Amazon.com Inc.

Venera Turaeva
Carmen Boxheimer
Agenda

 History
 Amazon´s assortment of goods
 Countries
 Partner companies
 Amazon´s growth and size
 Influencing factors
 Case
 Amazon Today
History
 1994: Foundation
 1995: start of the option: book revenue
 1997: $ 15.7 million revenue
 1997: sales of movies and CD´s
 1998: software, electronics, videos, games..
 1999: sales volume of: $ 1 billion
 2001: lost $ 1.4 billion and 1000 workers
 2002: let other companies sell their products
like Toys`R´Us or Old Navy
..till today: follow our presentation
Amazon´s assortment of goods
Amazon´s assortment of goods

Source: Amazon.com
Operates in
USA: www.amazon.com,
UK: www.amazon.co.uk,
Germany: www.amazon.de,
Japan: www.amazon.co.jp
France: www.amazon.fr
Canada: www.amazon.ca
Switzerland: www.amazon.cn,
Italy: www.amazon.it
Amazon´s companies
Amazon´s Web Services drives these
companies
 Amazon´s growth
-fastest growths in the Internet´s history-

Source: Amazon.com, Alexa, Brandz. Market capitalization as of April 2011.

Size of Amazon
What factors or activities define Amazon’s
business ?
Large Low
Selection Overhead

Convenience Brand
Large Customer Cost
& Share of
Database Structure
Ease of use Mind

High
Customer Customize
Service
Low
Customer Price
Loyalty
Source: Graphic courtesy of the Kellogg School, NWU
New big idea from Jeff Bezos
 Transform Amazon into a kind of 21st century digital utility,
how?

 In other words, Amazon rents out just about everything it

uses to run its own business: starting from rack space of
warehouses worldwide to spare computing capacity on its
servers, data storage on disk drives, line of software code.
Amazon Web Services (AWS)
 With AWS you can requisition compute power, storage, and
other services–gaining access to a suite of elastic IT
infrastructure services as your business demands them.
 With AWS you have the flexibility to choose whichever
development platform or programming model makes the
most sense for the problems you’re trying to solve.
 You pay only for what you use, with no up-front expenses or
long-term commitments, making AWS the most cost-
effective way to deliver your application to your customers
and clients.
 with AWS, you can take advantage of Amazon.com’s global
computing infrastructure that is the backbone of
Amazon.com’s multi-billion retail business and transactional
enterprise whose scalable, reliable, and secure distributed
computing infrastructure has been honed for over a decade.
 COMPUTING: MEDIA:
CROWDSOURCING:
Amazon’s Simple Storage Amazon Unbox is
Amazon Mechanical
Service and its Elastic software that lets
Turk- recognizing
Computer Cloud offer customers download
sorting images and
startups such as photo- and play movies and
photos.
sharing site SmugMug TV shows.

SEARCH: DISTRIBUTION: WEB MEASUREMENT:

After watching Google Amazon has run e- Alexa Internet Services
quickly become commerce operations for provides free Web
dominant force on the the likes of Target and traffic rankings and
web, Amazon quickly Borders. It also launched other paid services.
launched its own search a Fulfillment by Amazon.
site A9.com
 How does the new plan sound?
 Investors 1st worry: Low profits growth
 Lately profits have fallen
 Free-shipping offers (Amazon considers marketing in place
of TV ads)

Amazon.com’s Net Income (in

million US Dollars)
Year 2004 2005 2006

N/I 588 359 190

Source: www.wikipedia.com
Investors 2nd worry: 3 year plus binge on new technologies

 Spending on technology and content

 Hiring hundreds of engineers and programmers to develop to
produce all these new services
 Buy more servers to run them
Amazon’s retail business faces new threats:
 1st: Amazon’s sales growth
 2nd: competition from Google
 3rd : competition from social upstarts such as Youtube and
MySpace

 Challenge is: Can Amazon catch up them?

 Considering all these challenges, Bezos’ latest tech toys can

be thought as an attempt to take their(customers) eye off the
ball(from what the competition is offering)
Bezos hopes to make money with its Web-
scale applications
 Storage Service: charge 15cent/GB for a month for
businesses to store data and programs on Amazon’s vast
array of disk drives.
 Warehouse: Charge merchants 45cent/square foot per month
for real space in its warehouse
 Elastic Compute Cloud service=renting out computer power
equivalent of basic server computer, charge 10 cents an hour
 Amazon Mechanical Turk: 10% commission

 Customers: busineses of all kinds are ultimate targets,

starting from startup business to highly-powered customers
such as Microsoft Corp., Linden Lab, Powerset Inc. etc.
How profitable Amazon’s new business is?
 Direct cost of providing them appears relatively low because
the hardware and software are in place, and in-house
developed.
 Analyst Scott W.Devitt notes: “There’s not going to be any
economic return from any of these projects for the
foreseeable future”
 Bezos himself admits this fact, but he hopes to reap them in
the long run: “We think its going to be a very meaningful
business for us one day, because what we have historically
seen is that the seeds we plant can take anywhere from three,
five, seven years”
 A dark horse in a high stake race
 Nowadays, aim of the most Web giants like Microsoft, Google,
and Amazon is to become the “platform” for the Web- the
powerful layer of basic services on top of which everyone else
builds their Web sites.
 So, Bezos aim is to be “a pretty serious dark horse” in this
race and to lead the next wave of the Internet
 By sharing the same idea with Youtube, Google etc Amazon’s
infrastructure on the cheap, Bezos is taking the same idea
into realm of physical goods and human talent.
 Amazon’s prime innovation engines are its employees who
work in small groups.
 Amazon began offering outside software and Web site
developers access to selected Amazon data such as pricing
trends, gradually adding more and more.
 New Spark Plugs for Startups
 Amazon’s services helped many startups to get a much better
and faster start.

 Powerset secretive search startup, Google’s competitors, by

using the Amazon site for part of the company’s computing
power could cut its first year capital costs by more than half

 Opened 20 distribution centers worldwide, and with

Fulfillment by Amazon its serving not only upscale retailers
and manufacturers, but also small and midsize businesses.

 Thus, Amazon empowers new startups.

 Does amazon.com have a clear aim?
 Due to its business diversification, one might critize
amazon.com and Bezos for not having a clear aim.
 Bezos says: “We are willing to go down a bunch of dark
passages, and occasionally we find something that really
works.”
 But, investing in Bezos idea and his company require faith
that there’s a light at the end of his newest tunnel.
• Esteblished in 2008
• Like iTunes, it is a seamlessly integrated ecosystem
• up- and download

• 650 e-books,
• 167 e-newspaper,
• 94 e-magazines
• 12,982 blogs

• Amazon earns around $5.42 billion revenue in 2011

• will climb to at least $7.96 billion in 2012
• The average value of HITs posted in any day is around $2000.
• Average revenue per day for Amazon is around 200 per day
(10% of the requester's payment),

This hardly covers the expense of dedicating a developer to the

service!
 Amazon´s Brandwidth

In January of 2008 Amazon announced that the Amazon Web Services

consume more brandwidth (a rate of data transfer) than do the entire
global network of Amazon.com retail sites.
Amazon´s Sales Revenue

Source: Annual Report 2010

Thank you for your attention!