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Amazon-Krishna
This document summarizes the journey of Amazon from its founding in 1994 to 2010. It details how Jeff Bezos started Amazon as an online bookstore from his garage in Seattle. Through private funding and an IPO, Amazon grew rapidly while continuing to operate at a loss for many years as it expanded into new product categories. Key events included the launches of Amazon Marketplace and Amazon Web Services. By 2010, Amazon had become a global leader in e-commerce and online retail through innovative products like the Kindle e-reader.
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Amazon-Krishna
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- 2. Contents •An inspiring journey– Amazon’s Story (1994-2010)………… 3–33 •Annexure ………………………………………………………………………….. 34 Business Model Key Numbers Leadership Principles Departments •References ………………………………………………………………………… 39 •Concluding Note ……………………………………………………………….. 40
- 3. www.amazon.com 1 portal to 11 portals 1category to 16 categories 400 Sq ft. to 66,383,000 Sq ft 3 employees to 100,518 employees and much more In 19 years, A mazon now a $180 bn company And, its all started in the year 1994 by Jeff Bezos and the journey of building a company started on the road….
- 4. • Jeff Bezosleft his Sr. VP job and drove towards west to the destination – Seattle, during a summer morning in 1994 from New York city. • By 1994, the world wide web usage was growing at a rate of 2300% a year. Bezos believed, “Internet could be invisible today and ubiquitous tomorrow”. If you do build a great experience, customers tell each other about that. Word of mouth is very powerful – Jeff Bezos • He decided ‘Books’ as his business, since it is an universal product. He was also confident that his idea of building the book store on the web would help him to cut prices and be more competitive. • Ingram book store, one of the largest book distribution center in Roseburg, Oregon which is Seattle’s proximity was a major reason for Bezos to set his business there.
- 5. Jeff Bezos -President, Chief Executive Officer and Chairman of the Board. Times magazine described him as ‘King of Cybercommerce’.
- 6. • While lookingfor home in Seattle, Bezos had one mandatory requirement and that is it must have a garage. The reason being, he wanted to follow his entrepreneurial heroes who ventured out of garages. • Finally, he found one and set up his office in November 1994 with two programmers Sheldon Kaphan and Paul Barton Davis. Bezos and programmers relied on open source and developed the framework for the online store. There are two kinds of companies, those that work to try to charge more and those that work to charge less. We will be the second. – Jeff Bezos • In Feb 1995, Bezos father invested more than $1,00,000 in the venture. His mother too invested about $1,50,000 through a family trust. • The money he raised helped him to hire people and to move out of the garage. • On July 16, 1995, Amazon.com was launched with a tag line “Earths biggest bookstore.
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- 8. • ‘Fluid Conceptsand Creative Analogies : Computer models of the fundamental mechanisms of thought ‘ by Douglas Hofstadter was the first book ordered. By end of the first week amazon.com logged ordered worth $12,438. • Amazon was growing fastly with 2,200 hits daily and annual revenue projected was at $ 5 mn. However, operational expenses was more than what the company was making. There'll always be serendipity involved in discovery – Jeff Bezos • Bezos made $ 9,81,000 through private funding by end of 1995. It enabled him to move to 17,000 sq ft, a two storey building with a ware house. • Wall street journal publised an article about Amazon on may 16, 1996 and that helped him to accept $8m in cash from Kleiner Perkins Cowfield & byers in exchange for a 13% stake.
- 9. The first booksold.
- 10. • This againhelped Amazon to grow bigger. Down the year by August, it again moved to a 93,000 sq. ft new facility in South Seattle. However, it retained the old facility and made it as a warehouse. • Amazon was still losing money. During 1st quarter of 1997, sales increased to $16mn, which was more than the total sale of 1996 and that helped Amazon to raised $54mn when it went public on May 15, 1997. We see our customers as invited guests to a party and we are the hosts – Jeff Bezos • By October 1997, one millionth customer placed order from Japan and Bezos went personally to deliver the items. • During November 1997, Amazon operned a second warehouse at Delaware to house 3,00,000 titiles. This facility helped Amazon to ship products from both sides of the country.
- 11. Bezos personally deliveredone millionth order which got ordered from Japan in month of October 1997.
- 12. • By endof 1997, it made a whopping $147.8 mn and it was 838% jump over the previous year. But, Amazon was still losing money. • The share price went above $100 during spring 1998. In summer, Bezos expanded the offerings to include Music and Movies. Also, he made a lot of acquisitions which includes ‘Junglee Corp’. The best customer service is if the customer doesn't need to call you, doesn't need to talk to you. It just works – Jeff Bezos • The acquisitions helped Bezos vision to make Amazon a ‘one-stop’ shopping site. • Bezos also launched two international site in UK and Germany. Each site was very independent with it own country customer service and distributions centers to better serve Amazon’s European customers.
