An Insider View: Amazon.com 2016/7

An Insider View: Amazon.com 2016/7


Release date: October 11th, 2016 (153 pages)
PDF/Powerpoint format. Price: GBP2,499.00

Abstract

Enough has been written about the incredible success story AWS that is turning the company into the infrastructure provider of the internet, we want to focus on the retail business.

Amazon’s recent profit expansion points to the first major profit harvesting, which implies a strategic change at Amazon, as this is a departure from the cycle of growth.

According to Jeff Bezos profits hinder the flywheel effects and should always be reinvested for future growth and to keep the wheel spinning faster.

Seen in this light the profit harvesting is hugely significant, Amazon basically feel that such a major strategic change won’t hurt the business, as they have become so dominant, that they have become untouchable.

This means we have entered the second phase of the ecommerce era. It’s not the day one of the internet anymore.

We are entering the Amazon age. In other words Amazon have now become so dominant, that in their very own view they have become untouchable. Amazon can now run the business in the hunt for profits. And it can do so without having to worry too much about the competition or that its shoppers could defect. Prime locks them into the ecosystem.

This has three implications:

1) The market share grab is over, the competitive barrier has been erected and as online continues to grow so will Amazon’s dominance. Amazon could well be on its way to become the most valuable company on earth.

2) Amazon needs a new definition, as it’s clearly not “day one of the internet” any longer. Amazon’s profit harvesting is a massive change. The company will turn from hunter into prey. This actually raises a host of new challenges.

3) Amazon becomes more of an utility and the infrastructure of the internet through AWS, the marketplace and its logistics footprint roll out. This invites scrutiny from the state and we expect the current investigations into its tax matters to be a foretaste of things to come. There will be much more interference from regulators going forward.

