1. Amazon Case Competition
Team C^3G

2. Identify the Next Customer Segment… The Amazon Way
Think Big: Market Analysis
Customer Obsession: Profile
Bias for Action: Program Implementation
Deliver Results: Revenue, Costs and Risks

3. Think Big
Customer Obsession
Bias for Action
Deliver Results
Amazon’s next customer segment program: Our
approach
Amazon
Customer Segment
Goals
• Increase Prime Subscriptions
• Encourage recurring purchase
• More Selection
• Lower Pricing
• Greater Convenience
Considerations
• Identify New Customers
• Incorporate Existing Products
• Unmet Needs
• Segment Size
• Increase Profits
• Increase Overall Brand Awareness
• Customer Satisfaction and Loyalty
• Amazon Customer Advocacy
Outcomes

4. Think Big
Customer Obsession
Bias for Action
Deliver Results
Customer Segmentation
Customer
Segment
Market Size
% NonAmazon
Users
Recurring
Purchases
Ease to
Convert
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Baby Boomers 
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Entrepreneurs 




Active/Fit

Purchasing
Power
Mothers

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
Movers

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Students

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Yuppies

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

5. Think Big
Customer Obsession
Bias for Action
Deliver Results
Customer Segmentation
Customer
Segment
Market Size
% NonAmazon
Users
Recurring
Purchases
Ease to
Convert




Baby Boomers 




Entrepreneurs 




Active/Fit

Purchasing
Power
Mothers





Movers





Students


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
Yuppies

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

6. Think Big
Customer Obsession
Bias for Action
Deliver Results
Meet Ari…
Ari is a sandwich lover trying to start his own Deli
• I need furniture for my store
• I need point of sale systems
• I need computers, websites…
“I make great sandwiches, not business purchases!”

7. Think Big
Customer Obsession
Bias for Action
Meet Anne…
Anne aspires to become the next Coco Chanel
• I need design tools
• I need books on newest fashion trends
• I need a website that I can sell my clothes on
“I know fashion, not technology!”
Deliver Results

8. Think Big
Customer Obsession
Bias for Action
Deliver Results
Anne and Ari are not alone…
• There are 22 million small business owners in the US that represent
$218 billion in annual spending.
• They cover various industries and demographics
• They share similar pains running businesses:
• Tight on cash
• Not enough time
• Lack of technology expertise
So we thought why not create a
dedicated program to reduce some of
the pains so they can focus on what they
do best.

9. Think Big
Customer Obsession
Bias for Action
Deliver Results
Introducing: Amazon Entrepreneur
Let us help you realize your business potential
and more…

10. Think Big
Customer Obsession
Bias for Action
Amazon Entrepreneur: Details
Program Offer
•3 months of free Amazon Prime
•10% discount on all office supplies
•3 months of free tier 1 Amazon Web Services
•One hour of free Amazon Web Services consultation
Program Benefit
•Savings
•Convenience
•Technology Expertise
•Scalability
Deliver Results

11. Think Big
Customer Obsession
Bias for Action
Deliver Results
Amazon Entrepreneur: Marketing Channels
Online and Mobile
Google
AdWords
Email
Entrepreneur
Online
Entrepreneur
Blogs
LinkedIn
Twitter
Facebook
Mobile
amazon.com
aws.amazon.com
amazonsupply.com
Direct Mail
Identify
Entrepreneur:
Business
Registrations
and
Purchased
Lists
Television (Commercials)
Fox Business, MSNBC, ESPN
Amazon
Entrepreneur
Invitation
Public Relations
Amazon Business Case
Competition
Promotional Television
Appearance by Jeff Bezos

12. Think Big
Customer Obsession
Bias for Action
Deliver Results
Amazon Entrepreneur: Risks
• We believe that our AWS, Amazon Prime and Office Supplies
segments will suffer some revenue erosion from the roll-out of the
new Amazon Entrepreneur:
AWS
Decreases
- 0.01%
Prime
Decreases
- 0.30%
Office Supplies
Decreases
< - 0.01%
Other Retail
Increases
> 0.20%
Overall, the indirect revenue
impact on other lines of business
should not be significant.

13. Think Big
Customer Obsession
Bias for Action
Deliver Results
Amazon Entrepreneur: Program Cost
Cost decreases dramatically after the first year
25.0%
20.0%
Estimate Initial Program Cost: $20 Million
15.0%
10.0%
5.0%
0.0%
2014
2015
2016
Marketing Expenses
2017
Technology & Content
2018
AWS Consultations
2019
2020
General & Admin
Key assumptions
1) Marketing spend is composed of On-going Marketing Expense (estimated at 3.7% of revenue as per 10-k), plus additional advertising expense associated with the
new program ($25M over 3 years, mostly in cable TV and internet advertising). It also contains an additional $6M allowance for business development costs.
2) Technology & content is estimated at 9% of revenues (vs. 7.5% for all of Amazon).

14. Think Big
Customer Obsession
Bias for Action
Deliver Results
Amazon Entrepreneur: Revenue Projection
5 Year Highlights:
•566,200 new Prime customers
•$753 million new revenue
•50.7% compound Annual Growth
5 year target
2014
2015
2016
2017
2018
2019
2020
CAGR
Revenues
101.1
239.0
393.6
564.7
752.9
958.7
1,182.6
50.7%
New Prime Customers
91.2
195.7
309.7
433.2
566.2
708.7
860.7
45.4%

15. Think Big
Customer Obsession
Bias for Action
Deliver Results
Amazon Entrepreneur: Revenue Breakdown
1,400.0
1,200.0
1,000.0
Breakdown of Amazon Entrepreneur Revenues (in US$ millions)
•31.3% average EBITDA margin
•7.9 times higher EBITDA margin than Amazon
•Represent 3% of the total Amazon Profit starting year 3
367.7
299.6
800.0
172.7
235.7
600.0
176.0
111.1
400.0
60.5
46.2
200.0
0.0
4.5
36.2
53.0
2014
7.4
116.1
2015
62.5
26.2
16.2
78.7
63.5
49.8
84.1
37.3
117.6
140.6
563.6
454.9
356.3
267.3
187.3
2016
2017
COGS
Fulfillment Costs
2018
SG&A
2019
EBITDA
Key assumptions
1) We have taken future AMZN revenue and EBITDA projections done by Morgan Stanley.
2) We have assumed an uptick from current levels of Technology & Content expense from 7.5% of sales to 10% of sales.
3) We have assumed $19M in business development & initial marketing spend on year 1, $9M on year 2 and $3M on year three.
4) COGS and fulfillment costs are assumed to maintain current levels as a percentage of retail segment revenues.
5) All estimates include erosion of current AWS and Amazon Prime account revenues.
2020

16. Think Big
Customer Obsession
Thank You!
Bias for Action
Team C^3G
Deliver Results