Marketing Mix

COMPANY PROFILE

Amazon.com, Inc.

REFERENCE CODE: 2B52E1D8-E964-4D7F-8B1B-C48DBC97815F
PUBLICATION DATE: 27 Dec 2013 www.marketline.com COPYRIGHT MARKETLINE. THIS CONTENT IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED OR DISTRIBUTED.

Amazon.com, Inc.
TABLE OF CONTENTS

TABLE OF CONTENTS
Company Overview..............................................................................................3
Key Facts...............................................................................................................3
Business Description...........................................................................................4
History...................................................................................................................6
Key Employees...................................................................................................13
Key Employee Biographies................................................................................14
Major Products and Services............................................................................20
Revenue Analysis...............................................................................................23
SWOT Analysis...................................................................................................24
Top Competitors.................................................................................................32
Company View.....................................................................................................33
Locations and Subsidiaries...............................................................................36

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Amazon.com, Inc.
Company Overview

COMPANY OVERVIEW
Amazon.com, Inc. (Amazon or 'the company') is one of the largest global online retailers. It offers a wide range of merchandise, including books, apparel, electronics and other general merchandise products through its website www.amazon.com. Amazon also operates through various international websites. The company has operations in North America, Europe and Asia. It is headquartered in
Seattle, Washington, and employed about 88,400 people as of December 31, 2012.
The company recorded revenues of $61,093 million in the financial year ended December 2012
(FY2012), an increase of 27.1% over FY2011. The operating profit of Amazon was $676 million in
FY2012, a decrease of 21.6% compared to FY2011. The net loss was $39 million in FY2012, compared to the net profit of $631 million in FY2011.

KEY FACTS
Head Office

Amazon.com, Inc.
410 Terry Avenue North
Seattle
Washington 98109 5210
USA

Phone

1 206 266 1000

Fax
Web Address

http://www.amazon.com

Revenue / turnover 61,093.0
(USD Mn)
Financial Year End

December

Employees

88,400

NASDAQ Global
AMZN
Select Market Ticker

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Amazon.com, Inc.
Business Description

BUSINESS DESCRIPTION
Amazon is an online retailer. The company offers a range of products and services through its trademark e-commerce site, amazon.com.The products offered by the company include merchandise purchased for resale from vendors and products offered by third party sellers. The company also manufactures and sells the Kindle devices.
The company operates through two business segments, classified based on geographical presence:
North America and international.
The North America segment focuses on retail sales of consumer products and handles subscriptions through websites, including www.amazon.com and www.amazon.ca. This segment also includes export sales generated from these websites. The North American segment also serves developers and enterprises of all sizes through Amazon Web Services (AWS), which offers information technology infrastructure services to businesses in the form of web services. The company also offers customers a membership program, Amazon Prime.
The international segment earns revenue from the retail sales of consumer products (including from sellers) and subscriptions from international locations. This segment also includes export sales from international locations (including export sales from their respective sites to customers in the US and
Canada), but excludes export sales from the US and Canadian locations. The segment operates websites such as www.amazon.co.uk, www.amazon.de, www.amazon.fr, www.amazon.co.jp, www.amazon.it, www.amazon.cn, www.amazon.es, www.amazon.com.br, www.amazon.in, www.amazon.com.au and www.amazon.com.mx.
The company caters to four primary customer sets: consumers, sellers, enterprises and content creators. The company serves consumers through its retail websites. Amazon designed its websites to enable the sale of millions of unique products; some of these products are sold by Amazon, while the others are sold by third party vendors. The company offers merchandise at the lowest possible prices by adopting everyday low product pricing strategy and through shipping offers, including through membership in Amazon Prime. Amazon also provides order fulfillment services to its consumers.
The company fulfills customer orders through its fulfillment centers and warehouses located in the
US and other foreign countries. In certain countries, Amazon operates through co-sourced and outsourced arrangements for order fulfillment.
The company caters to sellers by offering programs that enable its customers to sell their products on sellers' websites and also on Amazon's websites. The company earns fixed fees, revenue share fees or per-unit activity fees on such transactions.
Amazon serves enterprises through AWS, which provides access to technological infrastructure that developers can use to enable virtually any type of business.

