“If you make customers unhappy in

the physical world, they might each

tell six friends. If you make
customers unhappy on the Internet,
they can each tell 6,000.”
 Introduction
Trade Name : Amazon
2
Founder : Jeff Bezos
Founded : July, 5, 1994
Headquarters : Seattle, Washington
Area served : Worldwide
Products : Echo, Fire Tablet,
Fire TV, Fire OS, Kindle
Services : Amazon.com, Alexa,
Appstore, Music,
Prime, Prime Videos,
Web Services
Revenue : 387 Billion USD
Employees : 1.3 Million
3
 Situation : Amazon
❖ Brand Image and Recognition :
Everyone knows about Amazon. Most people have also shopped there. In other words, it has a positive
brand image and high recognition.

❖ Cost Leadership:
Amazon is an e-commerce site and does not have a major physical presence and the costs associated
with it. Through this, as well as many strategic partnerships and well-implemented strategies, Amazon
maintains its image in the market as a low-cost vendor.

❖ Innovation and Uniqueness :

Every day, we see new kinds of products and services being added to the Amazon platform (many times
through third-party sellers). we also see new trends with a focus on user-friendly functionality and a great
shopping experience that sets it apart from competitors – this is a great example of Amazon’s strategic
differentiation.
4
 Situation : Amazon
❖ Customers’ First Choice :
Amazon’s customers are its priority – that is evident from Amazon’s mission statement, which states the company’s
goal to be the most customer-centric business in the world. Keeping in line with this mission, the company offers low costs,
great deals, and a phenomenal shopping experience to keep them satisfied. This makes it the go-to for millions of people.

❖ Partnerships :
Whether it is a strategic alliance with Evi Technologies or the acquisition of Whole Foods among other
things, the partnerships Amazon forms result in a massive increase in profits for the company.

❖ Distribution System :
Consumers want a smooth shopping experience and quick delivery – a process that does not create any
unnecessary hassle for them. And Amazon delivers immaculately. With the use of top-notch logistics and
distribution methods at play, it dominates the market when it comes to customer satisfaction.
5
 Situation : Amazon
❖ Expansion :
Amazon taps into new markets whenever it sees the opportunity to do something big. Its
unmatched brand recognition at an international level paired with its dedication to providing top-notch
services makes it a success anywhere it goes.

❖ Expansion of Offerings :
Having said what, we covered in the point above, there is always room for expanding the platform and
adding all kinds of products from more third-party sellers to its already massive list of offerings. The focus,
here, can be on products that are currently not found in abundance on the website.

❖ Unhappy Competitors:
A major strength of Amazon, as you will recall, is cost leadership – the company strives to provide its
consumers with the best products at the lowest prices. This, understandably, infuriates its competitors and
Amazon often finds itself in the middle of legal battles.

6
 Problem : Amazon
❖ Amazon is Complex :
Sellers are challenged with learning in detail about shipping options, FBA logistics, re-negotiating fees,
duplicate listings, MAP issues, tax set up, buy box competition, reviews management, and more. We’ve seen
our clients go from having one part-time employee managing their Amazon programs, to dedicating
experienced teams and bringing in agencies once they start to see the sales potential in the channel. Success
on Amazon requires keeping up with the evolving landscape and leveraging experts, whether in house or
through an agency like Ad lucent, to run a healthy and profitable program.

Solution: The biggest mistake we see is brands approaching Amazon as an afterthought and not capitalizing
on its true potential, usually because they simply don’t know where to start. You can start by comparing
your performance potential on Amazon to your other channels, and re-allocate your resources accordingly.
Take advantage of resources that Amazon offers, including Amazon’s Boost with FBA event, and their Seller
Education channel on YouTube. If you’re still how to do this, contact us and we can help you analyse and
forecast the opportunity for your products.

7
 Problem : Amazon
❖ Profitability Isn’t Guaranteed :
Depending on your sales structure, margins, shipping costs, and competition in your category, your
profit on Amazon can vary greatly. Analysing marketplace performance and profitability accurately and in a
timely fashion is challenging. Adding to this, Amazon’s reporting leaves a lot to be desired, so may sellers
don’t really know if they are truly profitable or not. If you’re running a hybrid program between 1P and 3P and
also running advertising campaigns, you have to download reports from several different interfaces, then
figure out a way to merge the data in a useful way and factor in your fee and margin data to really understand
profitability.

