1. Amazon Case Competition Team C^3G

2. Identify the Next Customer Segment The Amazon Way Think Big: Market Analysis Customer Obsession: Profile Bias for Action: Program Implementation Deliver Results: Revenue, Costs and Risks 3. Think BigCustomer ObsessionBias for ActionDeliver ResultsAmazons next customer segment program: Our approach AmazonCustomer SegmentGoals Increase Prime Subscriptions Encourage recurring purchase More Selection Lower Pricing Greater ConvenienceConsiderations Identify New Customers Incorporate Existing Products Unmet Needs Segment Size Increase Profits Increase Overall Brand Awareness Customer Satisfaction and Loyalty Amazon Customer AdvocacyOutcomes 4. Think BigCustomer ObsessionBias for ActionDeliver ResultsCustomer Segmentation Customer SegmentMarket Size% NonAmazon UsersRecurring PurchasesEase to ConvertBaby Boomers Entrepreneurs Active/FitPurchasing PowerMothersMoversStudentsYuppies 5. Think BigCustomer ObsessionBias for ActionDeliver ResultsCustomer Segmentation Customer SegmentMarket Size% NonAmazon UsersRecurring PurchasesEase to ConvertBaby Boomers Entrepreneurs Active/FitPurchasing PowerMothersMoversStudentsYuppies 6. Think BigCustomer ObsessionBias for ActionDeliver ResultsMeet 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, websitesI make great sandwiches, not business purchases! 7. Think BigCustomer ObsessionBias for ActionMeet 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 onI know fashion, not technology!Deliver Results 8. Think BigCustomer ObsessionBias for ActionDeliver ResultsAnne 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. 9. Think BigCustomer ObsessionBias for ActionDeliver ResultsIntroducing: Amazon Entrepreneur Let us help you realize your business potential and more 10. Think BigCustomer ObsessionBias for ActionAmazon Entrepreneur: Details Program Offer 3 months of free Amazon Prime 10% discount on all office supplies 3 months of free tier 1 Amazon Web Services One hour of free Amazon Web Services consultation Program Benefit Savings Convenience Technology Expertise ScalabilityDeliver Results 11. Think BigCustomer ObsessionBias for ActionDeliver ResultsAmazon Entrepreneur: Marketing Channels Online and Mobile Google AdWordsEmailEntrepreneur Online Entrepreneur BlogsLinkedIn Twitter Facebook Mobile amazon.com aws.amazon.com amazonsupply.comDirect Mail Identify Entrepreneur: Business Registrations and Purchased ListsTelevision (Commercials) Fox Business, MSNBC, ESPNAmazon Entrepreneur InvitationPublic Relations Amazon Business Case Competition Promotional Television Appearance by Jeff Bezos 12. Think BigCustomer ObsessionBias for ActionDeliver ResultsAmazon 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: AWSDecreases- 0.01%PrimeDecreases- 0.30%Office SuppliesDecreases< - 0.01%Other RetailIncreases> 0.20%Overall, the indirect revenue impact on other lines of business should not be significant. 13. Think BigCustomer ObsessionBias for ActionDeliver ResultsAmazon Entrepreneur: Program Cost Cost decreases dramatically after the first year 25.0%20.0%Estimate Initial Program Cost: $20 Million15.0%10.0%5.0%0.0% 201420152016 Marketing Expenses2017 Technology & Content2018 AWS Consultations20192020General & AdminKey assumptions 1) 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 over 3 years, mostly in cable TV and internet advertising). It also contains an additional $6M allowance for business development costs. 2) Technology & content is estimated at 9% of revenues (vs. 7.5% for all of Amazon). 14. Think BigCustomer ObsessionBias for ActionDeliver ResultsAmazon Entrepreneur: Revenue Projection 5 Year Highlights: 566,200 new Prime customers $753 million new revenue 50.7% compound Annual Growth5 year target2014201520162017201820192020CAGRRevenues101.1239.0393.6564.7752.9958.71,182.650.7%New Prime Customers91.2195.7309.7433.2566.2708.7860.745.4% 15. Think BigCustomer ObsessionBias for ActionDeliver ResultsAmazon Entrepreneur: Revenue Breakdown 1,400.01,200.01,000.0Breakdown of Amazon Entrepreneur Revenues (in US$ millions) 31.3% average EBITDA margin 7.9 times higher EBITDA margin than Amazon Represent 3% of the total Amazon Profit starting year 3367.7299.6800.0172.7 235.7600.0 176.0111.1400.060.5 46.2200.00.04.5 36.2 53.0 20147.4116.1 201562.5 26.2 16.278.763.549.884.1 37.3117.6140.6563.6 454.9 356.3267.3187.3 20162017COGSFulfillment Costs2018SG&A2019EBITDAKey assumptions 1) We have taken future AMZN revenue and EBITDA projections done by Morgan Stanley. 2) We have assumed an uptick from current levels of Technology & Content expense from 7.5% of sales to 10% of sales. 3) We have assumed $19M in business development & initial marketing spend on year 1, $9M on year 2 and $3M on year three. 4) COGS and fulfillment costs are assumed to maintain current levels as a percentage of retail segment revenues. 5) All estimates include erosion of current AWS and Amazon Prime account revenues.2020 16. Think BigCustomer ObsessionThank You!Bias for ActionTeam C^3GDeliver Results