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Amazon strategy

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Amazon strategy

  1. 1. Issues and recommendations on amazon
  2. 2. Issues ①  Net sales shows the drastic growth by expanding the categories of products  ROS is very low and it’s going down in 4 years. Profitability is a key issue of Amazon.  As the Categories of products will be limited, new business domain will be necessary. 70,000 10.0% Net sales ROS 60,000 61,093 8.0% 48,077 50,000 $ Mil. 40,000 6.0% 3.4% 30,000 20,000 3.7% 34,204 3.4% 4.0% 24,509 19,166 2.0% 1.3% 0.0% -0.1% 10,000 0 -2.0% 2008 2009 2010 2011 2012
  3. 3. Issues ②  Sales of ‘other(new business)’ from international segment hasn’t expanded for 3 years  Profits from international segment remains low North America 40,000 30,000 Other EGM Media International 40,000 Sales 30,000 20,000 Sales 20,000 10,000 Other EGM Media 10,000 0 0 2010 2011 2012 2010 2011 2012
  4. 4. To prevent being commodity service Horizontal integration New services Vertical integration
  5. 5. SWOT analysis of Amazon Strength: ・Low price ・e-Commerce system ・Logistics ・Long tail business ・・・・ Volume discount based on buying power ・・・・ User friendly I/F and Payment system ・・・・ Speedy delivery, Bar code system ・・・・ Providing niche products Weakness: ・Logistics center cost Opportunity: ・B to B business ・・・・ Company owns their e-commerce system and makes contracts with each supplier. ⇒Small company doesn’t have buying power for cost down. ⇒They are difficult to find better suppliers and products. Threat: Yahoo, Rakuten, Google, Apple
  6. 6. New service of Amazon For ・Amozon can supply materials for manufacturing companies such as Automobile, Electronics, Pharmaceutical company etc. For example: Automobile for Automotive, Amazon for Electronics etc. ・They also provide products for small firms, venture companies. ⇒Amazon for Business is effective for small companies. Items: ・Electrical parts, Semiconductors, Rare metals, Chemicals etc.
  7. 7. New service of Amazon For Buyers’ merit ・ to buy lower price and in small lot using buying power of Amazon. ・ especially benefit for small company ・ not to own their e-Commerce system ・ to find good suppliers by users’ grading and comment Suppliers’ merit ・ easy to participate to network to expand their sales ・ not to own e-Commerce system Issue: Security for business use
  8. 8. Horizontal integration • New service in the existing market – Amazon Travel – Amazon Auction – Amazon Insurance • Developing a New market (country) – Australia – South Korea – Indonesia
  9. 9. Horizontal integration GDP (2012) Already on business Potential market
  10. 10. Vertical integration • The value amazon has Mercha ndiser • Books • Music • Consumables One-to-One system Deliv ery • Yamato HD • Yubin Improving customer experience Technolog y • Big data • Data storage • Mining skill 1. 2. 3. 4. Recommendation Customer-matched design Usability Customer review
  11. 11. Vertical integration • Recommendation idea amazon Supply amazon’s data to manufacturers amazon integrated platform with manufacturers - New BtoB business to maximize customers’ value Big data Manufacturers Purchase & website view Purchase Customers R&D

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