An Insider View: Amazon.com 2016/7Release 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 |