Market Success StorySyndicate Group No.6November 2007

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Agenda

Who are Amazon?Interesting facts to keep you awakeHow they achieved success?But… vulnerabilitiesConclusion

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Who are Amazon?

Amazon.com (NASDAQ: AMZN), a Fortune 500 company based in Seattle, Washington USA. It was one of the first major companies to sell goods over the Internet and was one of the iconic stocks of the dot-com bubble. Since its creation in 1995 when Amazon began as an online bookstore, they have significantly expanded the product offerings, international sites, and worldwide network of fulfillment and customer-service centers. A blend of traditional retail principles and innovative application of marketing practicesNow after twelve years, Amazon has $11 billion USD

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Financial Performance

<WHICH GRAPH?>

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Amazon Vision

‘‘Earths most customer centric company - Start with customers and work

backwards’’ -Jeff Bezos, Founder

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Interesting facts to keep you awake

What was the first name for the company (before Amazon)?Cadabra Inc.Where does the ‘Amazon’ name come from?The name reflected the vision of Jeff Bezos, to produce a large scale phenomenon like the Amazon river.How much money has Amazon spent on real state (headquarters, warehouses, etc)? Amazon owns zero real estate!In 2003 Amazon passed the $5 billion sales mark – it took Wal-Mart 20 years to achieve this. Amazon has only 13,900 employees (2006) , Wal-Mart has 1.9 million employees (2007).

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Interesting facts to keep you awake

Which does Amazon do with main competitors (big traditional

bookstores)?Create a partnership! Amazon markets and distributes their books online in return for a commission online (Waterstones – UK, Borders – US)

<ANYTHING ELSE> ?<ANYTHING ELSE>

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“Be afraid of our customers, because those are the folks who have the money. Our competitor are never going to send us money”

- Jeff Bezos, Founder.

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“We don’t make money when we sell things; we make money when we help customers make purchase decisions”

- Jeff Bezos, Founder.

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“But if your focus is on customers, you keep improving”

- Jeff Bezos, Founder.

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“Data is King at Amazon”

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“Today automation replaces intuition”

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“Amazon is not merely a store, but an immense repository of facts”

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“If we can get this to work, it will be big” - Jeff Bezos, Founder.

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What makes Amazon successful

Copy Chart from Darren’s Presentation

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Who is clicking…..? ’Be afraid of the customers, because those are the folks who have money. Our competitors are never going to send us money’’ – Jeff Bezos

Customer is the King – Create an experience for him‘Culture of Metrics’ Customer’s each ‘click’ on website is recorded- a valuable asset for AmazonAllows clear sensing of customer needs & preferencesFormation of ‘S Team’ to address strategy issuesCustomer is the key at all levels in the OrganisationCustomer Loyalty and repeat purchaseAmazon do not over emphasise competitors – It has turned some of them like Borders in to collaborators

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Whole World is market place…..

Strategic change in vision from being an online bookstore in 1995 to becoming world’s largest online storeLeveraged on the strength of brand value and business modelVery low fixed costs Geographical expansion in Canada, Western Europe, Japan & most recently China.

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Amazon’s three pillars of innovation ’Relentlessly focus on customer experience by offering low prices, convenience and a wide selection of merchandise’ – Jeff Bezos

Add Picture from Darren’s presentation

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Amazon …an experience

SelectionWide product range Books, videos, many more …and they have a category ‘Crazy Things’ under Toys & Games !

ConvenienceSelection available on your screenVarious price ranges – New & UsedDelivery in shortest possible time

PricesPrices revised dailyMany times Free Shipping‘Goldbox’ – Discounts on new categories

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Relationships matterCustomers

Effective Process managementSatisfied CustomerLow costs

CompetitorsTurn them into collaboratorsSuperior Technology Platform – value for competitors to use the platform, advantage for Amazon to offer wider choice

CollaboratorsAmazon Marketplace – Customers and retailers can sell their new and old itemsAmazon Merchants – Larger third party MerchantsAmazon Affiliate Programme- Link on Amazon site – fees to Amazon

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Difficult terrain for The Mighty RiverPresence in new markets- Lack of local knowledge and practicesBetter known local brandsToo many new categories may result in loosing focusPace of change in technology and high level of investment required to upgrade- may impact customer service levelsImpact on image – service levels of associatesStrain on operational, management & financial resources

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ConclusionAmazon – Certainly a success storyCustomer at heart of everything they doA model for innovative implementation of Marketing Strategic PathwayNot just big ….spectacularNeeds to optimise growth to avoid ‘overexpansion’Dependency on collaborators is high

Remember there are ‘Anti Amazon’ sites on WWW