Description
Password is amazon
AMAZON, and it’s
Future Prospects
A M A Z O N . c o m I n c .
H e a d q u a r t e r s i n S e a t t l e -
Wa s h i n g t o n , U S A
Sumit Kumar as
!oll " #$%M&A%'())*) + M&A ,
-alcutta Uni.ersit/+ Ali0ur
-am0us
1
1H2 3U1U!2 O3 AMAZON" AM&I1IOUS,
I42!S2, AN 256ANSI42
In less than 20 years, the feats accomplished y !eattle’s Ama"on are simply
astoundin# and, curiously, often ta$en for #ranted% It is the &orld’s lar#est online
retailer, a master of lo#istics, an oracle of computin# po&er, a &ran#ler of di#ital
content, a eacon of customer ser'ice and re'ie&s, and e'en inno'ati'e &hen it
comes to concei'in# handheld electronic de'ices% In terms of &hat can e
reasonaly e(pected of a usiness at its scale, Ama"on has not only li'ed up to
its namesa$e as a massi'e force of nature, ut also its mytholo#y as )erce
&arriors, &a#in# attles alon# multiple fronts &ith remar$ale de(terity%
For conte(t, let’s rie*y re'isit ho& Ama"on has e'ol'ed since its ori#in% It e#an
as a destination to uy oo$s, and e'entually other media% It then o+ered
mar$etplace ser'ices for online retailers and,or indi'iduals -similar to e.ay/,
&hile simultaneously sellin# other physical #oods for homes, o0ces, cars, and
eyond% 1urin# the shift to online retail, Ama"on e(celled y harnessin# &e
data for optimi"e price, locatin# &arehouses to optimi"e lo#istics, and
e(perimentin# &ith deli'ery models -e%#% 2Prime3/ to se#ment its consumers, all
the &hile pro'idin# trust throu#h customer ser'ice and re'ie&s% In its second
decade, Ama"on maintained its roots &hile ecomin# a player in the mar$et for
di#ital media, cloud computin# ser'ices, and, most recently, manufacturin# its
o&n handheld electronic de'ices, a di""yin# amount of di'erse and complicated
usiness lines to e committed to, and yet it continues to hum alon#, e(ecutin#
its &ay to a 4100.5 mar$et cap and an e(tremely ri#ht future%
6ith such a #lorious run to date, &hat does that future loo$ li$e for Ama"on,
speci)cally7
6e all $no& that Ama"on is a truly e(ceptional company and their past is &ell8
documented% My o&n elief is that if the company &ere located in !ilicon 9alley,
it &ould recei'e an e'en more hype and e 'alued ao'e its already impressi'e
P,: ratios% My iases aside, I meet lots of up8and8comin# founders &ho idoli"e
Ama"on’s ;:O o'er other role models, not to mention that they &ouldn’t mind
ein# achis strate#y implies that the
company &ill continue to o+er deep discounts to push its sales% As far as mar#ins
are concerned, #ro&th in Ama"on’s 6e !er'ices usiness should help support
the company’s pro)taility%
8ro9th In 2--ommerce Mar:et
Mar$et research )rm Forrester e(pects C%!% online retail sales to #ro& rapidly and
ta$e mar$et share a&ay from physical stores% >his is clearly e'ident from the
comparison of Ama"on’s #ro&th &ith that of traditional ric$8and8mortar retailers
such as 6al8Mart, ;ostco, >ar#et and .est .uy% Forrester further predicts that the
D
C%!% online retail mar$et &ill reach 42A2 illion in 201D, re#isterin# 1D@ #ro&th
o'er 2012%
Althou#h the online channel still accounts for Eust F@ of total retail sales in the
C%!%, the future #ro&th is #oin# to e healthy &ith Ama"on leadin# the &ay% >his
#ro&th &ill e further complemented y traditional stores in'estin# in &e
usinesses to support a multichannel strate#y as &ell as the #loal adoption of
Internet and moile de'ices% >he research )rm forecasts a compounded annual
