Amazon - Howard Chow . com

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Group C Howard Chow Brian Devlin Benjy Finkel Brett Paterno Henry “Hank” Frank

INTRODUCTION  History  Retail Strategy  Retail Mix  Problems

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

STORE DESIGN • • • • Easy-to-use website Headquarters in Seattle and Luxembourg City Warehouses located near major airports Software Development Centers

PRODUCT OFFERINGS • • • • • • • “World’s Largest Bookstore” Private Labels: • Pinzon • Amazon Basics Amazon MP3 Amazon Fresh Amazon Unbox Amazon Web Store Amazon App Store

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 3 rd 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 → $17.81

← $10 • Price sensitivity analysis • Kindle Sales doing great Book industry vs Music industry Pursue authors Give publishers share of Kindle sales

MISC. RECOMMENDATIONS • • • Physical Stores with full multi-channel integration Too many markets/products Expand on existing projects before taking on new ones

QUESTIONS

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