Amazon vs. Wal-Mart

1. Let’s Get Ready to Rumble!!!! Amazon.com vs. Wal-Mart E-Commerce Presentation Team • John Lin • Darin Bodin • Carmen Saleh • Eric Head • Robert Distefano • Dom Gaudin

2. The Amazon Team CEO Jeffrey Bezos • Expertise: • Bits & Bytes Company Statistics: • Market Cap: $16 Billion • Stock Price: $100 1/16 • Net Profits: $-138 Million (2Q ‘99) • Headquarters: Seattle, Washington

3. The Wal-Mart Team CEO David Glass • Expertise: • Bricks & Mortar Company Statistics: • Market Cap: $188 Billion • Stock Price: $42 1/4 • Net Profit: $4.43 Billion • Headquarters: Bentonville, AR

4. HISTORIES

5. History of Amazon.com • July 1994: • Incorporated • Focus: software development • Sold books in his garage with ten employees • July 1995: • Virtual doors open • September 1997: • Introduced personalized recommendations and one-click purchase • June 1999: • Obtained 10 million registered customers

6. History of Amazon.com (continued) • 2nd quarter 1999 Revenues $314 billion • 1st quarter 1998 Revenues $87.4 million • Projected sales for 1999: over $1 billion • $138 million loss in 2nd quarter 1999 • Has not made a profit since company started • 10.7 million registered customers • 8.4 million in 1st quarter 1999 • 3.14 million in 1st quarter 1998

7. History of Amazon.com (continued) • Operates two international sites: • www.amazon.co.uk • www.amazon.de • Other sites operated or owned include: • Gear.com • Drugstore.com • Homegrocer.com • Pets.com • IMDB.com • Planetall.com • Livebid.com • Accept.com

8. History of Amazon.com (continued) Mission: To be the world’s most consumer-centric company where people can find and discover anything that they want to buy online.

9. History of Wal-Mart 1962 Company founded in Rogers, Arkansas 1969 Wal-Mart Incorporated 1970 Wal-Mart Goes Public 1979 First Billion Dollar Sales Year 1993 First Billion Dollar Sales Week!

10. History of Wal-Mart (continued) 1988David Glass named CEO 1991 Established International Presence in Mexico 1995 Established Presence in South America 1996 Entered Asia 1997 Largest national employer with 680,000 associates and first $100 Billion sales year!

11. History of Wal-Mart (continued) • Originally launched Website in 1996 • Owns six registered web addresses: • samsclub.com • w-mtour.com • samsclubtravel.com. • Has established alliances with: • Fingerhut • Books-A-Million • Announced plans for an Internet megasite in 1999!!!

12. STRENGTHS

13. Amazon’s Strengths • E-commerce is its core mission and environment • Amazon.com has enjoyed a first mover advantage • Amazon has: • a strong brand image • vast customer database • exceptional customer trust

14. Amazon’s Strengths • Amazon provides: • 100% guaranteed secured credit card transactions • Personalized product recommendations • Hassle-free shopping through 1-click and 1-bid technology • Risk-free return policy • Amazon’s IT and Logistics executives were formerly employed at Wal-Mart

15. Wal-Mart’s Strengths • A leader in almost every retail category • $137.6 billion in sales last year • $4.43 billion in net earnings • Excellent vendor alliances

16. Wal-Mart’s Strengths (continued) -History and image as a discount retailer -State of the art supply chain network -Culture of customer service -More than 3700 stores worldwide can be used in a “hybrid strategy”

17. WEAKNESSES

18. Amazon’s Weaknesses • Amazon has yet to achieve a profit • Customers cannot physically touch the product prior to purchasing • Lack of social interaction before purchasing • Risk-averse consumers may find buying on-line intimidating • Not every person has access to the Internet

19. Wal-Mart’s Weaknesses • Brand image not attractive to “upscale consumers” • High fixed costs • First Web launch was not very successful • Will a mature and successful firm be willing to make the necessary commitment?!

20. OPPORTUNITIES

21. Amazon’s Opportunities • Expand internationally • Actively pursue online auctions • Evolution of mass market from merchant-centric to consumer-centric

22. Create “segment fluidity” • Segments within segments • Typical segments • Low cost/value/high quality • Embedded segments • Customer service • Product uniqueness • Social experience • Quick and easy purchase • Personalized recommendations • Catch customers with high attention scarcity Amazon’s Opportunities (continued)

23. Wal-Mart’s Opportunities • Exploit vendor relationships • Establish strategic alliances • Explore hybrid models to enhance customer service • Spin off wal-mart.com as a separate IPO

24. Wal-Mart’s Opportunities (continued) • Market aggressively using traditional and online media • Explore hybrid models to enhance customer service • Do not worry about cannibalization. Use the Internet to expand customer base

25. THREATS

26. Amazon’s Threats • The future of E-Commerce • Amazon may bite off more than it can chew(over-diversification) • Other retailers are quickly creating an on-line presence • Amazon must effectively manage its growth to minimize growing pains

27. Wal-Mart’s Threats • Wal-Mart is NOT the first mover. The “wait and see” strategy could be problematic • Other retailers are getting into the game (Sears, Target, Kmart, etc.) • Establishing an online brand will cost….the longer the wait, the greater the cost!!

28. CONCLUSION

29. Prediction: NO ONE WINNER! • The Hybrid Model • Segment “Fluidity” - Attention Scarcity • Bits & Bytes vs. Bricks & Mortar Analysis

30. Questions??