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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 s next customer segment program our approach
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


Researched customer segmentation
Researched Customer Segmentation

Focus on lifestyle based purchasing habits – maximize recurring purchases and minimize existing customer segment overlap


Customer segmentation
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


Meet ari ari is a sandwich lover trying to start his own deli
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!”


Meet anne anne aspires to become the next coco chanel
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!”


Anne and ari are not alone
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.


Introducing amazon entrepreneur let us help you realize your business potential
Introducing: Amazon EntrepreneurLet us help you realize your business potential

and more…


Amazon entrepreneur details
Amazon Entrepreneur: Details


Amazon entrepreneur risks
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


Amazon entrepreneur program cost cost decreases dramatically after the first year
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).


Amazon entrepreneur revenue projection
Amazon Entrepreneur: Revenue Projection

5 yearbenchmark


Amazon entrepreneur profit projection
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.


Thank you

Thank You!

Team C^3G


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