#ro&th rate of G@ for the ne(t H years%
6hile the C%!% #ro&th outloo$ certainly loo$s promisin#, international mar$ets
can o+er e'en hi#her potential in the lon# term% A lot of #ro&th for Ama"on &ill
come from these mar$ets &here its presence is lo&%
Accordin# to eMar$eter, .2; -usiness to consumer/ e8commerce sales in the
Asia8Paci)c re#ion increased y more than DD@ in 2012, amountin# to 4DD2
illion% >he )#ure is e(pected to #ro& y more than D0@ this year amountin# to
4IDD illion and accountin# for more than one8third of the #loal .2; e8
commerce sales%
8ro9th In Kindle Shi0ments Will Attract More Online 1ra;c
>he #ro&in# popularity of Android de'ices can help Ama"on promote its Bindle
Fire de'ice ran#e% >hese de'ices can help the company capture a maEor share of
Internet tra0c as the tra0c’s source shifts from des$tops to moile de'ices such
as talets and smartphones% Ama"on had launched a re'amped ran#e of Bindle
de'ices &ith features closely matchin# those of talet de'ice pioneer Apple’s
iPad in !eptemer 2012%
An estimated 200 million talets ha'e een shipped &orld&ide since 200G and
another 1 illion are predicted to ship o'er the ne(t )'e years% Mar$et
intelli#ence )rm A.I Jesearch estimates that 22@ of the C%!% talet users spend
4H0 or more per month and G@ spend 4100 or more K much hi#her than the
spendin# le'els oser'ed for smartphone users% >he #ro&in# popularity of
Ama"on’s Bindle Fire ran#e could mean that a maEor share of this spendin# &ill
e re8directed to Ama"on’s online storefronts% !ince Bindle de'ices are optimi"ed
to run on Ama"on’s ser'ices, &e e(pect them to dri'e #reater adoption of
Ama"on’s ser'ices% 6e elie'e that the content usiness comprisin# e.oo$s and
mo'ie,music streamin# &ill e the i##est #ainer from the trend%
3ocus Is On -ash 3lo9 .s. Margins
Althou#h Ama"on’s di'ersi)ed product portfolio and #ro&in# e8commerce
usiness &ill support its stron# re'enue #ro&th, there are other factors that
su##est there could e mar#in pressure #oin# for&ard% >he company, &hich is in
the middle of settin# up a numer of ful)lment centres to roll out same day
I
deli'ery, is attlin# #ro&in# competition in the cloud,&e ser'ices front and is
spendin# hea'ily to&ards the de'elopment of its content lirary% All of these
acti'ities are cost8intensi'e and &ill ne#ati'ely impact its already thin mar#ins%
>his su##ests that it may try to control its re'enue #ro&th and focus on
ecomin# more pro)tale%
Lo&e'er, that is not the intent of the company, &hich leads us to elie'e that
the fast re'enue #ro&th may continue% In an inter'ie& &ith >he Lar'ard .usiness
Je'ie& earlier this year, Ama"on’s ;:O statedM 2Percenta#e mar#ins are not one
of the thin#s &e are see$in# to optimi"eN it’s the asolute dollar free cash *o&
per share that you &ant to ma(imi"e% If you can do that y lo&erin# mar#ins, &e
&ould do that% Free cash *o&, that’s somethin# in'estors can spend%3
!ourceM Fores
37I6KA!1 4S AMAZON" 3U1U!2
6!OS62-1S IN INIA
26e &ere not thin$in# aout numers then, ut &e $ne& somethin# i# can e
uilt out of e8commerce3
.inny .ansal O !achin .ansal, Founders, Flip$art%
>he e8commerce industry is a sunrise sector in the Indian mar$et at present% >his
can e primarily attriuted to the si#ni)cant reduction in the price of personal
computers, the increased internet penetration in India, O the many incenti'e
schemes -i%e% ;O1, 'aried payment options, discounts/ that online retailers #i'e