- 13. Amazon customer servicecenter, Huntington, West Virginia.
- 14. • During apicnic programme for employees, Bezos gave a printed T-Shirts to all with a slogan ‘Get Big Fast’. It was not making any money still. • During 1999, Amazon opened four new fulfillment centers in addition to Tacoma and Washington specifically for providing customer service to 8mn shoppers. What consumerism really is, at its worst is getting people to buy things that don't actually improve their lives– Jeff Bezos • Amazon continued to get into offerings such as toys, board games, software and gift etc. It also launched an auction site to become a rival for ebay. • By then, Amazon was having 5000 employees in US & Europe. It was still recording losses. However, TIME magazine selected Bezos as the person of the year in 1999. Time described him as a ‘King of Cybercommerce’.
- 15. Amazon.co.uk warehouse inGlenrothes, Scotland, UK
- 16. • By 2000,Amazon became a gatway for a wide range of proudcts and it was offered through various retailers. They listed their products in amazon for a share of profit . At the same time, company’s debt was also growing. • Pessimism started to go around Amazon. People wondered if ‘Amazon’ could ever become profitable. Amazon.com strives to be the e-commerce destination where consumers can find and discover anything they want to buy online– Jeff Bezos • Bezos started to feel the heat and was under pressure to show profit. By end of 2000, he sent a communication to the employees about the target of $5bn sales and $1bn profit. • In the process he laid of 1300 workers, closed two warehouses and a customer service centers and also streamlined the business process. He cut down products that are not making profits.
- 17. US President BarackObama at Amazon fulfillment center in Chattanooga, Tenn, on July 30, 2013.
- 18. • To confrontwith competition, he went into partnership with bookstore giant Borders to foster competition. This was looked as a postiive move. • In April 2001, Bezos wrote a letter to the investors stating ‘ Ouch, its been a brutal year’.However, by end of that year, the fourth quarter profile showed $5 mn. It gave investors a sense of confidence. What consumerism really is, at its worst is getting people to buy things that don't actually improve their lives– Jeff Bezos • Amazon then planned to expand product offerings and improve customer service. In 2002, it made shipping free and it cut down prices of many items. • It also introduced Amazon Web Services, a new venture to offer web site solution to other businesses.
- 19. Amazon's distribution centerin Phoenix, Arizona.
- 20. • Losses beganto go down. The net loss for 2002 was $149mn, which was very much less than $567 mn during the previous year. • Though the company’s stock price were still low, it was praised as a survivor, in spite of a great dot com bust. Also, the prediction states that Amazon would turn profitable in 2003. Business Week wrote,” After seven years and more than $1bn loss, Amazon is still in work in progress”. If you're competitor-focused, you have to wait until there is a competitor doing something. Being customer-focused allows you to be more pioneering– Jeff Bezos • Amazon’s travel towards profitability continued in 2003. It experienced 28% jump in sales during the first quarter. Also, it offered new feature called ‘Search inside the book’ an expansion of ‘Look inside the book’. This helped customers to search better from 1, 20,000 titles.
- 21. Amazon is notonly about books…..
- 22. • In thefirst half of 2003, ‘Harry Potter and the Order of Phoenix’, the fifth book in the popular Harry Potter series by JK Rowling got pre-ordered more than 1.3 mn copies. It was first of its kind in 8 years of Amazon’s history. • Amazon posted a third quarter profit of 2003 and the strong sales ‘Order of the Phoenix’ helped to it. The growth of international sales such as Canada, Japan and France also added to it. That year it earned $35mn. Life's too short to hang out with people who aren't resourceful– Jeff Bezos • It decided to improve customer discounts and technology advancement with money as a mean to compete with others. • In the year 2004, Amazon’s relationship with Toys “R” Us came to an end. In spite of this dispute, Amazon booked profit of $ 588mn. In that period, to its best, on a single day 2.8 mn items were ordered.
- 23. Amazon is muchmore than what it looks to be…..
- 24. • In thesame year, Amazon celebrated its 10th anniversary in a party in Seattle. By then it had 50mn loyal customer. It introduced a feature called Amazon Prime. It offered a free 2 day and a discounted shipping for an annual fee of $79. • Financial analysts considered Amazon’s low pricing and free shipping option would hamper its profits. The thing that motivates me is a very common form of motivation. And that is, with other folks counting on me, it's so easy to be motivated– Jeff Bezos • In the first three months of 2005, Amazon spent $167mn on shipping. It was also investing heavily on technology. Marketing budget was also increased. • Bezos continued to focus on customer service. He said “ if we take care of customers, the stock will take care of itself in long term’.
