• Eric Head
• Robert Distefano
• Dom Gaudin
• John Lin
• Darin Bodin
• Carmen Saleh

Bits & Bytes
Market Cap: $16 Billion
Stock Price: $100 1/16
Net Profits: $138 Million (2Q ‘99)
Headquarters: Seattle, Washington

• Bricks & Mortar
• Market Cap:
• Stock Price:
• Net Profit:
• Headquarters:
$188 Billion
$42 1/4
$4.43 Billion
Bentonville, AR

History of Amazon.com
– July 1994:
• Incorporated
• Focus: software development
• Sold books in his garage with ten employees
– July 1995:
• Virtual doors open
– September 1997:
• Introduced personalized recommendations and one-click purchase
– June 1999:
• Obtained 10 million registered customers

– 2nd quarter 1999 Revenues $314 billion
• 1st quarter 1998 Revenues $87.4 million
• Projected sales for 1999: over $1 billion
– $138 million loss in 2nd quarter 1999
• Has not made a profit since company started
– 10.7 million registered customers
• 8.4 million in 1st quarter 1999
• 3.14 million in 1st quarter 1998

History of Amazon.com (continued)
– Operates two international sites:
• www.amazon.co.uk
• www.amazon.de
– Other sites operated or owned include:
• Gear.com
• Drugstore.com
• Homegrocer.com
• Pets.com
• IMDB.com
• Planetall.com
• Livebid.com
• Accept.com

Mission: To be the world’s most consumercentric company where people can find and discover anything that they want to buy online.

History of Wal-Mart
1962 Company founded in Rogers, Arkansas
1969 Wal-Mart Incorporated
1970 Wal-Mart Goes Public
1979 First Billion Dollar Sales Year
1993 First Billion Dollar Sales Week!

History of Wal-Mart (continued)
1988 David Glass named CEO
1991 Established International Presence in Mexico
1995 Established Presence in South America
1996 Entered Asia
1997 Largest national employer with 680,000 associates and first $100 Billion sales year!

History of Wal-Mart (continued)
– Originally launched Website in 1996
– Owns six registered web addresses:
• samsclub.com
• w-mtour.com
• samsclubtravel.com.
– Has established alliances with:
• Fingerhut
• Books-A-Million
– Announced plans for an Internet megasite in
1999!!!

Amazon’s Strengths
– E-commerce is its core mission and environment
– Amazon.com has enjoyed a first mover advantage
– Amazon has:
•a strong brand image
•vast customer database
•exceptional customer trust

Amazon’s Strengths
– Amazon provides:
•100% guaranteed secured credit card transactions
•Personalized product recommendations
•Hassle-free shopping through 1-click and 1-bid technology
•Risk-free return policy
– Amazon’s IT and Logistics executives were formerly employed at Wal-Mart

WalMart’s Strengths
– A leader in almost every retail category
– $137.6 billion in sales last year
– $4.43 billion in net earnings
– Excellent vendor alliances

WalMart’s Strengths (continued)
-History and image as a discount retailer
-State of the art supply chain network
-Culture of customer service
-More than 3700 stores worldwide can be used in a “hybrid strategy”

Amazon’s Weaknesses
— Amazon has yet to achieve a profit
— Customers cannot physically touch the product prior to purchasing
— Lack of social interaction before purchasing
— Risk-averse consumers may find buying on-line intimidating
— Not every person has access to the
Internet

WalMart’s Weaknesses
– Brand image not attractive to “upscale consumers”
– High fixed costs
– First Web launch was not very successful
– Will a mature and successful firm be willing to make the necessary commitment?!

Amazon’s Opportunities
–Expand internationally
–Actively pursue online auctions
–Evolution of mass market from merchant-centric to consumer-centric

Amazon’s Opportunities (continued)
–Create “segment fluidity”
•Segments within segments
•Typical segments
–Low cost/value/high quality
•Embedded segments
–Customer service
–Product uniqueness
–Social experience
–Quick and easy purchase
–Personalized recommendations
•Catch customers with high attention scarcity

WalMart’s Opportunities
– Exploit vendor relationships
– Establish strategic alliances
– Explore hybrid models to enhance customer service
– Spin off wal-mart.com as a separate IPO

WalMart’s Opportunities (continued)
– Market aggressively using traditional and online media
– Explore hybrid models to enhance customer service
– Do not worry about cannibalization. Use the
Internet to expand customer base

Amazon’s Threats
– The future of E-Commerce
– Amazon may bite off more than it can chew(over-diversification)
– Other retailers are quickly creating an on-line presence
– Amazon must effectively manage its growth to minimize growing pains

WalMart’s Threats
– Wal-Mart is NOT the first mover. The “wait and see” strategy could be problematic
– Other retailers are getting into the game
(Sears, Target, Kmart, etc.)
– Establishing an online brand will cost….the longer the wait, the greater the cost!!

Prediction: NO ONE WINNER!
– The Hybrid Model
– Segment “Fluidity” - Attention Scarcity
– Bits & Bytes vs. Bricks & Mortar Analysis