ecommerce amazon.com
TRANSCRIPT
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-Evolution of an E-Tailing
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INTRODUCTION Core Area : E- Retailing Business Founder: Jeff Bezos Headquartered: Seattle,
Washington, United States. Deals in : Retail, Consumer
Electronics & Digital content Current Net worth: $100 billion,
2012 Revenue in 2012: $48 billion Subsidiary Ventures: Computing
Services, Content Production, Amazon local, Amazon wireless services
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HISTORY OF FUTURE The company was founded in Bezos'
garage in Bellevue, Washington. "Amazon" name was chosen because it
was a place that was "exotic and different" and it was one of the biggest rivers in the world, as he hoped his company would be.
In July 1995, the company began service and sold its first book on Amazon.com: Douglas Hofstadter's Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought
In October 1995, the company announced itself to the public.
It finally turned its first profit in the fourth quarter of 2001: $5 million (i.e., 1¢ per share), on revenues of more than $1 billion
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THE “IDEA” HE CASHED IN.....
“ Look at e-retailing. The key trade that we make is that we trade real estate for technology. Real estate is the key cost of physical retailers. That’s why there’s the old saw: location, location, location. Real estate gets more expensive every year, and technology gets cheaper every year. And it gets cheaper fast.”
- By Jeff Bezos
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REVENUE MODELS
Sales revenue model
Transaction fee revenue
model
Advertising revenue model
Subscription revenue model
Affiliate revenue model
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THE AMAZONS BUSINESS MODELTransaction & Sales Revenue model•allows sellers to offer their goods alongside Amazon’s
offerings. •Amazon charges a commission rate based on the sale
price, a transaction fee, and a variable closing fee
Affiliate Revenue model•A Store is an Amazon.com affiliate product
which website owners can use to create an online store on their site
•The fee structure is currently the same as for the other affiliate links and ranges from 4% to 10% of the product price.
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JOURNEY FROM BOOK-TAILER TO CROSS SELLER
• In addition, as a product, books were easy to ship since they were not bulky, they represented a low value (and risk) item
• Amazon wanted to get a greater share of each customer’s overall shopping basket
Blessings of the wall street
Forever Small
Economies
of Scale
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CROSS SELLING: PRODUCT DIVERSIFICATION
Music DVD Videos
Home Improvement
Toys & electro
nic video games
Amazon.com
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Amazon.com
Brand
Cost of Complexities
Competition
New products complexities
CHALLENGES FACED BY THE UNCHALLENGED
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OTHER VENTURES
Amazon Publishing Amazon Local Amazon
Wireless
Amazon vine Amazon glacier
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CUSTOMER REVIEW METHODLOGY
• Amazon allows users to submit reviews to the web page of each product. Reviewers must rate the product on a rating scale from one to five stars.
• Amazon provides a badging option for reviewers which indicate the real name of the reviewer or which indicate that the reviewer is one of the top reviewers by popularity.
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CONTENT SEARCH
• Search Inside the Book" is a feature which allows customers to search for keywords in the full text of many books in the catalogue..There are currently about 300,000 books in the program. Amazon has cooperated with around 130 publishers to allow users to perform these searches.
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AMAZON SALES RANK
• The Amazon sales rank (ASR) provides an indication of the popularity of a product sold on any Amazon locale. It is a relative indicator of popularity that is updated hourly. Effectively, it is a "best sellers list" for the millions of products stocked by Amazon
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AMAZON TECHNOLOGY
• The core technology that keeps Amazon running is Linux-based. As of 2005, Amazon had the world’s three largest Linux databases, with capacities of 7.8 TB, 18.5 TB, and 24.7 TB. The central data warehouse of Amazon is made of 28 Hewlett Packard servers with four CPUs per node running Oracle database software.
• Amazon employs Netscape Secure Commerce Server using the Secure Socket Layer protocol which stores all credit card details in a separate database.
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MULTI- LEVEL SALES STRATEGY
Amazon started off by focusing on Business-to-Consumer relationships between itself and its customers, and Business-to-Business relationships between itself and its suppliers but it then moved to incorporate Customer-to-Business transactions as it realized the value of customer reviews as part of the product descriptions.
Some other large e-commerce sellers use Amazon to sell their products in addition to selling them through their own websites.
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PROMOTION STRATEGIES
Promotion Strategies
Online advertising
E-mail campaigns
Portal advertising
Sponsored search
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STRENGTH
Dips in the promotion cost
CRM & ITM enables to bring
customer specific items
First mover advantages &
original product innovations
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WEAKNESS
Entering into new ventures is hurting its
brand image and consumers loyalties
Free shipping cost can be of serious concern
in the long run as huge amount of its cost can hurt the profitability
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Opportunities
Online retailing JV with other brick
motor firms
Opportunities to build firms with
public enterprises
Recent takeover of Chinese e- tailer
Joyo.com opens up new markets
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THREATS
Intense competition given by the exiting
marketers
Domestic as well as overseas competition
hampering its success
Products sold by Amazon are bought
as gifts
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