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Business Description

The company serves content creators such as authors and independent publishers through Kindle
Direct Publishing, an online platform that allows independent authors and publishers to select a 70% royalty option and make their books available in the Kindle Store. Amazon Publishing (Amazon's own publishing unit) also offers authors another platform to publish their books. Amazon also offers programs that allow authors, musicians, filmmakers, application developers, and others to publish and sell content.
In addition, Amazon generates revenues through co-branded credit card agreements and advertising services. Amazon.com, Inc.
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Amazon.com, Inc.
History

HISTORY
Amazon was promoted by Jeff Bezos in 1994. The company's website was publicly launched in
1995 when it became the exclusive book retailer on the Netscape and America Online websites.
The company's initial public offering on the NASDAQ Stock Exchange took place in 1997. Amazon acquired Bookpages, Telebook, Internet Movie Database, Planet All and Junglee Corp in 1998.
In 1999, Amazon expanded further with the acquisition of stakes in drugstore.com, HomeGrocer.com,
Pets.com and Exchange.com. Amazon formed a strategic alliance with Toysrus.com in the year
2000 to create a co-branded toy and video games store as well as a co-branded baby products store. Amazon established a strategic alliance with Borders Group to re-launch the Borders.com website on the Amazon e-commerce platform, in 2001. In the same year, the company launched imaginarium.com, a co-branded specialty and learning toy store.
In 2002, Amazon established a strategic alliance with the Virgin Entertainment Group to re-launch
Virgin Megastore's US and Japanese websites using the Amazon e-commerce platform. In the same year, the company launched its Canadian website.
Amazon signed a multi-year agreement with the National Basketball Association (NBA) and Foot
Locker in the year 2003 to operate the NBA Store on NBA.com and the Women's NBA Store on
WNBA.com. During the same year, the company added over 40,000 gourmet food items, more than
60,000 jewelry items, and over 70,000 health and personal care items to its product portfolio.
In 2004, the company signed a strategic alliance with The Bombay Company to launch new websites powered by Amazon's e-commerce technology for Bombay, Bombay Kids, Bombay Outlet, and
Bombay's Canadian operations. In the same year, Amazon acquired joyo.com, one of the largest online retailers of books, music and videos in China. Through this acquisition, the company entered the Chinese internet market.
The company officially launched its search engine A9 in 2005. Later in the same year, Amazon acquired BookSurge, a global leader in inventory-free book printing and fulfillment based in Charleston,
South Carolina. In 2006, Amazon acquired Shopbop.com (www.shopbop.com), a retailer of fashion-forward apparel, shoes and accessories for women. In the same year, AWS launched
'Amazon S3', a simple storage service for software developers at very low costs. The company launched Endless.com, an online shoe and accessories store, in 2006.
In 2007, Amazon acquired www.dpreview.com, a site for digital camera information and reviews. In the same year, the company acquired Brilliance Audio (www.brillianceaudio.com), the largest independent publisher of audio books in the US.

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Amazon.com, Inc.
History

Internet Movie Database (www.imdb.com), a subsidiary of Amazon, agreed to acquire Without A
Box, an online service that enables independent filmmakers to submit their works to festivals worldwide and to promote movies online, in 2008. Amazon launched its new Indie & Art House store at www.amazon.com/indies in the same year. Also in 2008, LOVEFiLM, a digital versatile disc (DVD) rental subscription service provider in the UK, acquired Amazon's DVD rental business in the UK and Germany. Amazon completed the acquisition of Audible.com in the same year. Audible is a provider of spoken audio information and entertainment on the Internet. As a result of the transaction,
Audible became a wholly-owned subsidiary of Amazon.
Further in 2008, Amazon acquired Fabric.com, an online fabric store offering custom measured and cut fabrics, as well as patterns, sewing tools and accessories.The company also launched Motorcycle
& all-terrain vehicle (ATV) Store (www.amazon.com/motorcycle), a single shopping destination for motorcycle and ATV parts, accessories and protective gear, in 2008. Later in the year, AWS launched a public beta of Amazon Elastic Compute Cloud (Amazon EC2) running Microsoft Windows Server and Microsoft SQL Server, which provided even greater flexibility for deploying solutions in the AWS cloud. Towards the end of 2008, Amazon completed the acquisition of AbeBooks, an online marketplace for books, with over 110 million primarily used, rare and out-of-print books listed for sale by thousands of independent booksellers from around the world. During the same time, AWS extended Amazon
EC2 to the European market.
The company introduced 'Amazon Kindle 2' in 2009. In the same year, Amazon launched the Amazon
Xbox LIVE Store, www.amazon.com/xboxlive, offering customers the option to purchase and gift selected Xbox LIVE games, subscription cards and Microsoft Points cards. Further in 2009, the company launched Amazon Kindle DX, a reading device that offers Kindle's wireless delivery and a massive selection of content with a large 9.7 inch electronic paper display, built-in PDF reader, auto-rotate capability, and storage for up to 3,500 books.
The company launched AmazonBasics (www.amazon.com/AmazonBasics), a new private-label collection of consumer electronics, in 2009. In the same year, Amazon completed the acquisition of
Zappos.com, an online apparel, footwear and accessories retailer.
In early 2010, Amazon introduced Kindle DX with Global Wireless, a new version of Kindle with the convenience of wireless content delivery, in over 100 countries. Around the same time, Amazon allowed authors and publishers around the world to use the self-service Kindle Digital Text Platform
(DTP) to upload and sell books in English, German and French to customers worldwide in the Kindle
Store. Previously, the service was available only to authors and publishers in the US.
Subsequently in the year, the company acquired Touchco, a touch screen technology company.
The company also allowed authors and publishers to use the self-service Kindle DTP to upload and make available their books in Spanish, Portuguese and Italian to customers worldwide.
AWS launched the beta release of Amazon Simple Notification Service later in 2010. This service allows developers to publish messages from an application and immediately deliver the message

