amaozn amazing business model

1. Pragati
Priya
Radha
December 2015
Business Models

2. The Amazon logo was created to represent the
message that it sells everything from A to Z (the
arrow connects the two letters) and also
represents the smile that customers would
experience by shopping on theAmazon.com
Web site (the arrow becomes a smile).

3. Company Overview
Founded in 1994
in Seattle, USA
28,300
employees
Global leader in
e-commerce
Wide range of
products
Worldwide
network of
fulfilment
Mass
customisation
Customer
experience
Affiliations Stickiness

4. • ‘To leverage technology and the expertise of our invaluable employees to
provide our customers with the best shopping experience on the Internet.’
Mission
• ‘To be earth’s most customer centric company; to build a place where
people can come to find and discover anything they might want to buy
online.’
Vision
• Customer Obsession
• Innovation
• Bias for Action
• Ownership
• High Hiring Bar
• Frugality
Values

5. • ‘Not to discount a small number of products for a limited period of time, but
to offer low prices everyday and apply them broadly across our entire
product range.’
Objective
• Price
• Convenience
• Selection
Core Value Proposition
• ‘To ‘Get Big Fast’ by investing aggressively in new product categories and
new businesses, by spending money on brand awareness and getting new
customers.’
Strategy

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Did you know?
all these companies belong to Amazon…

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Other Amazon Initiatives
Companies with Mother brand name
AmazonBasics
Amazon-branded
electronic products
AmazonFresh
sells and delivers
groceries in Seattle
Amazon Warehouse
Deals
offers discounts on
refurbished products
Amazon Studios
online social movie
studio
Amazon Kindle
E- book reader
Amazon prime
Prime membership
program

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Other Amazon Initiatives
Companies with Mother brand name
Amazon Cloud drive
Cloud computing
Amazon Appstore
Interactive venue for
developers and buyers
Amazon Instant Video
Video on Demand Service
Amazon Cloud Player
lets you sync music and
playlists across computers
Amazon Web Services
Collection of web services
giving cloud computing
platform
Amazon mp3
Online music store

9. Q1: How did Jeffrey Bezos build the
“Amazon.com” brand?
• Bezos had vision of making Amazon as Earths biggest
book store.
• Amazon was positioned as customer centric company
• Gave unique shopping experience to customers
• To promote goodwill Amazon upgraded many
of its order to priority shipping
• Shipping at no extra cost.

10. Q2: What were the reasons for
Amazon.com ’s early growth?
• Word of mouth such as testimonials from
satisfied customers and media stories.
• It had top of mind awareness amongst the
customer looking to buy products online.
• Trusted brand
• 60% of orders were from repeat customers

11. Q3: How did Amazon.com expand
their business further?
• Expanded after success of bookselling
• Expanded into other product categories

12. • Extended Products:
– CD’s
– Videos
– Gifts
– Baby Products
– Electronics
– Kitchen and Housewares
– Tools and hardware
– Toys
– Barbecues

13. How long do you stay @ ?
Stickiness
Holds customers and keeps them coming back for more!
Measurement: *Time spent at a website
*Number of visits per person
*Number of pages viewed

14. 2
3
4
Variety
5
Speed & Delivery
1
Easy
Navigation

15. VALUE CHAIN ANALYSIS

17. VALUE PROPOSITION

19. Auctions & zShops
eBooks/Kindle
E-commerce
Platform/
Web Services
Marketplace
OnLine Book Retailing
Partherships
&
Logistic Services
Business Model Evolution

20. Business Model Canvas
9 building blocks
Customer
Segment (CS)
Cost
Structure(C$)
Customer
Relationship (CR)
Channels (CH)
Revenue Streams
(R$)
Key Resources
(KR)
Key Partnerships
(KP)
Key Activities
(KA)
Value
Proposition
(VP)

