Group C

Howard Chow

Brian Devlin

Benjy Finkel

Brett Paterno

Henry “Hank” Frank

INTRODUCTION

HistoryRetail StrategyRetail MixProblems

HISTORY• Started in 1995 as an online book store

• Strategically placed in Seattle (Silicon Valley)

• IPO May 15,1997

• First online “book store”

• Eventually started selling DVDs, music CD's, computer software, hardware, video games, electronics, toys, furniture, apparel and much more

• Acquired Zappos in 2009

COMPETITIVE ANALYSIS• At first competitors were just Barnes and Noble and Borders

• Nook Vs. Kindle

• Now threats include places like Wal-Mart, and eBay

• Market Price vs. Auction Price

• In store convenience vs. at home convenience

• Easy-to-use website

• Headquarters in Seattle and Luxembourg City

• Warehouses located near major airports

• Software Development Centers

STORE DESIGN

• “World’s Largest Bookstore”

• Private Labels:

• Pinzon

• Amazon Basics

• Amazon MP3

• Amazon Fresh

• Amazon Unbox

• Amazon Web Store

• Amazon App Store

PRODUCT OFFERINGS

TARGET MARKET• Demographically

• Male or Female

• Ages of 18-50

• Any race

• Income from lower middle class to upper class

• Must have a computer or smart phone to access internet

• Customers who know what they want and how much they want to spend

RETAIL FORMAT• Pure Play E-Tailer

• Convenient online shopping; Open 24/7

• One of the world’s largest

• Pricing depends on product and brand

• Ranges from moderately priced to expensive high end products

• Extremely wide range of products

• Internet website with visual merchandising

• Customer friendly and easy to navigate

• Strategy: Serve customers conveniently with the best quality products at an affordable cost and the quickest way possible

COMPETITIVE ADVANTAGE

• Amazon Prime• Dynamic Pricing• Personalized Service• Huge product assortment• Innovation (one-click-ordering)• Successful online retail leader since 1994

MERCHANT QUALITY CONTROL

• Independent 3rd party merchants selling products

• Discrepancies in price, quality, shipping

• Can reflect poorly on Amazon’s reputation

MERCHANT QUALITY CONTROL• Example:

• A customer wants a tricycle, but wants it in a specific color

• Base product sold for $83.99 with standard shipping

• Color not offered by Amazon, so customer must buy from Amazon Merchant

MERCHANT QUALITY CONTROL• Example Continued

• Given the following options:

• Consequences

• Higher prices

• Confusing shipping options

• Varying shipping times

• Indefinite product quality

• Less appealing customer

experience

SOLUTIONS TO THE PROBLEM• Price match guarantee

• Shipping guarantee

• Satisfaction guarantee

• Amazon Quality Supervisors

AMAZON & PUBLISHERS

AMAZON & PUBLISHERS• $10 price point

• Publishers fighting back

• Backed by Apple

• Agency Model

• Over wholesale model

RECOMMENDATIONS• End the conflict

• Market penetration strategy is dangerous

• Selling below cost not very smart (eBooks, Kindle Fire, etc.)

• Public image

• Lawyer/Court Costs

• Price Point

• $25

• Price sensitivity analysis

• Kindle Sales doing great

• Book industry vs Music industry

• Pursue authors

• Give publishers share of Kindle sales

$17.81→ ← $10

MISC. RECOMMENDATIONS• Physical Stores with full multi-channel integration

• Too many markets/products

• Expand on existing projects before taking on new ones

QUESTIONS