1. Case presented by: Amani Anas A/Alla ElRawda Hassan Dai Iman M.Ahmed Ibrahim Reem Tambal Roweda Ahmed Abdel Rahman 10/29/2013 1

2. This presentation will report the analysis of: Amazon.com case, prepared by e-business fellow Collura & Prof. Applegate in 2000. Amazon.com is an American multinational e-commerce company with headquarters in Seattle, Washington, United States. It is the world's largest e-retailer; recognized by 60% as number 1 brand and 57th most valuable brand worldwide. Despite that, it faces pressure for not making high profit. This analysis will come up with recommendations expected to contribute to serve its stakeholders concern. 10/29/2013 2

3. History and background Jeff Bezos founded Amazon.com in July 1994; Launched the web store in July 1995 out of a 400 square foot warehouse; September 1995 the company was selling $20000 /week; By 1998 aggressively launched new retail categories including music, DVDs, videos, electronics, software, toys, video games, home improvement and grass and courtyard products.; By 1999 launched two online auction stores and an online marketplace for small merchants (zShop). By 2000 it started entering into a number of equity partnership with brand-name online retailers such as Drugstore.com and it was estimated that these would generate $1 billion in co-marketing by 2005. 10/29/2013 3

4. Vision: Bezos declared that: Our vision is to use our digital business platform to build the earth most customer centric company, a place where people can come to find and discover anything and everything they might want to buy online. (2) Mission: Amazons stated mission was to be the most customer centric and convenient online shopping destination, allowing customers to buy anything and everything at the Earth biggest store. (3) 10/29/2013 4

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6. Despite the numerous strengths that Amazon possessed, few weaknesses have been identified, hence Amazon strengths and weaknesses can be listed as follow: Strengths - Wide range e-commerce operations. - Impressive horizontal portal infrastructure. - Flexible business model i.e. horizontal portal. 10/29/2013 6

7. - Allowing outsourcing marketing, sales, order fulfillment and physical logistic through small, medium, and large merchants. - Its great customer relationship, which is regarded as one of its core values. - Company culture that allows quick response to customers. - Qualified management team. - Well known e-commerce brand name. 10/29/2013 7

8. - Innovative advertising programme. - Reliability i.e. fulfillment tight deadlines. - Distribution centers with storage overcapacity. - Protected innovations. - Clean and easy-to-navigate site. -The first to use syndicated selling. -Pricing policy with discounts. Weaknesses - Free shipping that negatively impacted its financial position. -Uncertain time for Amazons overall profitability. 10/29/2013 8

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10. Macro-environment The political- legal factor: deregulating telecommunication industry in 1996 in USA creates an intense competitive situation among companies in ebusiness industry: enter each other markets, penetrated the market of wireless services and meeting rapid demand growth; 10/29/2013 10

11. Macro-environment The Technological factor: The third era of computer industry marked the first appearance of the Web as a publicly available service on the Internet particularly on August 6, 1991. And the emergence of web-based applications that deliver persuasive values to users including: email; e-commerce; 10/29/2013 11

12. Macro-environment The economic Factor: the economy of the United States is the world's largest national economy. Its nominal GDP was estimated to be nearly $14.5 trillion in 2010. This lead to expansion in customers expenditure, resulting in competitive pressure within an industry and generating opportunities to expand operations globally. This had enhanced Amazons business opportunities and when the $ declines it reduced threats from its overseas competitors. 10/29/2013 12

13. Industry life cycle Each of the three operating units of Amazon represents certain stage in industry life cycle. First, businesses at a mature stage level i.e. retail on books, music and DVDs/Videos. Second, businesses at the early stage level, i.e. (a) retailing on electronic, software, video game, toys, home improvement (b) marketplace/exchange that include auction, zShop, and Sothebys. Amazon (c) aggregator/ portal,- Amazon Commerce Network. Third, businesses at an international level i.e. retail, marketplace/exchange, aggregator/portal in UK and Germany. E-retailing is a growth industry because consumers are familiar with the technology and their demand is expanding rapidly, prices fall and distribution channels develop. Threats from potential competitor are high, but they can be absorbed. 10/29/2013 13