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History

to subscribers or other applications. During the same period, AWS launched its Amazon Relational
Database Service in the European Union. The service provides cost-efficient and resizable database capacity in the cloud by automating database administration tasks. Further in 2010, Amazon launched a new customer education center, Amazon 3D 101, a one stop information and shopping center for all 3D related merchandise.
Later in the year, AWS entered into an agreement with Netflix to operate a number of mission-critical, customer-facing and backend applications for Netflix. Around the same time, Amazon Services, a subsidiary of the company, launched a new version of Amazon WebStore, a full-featured e-commerce product that enables small and medium sized retailers and manufacturers to design, build and manage their multichannel e-commerce businesses using the company's technology.
Further in the year, Amazon launched its Wheels Store, a shopping destination for wheels and related parts and accessories. Subsequently, Amazon also launched a new generation of Kindle, with electronic ink screen, 21% smaller body and 15% lighter weight. Later in 2010, the company acquired BuyVIP.com, a fashion and lifestyle online buying community. BuyVIP.com has more than six million members in countries such as Spain, Germany and Italy. During the same period,
Endless.com launched its new jewelry category featuring 68 brands and more than 3,500 styles.
Amazon.ca launched its new Sports and Outdoors Store featuring several brands and sports and activity related products later in 2010. Around the same time, Amazon acquired Quidsi, which operates
Diapers.com, an online baby care specialty site, and Soap.com, an online site for everyday essentials.
In the beginning of 2011, Amazon acquired the remaining shares in LOVEFiLM International, one of the leading European subscription entertainment services. Later in the same year, the company launched the biggest eBook store in Germany. Amazon also opened a 900,000 square feet fulfillment center in Indianapolis, Indiana. The company entered into a partnership with Triggit, a San Francisco based company, to strengthen its focus on online display advertisement business.
The company opened 1.2 million square feet fulfillment center in Phoenix, Arizona in 2011. In the same year, CBS Corporation (CBS) and Amazon entered into a non-exclusive licensing agreement enabling Amazon's customers to stream television (TV) shows from CBS's library. Further in the year, Amazon signed a licensing agreement with NBCUniversal Domestic TV Distribution allowing
Amazon Prime members to stream select Universal Pictures movies through Prime Instant Video.
Further in 2011, the company opened 500,000 square feet fulfillment center in Lebanon, Tennessee.
Amazon launched Kindle Fire selling at $199, much lower than Apple's cheapest iPad priced at $499 in 2011. In the same year, Amazon and Hearst Corporation (Hearst) entered into an expanded, multi-faceted consumer marketing, e-commerce and content relationship. Through this relationship,
Amazon became Hearst's single-largest third-party seller of print subscriptions for its magazines through digital channels. The company also announced plans work with Hearst in e-commerce.
Later in 2011, Amazon.fr launched the French Kindle Store offering its customers more than 35,000
French-language Kindle books, 28 L'Express best sellers, graphic novels and more than 4,000 free classics in French. During the same time, Amazon.ca launched its new Tools and Building Supplies

