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Marching Towards Profitability

Marching Towards Profitability. By Peter Moua Bus 550 The Contemporary Firm. Short History. Founded by Jeff Bezos in 1994 Recognized web usage was growing at 2,300% a year. He sought to find the first best product to sell online. “Books”

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Marching Towards Profitability

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  1. Marching Towards Profitability By Peter Moua Bus 550 The Contemporary Firm

  2. Short History • Founded by Jeff Bezos in 1994 Recognized web usage was growing at 2,300% a year. He sought to find the first best product to sell online. “Books” • Amazon opened its online bookstore in July 1995 • Amazon went public on May 15, 1997 sold 3 million shares at $18 per share

  3. Trivia Question What was Amazon.com’s original name?

  4. Trivia Question Cadabra

  5. Customer Value Focused on Customer’s online experience: Features: “1-Click”: Fast/Secure credit card processing easy and rich merchandise evaluation: pictures, descriptions, and reviews Amazon Personalization: “build the right store for every customer” recognize, remember, and learn Branding: e-commerce and customer satisfaction.

  6. Fulfillment Minimum of Bricks: Minimal Inventory and rapid fulfillment Automated interfaces for sorting and organizing orders How itwas done: Randomly processed and stored, Hand picked, Hand packed, and shipped. How it is done now: Amazon Acquired Kiva Systems for $775M

  7. Amazon Prime • Currently around 10 million members enrolled • Results in about 1/3 of Amazon’s operating income • Recently increased annual fee from $79 to $99 • Prime benefits: • Unlimited free two-day shipping on eligible purchases (20 million items are in the prime category) • Unlimited streaming with Prime instant video • Ability to borrow books from the Kindle owners’ lending library

  8. Vision to improve upon the physical book. • In October 2004 a small team moved into a shared space in Palo Alto law library and got to work as Lab126. • The Lab126 name originated from the arrow in the Amazon logo. • On November 19, first Kindle e-reader launched with 90,000 e-books. 5.5 hours later, Kindle was sold out after 5.5 hours of its announcement. • The team has expanded to products like the Kindle Keyboard, Kindle Touch and Kindle Paperwhite e-readers to Kindle Fire tablets.

  9. Electronics from Lab126 2007 - Amazon Kindle E-book Reader: Reads like paper with no glare, even in bright sunlight. Current versions: Kindle, Paperwhite, Paperwite 3G, and DX 2011 - Kindle Fire Table Computer: Runs Fire OS 3.0 “Mojito”. Current versions: Fire HD, HDX, HD 8.9”, Fire HDX 8.9” 2014 - Amazon Fire TV: enables television sets to access internet programing, streaming shows from Amazon Prime, and video games. Features voice recognition on the remote and a gaming controller can be purchased. Smartphone rumor: 6 camera across the face to enable 3D images and ability to use gestures for the OS. Projected to release this year.

  10. Electronics from Lab126

  11. Patents As of 2013, Amazon has 1,263 Patents. Examples: Affiliates Program: Allows owners of other Web sites to refer customers to Amazon in exchange for a referral fee. 1-Click: allows customers to shop without entering their shipping and billing information every time they purchase an item. Build-a-box: cranks out custom-designed boxes for odd-shaped shipments. Anticipatory Shipping: Uses historical data to predict what a customer will buy next. Amazon would pre-ship the item in advance in anticipation that the customer will buy it.

  12. Acquisitions & Investments

  13. Financials 53-week high $408.06 1stQuarter revenue grew 23% over the year to $19.74 Billion EPS of $0.23

  14. Financials Continue Why the down slope? Amazon focuses on long-term competitive advantage Capital Expenditures in infrastructure Innovation Spending Therefore Amazon continues to operate with negative Operating Income. Spent $1.1 billion on additional investments to support technology infrastructure including Amazon Web Service, and fulfillment operations. Amazon is investing more than they did in the past. Domestically and internationally. Recent investments Italy and Spain and continued in China.

  15. Marching Towards Profitability Conclusion: • Currently not profitable because they are spending more than their profits • Infrastructure • Innovation • Focuses on long-term competitive advantage • Continue to grow at a fast pace • New technologies • Fire TV • Smartphone • International Growth • Austria, Canada, China, France, Germany, Italy, Japan, Spain, UK

  16. Multiple Choice Questions • How much did Amazon’s 2014 1st quarter revenue grow from the previous quarter? • 8% • 17% • 23% • 31% • What robotic company did Amazon acquire to improve the customer fulfillment process? • AeroViroment • Kiva Systems • iRobot • The Robot Company • You can play videogames on the new Amazon Fire TV. True False

  17. Works Sited • Byers, Ann (2006), Jeff Bezos: the founder of Amazon.com, The Rosen Publishing Group, pp. 46–47 • Himelson, Jeffrey (2014), Amazon: Impatient Investors Are Giving You A Golden Opportunity; http://seekingalpha.com/article/2178773-amazon-impatient-investors-are-giving-you-a-golden-opportunity • Lab126 (2014), http://www.lab126.com/welcome.htm • Anders, George (2013), Amazon’s 1,263 Patents Reveal Retailing’s High-Tech Future; http://www.forbes.com/sites/georgeanders/2013/11/14/amazons-1263-patents-reveal-retailings-high-tech-future/ • Lomas, Natasha (2014), Amazon Patents “Anticipatory” Shipping – to Start Sending Stuff Before You’ve Bought It”; http://techcrunch.com/2014/01/18/amazon-pre-ships/ • Slawski, Bill (2009), Amazon Acquisitions and Investments; http://www.seobythesea.com/2006/10/amazon-acquisitions-and-investments/

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