to consumers% India has close to 10 million online shoppers , &hich is #ro&in#
&ith a &hoopin# ;A?J of around D0@%In addition, India has one of the youn#est
online demo#raphic audiences #loally, &ith PH@ of them in the a#ed #roup of
1H8DI years% Apparel has een the fastest #ro&in# su8cate#ory in online
retailin#, follo&ed y consumer #oods O sports O outdoor merchandises%
A leadin# #loal research and ad'isory )rm, Forrester Jesearch’s proEections for
Asia8Paci)c e8commerce sales y country -in illions, in C%!% dollars/ in 2012 O
201A8
-ountr/ Sales in infrastructure, as online shoppin# is
hea'ily dependent on technolo#y% It &ants to customi"e its I> frame&or$ to
perform 2 functionalities% One is the aility to recommend its uyers to &hat
other purchases can e ou#ht to complement a product that has een already
purchased from Flip$art -li$e recommendin# a stereo headset for a moile
phone/% >he other one is to simultaneously conduct a li'e sur'ey y siphonin# a
small portion of this data to analyse customer purchase patterns O preferences%
Flip$art is also considerin# ha'in# their o&n lo#istics so as to reduce
dependaility on the third party companies to pro'ide it% Flip$art has also
recently launched its o&n di#ital accessories rand 1i#i*ip, O its apparel rand
Flippd, O is yet to see ho& they perform in the mar$et% Also part of its a#enda is
to e present in more numer of cities, O for that it is contemplatin# on ha'in#
lar#er no% of &arehouses O increased automation in its supply chain system%
Flip$art also &ants to include more cate#ories of products in its domain, O plu#
the #aps in its e(istin# cate#ories%
3uture 6ros0ects , AmaCon
As part of its e(pansion plan in India, Ama"on has een pushin# its Bindle talet,
especially the Bindle Fire ran#e, &hich can automatically act as a catalyst for
P
promotin# its merchandise sales% As consumers are maEorly shiftin# from
computers to moile handsets, they &ill e maEorly ene)ted from readin# e8
oo$s O streamin# li'e music O 'ideos throu#h the Bindle de'ices%
Ama"on is mostly interested in its cash *o& per share 'aluation rather than
percenta#e mar#ins% >hus, they are li$ely to o+er e'en lar#er discounts to push
sales% >he company is also in tal$s &ith leadin# retail chains of India li$e Future
?roup, !pencer’s Jetail, 6oodlands, !hoppers !top O ;ross&ords to act as a
sellin# platform for their products% Ama"on is also plannin# to introduce its 'ery
o&n moile handset in the future, throu#h &hich it hopes customers &ill ha'e
more access to its online store O its contents%
.ut perhaps the most interestin# O path8rea$in# ser'ice that Ama"on is aout
to o+er yet, is usin# drones, or unmanned aerial 'ehicles, to deli'er pac$a#es to
customers% Ama"on came up &ith this concept in 201D, O &ill supposedly
-accordin# to media reports/ e launchin# it )rst in India durin# in late 201I%>he
drone, $no&n as Ama"on’s Prime Air is an octocopter, i%e% )tted &ith F rotors,
&ei#hin# less than 2H $# and tra'ellin# at o'er F0 $mph% >he drone is supposed
to e carryin# a payload of up to 2%2A $#, &hich co'ers FA@ of products sold on
Ama"on% Csin# this, Ama"on elie'es, top8sellin# products li$e moiles O oo$s
&ithin G0 minutes to D hours for select customers%
>han$ Tou
Sumit Kumar as
GH,M.A,1D0020
M.A K MaEor Finance, Minor Mar$etin#
;alcutta Cni'ersity
Alipur ;ampus
999.DaceEoo:.com%sumit.das.sd
doc_403504759.docx
Password is amazon
AMAZON, and it’s
Future Prospects
A M A Z O N . c o m I n c .