Table of contents

Executive summary p10
Data p18
Data and KPIs: Net Sales & Income, Margin 2008-15, adding $18.0bn in 2015 p19
Data and KPIs: more than $13bn added every year since 2011, profitability p20
Data and KPIs: US, international, AWS sales, in $m, % split, growth, 2013-2015 p21
Data and KPIs: Sales by segments 2008-2015 in $m, growth, Media, EOM, other p22
Data and KPIs: Margins analysis, what is the impact of 3P’s rapid growth? p23
AWS p24
Data and KPIs: AWS, transposing the marketplace model from physical to digital p25
Data and KPIs: Amazon Web Services, the world’s biggest cloud provider p26
Revenues, Financials, KPIs, Benchmarks in Amazon geographies p27
Data: sales per country in €m 2008-15, Germany, UK, Japan, France p28
Data: Int’l sales per country in €m, China, India, Spain, Italy, Brazil, 2008-2015 p29
Data: Sales per country in €m, Mexico, Netherlands, Australia, Canada, 2013-15 p30
Data: International sales per country in local currencies 2011-15, Japan, UK p31
Data and KPIs: India and currency devaluations impact p32
Active customer accounts per Amazon geography and annual basket spend p33
Data: Active Customer accounts 2009 – 15 in m, USA, Germany, Japan, UK, France p34
Data and KPIs: Active Customer accounts, Analysis p35
Data and KPIs: Active Customer accounts, growth of AOV p36
Data and KPIs: Average annual spend 2011 – 15e on AMZN 1P, Analysis p37
Data: 1P by geography, average price, total units, customers, frequency 2015 p38
Data: total units shipped 1P and 3P, frequency per country, Analysis p40
Data: average price, total units, customers, frequency per country, 2014 p41
Data: Best seller average prices 2013 - 15 in local currency, CA, CN, ES, IT p42
Prime in Amazon geographies, annual spend p43
Prime - behind the “death of b&m loyalty”? Membership, spend and GMV share data 2015 p44
Prime: Prime Customer accounts 2009 – 15 in m, USA, Germany, Japan, UK, France p45
Prime: Introduction, % share of customer accounts p46
Prime: Prime: What we know and what we don’t, GMV share, stops shopping around p47
Prime: focus on most loyal shopper to drive sales and profits p48
Prime: Most successful tool to get buy-in to new categories, net costs, uplifts p49
Prime: the 7 key prime benefits to Amazon p50
Prime: Prime fee income 2015 in US$m, USA, Germany, Japan, UK, France p51
Prime: geographic footprint for same day in the USA widened p52
Prime: recent developments, prime product eligibility widened p53
Prime: recent developments, prime only products p54
Prime: Sprint partnership – the possibilities for external partners to cooperate p55
Prime: Amazon’s attack on Netflix, (re)introducing monthly prime p56
Prime: VOD Germany, Amazon leads Netflix p57
Prime Now USA p58
Prime Now: introduction p59
Prime Now: geographic footprint in the USA – list, addressable population figures p60
Prime Now: geographic footprint in the USA – map p61
Prime Now: September 2015 Prime now launches in Seattle, selling alcohol p62
Prime Now: September 2015 restaurant deliveries in Seattle, a Spotlight update p63
Prime Now: October 2015, expansion of Prime services in several states p64
Prime Now: US Best sellers by region 2015 p65
Prime Now: regional bestsellers – analysis, a procrastinator's dream p66
Prime Now: local store delivery – rivaling Postmates and Instacart p67
Prime Now: local store delivery – operational set up p68
Prime Now: integration of the app into the mother ship p69
Prime Now: Amazon partners with Sprouts for delivery service p70
Prime Now: Amazon daily dish p71
Prime Now: Amazon taking on and copying Peach p72
Prime Now ROW p73
Prime Now: geographic footprint in EU, Japan – map p74
Prime Now: geographic footprint in the ROW – list, population figures p75
Prime Now: London and the roll out in the UK p76
Prime Now: Prime now best sellers in the UK p77
Prime Now: Best sellers in Newcastle, Leeds, London, Surrey 2016/7 p78
Prime Now: Best sellers in the UK by region, London North, South, West p79
Prime Now: Best sellers in the UK by region, East London p80
Prime Now: Prime Now UK extension, Amazon Restaurants launched in the UK p81
Prime Now: May 2016, Prime Now launches in Berlin, other German cities to follow p82
Prime Now: Germany – network to become much denser p83
Prime Now: Berlin – how the processes in the inner city DC are organized p84
Prime Now: Berlin – e-bikes, range depth, out of stocks p85
Prime Now: June 2016 Berlin, recruiting new partners for fresh categories p86
Prime Now: Berlin, suppliers and partners to Prime Now p87
Prime Now: France, categories split p88
Prime Now – Strategic considerations p89
Prime Now: the attraction to Amazon, others cannot replicate the offer p90
Prime Now: set up to minimise costs, delivery charges, tight range p91
Prime Now: drives extra spend from prime shoppers, a new consumer proximity p92
Prime Now: introducing more localised and seasonal ranges p93
Prime Now Data – Building out an unassailable competitive advantage p94
Prime Now data: which products are sold together? p95
Prime Now data: usage data, number of shoppers, orders, total spend – estimate p96
Prime Now data: 2016/7, consumer research p97
Prime Now data: Prime Now 2016/7, consumer research – analysis p98
