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  • Inventory turnover
  • how long does inventory sit in the warehouse
  • how much does it cost to warehouse goods
  • Packaging/Fulfillment efficiency
  • how long does it take to fill orders
  • time from shelf to truck
  • elimination of unnecessary steps

Amazons strengths:

  • COGS/Sales.
  • Working Capital/Sales.
  • Largest online retailer.
  • Extending product line and strengthening technical platform through strategic acquisitions.
  • Customer service
  • Innovation

Amazons weaknesses:

  • Low ROIC, low ROS, low R&D, and the highest PPE/Sales
  • Patent Infringement issues affect stakeholder confidence.
  • Frequent outages of Amazon's web hosting and cloud computing servers
  • Profit margins

THE END

Critical Success Factors

  • Low cost provider
  • Broad selection
  • Efficiency of distribution and fulfillment
  • First mover advantage
  • Customer service

Customer Responsiveness

Efficiency

  • Customer satisfaction
  • Retention
  • Growth
  • Amazon is the industry leader in customer satisfaction

Customer Service

Innovation

Low cost provider

Quality

- Realizing that their business model is quickly being copied by its competitor, Amazon.com differentiates itself from the others by providing superior customer service. Better customer service in Amazon.com comes in the form of additional features in their website to enhance the customer experience.

- Measuring tool: ForeSee Experience Index: US Retail Edition

One of the biggest advantage amazon.com has is its ability to sell books and other products at extremely low price without compromising the quality of its product or service. This advantage of Amazon.com quickly became one of its most important success factor.

“data gathered during 2013 and features company-level and channel-specific customer satisfaction analysis for the top 100 U.S. retailers. The report’s revealing findings from more than 67,700 customer surveys allow for comparisons of both aggregate satisfaction and satisfaction with individual retailers at the company and channel level.”

Measuring tool: Operating Expenses (in millions)

-Amazon was ranked number 1 for the 9th consecutive year in a row.

First mover advantage

Broad selection

Being one of the first few companies that ventured into the e-commerce business, Amazon.com has the first mover advantage compared to WalMart online or Barnesandnoble.com who joined shortly after. Being one of the first few, Amazon.com enjoyed benefits like having a strong customer base, a strong brand and first hand experience of handling or running business with such nature.

Efficiency of distribution and fulfillment

Leveraging on the power of the internet, Amazon.com are able to provide its customers a wide selection of books and product. Unlike the traditional retailers that needs to stock up inventory in order to display out to the public, Amazon.com displays its goods through an electronic catalog without having to stock all that is displayed.

Measuring tool: Net Sales (millions)

Organizations must ensure robust processes for product or service delivery have been put in place to deliver on the expectations set within the purchase process. Maintaining a superior distribution system allows Amazon to have a high customer retention rate compared to other competitors. The customers trust that Amazon will deliver the purchased goods on time, and with little hassle.

Measuring tool: Inventory (millions)

Measuring tool: Inventory Turnover (millions)

Amazon Internal Analysis

Value Creation Model

Alex Vincent

Joe Zhou

Bryce Rose

Kurt Christensen

Bryan Brody

Pricing

COST OF PRODUCTION

(COGS)

  • COST
  • PRICING
  • UTILITY/VALUE

Distinctive Competencies

Amazon (Millions)

2012: $45,971

2013: $54,181

Ebay (Millions)

2012: $6,968

2013: $7,640

Overstock (Millions)

2012: $900.85

2013: $1,056.55

Amazon vs Overstock

Amazon vs Ebay

  • Key Resources
  • Key Capabilities
  • Distinct competencies
  • Weaknesses

Weaknesses

Key Resources

  • Inter-competence
  • Low or negative profit margin although huge revenue
  • High SG&A cost due to good customer service
  • Risk of expansion into new market (Logic, thinking)
  • "Earth's Biggest Selection"
  • Its goodwill of the famous online-selling website in North America
  • Huge loyal customer base

Distinct competencies

Key Capabilities

  • Reputation
  • Good customer experience
  • Long-term growth potential
  • Amazon empire
  • Fast shipping
  • Innovation
  • Good customer service
  • Fast expanding in both services and geographic positions

ROIC

Overview

2014

Our COGS is high, which

shows quality & differentiation.

Our ROIC is way too low;

however, our capital turn over is great.

2013

Interest-bearing debt is money the company borrows from banks

and from those who purchase its bonds. Shareholders’ equity is the money raised from selling shares to the public,

plus earnings that have been retained by the company in prior years and are available to fund current investments.

ROIC measures the effectiveness with which a company is using the capital

funds that it has available for investment.

Return on invested capital (ROIC) = Net profit /Invested capital

net profit = total revenues – total costs

total costs = (1) costs of goods sold, (2) sales, general, and administrative expenses,

(3) R&D expenses, and (4) other expenses. (interest expense?)

Invested capital is the amount that is invested in the operations of a company—

that is, in property, plant, equipment, inventories, and other assets.

Invested capital comes from two main sources: interest-bearing debt and shareholders’ equity.

Signifying net profit by π, invested capital by K, and

revenues by R, then ROIC = π/K. If we multiply

through by revenues, R, this becomes R * (π/K) = (π * R)/(K * R),

which can be rearranged as π/R * R/K.

π/R is the return on sales and R/K capital turnover.

Comparisons

Our ROIC has

declined over the

last year, and is

not as strong as

we need. We are

not too far from

our competitors,

and strong strategy

will change that.

Competitive Advantage Model

  • Efficiency
  • Quality
  • Innovation
  • Customer Responsiveness

  • Increased efficiency
  • new creative products
  • Platforms that expand usability

1- Trust

2- Simplicity

3- Sales & Promotions

4- Buyer Experience

1- Trust.

Upscale store vs. garage sale.

2- Simplicity.

What would one click get you?

3- Sale & Promotions.

Playing on Repeat

4- Buyer Experience.

Check-out and Shipping speeds

1- Trust

2- Simplicity

3- Sales & Promotions

4- Buyer Experience

1- Trust.

The target market.

2- Simplicity.

Both equal.

3- Sales & Promotions.

Both equal.

4- Buyer Experience.

Convenience

.

Our COST OF GOODS SOLD is declining,

which is in our favor.

And our cost of SALES, GENERAL, and

ADMINISTRATIVE is the lowest,

also a postive for us

We are in the middle ground

on CAPITAL TURNOVER,

a measure of how effectively we

use invested capital to generate revenues.

And we are making good use

of our working capital.

Internal Analysis

  • Critical Success Factors
  • Distinctive Competencies
  • Competitive Advantage Model
  • Value Creation Model
  • ROIC
  • SWOT
  • Fast delivery
  • Accuracy
  • Condition of package upon arrival
  • Goods in same condition as portrayed on the website
  • Price Points
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