- 25. Amazon fresh sellsand delivers groceries in Seattle
- 26. • The year2006 was an important year for Amazon, as its expanded its services, products and features of its portal. • By the end of that year, it was offering Print on Demand for book publishers, an online talk show, music and movies. Real estate is the key cost of physical retailers. That's why there's the old saw: location, location, location– Jeff Bezos • The company posted disappointing annual earnings of $190 mn, recording 2 straight years of declining profits. • In the year 2007, Amazon’s commitment of customer service and the strong sales of electronics and clothing helped companies profit to rebound.
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- 28. • Amazon wasalso very optimistic about its new product - a portable electronic reader. Though there was already such product available from companies such as Sony, Amazon perfected the technology by providing a great reading experience. The best customer service is if the customer doesn't need to call you, doesn't need to talk to you. It just works – Jeff Bezos • In Nov 19, 2007, it launched its ‘Kindle’ at $399. More than 90,000 digital books was immediately made offered for purchase. • The talk show legend Oprah Winfrey promoted Kindle on her show and it became immediate hit. Within a year of its launch, more than 2,50,000 kindles got sold out.
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- 30. • In thatyear 10% of the total books sales came from digital books. The success of Kindle helped Amazon to push sales in 2008 as well. • In 2009, Amazon released an upgraded version of Kindle. Then, almost 4,00,000 titles were made available on the web site. I believe you have to be willing to be misunderstood if you're going to innovate– Jeff Bezos • During that season, for the first time, digital books sold more than the physical books. Kindle became most popular on Amazon.com. • Amazon continued to expand its services and products and its improved its customer experiences.
- 31. Amazon’s ambitious project‘Prime Air’ - to deliver packages to customer in 30 minutes or less.
- 32. • In thesame year, it acquired Zappos, an online shoe and apparel retailer. • Amazon released the third version of Kindle in 2010 which is named as Kindle DX. It also made Kindle application for smart phones, tablets and personal computers. The over all sales continued to grow. I think frugality drives innovation, just like other constraints do. One of the only ways to get out of a tight box is to invent your way out.– Jeff Bezos • The company continued to invest in its hardware division from late 2010. • This has left people guessing about what would be the next revolutionary product from Amazon.
- 33. and it haslined up now..
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- 36. 1. Maintenance ofthe massive IT infrastructure 2. Marketing 3. Maintenance of warehouses & fulfillment centers 4. Salaries to all the technical and non technical resources Suppliers & Manufacturers Sellers Network Alliance with ebook publishers Skillful technical & operation people Warehouses & Fulfillment Centers Kindle product developers Merchandising On the web By email Selling products on amazon.com Amazon S3 A9 Product Search Kindle The mass customer group Web 2.0 companies Ecom Portals Book Readers On Amazon.com Mobile Apps Partners 1. Sales (physical books & e-books) 2. Commission on reseller sales 3. Prime monthly subscriptions 4. Data storage revenue Resources Value Offer Channels Customer Cost Revenue Activities Customer Relationship Business Model
- 37. Key Numbers (inmn) ($39) $631 $1,152 2012 2011 2010 Net income (loss) $51,733 $42,000 $30,792 $9,360 $6,077 $3,412 2012 2011 2010 Product / Service Sales Net product sales Net services sales $544 $934 $1,497 2012 2011 2010 Income before income taxes $61,093 $48,077 $34,204 2012 2011 2010 Net Sales
- 38. Leadership Principles • CustomerObsession • Ownership • Invent & Simplify • Are Right, A Lot • Hire and Develop the Best • Insist on the Highest Standards • Think Big • Bias for Action • Frugality • Vocally Self Critical • Earn Trust of Others • Dive Deep • Have Backbone; Disagree and Commit • Deliver Results
- 39. Departments • North Americaand International Sales • Seller Services • E-Commerce Platform • Worldwide Operations and Customer Service • Amazon Web Services • Digital • Finance and Administration • Human Resources • Legal
- 40. References •The story ofamazon.com – Sara Gilbert •Faber Novel’s – Amazon.com – the Hidden Empire •Amazon.com – 2012 annual report •Wikipedia •www.amazon.com / ir •World Wide Web •http://www.brainyquote.com/quotes/authors/j/jeff_bezos.html •Business model generator •Geekwire
- 41. Concluding Note This ismy tribute to Amazon, one of the most innovative company in the planet. KR Krishna CBAP PMP Program Management Consultant Mobile : +91-98408-53661 Email : [email protected]