Prime Now data: How many orders have been sent, average basket size per order p99
Prime Now data: How has the offer evolved since the launch? p100
Prime Now data: how is the logistics set up organised? p101
Prime Day p102
Prime Day: Prime day, essentially impossible to copy for competitors p103
Prime Day: Sales estimates, a worldwide shopping holiday? p104
Prime Day: 5 key reasons from peak to device sales p105
Marketplace p106
Marketplace: 3P has overtaken 1P in value terms p107
Marketplace: The Key Performance Indicator p108
Marketplace: inventories and cash flow, marketplace as the core of the model p109
Marketplace: Recent developments, Seller Fulfilled Prime, lending program p110
Marketplace: globalising the platform p111
Marketplace: 3P commissions, fees, another 10% for FBA, risk of being replaceable p112
Marketplace: Net product, service sales, units shipped, 3P % share 2009-15 p113
Marketplace: The main marketplace winner, 1P and 3P contribution in US $m 2010-15 p114
Marketplace: 3P sales in US$m in 2010 – 2015, 3P bigger than 1P p115
Marketplace: Amazon Marketplace 2015 record year p116
Marketplace: UK stats, 3P and 1P units neck on neck p117
Marketplace Sellers Data p118
Marketplace: Top 10 sellers, ranked in US$m in 2015, all from USA, UK & DE p119
Marketplace: entertainment categories are generating biggest income p120
Marketplace: the space is getting crowded, competition from China p121
Marketplace SKU analysis p122
Marketplace: Asin/SKU count per category – chart p123
Marketplace: Asin/SKU count per category – analysis p124
Marketplace: Selection growth in 2015, 1P versus 3P p125
Future strategy Marketplace p126
Marketplace: 4 strategic priorities, policing the 3P space p127
Marketplace: brand-gating and pushing the costs on to sellers p128
Marketplace: creating new Marketplaces, Handmade, copying etsy p129
Marketplace: Home Services, Amazon’s take on the gig economy p130
Marketplace: how Home Services has changed the way customers shop p131
Marketplace: Amazon Business targeted for significant growth p132
Marketplace: Amazon exclusives – the need for more services marketplaces p133
Marketplace: creating dynamic fee structures – possible benefits p134
Marketplace: creating dynamic fee structures – assessing the impact of changes p135
Marketplace: creating dynamic fee structures – challenges for sellers p136
Marketplace: turning sellers into wholesalers p137
Stores p138
Amazon Book stores: the book store, what has happened so far p139
Amazon Book stores: should Amazon open physical stores? p140
Amazon Book stores: the argument in favour I p141
Amazon Book stores: the argument in favour II p142
Amazon Book stores: the argument against I p143
Amazon Book stores: the argument against II p144
Amazon Book stores: the conclusion p145
Amazon Book stores: the pop up stores p148
Outlook p149
Sources p153
Table 1 - Data and KPIs: Net Sales & Income, Margin 2008-15, adding $18.0bn in 2015 p19
Table 2 - Data and KPIs: US, international, AWS sales, in $m, % split, growth, 2013-2015 p21
Table 3 - Data and KPIs: Sales by segments 2008-2015 in $m, growth, Media, EOM, other p22
Table 4 - Data: sales per country in €m 2008-15, Germany, UK, Japan, France p28
Table 5 - Data: Int’l sales per country in €m, China, India, Spain, Italy, Brazil, 2008-2015 p29
Table 6 - Data: Sales per country in €m, Mexico, Netherlands, Australia, Canada, 2013-15 p30
Table 7 - Data: International sales per country in local currencies 2011-15, Japan, UK p31
Table 8 - Data: Active Customer accounts 2009 – 15 in m, USA, Germany, Japan, UK, France p34
Table 9 - Data: Average annual spend 11 – 15, USA, DE, Japan, UK, France in local currency p37
Table 10 - Data: 1P by geography, average price, total units, customers, frequency 2015 p39
Table 11 - Data: average price, total units, customers, frequency per country, 2014 p41
Table 12 - Data: Best seller average prices 2013 - 15 in local currency, CA, CN, ES, IT p42
Table 13 - Prime: Prime Customer accounts 2009 – 15 in m, USA, Germany, Japan, UK, France p44
Table 14 - Prime: Prime fee income 2015 in US$m, USA, Germany, Japan, UK, France p50
Table 15 - Prime Now: geographic footprint in the USA – list, population figures p60
Table 16 - Prime Now: geographic footprint in the ROW – list, population figures p75
Table 17 - Prime Now: usage data, number of shoppers, orders, total spend – estimate p96
Table 18 - Amazon: Net product, service sales, units shipped, 3P % share 2009-15 p113
Table 19 - Marketplace: Top 10 sellers, ranked in US$m, in 2015, all from USA, UK & DE p119
Chart 1 – Prime Membership, spend and GMV share data 2015 p43
Chart 2 – Prime Now: geographic footprint in the USA – map p61
Chart 3 – Prime Now: US Best sellers by region 2015 p65
Chart 4 – Prime Now: geographic footprint in EU, Japan – map p74
Chart 5 – Prime Now: Prime now best sellers in the UK p77
Chart 6 – Prime Now: Best sellers in Newcastle, Leeds, London, Surrey 2016 p78
Chart 7 – Prime Now: France, category split p88
Chart 8 – Data: Prime Now 2016/7, consumer research p97
Chart 9 – Amazon: The main marketplace winner, 1P and 3P contribution in US $m 2010-15 p114
Chart 10 – Amazon MP: 3P sales in US$m in 2010 – 2015, 3P bigger than 1P p115
Chart 11 – Marketplace: Asin/SKU count per category p123