21. MARKETING
TECHNOLOGY & CONTENT
FULFILMENT
SALES MARGINS
AUTOMATED
SERVICES & CO-
CREATION
(CUSTOMISED ONLINE
PROFILES &
RECOMMENDATIONS)
AMAZON.COM (&
OVERSEAS SITES)
AFFILIATES
IT INFRASTRUCTURE,
SOFTWARE &
EXPERTS
GLOBAL FULFILMENT
INFRASTRUCTURE
FULFILMENT & IT
INFRASTRUCTURE
DEVELOPMENT AND
MAINTENANCE
Business Model Canvas
GLOBAL MARKET
(SELLERS &
CONSUMERS)
INTERMEDIATION
SERVICES
COMMISSIONS
SELLERS (COMPANIES
& INDIVIDUALS)AGGREGATION OF
DEMAND (LONGTAIL)
FULFILMENT
COMPANIES (ONLINE
& TRADITIONAL
RETAILERS)
LOGISTICS NETWORK
PARTNERSHIPS &
ALLIANCES
DEVELOPERS
MASS-CUSTOMISED
WEB SERVICES
APIs
PORTABLE DEVICE
PRODUCT
DEVELOPMENT, AND
PROMOTION
HARDWARE
MANUFACTURERS
GLOBAL MARKET
(CONSUMERS)
LOW PRICES
CONVENIENCE
WIDE SELECTION
CUSTOMER EXPERIENCE
LOGISTIC PARTNERS
AFFILIATES
(PUBLISHERS, AUTHORS,
BOOKSTORES…)
Online RetailingAuctions & zShopsMarketplacesPartnerships and Logistic Service ProviderE-commerce Platform/Web ServiceseBooks/Kindle
COMPANIES (ONLINE
& TRADITIONAL
RETAILERS)

22. eBooks/Kindle
>450 000 books
available for
download
Newspapers,
magazines and blogs
subscription
Amazon keeps 65% of
the revenue from all
eBook sales for Kindle
eBooks downloaded
from Amazon not
exclusive to Kindle
Kindle eBooks add 35%
to a physical book’s
sale on Amazon
Amazon reported 80% of
eBook market
"Our vision is to have every book ever printed, in any language,
all available in tinder 60 seconds.“
- Jeff Bezos, Amazon.com CEO

23. Source: www.meettheboss.com

24. BRAND
DIAGNOSTICS

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Target Group
Basic Outlook on TG
O Internet users – Primarily those who are
comfortable with e-commerce
O All internet users. Almost all internet
users are in one way or other a paid or
non paid customer of Amazon. For
different customer segments different
products have been launched.
Ex. IMDB, Alexa, A9, fabric, Zappos,
instavideo etc
O Both male and female, mostly in the age
group 35 – 49. More importance to
females as they are the predominant
customers for Amazon. Amazon’s
acquisition of Zappos was also for getting
detailed insights about young woman as
an online customer
O From all over the world. Amazon is a global
company and looks for customers all around
the world. They have got tie-ups with third
party sellers for international coverage
O Tech Savvy users and Early technology
adopters. Separately designed products like
Amazon mp3, Amazon kindle, Amazon
Appstore for them.
O Those who yearn on convenience shopping
O Seller customers. Amazon’s primary
objective is to bring maximum number of
reliable sellers under it.
O App developers. New TG. Started targeting
through Amazon Appstore

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Competitors
Classification
O Amazon Inc being a multinational
e-commerce company and due to its
presence over various e-commerce
categories have a lot of competitors
in various categories
O For example rottentomatoes.com
is a competitor for IMDB.com and
Google App Engine is a competitor
for Amazon Web Services. These two
in actual becomes competitor for
Amazon Inc but not amazon.com
O Here we are considering only the
online retailing/retailing division of
Amazon.com and have classified the
competitors accordingly
Competitors of Amazon can be classified into
Category Example
1 online mass retailers Myntra.com, ebay.com,
jabong.com,
flipkart.com
2 Online specialized retailers Apple.com, Dell.com.
Staples.com
3 book retailers (As this is the main
revenue source of amazon.cm)
flipkart
4 Brick and Mortar retailers Wal-Mart, and other
retailers
5 E-book readers (As kindle is a main
revenue generator for Amazon.com
through both its own sales and induced
e-book downloads)
Kobo e-reader, Apple i-
pad, Barnes and Nobles
Cybook
6 Social buying sites Groupon, flipkart,
jabong.