H e a d q u a r t e r s i n S e a t t l e -
Wa s h i n g t o n , U S A
Sumit Kumar as
!oll " #$%M&A%'())*) + M&A ,
-alcutta Uni.ersit/+ Ali0ur
-am0us
1
1H2 3U1U!2 O3 AMAZON" AM&I1IOUS,
I42!S2, AN 256ANSI42
In less than 20 years, the feats accomplished y !eattle’s Ama"on are simply
astoundin# and, curiously, often ta$en for #ranted% It is the &orld’s lar#est online
retailer, a master of lo#istics, an oracle of computin# po&er, a &ran#ler of di#ital
content, a eacon of customer ser'ice and re'ie&s, and e'en inno'ati'e &hen it
comes to concei'in# handheld electronic de'ices% In terms of &hat can e
reasonaly e(pected of a usiness at its scale, Ama"on has not only li'ed up to
its namesa$e as a massi'e force of nature, ut also its mytholo#y as )erce
&arriors, &a#in# attles alon# multiple fronts &ith remar$ale de(terity%
For conte(t, let’s rie*y re'isit ho& Ama"on has e'ol'ed since its ori#in% It e#an
as a destination to uy oo$s, and e'entually other media% It then o+ered
mar$etplace ser'ices for online retailers and,or indi'iduals -similar to e.ay/,
&hile simultaneously sellin# other physical #oods for homes, o0ces, cars, and
eyond% 1urin# the shift to online retail, Ama"on e(celled y harnessin# &e
data for optimi"e price, locatin# &arehouses to optimi"e lo#istics, and
e(perimentin# &ith deli'ery models -e%#% 2Prime3/ to se#ment its consumers, all
the &hile pro'idin# trust throu#h customer ser'ice and re'ie&s% In its second
decade, Ama"on maintained its roots &hile ecomin# a player in the mar$et for
di#ital media, cloud computin# ser'ices, and, most recently, manufacturin# its
o&n handheld electronic de'ices, a di""yin# amount of di'erse and complicated
usiness lines to e committed to, and yet it continues to hum alon#, e(ecutin#
its &ay to a 4100.5 mar$et cap and an e(tremely ri#ht future%
6ith such a #lorious run to date, &hat does that future loo$ li$e for Ama"on,
speci)cally7
6e all $no& that Ama"on is a truly e(ceptional company and their past is &ell8
documented% My o&n elief is that if the company &ere located in !ilicon 9alley,
it &ould recei'e an e'en more hype and e 'alued ao'e its already impressi'e
P,: ratios% My iases aside, I meet lots of up8and8comin# founders &ho idoli"e
Ama"on’s ;:O o'er other role models, not to mention that they &ouldn’t mind
ein# achis strate#y implies that the
company &ill continue to o+er deep discounts to push its sales% As far as mar#ins
are concerned, #ro&th in Ama"on’s 6e !er'ices usiness should help support
the company’s pro)taility%
8ro9th In 2--ommerce Mar:et
Mar$et research )rm Forrester e(pects C%!% online retail sales to #ro& rapidly and
ta$e mar$et share a&ay from physical stores% >his is clearly e'ident from the
comparison of Ama"on’s #ro&th &ith that of traditional ric$8and8mortar retailers
such as 6al8Mart, ;ostco, >ar#et and .est .uy% Forrester further predicts that the
D
C%!% online retail mar$et &ill reach 42A2 illion in 201D, re#isterin# 1D@ #ro&th
o'er 2012%
Althou#h the online channel still accounts for Eust F@ of total retail sales in the
C%!%, the future #ro&th is #oin# to e healthy &ith Ama"on leadin# the &ay% >his
#ro&th &ill e further complemented y traditional stores in'estin# in &e
usinesses to support a multichannel strate#y as &ell as the #loal adoption of
Internet and moile de'ices% >he research )rm forecasts a compounded annual
#ro&th rate of G@ for the ne(t H years%
