Case Study
AMAZON.COM:
MARCHING TOWARDS PROFITABILITY
Rebecca Dustman | April 29, 2013 | BUS 550 The Contemporary Firm
CASE BACKGROUND



July 2001
1999
2000
2012
Customers
14 million
20 million
180 million
Sales
$1.64 billion
$2.76 billion
$61 billion
Net Profit / Loss
$720 million
$1.4 million
$39 million
Could Amazon become profitable?
1997 Annual Report - letter to shareholders
COMPANY BACKGROUND

1994 founded




Web usage - 2300% growth per year
20 products
Books
Jeff P. Bezos
32 years old
 President, Chief Executive Officer
and Chairman of the Board



HQ Seattle, WA
"Fluid Concepts & Creative Analogies: Computer Models
of the Fundamental Mechanisms of Thought"
ORGANIZATION - BUSINESS PROCESSES

2001
1-Click Shopping, Advantage Program, In-store pick up,
fulfillment centers
 Free Super Shipping

 Over
$100 - Nov 2000
 Over $25 - Aug 2001

2012?
2012






Amazon Prime
Bill Me Later
Frustration-Free Packaging
Free shopping for Android
Local Express Delivery
Fulfillment centers
MANAGEMENT DECISIONS - EXPANSION
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
1999
1998
1997
1996
1995
1994
Auctions
Consumer Electronics
And Toys & Games
zShops
2000
Borders & Target
Diane Von Furstenberg
Kindle 2 AmazonSupply
Wedding, Hollywood Rx
Xbox LIVE Game Collect
New Gift Exp
GameCircle
Outdoor Rec
NBA
Textbook
Sports & Outdoor Endless.com Basics
Rental
Go Indie, MP3
Wheels
Gourmet Food
Wine
Amazon Studios
Health & Personal Askville.com
Brazil
Kindle
Italy
Care
Canada
Timex
Enter.
Office Products
Benefit Cosmetics
Collectibles
Apparel & Accessories
Grocery
Sports Collectibles
Unbox
Jewelry
Kitchen
Silk
Currency Conv
Bombay
France & Japan
AmazonLocal
TextBuyIt
Paris Hilton Jewelry
Camera & Photo
MyHabit.com
Office Supply
Beauty
Toys “R” Us
Spain
TV Show
Theater
Marketplace
Motorcycle & ATV
China
Music
UK & Germany
DVD/Video
MANAGEMENT DECISIONS –
EQUITY INVESTMENTS AND ACQUISITIONS
LOVEFILM International Ltd
Marshall Cavendish US
Children’s Book Titles
$175M investment LivingSocial
Internet Movie Database
BuyVIP.com
Joyo.com Limited
Shopbop.com
Audible
Fabric.com
AbeBooks
Note: only shows US acquisitions
Kiva Systems, Inc.
Avalon Books
2013
2012
2010
2009
2008
2011
IVONA
Software
Zappos.com.
2007
2006
2005
2004
2003
2001
2002
BookSurge LLC
CustomFlix Labs, Inc.
2000
1999
1998
1997
1996
1995
1994
Alexa Internet
Tool Crib
TECHNOLOGY THEN…
TECHNOLOGY NOW…
TECHNOLOGY NOW…















A9
Cloud
Kindle
Prime









Amazon Services, Inc & Subsidiary
Search Inside The Book
A9.com, Inc Subsidary
Presidential Candidates Feature
A9.com new website and A9 Toolbar
Alexa Internet data
A9 toolbar for Mozilla Firefox
A9.com Yellow Pages
Election 2008
CloudFront
Daily Text Alerts
Holiday Toy List
AmazonWireless
Kindle for iPhone, iPod Touch, PC, Blackberry,
Mac, iPad, Android, Web
Amazon WebStore
Shopping on iPad
Price Check
Amazon Deal App
AWS CloudFormation
Prime – videos, Original Series
BUSINESS IT SOLUTIONS
1997 – it’s always Day 1
 2001 – collaborative filtering
 2012:

 Invention
is in our DNA
 Technology is the fundamental tool
AMZN
PROFITABILITY
Diane Von Furstenberg
LOVEFILM
International
Ltd
Kindle
2 AmazonSupply
Wedding, Hollywood Rx Marshall Cavendish
US Collect
Xbox LIVE Game
New Gift Exp
Children’s
GameCircle
Borders & Target
OutdoorBook
Rec Titles
NBA
$175M investment
LivingSocial
Textbook
Endless.com
Basics
Sports
&
Outdoor
Auctions
$1,000
Rental
Alexa Internet
BookSurge
GoLLC
Indie, MP3
Wheels
Gourmet
Food
Consumer Electronics
IVONA Wine
Tool Crib
CustomFlix
Labs,
Inc.
Askville.com
Amazon Studios
Health & Personal
And Toys & Games
Software
Zappos.com.
Brazil
Kindle
$500zShops
Italy
Care
In millions
$1,500
$Canada
Timex
BuyVIP.com
$(500)
Enter.
Internet
Music
Movie Database
OfficeJoyo.com
ProductsLimited
Benefit Cosmetics
Collectibles
UK & Germany
Kiva
Systems,
Inc.
Apparel & Accessories
Grocery
Shopbop.com
DVD/Video
$(1,000)
Avalon
Books
Sports
Collectibles
Unbox
Jewelry
Kitchen
Silk
Currency
Audible Conv
Bombay
France & Japan
AmazonLocal
TextBuyIt
Fabric.com
Paris Hilton Jewelry
$(1,500)
Camera & Photo
MyHabit.com
Office Supply
AbeBooks
Beauty
Toys “R” Us
Spain
TV Show
Theater
Marketplace
$(2,000)
Motorcycle & ATV
China
MARCHING TOWARD PROFITABILITY…AGAIN

2012 risks identified
 Competition
 Expansion
strain
 Fluctuation in operating results and growth rate
 Optimization of fulfillment centers
 Seasonality, inventory
Remain customer driven focus
 Prime, AWS, Kindle, digital medial, customer
experience

MULTIPLE CHOICE QUESTIONS
MULTIPLE CHOICE #1

Why did Jeff Bezos from Amazon.com choose
books to sell online?
 A.
There were too many online CD sellers
 B. There are far more items in the book category
than any of the other categories
 C. He always wanted to be a writer
 D. He owned 450 books
MULTIPLE CHOICE #2

Why is the 1997 shareholders letter included in
every annual report?
 A.
Reminder of the worst year they had
 B. The best technology year for Amazon
 C. Reminder it’s day 1 every day
 D. The most Amazon stores launch that year
MULTIPLE CHOICE #3

What is amazon’s focus?
 A.
Customers
 B. Profitability
 C. Largest inventory
 D. Increase stock