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Consumer Insights (1/2)
Insights that shaped Amazon.com
Building Trust
When Amazon started they found out that
their main issue was the doubtfulness inside
the customers towards e-commerce and
amazon.com. From this insight Amazon came
up with the idea of customer reviews. When
people see other people’s review they feel
more confident to do the purchase.
Increasing Sales
Amazon found out from their database that
there is a relation between the next purchase
and current purchase. Based on this they
developed a recommendation module which
suggested a set of customized products to the
customer.
Faster Process
It was found out that the customers who
come to an online shop are there basically
because of the ease of shopping. They like
the reduced hassle and no-queue process.
Based on this insight Amazon developed a
process called one-click ordering and
patented it.
Prime Customers
From the insight that many customers feel
that delivery charges are non value adding
items and felt looted for paying that
Amazon came up with the idea of Amazon
prime. For a subscription price the
subscriber gets one year free delivery. This
also induced brand loyalty.

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Consumer Insights (2/2)
Insights that shaped Amazon.com
SEO
Soon after Google became a leader in online
search Amazon identified that many of the
potential customers search in Google for
landing into a page for online purchase.
Amazon strengthened its search engine
optimization (SEO). Amazon has 248,000,000
pages stored in Google's index. Each of
these pages has the opportunity to rank for
any number of keywords in search engines.
Affiliate Marketing
Amazon found out that when there is more
involvement with the brand, the consumer
himself will act as a brand ambassador.
Amazon thus started affiliate marketing.
People loved to recommend the books they
love to others and get an income out of it.
Acquisitions
Amazon found out lately that its customers
mostly belong to age group of 30-50. So they
wanted to get to know more about young
customers. Rather than changing the current
image they acquired company’s which were
targeting youth such as Zappos and woot.
Also they found that customers to digital
camera and books go to specified sites and
communities to discuss and search products.
With this insight they acquired dpreview
which is the leading review site on digital
camera and shelfari for book community

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Customer Care
Services that increase brand loyalty
O “If you make customers unhappy on the
Internet, they can each tell 6,000 friends”
Jeff Bezos (CEO Amazon).
O Amazon’s customer service was ranked No
1 in 2009 and 2011 by American Customer
Satisfaction Index
O Following a bottom-up approach, every
decision at Amazon is driven by the customer's
needs.
O Every employee, even the CEO, spends two
days every two years on the service desk to
answer calls and help customers
Amazon introduced many of the current
ubiquitous best-practices to e-commerce
industry. Below are a list of innovations
bought by them
Year Innovation
1995 Customer reviews
1997 Recommendations & bundles
1997 1-Click Ordering
2001 Look inside the book
2001 Where's my stuff
2002 Free Super Saver Shipping
2003 Search inside the book

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Increasing seller & customer base
Basic Strategy

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Handling Complaints
Customer
service channels
Telephonic
Email
Chat
Easy Return of goods (no questions asked)
Can return own purchases
Can return gift items
Sell online after return date
Fast refunds and replacements
•Heavy focus on customer service
•Provides an easy interface for customers to
register their complaints
•All queries and complaints are addressed
immediately
•Customer feedback on products and packaging
•Liberal return and replacement policies

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Customer Retention
Strategies followed to retain the current customers
Vertical Integration
Kindle became another reason for
customers to come back to Amazon.
Huge seller base
A customer base of 137 millions makes it
impossible for any seller to neglect Amazon
and they joins in which in turn increases
customer base due to large collection of
items
Lock in
Amazon made it difficult for customers to
switch platforms for reading their e-book
through their proprietary format
Special Offers everyday
Plays with various offers in Amazon instant
video, the video on demand service.
Personalized store
Personalized pages tracking past purchase
behavior and using modern algorithms to
give recommendations. Also the look and
feel of the page keeps on changing to give a
modern outlook
Amazon Prime
Annual subscription saving schemes for loyal
customers

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Brand Portfolio Analysis
BCG Matrix
STARS
•Amazon Kindle
•Amazon Fresh
•Amazon.com
•Instant Video
QUESTION MARK
•Pinzon- Private Label
•Amazon Web Services
CASH COW
•Audible.com
•Createspace
DOGS
•Amazon mp3
•Amzon Cloud
Relative Market Share
MarketGrowthRate
HIGH LOW
LOWHIGH

