AMAZON.COM: MARCHING TOWARDS PROFITABILITY
Case Study
Rebecca Dustman | April 29, 2013 | BUS 550 The Contemporary Firm
CASE BACKGROUND
July 2001
Could Amazon become profitable? 1997 Annual Report - letter to shareholders
1999 2000
Customers 14 million 20 million
Sales $1.64 billion $2.76 billion
Net Profit / Loss $720 million $1.4 million
2012
180 million
$61 billion
$39 million
COMPANY BACKGROUND
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"
ORGANIZATION - BUSINESS PROCESSES
2001 1-Click Shopping, Advantage Program, In-store pick
up, fulfillment centers Free Super Shipping
Over $100 - Nov 2000 Over $25 - Aug 2001
2012? 2012 Amazon Prime Bill Me Later Frustration-Free Packaging Free shopping for Android Local Express Delivery Fulfillment centers
MANAGEMENT DECISIONS - EXPANSION
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
Music UK & Germany
DVD/Video
AuctionsConsumer Electronics
And Toys & GameszShops
KitchenFrance & Japan
Camera & PhotoToys “R” UsMarketplace
Borders & Target
CanadaOffice Products
Apparel & Accessories
NBASports & Outdoor
Gourmet FoodHealth &
Personal Care
JewelryBombay
Paris Hilton JewelryBeautyTheaterChina
Diane Von Furstenberg Wedding, Hollywood Rx
New Gift Exp
Timex Benefit CosmeticsGroceryUnbox
Endless.comGo Indie, MP3Askville.com
Kindle
Currency ConvTextBuyIt
Office SupplyTV Show
Motorcycle & ATV
Kindle 2Xbox LIVE
Outdoor RecBasics
WheelsAmazon Studios
Italy
Sports Collectibles
SilkAmazonLocalMyHabit.com
Spain
AmazonSupply
Game CollectGameCircle
Textbook Rental
WineBrazil
Enter. Collectibles
MANAGEMENT DECISIONS – EQUITY INVESTMENTS AND ACQUISITIONS
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
Internet Movie Database
Alexa InternetTool Crib
Joyo.com Limited
BookSurge LLCCustomFlix Labs,
Inc.
Shopbop.com
AudibleFabric.comAbeBooks
Zappos.com.
BuyVIP.com
LOVEFILM International LtdMarshall Cavendish US Children’s Book Titles
$175M investment LivingSocial
Kiva Systems, Inc.Avalon Books
IVONA Software
Note: only shows US acquisitions
TECHNOLOGY NOW… 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
A9 Cloud Kindle Prime
BUSINESS IT SOLUTIONS
1997 – it’s always Day 1 2001 – collaborative filtering 2012:
Invention is in our DNA Technology is the fundamental tool
PROFITABILITY
Music UK & Germany
DVD/Video
AuctionsConsumer Electronics
And Toys & GameszShops
KitchenFrance & Japan
Camera & PhotoToys “R” UsMarketplace
Borders & Target
CanadaOffice Products
Apparel & Accessories
NBASports & Outdoor
Gourmet FoodHealth &
Personal Care
JewelryBombay
Paris Hilton JewelryBeautyTheaterChina
Diane Von Furstenberg Wedding, Hollywood Rx
New Gift Exp
Timex Benefit CosmeticsGroceryUnbox
Endless.comGo Indie, MP3Askville.com
Kindle
Kindle 2Xbox LIVE
Outdoor RecBasics
WheelsAmazon Studios
Italy
Sports Collectibles
SilkAmazonLocalMyHabit.com
Spain
AmazonSupply
Game CollectGameCircle
Textbook Rental
WineBrazil
Enter. Collectibles
Currency ConvTextBuyIt
Office SupplyTV Show
Motorcycle & ATV
Alexa InternetTool Crib
BookSurge LLCCustomFlix Labs,
Inc. Zappos.com.
LOVEFILM International LtdMarshall Cavendish US Children’s Book Titles
$175M investment LivingSocial
IVONA Software
Internet Movie DatabaseJoyo.com Limited
Shopbop.com
AudibleFabric.comAbeBooks
BuyVIP.com
Kiva Systems, Inc.Avalon Books
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
$(2,000)
$(1,500)
$(1,000)
$(500)
$-
$500
$1,000
$1,500
In millions
MARCHING TOWARD PROFITABILITY…AGAIN
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
MULTIPLE CHOICE #1
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 #2
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
Top Related