 | Amazon 2013: The Future Of RetailingRelease date: March 7th, 2013 (124 pages) PDF/Powerpoint format. Price: GBP1,990.00 |
Abstract
Amazon is the world’s leading online retailer and as such the best in class and the only benchmark. Seattle’s finest is transforming the retail industry and the effects are felt by players in every category, in every channel and in every market.
• The various business models and KPIs Amazon operates with will undergo a radical change soon, when sales growth, profit growth and market shares will reach a definitive tipping point.
• While some business units will see maturing growth rates, lulling some competitors into a false sense of security, other parts of the business will see an outright explosion of growth, which will have an even bigger impact on the retail universe than Amazon has had up to now. Clearly, for some the worst is yet to come.
• Crucially and dangerously these parts of the business remain hidden from view through Amazon’s reporting policies and only emerge once one has carried out a deep dive into the business model.
• The move to next day deliveries, innovations around prime, the roll out of more fulfillment centres and lockers across the globe, linking up the international marketplaces and pushing of FBA, offering credit lines and opening up advertising to 3P (and the scalable AWS infrastructure in the background tying it all together) show where Amazon’s journey is headed.
Table of contents
| Executive summary | p13 |
| Amazon – an introduction | p16 |
| Amazon: Country presence, slowly expanding, place holders in Brazil and India | p17 |
| Amazon: Categories, from “A to Z” with a smile p18 Amazon: Acquisitions | p19 |
| Amazon: Partnerships | p20 |
| Recent key developments | p21 |
| Amazon: Launching kindle and the online bookstore in Brazil | p22 |
| Amazon: Prime Germany gets cut back, minimum order requirement introduced p23 Amazon: Select committee orders Amazon transparency in UK p24 Amazon: First quarterly loss since 2003, Germany’s eBooks boom, paperwhite and fire p25 Amazon: Resolution of sales tax collection issue in US leading to same day delivery push | p26 |
| Amazon: New kindle fire devices, price cuts, European launch | p27 |
| Amazon: E-books outpace hardcover sales in the UK | p28 |
| Amazon: Gaming and renting text books, launching the appstore in the EU p29 Amazon: Monthly prime memberships trial, lowering barriers, not a success | p30 |
| Amazon: UK tie up between Waterstones and Amazon | p31 |
| Amazon: Adding on impulse buys and split packs, a pointer towards online grocery p32 Amazon: Amazon Supply targeting industrials, marketing exercise | p33 |
| Amazon: The Kiva acquisition, a sign post of same day delivery intentions | p34 |
| Amazon: A strong start of the kindle, altering the market and business dynamics | p35 |
| Financials, KPIs, Benchmarks | p36 |
| Amazon: Net Sales, Net Income, Growth, Margin 2008-2012, adding $13bn a year p37 Amazon: US Sales, growth, international sales, in $m, % split 2008-2012 | p38 |
| Amazon: Sales by segments 2008-2012 in $m, growth | p39 |
| Amazon: AWS, transposing the marketplace model from physical to digital | p40 |
| Amazon: A couple of words on margins, what is the impact of 3P’s rapid growth? | p41 |
| Amazon: The “Key” Key Performance Indicator p42 Amazon: inventories and cash flow, marketplace as the core of the model | p43 |
| International expansion strategy | p44 |
| Amazon: International expansion strategy, 3 core factors, online is global | p45 |
| Amazon: The platform, incrementalism, the threat from copy cats, Amazon’s dilemma | p46 |
| Financials, KPIs, Benchmarks in Amazon geographies | p47 |
| Amazon: International sales per country in €m 2008-12, Germany, Japan, UK, France | p48 |
| Amazon: International sales per country in €m 2008-12, China, Italy, Spain, India, Brazil | p49 |
| Amazon: Germany, most important foreign market, taking a quarter of DE ecommerce | p50 |
| Amazon: Germany Packstationen prevent need for proprietary Amazon lockers... p51 Amazon: ... big opportunity further abroad for Amazon logistics p52 Amazon: DHL trials parcel boxes in Bonn and sets up its own marketplace p53 Amazon: Japan, largest online player ahead of Rakuten, fashion offer p54 Amazon: the e-book reader battle with Rakuten | p55 |
| Amazon: UK third biggest foreign market, dominating the sector, competition from Tesco | p56 |
| Amazon: UK record Christmas, utilising click & collect, convenience stores partnerships | p57 |
| Amazon: Amazon’s lockers, the Co-op cooperation in the UK | p58 |