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Brand Life Cycle
Innovation
Introduction
Growth
Maturity
Decline
Innovation
Growth
Onlinebookstore
Largestcatalogue,home
deliveryofbooks
Diversification:
Electronics,apparel,CD,
DVDetc.
Spinoffs:A9,Lab126,
endless.cometc.
Acquisitions:
Joyo,IMDB.MobiPocketetc.
Amazonwebservices,
publishing
MACdownloads,MP3s,
Internationalexpansion

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Emerging Trends
Internet Retailing Performance and Growth prospects by Category 2010-15
Source: Euromonitor
0
5
10
15
20
25
0 20,000 40,000 60,000 80,000
%CAGR2010-2015
Market Size 2010 (US$ mn, rsp excl sales tax)
Beauty and Personal Care Internet Retailing
Clothing and Footwear Internet Retailing
Consumer Electronics Internet Retailing
Consumer Healthcare Internet Retailing
DIY and Gardening Internet Retailing
Consumer Appliances Internet Retailing
Home Care Internet Retailing
Housewares and Home Furnishings Internet
Retailing
Media Products Internet Retailing
Food and Drink Internet Retailing
Note: Bubble size shows growth in absolute value terms over 2010-2015

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Customer Profiling
WALKING WOUNDED
1. Some of the current users who
are dissatisfied about shipping
delays
2. Customers who faced technical
glitch and their cash got locked in
CHAMPION
1. Repeat purchasers
2. Customers who give reviews and
ratings to different services
3. Early adopters of technology
4. Those who enrolled for prime
membership program
MISSING IN ACTION
1. Registered inactive users
2. Loyal customers of other
competitors
3. Customers who are doubtful
towards online payment modes
TERRORIST
1. Dissatisfied customers spreading
their opinion through social
media sites
2. Hard core I pad fans creating
disruptive blogs against kindle

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Pricing Strategy
Cost Leadership
New Opportunities:
Revenue opportunities through bundling or products.
Amazon prime : Next day shipping > Customer switch from other sites.
Average of 5-6% of revenue comes from shipping
Strategy
• Consistently Lower prices
• Maximizing long-term profits by
increasing market share
• Lowered costs through economies of
scale
Features
• Pre-Order Price Guarantee - For
items to be launched recently.
• No Post order price match.
• No price match with other retailers.
• 14 day post order price match for
TVs.
• Most recent price for items in
shopping cart.
• Displayed price is the full retail price
(excluding shipping)

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Advertising, Sales and Promotion Strategies
Attractive Advertising and Selling Plans available on Amazon.com
O Upload product catalog and set budget
O Customers see seller’s product ads on amazon.com
O Customers click to product pages on seller’s website
O Seller’s are charged a cost-per-click
O Customers purchase products from seller’s website

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BRAND
PLAN

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Vision and Mission
"Our vision is to be earth's most
customer centric company; to build
a place where people can come to
find and discover anything they
might want to buy online.“
All the activities including promotions, marketing campaigns, acquisitions
etc. are aligned towards this common vision of the company.

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Target Group
Market Segmentation
Demographic segmentation
1. For those who have access to internet
2. When income increases, so does the number
of online purchases ( E&Y Study).
3. 41 percent of online shoppers between the
ages of 35 and 49. 55 percent male and 49
percent female internet users prefer
Amazon.com for online purchases
4. Recently increased focus to younger class (20-
30 year old)
Geographic segmentation
1. Appeals to customers all over the world
2. Sell digital products where their
merchandise sales are difficult (e books)
3. US still main revenue generator.
4. Has seven international websites for Japan,
China, Canada, UK, Germany, France and US
5. Have not started direct sales in India. Uses
sending which adds extra charges to
customers
Psychographic segmentation
1. Focuses on personalization and customer
loyalty
2. Keep a modern and dynamic image by
renovating site design frequently.
3. Quality customer service department to build
long term relationships with customers
4. Helps customers find and recommend things
they enjoy, rather than push products
Situation segmentation
1. Most online purchases done for
convenience
2. Keeps on adding categories for catching
every customer and every situation
3. Sale inducing gold box deals everyday
4. Attractive offers with video on demand
5. Low pricing also an encouraging factor for
online purchases

