Amazon 2013: The future of retailing

Amazon 2013: The Future Of Retailing

Release date: March 7th, 2013 (124 pages)
PDF/Powerpoint format. Price: GBP1,990.00


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