6hile the C%!% #ro&th outloo$ certainly loo$s promisin#, international mar$ets
can o+er e'en hi#her potential in the lon# term% A lot of #ro&th for Ama"on &ill
come from these mar$ets &here its presence is lo&%
Accordin# to eMar$eter, .2; -usiness to consumer/ e8commerce sales in the
Asia8Paci)c re#ion increased y more than DD@ in 2012, amountin# to 4DD2
illion% >he )#ure is e(pected to #ro& y more than D0@ this year amountin# to
4IDD illion and accountin# for more than one8third of the #loal .2; e8
commerce sales%
8ro9th In Kindle Shi0ments Will Attract More Online 1ra;c
>he #ro&in# popularity of Android de'ices can help Ama"on promote its Bindle
Fire de'ice ran#e% >hese de'ices can help the company capture a maEor share of
Internet tra0c as the tra0c’s source shifts from des$tops to moile de'ices such
as talets and smartphones% Ama"on had launched a re'amped ran#e of Bindle
de'ices &ith features closely matchin# those of talet de'ice pioneer Apple’s
iPad in !eptemer 2012%
An estimated 200 million talets ha'e een shipped &orld&ide since 200G and
another 1 illion are predicted to ship o'er the ne(t )'e years% Mar$et
intelli#ence )rm A.I Jesearch estimates that 22@ of the C%!% talet users spend
4H0 or more per month and G@ spend 4100 or more K much hi#her than the
spendin# le'els oser'ed for smartphone users% >he #ro&in# popularity of
Ama"on’s Bindle Fire ran#e could mean that a maEor share of this spendin# &ill
e re8directed to Ama"on’s online storefronts% !ince Bindle de'ices are optimi"ed
to run on Ama"on’s ser'ices, &e e(pect them to dri'e #reater adoption of
Ama"on’s ser'ices% 6e elie'e that the content usiness comprisin# e.oo$s and
mo'ie,music streamin# &ill e the i##est #ainer from the trend%
3ocus Is On -ash 3lo9 .s. Margins
Althou#h Ama"on’s di'ersi)ed product portfolio and #ro&in# e8commerce
usiness &ill support its stron# re'enue #ro&th, there are other factors that
su##est there could e mar#in pressure #oin# for&ard% >he company, &hich is in
the middle of settin# up a numer of ful)lment centres to roll out same day
I
deli'ery, is attlin# #ro&in# competition in the cloud,&e ser'ices front and is
spendin# hea'ily to&ards the de'elopment of its content lirary% All of these
acti'ities are cost8intensi'e and &ill ne#ati'ely impact its already thin mar#ins%
>his su##ests that it may try to control its re'enue #ro&th and focus on
ecomin# more pro)tale%
Lo&e'er, that is not the intent of the company, &hich leads us to elie'e that
the fast re'enue #ro&th may continue% In an inter'ie& &ith >he Lar'ard .usiness
Je'ie& earlier this year, Ama"on’s ;:O statedM 2Percenta#e mar#ins are not one
of the thin#s &e are see$in# to optimi"eN it’s the asolute dollar free cash *o&
per share that you &ant to ma(imi"e% If you can do that y lo&erin# mar#ins, &e
&ould do that% Free cash *o&, that’s somethin# in'estors can spend%3
!ourceM Fores
37I6KA!1 4S AMAZON" 3U1U!2
6!OS62-1S IN INIA
26e &ere not thin$in# aout numers then, ut &e $ne& somethin# i# can e
uilt out of e8commerce3
.inny .ansal O !achin .ansal, Founders, Flip$art%
>he e8commerce industry is a sunrise sector in the Indian mar$et at present% >his
can e primarily attriuted to the si#ni)cant reduction in the price of personal
computers, the increased internet penetration in India, O the many incenti'e
schemes -i%e% ;O1, 'aried payment options, discounts/ that online retailers #i'e