14. Porters five Industry forces Low Suppliers Bargaining power Opportunity Complimentors 10/29/2013 Medium to HIGH Risk of entry by potential competitors Threat HIGH Rivalry among existing firms in the industry Threat HIGH Buyers Bargaining power Threat Medium HIGH Threats of substitutes Threat 14

15. Opportunities Extensive community of buyers; Suppliers low bargaining power; Growth of internet users, predominantly in the international market; E-commerce global expansion; Several product categories with high penetration of retail on-line sales. 10/29/2013 15

16. Threats Intense of rivalry between established firms in the industry; Strong competitors eg.: eBay, Barnes & Nobles, and Wal-Mart; Competition will increase due to the low barriers to entry in the market: offline companies are coming online; Buyers low switching cost and high bargaining power; Availability of substitutes; Lack of internet access leads to not targeting some population segments to on-line sales. 10/29/2013 16

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18. Capitalizing on its internal strengths Amazon can make the best use of the future opportunity of having potential community of buyers (i.e. extensive community of buyers); Being one of the first e-businesses that used syndicated selling Amazon can take advantage of having suppliers with low bargaining power; 10/29/2013 18

19. Future opportunities: growth of internet users (in overseas markets), the prospects of ecommerce global expansion, and the potentiality of penetrating the online market through diversified product; The maximum utilization of these opportunities can be correlated to Amazons strengths: its impressive horizontal portal infrastructure, its flexible business model (it facilitated its evolution from online retailer to having equity partnership with brand-name online retailers), its well know brand name, and having qualified management team, innovation, reliability (fulfillment orders in a timely manner). 10/29/2013 19

20. Amazon has few weaknesses (i.e., lean financial position resulted from the free shipping, and uncertain time for its overall profitability) in its internal operating environment, corrective actions should be undertaken against it. As a result of correcting these weakness , it will be prepared for facing any future threats of the intense rivalry in the industry as a result of low barriers to entry (high shift from offline to online business operations), tough competitors, availability of substitutes, losing wide range of segments in developing countries for not having appropriate internet access and knowledge. 10/29/2013 20

21. Sustaining Amazons strengths in its internal operating environment the external future opportunities can be easily grasped and utilized to its maximum limits. In addition, correcting what are considered as weaknesses in internal operating environment Amazon will be well prepared for facing the external future threats. 10/29/2013 21

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24. E-Business model: Online book music and video retailing (1995); Consumer online shopping portal (1998); Online auction (1999); Equity partnership with brand name online retailers (2000). Values: Provide better-quality retailing services at low cost; making business process more efficient; creating new reality for innovation. Objectives: generate and develop revenue from global markets. Achieve high revenue contribution. 10/29/2013 24

25. E-business Channels Decisions: Chanel priority: Click: all transactions and customer services are undertaken online; Revenue model: Gross margin on products in inventory and shipped to retail customers; commissions through market place exchanges; slotting fees received from strategic equity partnership. Organization restructuring: Strategic partnership Market place restructuring: disintermediation CRM (sell-side e-marketing) strategies: fully interactive site supporting the whole buying process, providing relationship marketing with individual customers and facilitating the full range of marketing exchanges. SCM (buy-side) strategies: orders placed electronically with full integration of companys procurement, requirement planning and stock control system. 10/29/2013 25

26. occupies the highest level of strategic decisionmaking and covers actions dealing with the objective of the firm, acquisition and allocation of resources and coordination of strategies of various SBUs for optimal performance. 10/29/2013 26

27. Amazon.com adopted an aggressive growth strategy as the earths biggest most consumer centric online store. Therefore, Amazon corporate level strategies are:

28. market development diversification product development organization restructure marketplace restructure positioning and differentiation acquisition

29. In conclusion Amazon.com as leading company in e- retailing managed to successfully create it strong brand name, invest in internet and soft-ware services and create its own patent, and adopted different strategies that allow it to move further globally. Nevertheless, these successes may not always lead to success. Therefore, Amazon.com needs to revisit its strategic direction especially those design toward its stakeholders interest. 10/29/2013 29

30. Retain customer by introducing quality services that raise the cost of switching to others. Continuous improvement and innovation in software and technology as it main protector so as not to be invade/imitate. Exploiting other international emerging market make use of prevalence of internet access and usages. Re-visit its financial policies regarding free shipment. To slow down future expansion (e.g. set-up & advertisement) to generate some profit. 10/29/2013 30

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