| Amazon: France leading Cdiscount, tax disputes and fulfillment centre rollout p59 Amazon: Strong starts in Italy and Spain, maximising existing infrastructure in the EU p60 Amazon: China, Brazil and India | p61 |
| Prime – the loyalty scheme par excellence | p62 |
| Amazon: Active Customer accounts 2009 – 12 in m, USA, Germany, Japan, UK, France | p63 |
| Amazon: Active Customer accounts 2009 – 12, Analysis USA, Germany, Japan, UK, France | p64 |
| Amazon: Prime Customer accounts 2009 – 12 in m, USA, Germany, Japan, UK, France p65 Amazon: Prime Customer accounts 2009 – 12, Analysis USA, Germany, Japan, UK, France p66 Amazon: Prime, the jewel in the loyalty crown, stable price - more content | p67 |
| Amazon: focus on most loyal shopper to drive sales and profits p68 Amazon: Most successful tool to get buy-in to new categories, net costs, uplifts | p69 |
| Amazon: prime versus traditional marketing, more 90/10 than 80/20 rule | p70 |
| Amazon: the 7 key prime benefits to Amazon (I) p71 Amazon: the 7 key prime benefits to Amazon (II) p72 Amazon: More US Prime deliveries than free super saver shipping in August 2012 | p73 |
| Amazon: Shipping revenue and costs 2010 – 12 in $ m, towards a fixed cost, FBA | p74 |
| Building ecosystems: from the kindle to the Amazon smartphone | p75 |
| Amazon: kindle multi billion $ business, altering the market and business dynamics | p76 |
| Amazon: The agency model, first mover market share, yet another loyalty driver | p77 |
| Amazon: reading renaissance, data from ereaders to provide input into Amazon publishing | p78 |
| Amazon: From the kindle fire to the Amazon smartphone, show-rooming preinstalled? | p79 |
| Advertising, KPIs, data collection | p80 |
| Amazon: collecting data, KPIs, algorithms, upselling, personalisation | p81 |
| Amazon: Algorithm, item to item collaborative filtering, recommendations uplift | p82 |
| Amazon: Key engagement metrics, rigorous AB testing | p83 |
| New concepts: advertising and the Adzinia business | p84 |
| Amazon: advertising – the Adzinia business, exploiting the funnel opportunity | p85 |
| Amazon: Perfect visibility of the online shopper, algorithm opened up to others p86 Amazon: privacy issues, push for marketplace | p87 |
| The core of the business model: the marketplace | p88 |
| Strengths of marketplaces: The model p89 Strengths of marketplaces: free market research, price competitiveness p90 Strengths of marketplaces: beneficial cash flow, near perfect OSA p91 Strengths of marketplaces: unlimited range and network effects | p92 |
| Amazon’s marketplace | p93 |
| Amazon: Marketplace – the game changer p94 Amazon: Marketplace stretching into Fulfillment, beneficial network effects p95 Amazon: 3P commissions and fees, another 10% for FBA, risk of being replaceable | p96 |
| Amazon: Marketplace options, uplifts on joining, drawbacks p97 Amazon: The marketplace contribution in %, rapid paid unit growth of 40% y-o-y p98 Amazon: The main marketplace winner, contribution in value terms (in US $m) 2010-12 | p99 |
| Amazon: What are the average unit prices of 3P relative to 1P? p100 Amazon: Is marketplace already bigger than Amazon 1P? 3P net sales in $m, 2010 -12 | p101 |
| Amazon: rapid marketplace expansion financed through marketplace cash flow | p102 |
| Amazon: stocking stores versus populating a website, long tail economics | p103 |
| Amazon: A truly record breaking Q4 for marketplace with more than 40% growth p104 Amazon: the strategy for FBA, link ups, European Fulfillment Network, logistics potential | p105 |
| Amazon: the back-end | p106 |
| Amazon: DC in Germany fully operational in just 7 months | p107 |
| Amazon: pick, sort, pack and ship | p108 |
| New concepts: the move to same day delivery | p109 |
| Amazon: it’s all about the supply chain, same day delivery, loads utilisation | p110 |
| Amazon: Collaboration, lockers roll out and next stage of online evolution p111 Amazon: Fulfillment centre rollout, load factors, prime p112 Amazon: the cost of doing business, shoprunner delivering from the store estate | p113 |
| Amazon: same day delivery – the conversion and take up results from the first tests | p114 |
| Amazon: split cases, customer centric supply chain p115 Amazon: Locker roll out as precursor to full on assault on online grocery in the US? | p116 |
| Amazon: Outlook | p117 |
| Amazon: where are investment levels going? High margin potential in digital p118 Amazon: Even higher potential in marketplace, linking up international 3P | p119 |
| Amazon: profit driver par excellence, inventory cycle, same day delivery | p120 |
| Amazon: Advertising and AWS, logistics, smartphone, threats | p121 |
| Amazon: Regulatory threats, pricing, logistics, marketplace failures | p122 |
