Ecommerce amazon.com

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-Evolution of an E-Tailing

Transcript of Ecommerce amazon.com

Page 1: Ecommerce amazon.com

-Evolution of an E-Tailing

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INTRODUCTION Core Area : E- Retailing Business Founder: Jeff Bezos Headquartered: Seattle,

Washington, United States. Deals in : Retail, Consumer

Electronics & Digital content Current Net worth: $100 billion,

2012 Revenue in 2012: $48 billion Subsidiary Ventures: Computing

Services, Content Production, Amazon local, Amazon wireless services

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HISTORY OF FUTURE The company was founded in Bezos'

garage in Bellevue, Washington. "Amazon" name was chosen because it

was a place that was "exotic and different" and it was one of the biggest rivers in the world, as he hoped his company would be.

In July 1995, the company began service and sold its first book on Amazon.com: Douglas Hofstadter's Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought

In October 1995, the company announced itself to the public.

It finally turned its first profit in the fourth quarter of 2001: $5 million (i.e., 1¢ per share), on revenues of more than $1 billion

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THE “IDEA” HE CASHED IN.....

“ Look at e-retailing. The key trade that we make is that we trade real estate for technology. Real estate is the key cost of physical retailers. That’s why there’s the old saw: location, location, location. Real estate gets more expensive every year, and technology gets cheaper every year. And it gets cheaper fast.”

- By Jeff Bezos

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REVENUE MODELS

Sales revenue model

Transaction fee revenue

model

Advertising revenue model

Subscription revenue model

Affiliate revenue model

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THE AMAZONS BUSINESS MODELTransaction & Sales Revenue model•allows sellers to offer their goods alongside Amazon’s

offerings. •Amazon charges a commission rate based on the sale

price, a transaction fee, and a variable closing fee

Affiliate Revenue model•A Store is an Amazon.com affiliate product

which website owners can use to create an online store on their site

•The fee structure is currently the same as for the other affiliate links and ranges from 4% to 10% of the product price.

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JOURNEY FROM BOOK-TAILER TO CROSS SELLER

• In addition, as a product, books were easy to ship since they were not bulky, they represented a low value (and risk) item

• Amazon wanted to get a greater share of each customer’s overall shopping basket

Blessings of the wall street

Forever Small

Economies

of Scale

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CROSS SELLING: PRODUCT DIVERSIFICATION

Music DVD Videos

Home Improvement

Toys & electro

nic video games

Amazon.com

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Amazon.com

Brand

Cost of Complexities

Competition

New products complexities

CHALLENGES FACED BY THE UNCHALLENGED

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OTHER VENTURES

Amazon Publishing Amazon Local Amazon

Wireless

Amazon vine Amazon glacier

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CUSTOMER REVIEW METHODLOGY

• Amazon allows users to submit reviews to the web page of each product. Reviewers must rate the product on a rating scale from one to five stars.

• Amazon provides a badging option for reviewers which indicate the real name of the reviewer or which indicate that the reviewer is one of the top reviewers by popularity.

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CONTENT SEARCH

• Search Inside the Book" is a feature which allows customers to search for keywords in the full text of many books in the catalogue..There are currently about 300,000 books in the program. Amazon has cooperated with around 130 publishers to allow users to perform these searches.

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AMAZON SALES RANK

• The Amazon sales rank (ASR) provides an indication of the popularity of a product sold on any Amazon locale. It is a relative indicator of popularity that is updated hourly. Effectively, it is a "best sellers list" for the millions of products stocked by Amazon

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AMAZON TECHNOLOGY

• The core technology that keeps Amazon running is Linux-based. As of 2005, Amazon had the world’s three largest Linux databases, with capacities of 7.8 TB, 18.5 TB, and 24.7 TB. The central data warehouse of Amazon is made of 28 Hewlett Packard servers with four CPUs per node running Oracle database software.

• Amazon employs Netscape Secure Commerce Server using the Secure Socket Layer protocol which stores all credit card details in a separate database.

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MULTI- LEVEL SALES STRATEGY

Amazon started off by focusing on Business-to-Consumer relationships between itself and its customers, and Business-to-Business relationships between itself and its suppliers but it then moved to incorporate Customer-to-Business transactions as it realized the value of customer reviews as part of the product descriptions.

Some other large e-commerce sellers use Amazon to sell their products in addition to selling them through their own websites.

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PROMOTION STRATEGIES

Promotion Strategies

Online advertising

E-mail campaigns

Portal advertising

Sponsored search

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STRENGTH

Dips in the promotion cost

CRM & ITM enables to bring

customer specific items

First mover advantages &

original product innovations

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WEAKNESS

Entering into new ventures is hurting its

brand image and consumers loyalties

Free shipping cost can be of serious concern

in the long run as huge amount of its cost can hurt the profitability

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Opportunities

Online retailing JV with other brick

motor firms

Opportunities to build firms with

public enterprises

Recent takeover of Chinese e- tailer

Joyo.com opens up new markets

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THREATS

Intense competition given by the exiting

marketers

Domestic as well as overseas competition

hampering its success

Products sold by Amazon are bought

as gifts

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