to consumers% India has close to 10 million online shoppers , &hich is #ro&in#
&ith a &hoopin# ;A?J of around D0@%In addition, India has one of the youn#est
online demo#raphic audiences #loally, &ith PH@ of them in the a#ed #roup of
1H8DI years% Apparel has een the fastest #ro&in# su8cate#ory in online
retailin#, follo&ed y consumer #oods O sports O outdoor merchandises%
A leadin# #loal research and ad'isory )rm, Forrester Jesearch’s proEections for
Asia8Paci)c e8commerce sales y country -in illions, in C%!% dollars/ in 2012 O
201A8
-ountr/ Sales in infrastructure, as online shoppin# is
hea'ily dependent on technolo#y% It &ants to customi"e its I> frame&or$ to
perform 2 functionalities% One is the aility to recommend its uyers to &hat
other purchases can e ou#ht to complement a product that has een already
purchased from Flip$art -li$e recommendin# a stereo headset for a moile
phone/% >he other one is to simultaneously conduct a li'e sur'ey y siphonin# a
small portion of this data to analyse customer purchase patterns O preferences%
Flip$art is also considerin# ha'in# their o&n lo#istics so as to reduce
dependaility on the third party companies to pro'ide it% Flip$art has also
recently launched its o&n di#ital accessories rand 1i#i*ip, O its apparel rand
Flippd, O is yet to see ho& they perform in the mar$et% Also part of its a#enda is
to e present in more numer of cities, O for that it is contemplatin# on ha'in#
lar#er no% of &arehouses O increased automation in its supply chain system%
Flip$art also &ants to include more cate#ories of products in its domain, O plu#
the #aps in its e(istin# cate#ories%
3uture 6ros0ects , AmaCon
As part of its e(pansion plan in India, Ama"on has een pushin# its Bindle talet,
especially the Bindle Fire ran#e, &hich can automatically act as a catalyst for
P
promotin# its merchandise sales% As consumers are maEorly shiftin# from
computers to moile handsets, they &ill e maEorly ene)ted from readin# e8
oo$s O streamin# li'e music O 'ideos throu#h the Bindle de'ices%
Ama"on is mostly interested in its cash *o& per share 'aluation rather than
percenta#e mar#ins% >hus, they are li$ely to o+er e'en lar#er discounts to push
sales% >he company is also in tal$s &ith leadin# retail chains of India li$e Future
?roup, !pencer’s Jetail, 6oodlands, !hoppers !top O ;ross&ords to act as a
sellin# platform for their products% Ama"on is also plannin# to introduce its 'ery
o&n moile handset in the future, throu#h &hich it hopes customers &ill ha'e
more access to its online store O its contents%
.ut perhaps the most interestin# O path8rea$in# ser'ice that Ama"on is aout
to o+er yet, is usin# drones, or unmanned aerial 'ehicles, to deli'er pac$a#es to
customers% Ama"on came up &ith this concept in 201D, O &ill supposedly
-accordin# to media reports/ e launchin# it )rst in India durin# in late 201I%>he
drone, $no&n as Ama"on’s Prime Air is an octocopter, i%e% )tted &ith F rotors,
&ei#hin# less than 2H $# and tra'ellin# at o'er F0 $mph% >he drone is supposed
to e carryin# a payload of up to 2%2A $#, &hich co'ers FA@ of products sold on
Ama"on% Csin# this, Ama"on elie'es, top8sellin# products li$e moiles O oo$s
&ithin G0 minutes to D hours for select customers%
>han$ Tou
Sumit Kumar as
GH,M.A,1D0020
M.A K MaEor Finance, Minor Mar$etin#
;alcutta Cni'ersity
Alipur ;ampus
999.DaceEoo:.com%sumit.das.sd
doc_403504759.docx