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Case Study. Amazon.com: Marching Towards Profitability. Rebecca Dustman | April 29, 2013 | BUS 550 The Contemporary Firm. July 2001 Could Amazon become profitable? 1997 Annual Report - letter to shareholders. Case background. 180 million. $61 billion. $39 million. 1994 founded
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Case Study Amazon.com: Marching Towards Profitability Rebecca Dustman | April 29, 2013 | BUS 550 The Contemporary Firm
July 2001 • Could Amazon become profitable? • 1997 Annual Report - letter to shareholders Case background 180 million $61 billion $39 million
1994 founded • Web usage - 2300% growth per year • 20 products • Books • Jeff P. Bezos • 32 years old • President, Chief Executive Officer and Chairman of the Board • HQ Seattle, WA • "Fluid Concepts & Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought" Company background
2001 • 1-Click Shopping, Advantage Program, In-store pick up, fulfillment centers • Free Super Shipping • Over $100 - Nov 2000 • Over $25 - Aug 2001 Organization - business processes • 2012? • 2012 • Amazon Prime • Bill Me Later • Frustration-Free Packaging • Free shopping for Android • Local Express Delivery • Fulfillment centers
Management decisions - expansion 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1994 1995 1996 1997 1998 1999 2000 2001 Wheels Amazon Studios Italy Canada Office Products Apparel & Accessories Timex Benefit Cosmetics Grocery Unbox AmazonSupply Game Collect GameCircleTextbook Rental Wine Brazil Music UK & Germany DVD/Video Sports Collectibles Silk AmazonLocal MyHabit.com Spain Kindle 2 Xbox LIVE Outdoor Rec Basics Endless.com Go Indie, MP3 Askville.com Kindle NBA Sports & Outdoor Gourmet Food Health & Personal Care Diane Von Furstenberg Wedding, Hollywood Rx New Gift Exp Jewelry Bombay Paris Hilton Jewelry Beauty Theater China Auctions Consumer Electronics And Toys & Games zShops Kitchen France & Japan Camera & Photo Toys “R” Us Marketplace Borders & Target Currency Conv TextBuyIt Office Supply TV Show Motorcycle & ATV Enter. Collectibles
Management decisions – Equity investments and acquisitions 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1994 1995 1996 1997 1998 1999 2000 2001 BuyVIP.com Internet Movie Database Joyo.com Limited Kiva Systems, Inc. Avalon Books Audible Fabric.com AbeBooks Shopbop.com BookSurge LLC CustomFlix Labs, Inc. Alexa Internet Tool Crib LOVEFILM International Ltd Marshall Cavendish US Children’s Book Titles $175M investment LivingSocial Zappos.com. IVONA Software Note: only shows US acquisitions
Amazon Services, Inc & Subsidiary • Search Inside The Book • A9.com, Inc Subsidary • Presidential Candidates Feature • A9.com new website and A9 Toolbar • Alexa Internet data • A9 toolbar for Mozilla Firefox • A9.com Yellow Pages • Election 2008 • CloudFront • Daily Text Alerts • Holiday Toy List • AmazonWireless • Kindle for iPhone, iPod Touch, PC, Blackberry, Mac, iPad, Android, Web • Amazon WebStore • Shopping on iPad • Price Check • Amazon Deal App • AWS CloudFormation • Prime – videos, Original Series Technology NOW… • A9 • Cloud • Kindle • Prime
1997 – it’s always Day 1 • 2001 – collaborative filtering • 2012: • Invention is in our DNA • Technology is the fundamental tool Business it solutions
Profitability In millions BuyVIP.com Wheels Amazon Studios Italy Canada Office Products Apparel & Accessories Timex Benefit Cosmetics Grocery Unbox AmazonSupply Game Collect GameCircleTextbook Rental Wine Brazil Music UK & Germany DVD/Video Internet Movie Database Sports Collectibles Silk AmazonLocal MyHabit.com Spain Kindle 2 Xbox LIVE Outdoor Rec Basics Joyo.com Limited Kiva Systems, Inc. Avalon Books Endless.com Go Indie, MP3 Askville.com Kindle NBA Sports & Outdoor Gourmet Food Health & Personal Care Diane Von Furstenberg Wedding, Hollywood Rx New Gift Exp Audible Fabric.com AbeBooks Shopbop.com Jewelry Bombay Paris Hilton Jewelry Beauty Theater China BookSurge LLC CustomFlix Labs, Inc. Alexa Internet Tool Crib Auctions Consumer Electronics And Toys & Games zShops Kitchen France & Japan Camera & Photo Toys “R” Us Marketplace Borders & Target Currency Conv TextBuyIt Office Supply TV Show Motorcycle & ATV LOVEFILM International Ltd Marshall Cavendish US Children’s Book Titles $175M investment LivingSocial Zappos.com. IVONA Software Enter. Collectibles
2012 risks identified • Competition • Expansion strain • Fluctuation in operating results and growth rate • Optimization of fulfillment centers • Seasonality, inventory • Remain customer driven focus • Prime, AWS, Kindle, digital medial, customer experience Marching toward profitability…again
Why did Jeff Bezos from Amazon.com choose books to sell online? • A. There were too many online CD sellers • B. There are far more items in the book category than any of the other categories • C. He always wanted to be a writer • D. He owned 450 books Multiple choice #1
Why is the 1997 shareholders letter included in every annual report? • A. Reminder of the worst year they had • B. The best technology year for Amazon • C. Reminder it’s day 1 every day • D. The most Amazon stores launch that year Multiple choice #2
What is amazon’s focus? • A. Customers • B. Profitability • C. Largest inventory • D. Increase stock Multiple choice #3