Solution: We recommend using an agency or a third party reporting tool to pull in your data and help you
analyse it in a useful way. Here at Ad lucent, we developed a proprietary Amazon reporting tool to pull in
product margins at the SKU level, show sales performance across both 1P and 3P and from advertising
campaigns to provide a true profitability analysis for you on an ongoing basis. A solution like this can help
you examine your margins across channels with all components factored in, allowing you to make better
business decisions. This can also be helpful in understanding sales forecasting and pricing recommendations
for your products based on category research.
8
 Problem : Amazon
❖ There’s A Lot of Competition :
Certain industries on Amazon — nutrition supplements and electronics, for example — are very
saturated, making it difficult to enter the marketplace and secure market share. Increasing competition from
new sellers in their categories is a challenge we often hear from brands. So, whether you are re-selling and
competing for the buy box or you manufacture your own products, it’s crucial to perform competitive analysis
and constantly evolve your strategy. We also often hear from brands that competitors are bidding on their
brand terms, showing headline search ads to cannibalize their traffic.

Solution: While there are many nuances in competing on Amazon based on the type of products you are
manufacturing or selling and your industry, our top three recommendations to secure market share are:
Focus on building reviews
Evaluate your product mix
Brand Registry
Build a paid advertising strategy

9
 What AMAZON has to do
❖ Keeping Up E-commerce Growth :
As noted in a recent report from by Evercore ISI's Anthony DiClemente, growth in Amazon's legacy, first-
party e-commerce business has lost some of its steam, with Amazon posting 10% growth year-over-year in
the segment "While other higher margin business lines have taken over the growth mainly from the Online
Stores unit, this operating segment still makes up >50% of revenue, and a more substantial slowdown would
weigh on consolidated revenue growth," he wrote.

❖ International Performance :
Some of Amazon's lacklustre October earnings was accounted for by weak returns in Amazon's
international segments, which posted lighter-than-expected growth at 15% on a constant currency basis
versus 21% the previous quarter. Amazon CFO Brian Olshansky pinned some of the weak growth on the
timing of India's Diwali holiday as well as Amazon's purchase of Souq.com on an earnings call, but investors
will be on the lookout for how Amazon fares internationally this year.

10
 What AMAZON has to do
❖ Keeping Rivals at Bay :
Amazon may be the undisputed leader in e-commerce, but formidable rivals like Walmart (WMT) - Get Report could
get more aggressive in their efforts to siphon market share from Amazon. In a December report, Edgewater Research's Daryl
Boehringer pointed out that Amazon pulled back on promotions and price matching versus rivals last year, and in turn,
"brick-and-mortar competition (namely Walmart) appears to be taking advantage of Amazon's less aggressive stance," he
wrote, citing an apparent profit focus, rather than a growth focus, by Amazon in recent quarters. For investors, sabre-rattling
from other retail giants, ever eager to deepen their online presence, is worth keeping an eye on in 2019.

❖ Balancing Investments vs. Profits :

With Amazon's newer efforts in areas like health care consistently in the news, Evercore's DiClemente wrote
that a fresh wave of investment by Amazon could be imminent in 2019. "Amazon is obviously notorious for plowing
earnings back into the business," he wrote. "With new initiatives like healthcare, payments, logistics, etc. continuing
to make headlines, there is some concern amongst investors that the next aggressive investment inflection could be
just around the corner." Although investing in new technologies and lines of business can reap rewards down the
road, an aggressive investment ramp-up could also weigh on Amazon's earnings growth story in the coming year,
according to DiClemente.

11
 What AMAZON has to do
❖ Dealing With More Intense Government Scrutiny :
With a new congress just settling in, fresh scrutiny of tech giants could also pose issues down the road. The EU and
other countries like France have stepped up their regulation and taxation efforts of major tech companies, including
Amazon. In the U.S., Amazon's HQ2 expansion -- and the large tax breaks it received -- became a flash point for criticism last
year of Amazon's size and influence over policymakers. And with a changing of the guard in Congress, privacy and antitrust
concerns will be key issues to watch as lawmakers on both sides of the aisle step up their scrutiny of the power of Big Tech.

12
 Conclusion
Amazon is a company that has grown exponentially from their eBook store beginnings. The internet
boom certainly contributed to the success of Amazon. However, the company has found ways to stay innovative
and relevant; Amazon has used their internet marketplace to help consumers and third party retailers buy and
sell goods conveniently from the comfort of home. The company has a goal of same day delivery, that way buying
something on Amazon will have no drawbacks. They have already accomplished two day and same day delivery to
urban areas with their subscription based services. Amazon Prime Air will make it possible to send items out of
the fulfilment centre the same day without a third party delivery service which will cut down September - 18 –
2016 PESTEL ANALYSIS OF THE VIDEO GAME INDUSTRY 5on the time it takes for the consumer to start using the
items that they purchased. With the launch of Amazon Prime Air, the company will get closer and closer to their
goal of same day delivery.

13
14