommerce expertise to third parties. E.g.,
From time to time, Amazon simply created a new category.
When competitors are already well established, Amazon may buy out an incumbent. E.g.,
E.g.,
To be Earth's most customer-centric company where people can find and discover anything they want to buy online. Amazons Mission
Customer-Centric Company
Amazon created a trusted, informative and loyal customer relationship
Amazons customer service was ranked #1 in 2009 and 2011
Customer Focus
We start with the customer and work backward. Easy-to-use Functionality Timely Customer Service
Fast and Reliable Fulfillment
User Experience Personalized Stores
Customer-Centric Innovations
Trust
Customer-Centric Innovations
Amazon was a first-mover of most e-commerce innovation practices
More Consumers
Lower Prices Larger Selection Greater Convenience
More Distribution Channels

Larger Reach
More Sellers
Amazon aims at being the only place where you discover and buy goods.
For over 500 years, the publishing industry remained unchanged
In 2007 after 3 years of development, Amazon revolutionized the industry with the release of the
It sold out within 51.5 hours
Authors
Prior to Kindle, substantial concentration and costs along the chain

Virtual delivery = value creation Pull marketing Efficiency Suppliers
Electronic paper, screen technology (E-ink) E-books (Publishers) Network technology
Top 10 = 20% Top 5= 40%
Publisher Transportation
Source: Booz & Co.
Printers
Distributors
Consumers Consequence = Poor Value Chain
The #1 bestseller on Amazon Free 3G Lending Library eInk Technology Synchronization with Kindle Store and Amazon Publishing Long term > Short Term Low price starting at $79 New kindle fire tablet at $199 Synchronization with Services
Service Amazon Web Services (AWS)

Dominate global market share for cloud computing services
In terms of market share Amazon is Coke and there isn't yet a Pepsi.
(William Fellows, principal analyst of the 451 Group)
http://www.youtube.com/watch?feature=player_detailpage&v=ae_DKNwK_ms#t=65s
Service Amazon Web Services (AWS)
How about employee satisfaction?

Encourage Innovation Great place to grow professionally Most & Professionalism meaningful experience
Entrepreneur Factory Companies by former employees
Mobile Web
E-commerce
E-Commerce over $2.5 billion Services over $600 million Database over $500 million
http://www.seobythesea.com/2006/10/amazon-acquisitions-and-investments/
E-Retailing: Competitors
Recommendation
Strategy 1 Strategy 2
Extensive Marketing to build brand name and Market raise awareness penetration E.g. TV, press, radio
Increase product range and suitability by introducing merchant programme to increase market share and sales
Why China?
Increasing consumer spending Rapid economic growth Most attractive market for Amazon High Internet usage
Feasibility
Possess relevant skills, experience and knowledge to undertake global operations Less capital intensive than entering new market Successful Merchant programme in the US as demonstration
Create value to Chinese consumers Increase shareholder earnings in long term
PRODUCTS
Enhance Value Chain Kindle Kindle DX Kindle Fire Kindle Store Kindle Library
Amazon Silk
3G Browser
ECONOMIES OF SCALE
Virtual Shelf
Whispersync
Virtual Device
E-COMMERCE
First Mover Books Fulfilllment
Establish market Economies of Scale Shipping for 3rd party Vendors Scale
Device Isolation Cloud Storage
Harmonization
Shared and Interoperable Processes
Virtual Shelf
Keep hot inventory
Prime
Premium service option
SOA (Service Oriented Architecture)

Cloud Storage Cloud Services
INNOVATION (First Mover)

Logistics (Fulfillment)
Sell Spare Capacity
Scale New Revenue Source
EC^2
Shared Services Interoperable Processes
SERVICES
Recoup IT Investments Data Mining
Client-Centric
Revenue Source
Media Electronics and other general merchandise AWS, Misc. Marketing
$ in M 15,923 24,115 1,484 41,522
38%
35
35
58% 4%
Net Sales in Past 12 Months ($M) North America 22,736 55% International 18,786 45%
Total
41,522
Sales and income Past 12 Months ($M) Net sales 41,522 Net income 517
Total
E-cosystem
Amazons expansion into new arenas is synergistically supported bytheir existing model However, the strategy is in direct conflict with other players strategies, we call this The Great Convergence
Kindle Library
Store
The Great Convergence foreshadows a 'Great Paradox, the moment when Amazon cannot compete solely on the basis of their pillars of durability
Gracias Thank You
Danke
Merci
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___________ .

90th most popular website

1.5 Million Customers

$147.8 Million Revenue

$1,600 Million Revenue

Pioneers of the E-Commerce

Pioneers of the E-Reader

Pioneers in the Cloud

.com Bubble in 2001

The Cloud in 2008

$3,120 Million Revenue

E-Reader Released, sold out in 51.5 hours

$24,510 Million Revenue

Service Oriented Architecture

$94 Billion Market Cap

$34 Billion in Revenue

The Most Client-Centric Company in the World

3rd Party Vendors

Virtual Shelf Amazon Fulfillment

True Supply and Demand

E-Commerce natural habitat Electronics Books

Market share now equals revenue later.

The Fastest Growth in the Internets History So Far

Resources and Capabilities

Valuable + rare + costly to imitate Skilled Applied Sustainable Advantages Workforce

Earths Biggest Selection

Classical Value Proposition

Foster the model with the Internets specific advantages

Began with books (1995-1997)

From books to music (1998)

Only 3 Main Categories before 2000

No First-Mover Become the largest online seller of music within 4 months

Books Music DVD/Video

16 Main Categories, Over 100 Sub-categories

Today, 16 Main Categories, Over 100 Sub-Categories

Amazon had been able to offer a massive inventory by

From time to time, Amazon simply created a new category.

Amazon created a trusted, informative and loyal customer relationship

Amazons customer service was ranked #1 in 2009 and 2011

Fast and Reliable Fulfillment

User Experience Personalized Stores

Amazon was a first-mover of most e-commerce innovation practices

Lower Prices Larger Selection Greater Convenience

More Distribution Channels

For over 500 years, the publishing industry remained unchanged

It sold out within 51.5 hours

Prior to Kindle, substantial concentration and costs along the chain

Top 10 = 20% Top 5= 40%

Consumers Consequence = Poor Value Chain

Service Amazon Web Services (AWS)

Service Amazon Web Services (AWS)

How about employee satisfaction?

Entrepreneur Factory Companies by former employees

Create value to Chinese consumers Increase shareholder earnings in long term

Device Isolation Cloud Storage

Shared and Interoperable Processes

Keep hot inventory

Premium service option

SOA (Service Oriented Architecture)

INNOVATION (First Mover)