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Brand Identity (1/2)
Brand Identity Planning Model
Brand as Product
• Wide range
• Lowest price
• High service
• Reliability
• Value for money
Brand as
Organization
• Innovative
• Customer
friendly
• Global
• Trustworthy
Brand as Person
• Honest
• Reliable
• Timely
• Energetic
• Friend
Brand as symbol
• Symbol for
reliability
• Functional
appeal
• Modern/With
less heritage

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Brand Identity (2/2)
The Brand identity prism
Self-Image
Culture
Online Shopping Giant
• World's largest online retailer
• Established separate websites in
different countries
• Acquired multiple organizations
and websites
• Punctual
• Environment-
friendly
• Offers international shipping
to certain countries for some
products
• Accessible
• Customer centric
• Exclusive
products
• Internet-based
• Started as an online bookstore
• Sells a wide range of products
now
• Attractive Prices
• Buy everything at the click
of a button
• Easy shopping in less time

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Distribution Strategy
Digitally driven distribution network
Amazon understood that sustainable massive growth can be obtained only through
developing distribution network. They poached 2 of Wal-Mart's critical employees.
O Richard Dalzell as its Chief Information Officer
O Jimmy Wright as its Chief Logistics Officer
They were responsible for Wal-Mart's computerized supply chain and impressive supply-
and-distribution network . Wal-Mart filed a suit in 1998 which was settled outside the court.

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Distribution Strategy
Digitally driven distribution network
With the help of Richard and Jimmy
Amazon started its process of developing a
world class distribution network and
circumvent other distributors
They massively used IT for developing
their supply chain and logistics. This was
copied after seeing the success of Wal-
mart.
In 2000 70% of Amazon’s software
development concerned about
distribution centers.
As a part of completely controlling its
distribution, Amazon Fresh implemented
its own delivery network
Started in-sourcing the value chain to have
more control over distribution
Ex. Acquired book surge (now createspace)
which was a print on demand company.
This helped Amazon to reduce their
dependence on suppliers and also
inventory level.
Now entered digital
distribution through kindle,
Amazon mp3, instavideo
etc. This means every
book/song is available in 60
seconds.

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Shopping cart technology
By: Amazon.com
Search box
Adding to cart
Proceed to payment
1-click system
Confirmation

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SWOT Analysis
For Amazon.com in Retailing industry
1. largest online retailer
2. Robust brand image enhances bargaining
power
3. Diversified into product lines other than
books to strengthen customer reach
1. Free shipping offers would be a challenge
in the long run.
1. Acquisitions extend product line and
strengthen technical platform.
1. Foreign exchange fluctuation.
STRENGTHS WEAKNESSES
OPPURTUNITIES THREATS

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Marketing Strategies of Amazon
Amazon.com bases its marketing strategy on six pillars.
1. It freely proffers products and services.
2. It uses a customer-friendly interface.
3. It scales easily from small to large.
4. It exploits its affiliate’s products and resources.
5. It uses existing communication systems.
6. It utilizes universal behaviours and mentalities.
Much of its marketing is subliminal or indirect – it does not run $1 million dollar ads
during Super Bowls nor post flyers in mall marketplaces (unlike Groupon).
Amazon.com relies on wily online ploys, strong partner relations and a constant
declaration of quality to market itself to the masses.

