Amazon: Innovator or Destroyer? (Or Both?)

A M A Z O NI N N O VAT O R O R D E S T R O Y E R ?

( O R B O T H ? )

2003/12/31 2005/3/31 2006/6/30 2007/9/28 2008/12/31 2010/3/31 2011/6/30 2012/9/28 2013/12/30$0

$40

$80

$120

$160

$200

$240

$280

$320

$360

$400

-2.50%

-1.25%

0%

1.25%

2.50%

3.75%

5.00%

A M A Z O N ’ S P E R F O R M A N C EM

arke

t Cap

italiz

atio

n

Net P

rofit

Mar

gin

Why the sudden decline?

Yet Market Cap kept rising

“We seek to offer the Earth's Biggest Selection and to be the Earth's most customer-centric company, where customers can find and discover anything they may want to buy online.”

Amazon Timeline

A m a z o n d e b u t s o n

t h e w e b

1995 20132000 2005 2010

A m a z o n g o e s p u b l i c . H i t s

1 M M c u s t o m e r s

A d d s m u s i c a n d v i d e o

A d d s t o y s , e l e c t r o n i c s ,

t o o l s , h a r d w a r e

R e p o r t s f i r s t n e t p r o f i t

F o c u s o n a d d i n g c o n t e n t a n d p r o p e r t i e s

O r i g i n a l K i n d l e l a u n c h

A n n o u n c e K i n d l e F i r e

Ta b l e t

P r i m e A i r a n n o u n c e d

B e g i n i n v e s t i n g i n t e c h n o l o g y

( A 9 , L a b 1 2 6 )

L a u n c h A m a z o n F r e s h , g r o c e r y

d e l i v e r y s e r v i c e

M a j o r W a r e h o u s e E x p a n s i o n

A m a z o nP r i m e

Four key investments

$0

$40

$80

$120

$160

$200

$240

$280

$320

$360

$400

2003/12/31 2005/3/31 2006/6/30 2007/9/28 2008/12/31 2010/3/31 2011/6/30 2012/9/28 2013/12/30-2.50%

-1.25%

0%

1.25%

2.50%

3.75%

5.00%

M a j o r W a r e h o u s e E x p a n s i o n

B e g i n i n v e s t i n g i n t e c h n o l o g y

( A 9 , L a b 1 2 6 )

L a u n c h A m a z o n F r e s h , g r o c e r y

d e l i v e r y s e r v i c e

A m a z o nP r i m e

Software Hardware

Building a foundation

Prime

Establishing a habit

P O W E R E D B Y A C O M P L E X D ATA B A S E W I T H A S I M P L E P H I L O S O P H Y

“Chaotic Storage System”

Compare Fulfillment Costs

B Y 2 0 1 5 , E S T I M AT E A C C E S S T O 5 0 % O F P O P U L AT I O N

Amazon Fulfillment Centers

Automation: 80% of shipments, within 30 minutes of order

Technology + Scale + Ecosystem + Storage + Fullfillment = Defacto Distribution System

So what does all this mean?

R E TA I L E R S S H O U L D B E S C A R E D S H * T L E S S

Possible Retail Scenarios

Ubiquitous Home Delivery

Selective Home Delivery

High Touch Environment

Low Touch Environment






• Consumers want to get out• Less about product selection• More about entertainment• Don’t desire to transport goods• Delivery is reliable and inexpensive• Retail space is small and hands on






Retail as Experience







• Consumers want to be efficient• More about product mixes• More about context• Don’t desire to transport goods• Delivery is reliable and inexpensive• Retail space is larger and themed







Retail as Showroom







Retail as Showroom

• Consumers want to be efficient• All about the product options• More about efficiency and price• Have to transport many goods• Delivery is fragmented/costly• Retail space is large and stacked







Retail as ShowroomRetail as Warehouse








• Consumers want to get out• Curated product selection• More about service• Have to transport select goods• Delivery is bundled in price• Retail space is a blend






Retail as ExperienceRetail as Service







Retail as ExperienceRetail as Service


D I R E C T O R O F S T R AT E G I C P L A N N I N GC A L L A H A N C R E E K

Kent Stones

[email protected]@KentStones913-948-1210

Amazon: Innovator or Destroyer? (Or Both?)

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