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Amazon Case Competition

Amazon Case Competition. Team C^3G. Amazon’s next customer segment program: Our approach. Amazon. Customer Segment. Goals. Increase Prime Subscriptions Encourage recurring purchase. More Selection Lower Pricing Better Convenience. Identify New Customers Incorporate Existing Products.

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Amazon Case Competition

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  1. Amazon Case Competition Team C^3G

  2. Amazon’s next customer segment program: Our approach Amazon • Customer Segment Goals • Increase Prime Subscriptions • Encourage recurring purchase • More Selection • Lower Pricing • Better Convenience • Identify New Customers • Incorporate Existing Products • Unmet Needs • Segment Size • Considerations • Customer Satisfaction and Loyalty • Amazon Customer Advocacy • Increase Profits • Increase Overall Brand Awareness • Outcomes

  3. Researched Customer Segmentation Focus on lifestyle based purchasing habits – maximize recurring purchases and minimize existing customer segment overlap

  4. Customer Segmentation Focus on lifestyle based purchasing habits – maximize recurring purchases and minimize existing customer segment overlap Entrepreneurs: strong purchasing power coupled with low segment overlap and strong recurring purchase potential

  5. Meet Ari…Ari is a sandwich lover trying to start his own Deli • I need furniture for my store • I need point of sale systems • I need computers, websites… “I make great sandwiches, not business purchases!”

  6. Meet Anne…Anne aspires to become the next Coco Chanel • I need design tools • I need books on newest fashion trends • I need a website that I can sell my clothes on “I know fashion, not technology!”

  7. Anne and Ari are not alone… • There are 22 million small business owners in the US that represent $218 billion in annual spending. • They cover various industries and demographics • They share similar pains running businesses: • Tight on cash • Not enough time • Lack of technology expertise So we thought why not create a dedicated program to reduce some of the pains so they can focus on what they do best.

  8. Introducing: Amazon EntrepreneurLet us help you realize your business potential and more…

  9. Amazon Entrepreneur: Details

  10. Amazon Entrepreneur: Risks • We believe that our AWS, Amazon Prime and Office Supplies segments will suffer some revenue erosion from the roll-out of the new Amazon Entrepreneur: AWS - 0.01% Decreases Prime - 0.30% Decreases Overall, the indirect revenue impact on other lines of business should not be significant. Office Supplies < - 0.01% Decreases Other Retail > 0.20% Increases

  11. Amazon Entrepreneur: Program CostCost decreases dramatically after the first year Key assumptions Marketing spend is composed of On-going Marketing Expense (estimated at 3.7% of revenue as per 10-k), plus additional advertising expense associated with the new program ($25M, mostly in cable TV and internet advertising). It also contains an additional $6M allowance for business development costs. Technology & content is estimated at 9% of revenues (vs. 7.5% for all of Amazon).

  12. Amazon Entrepreneur: Revenue Projection 5 yearbenchmark

  13. Amazon Entrepreneur: Profit Projection Key assumptions We have taken future AMZN revenue and EBITDA projections done by Morgan Stanley. We have assumed an uptick from current levels of Technology & Content expense from 7.5% of sales to 10% of sales. We have assumed $19M in business development & initial marketing spend on year 1, $9M on year 2 and $3M on year three. COGS and fulfillment costs are assumed to maintain current levels as a percentage of retail segment revenues. All estimates include erosion of current AWS and Amazon Prime account revenues.

  14. Thank You! Team C^3G

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