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Marketing Plan (1/2)
Online marketing
Amazon Mainly concentrate on Online marketing through adsense, affiliate marketing and online
community building. Compared to their online spend, their offline spend is meager.
PAY PER CLICK ADVERTISING
1. Purchases PPC ads on Google to direct
browsing customers to their websites.
2. Buys space on the left side of Google’s
search listing results, and pays a fee for
each visitor to Amazon.com who clicks on
their sponsored link
AFFILIATE MARKETING
1. Links to various products in
Amazon.com is kept in the websites of
third parties or of other retailers.
2. Amazon.com pays a certain fee for
each customer visit through these links.
EMAIL MARKETING
1. Amazon.com engages in permission
marketing, where customers give the
company permission to send them e-mails
detailing product promotions
ONLINE ADS
1. In various social networking sites such
as Facebook, Orkut etc
2. In various communities and discussion
forums for specific products and services
such as dpreview, goodreads etc

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Marketing Plan (2/2)
Offline marketing
Amazon’s offline spent is very less (below $10 dollar. Amazon.com’s strategy is simple: since
customers shop online, online is where they will be found. )
MEDIA
1. TV – ads showing benefits of products
like Kindle
2. Radio – sponsoring various radio
programs
EVENTS
1. Shopping Malls: competitions like
reading speed challenges
2. Helps in customer experiencing the
product (Kindle)
PROMOTION
1. Events
2. Online buying experience
3. Online games
4. Free delivery on special occasions
OTHERS
1. Sponsored T-shirts pens, mugs etc

51. Marketing Plan Diagram : ______
Strong CRM
‘1-Click Shopping’
Convenience
Low Costs
Diversification
Partnering
Network
Externality
Brand Image
Product Review
Information
Customer Base
Fixed Merchants
Product
Recommendations
Cross-selling
Distributed
Web Services
Money-back
Guarantee
Email Marketing
Loyalty &
Advocacy
Merchant Advantage:
Automatic Re-Ordering, etc
Associates
Program
Association
Repeat
Purchases
Positioning: Online Shopping
Order Fulfillment
Buyer
Seller

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Competitors
Amazon Vs Ebay
Even though the business models of Amazon.com and EBay.com are different EBay is one of the
major competitor for Amazon.
1. Normal retailing model of business
2. Faster search and transaction speed
3. More trusted brand by customers
4. Products are on an average cheaper
than any other site
5. Late in global entry and not fully
utilized global distribution
6. Best in the industry in customer
service
7. Simplicity due to one listing per
product
8. More repeat purchase
1. Auction model of retailing
2. More number of sellers and buyers
3. Lesser inventory cost
4. Better reach and global presence
(Amazon still doesn’t have a
specialized unit in India where as
ebay.in is doing well)
5. Good customer service and very
less error rate
6. Multiple listing per product.
7. Better margins for sellers

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Competitors
Amazon Vs Walmart
As Wal-Mart has entered into online retailing it poses as a major threat to Amazon.com. The
increasing presence of amazon in web space was the reason which made Wal-mart jump into
online retailing at the first place. Amazon is supposed to overtake Wal-Mart in total revenues by
2025
1. Largest online retailer
2. No store presence
3. Online sales of 34 billion in 2010
4. 40% growth in 2010
5. Better prices than walmart !!! (cheaper
by almost 19 %)
6. Diversified portfolio with futuristic
outlook
7. Customer base of 137 million
8. Subsidiaries in 7 countries
9. Customer service ranking is 1
10. 28 acquisitions till date
1. Largest retailer
2. Online sales of 4 billion in 2010
3. Store sales around 400 billion in
2010
4. Better brand value due to store
presence
5. 17% growth in 2010
6. Low profit margin
7. Customer base of 200 million
8. Subsidiaries in 14 countries
9. Customer service ranking is 10
10. 14 acquisitions till date

54. Conclusion
Evolution
• Logical path
• Resources &
Channels
• B2C, B2B
Expansion
• New markets
• Strength of Brand
• “Earth’s biggest
selection”
Attention
Economy
• Community &
Stickiness
• Trust
• Customer
Experience

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References
http://en.wikipedia.org/wiki/Amazon.com
http://en.wikipedia.org/wiki/Walmart
http://en.wikipedia.org/wiki/EBay
http://www.amazon.com/
www.slideshare.net
http://www.brandz.com/upload/Top_25_Retail_Report.pdf
http://www.theacsi.org/index.php
http://360.datamonitor.com
http://7pillarsofsellingonline.com
http://www.onlinemba.com/walmart-vs-amazon/
http://www.internetretailer.com/top500/list/
http://www.marketingplan.net/amazon-com-marketing-strategies/