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Store (amazon.ca/tools) featuring more than 60,000 tool and home improvement-related products.
Further in the year, Endless.com launched its free endless.com application for iPhone.This application allows Amazon's customers to purchase from a wide assortment of shoes and accessories for men, women and kids.
Amazon.es launched the Spanish Kindle Store towards the end of 2011 offering its customers access to more than 22,000 Spanish-language Kindle books, including best sellers, and more than a thousand free classics in Spanish. In the same year, Amazon.it launched the Italian Kindle Store offering its customers more than 16,000 Italian-language Kindle books, a wide range of best sellers and hundreds of free Italian classics. Around the same time, LOVEFiLM, an Amazon company, and Sony Pictures
Television signed a multi-year content deal, allowing LOVEFiLM members access to new and future
Sony Pictures titles, as well as catalog titles and TV series effective from June 2012. During the same time, Amazon expanded its fulfillment center in Phoenix by 400,000 square feet.
In February 2012, AWS introduced Amazon Simple Workflow Service, a workflow service for developing scalable and resilient applications. In April 2012, the company launched a new
Spanish-language eBook store within the Amazon Kindle Store, eBooks Kindle en Espanol
(www.amazon.com/tiendakindle). In the same month, AWS introduced Amazon CloudSearch, a new service that allows customers to easily integrate fast and highly scalable search functionality into their applications. Further in April 2012, Amazon launched AmazonSupply (www.amazonsupply.com), a new website offering a broad range of parts and supplies to business, industrial, scientific and commercial customers. Later in the month, Amazon.ca launched its new Baby store (amazon.ca/baby) with more than 25,000 baby-related products.
In May 2012, the company announced plans to open a new 70,000 square feet customer service facility in Winchester, Kentucky. In the following month, Amazon Publishing acquired the publication rights from Avalon Books to more than 3,000 backlist titles mainly in the romance, mystery and
Western categories. In the second quarter of FY2012, Amazon acquired Kiva Systems, one of the leading developers of material handling technology. In July 2012, the company opened a 244,000 square feet fulfillment center in Saga, Japan.
Amazon launched Amazon Textbook Rental program in August 2012. Through this program, students can rent textbooks for the semester and save up to 70%. In the same month, the company launched
India Kindle Store on Amazon.com (www.amazon.com/kindlestoreindia). Further in August 2012,
Amazon launched its Amazon Appstore in the UK, Germany, France, Italy and Spain. This gives the European customers access to Amazon's broad range of Android applications with the convenience of shopping on Amazon from their Android phones and tablets.
In September 2012, Amazon launched Kindle Fire high definition (HD) tablet which has seven inch display and is sold for $199. In the same month, the company opened 1,000,000 square feet fulfillment center in Germany and 430,400 square feet fulfillment center in France. Amazon also opened nearly one million square feet fulfillment center in Spartanburg, South Carolina in the same month.
Amazon launched Kindle Paperwhite and Kindle Paperwhite third Generation (3G) in October 2012.
These are the most advanced e-readers created with 62% more pixels and 25% higher contrast. In

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the same month, Amazon.co.jp introduced Japanese Kindle Store and Kindle Paperwhite, the first
Japanese-language Kindle. Also in October 2012, Amazon introduced a new Kindle application designed for Windows 8. In the same month, the company opened fulfillment centers in the following locations: one each in Delaware, Indiana and Spain, and two each in Tennessee and Virginia.
In November 2012, the company launched Fulfillment by Amazon, a new service for third-party sellers that provides access to Amazon's fulfillment and customer service resources and expertise.
In the same month, Amazon launched Amazon Wine (www.amazon.com/wine), a new website offering customers a broad range of wines crafted by wineries around the country. Further in
November 2012, the company opened a 193,500 square feet fulfillment center in Canada, 450,000 square feet fulfillment center in the UK, 1,000,000 square feet fulfillment center in Germany, and
860,800 square feet fulfillment center in Japan.
The company launched the Brazil Kindle Store (www.amazon.com.br) and Free Portuguese Kindle reading applications for Android phones and tablets, iPads and iPhones, in December 2012. In the same month, Amazon launched Friends & Family Gifting, a feature that allows customers to keep track of birthdays and special occasions, get shopping reminders and manage gift ideas for everyone on their list.
In January 2013, Amazon acquired IVONA Software, a text-to-speech technology company. AWS launched Amazon Elastic Transcoder, a highly scalable service for transcoding video files between different digital media formats, in January 2013. Through this, customers can convert their large high resolution master video files into smaller versions that are optimized for playback on websites, mobile devices, connected TVs and other video platforms.
The company launched Amazon Coin, a new virtual currency for purchasing games, applications and in-app items on Kindle Fire, in February 2013. In the same month, AWS introduced AWS
OpsWorks, an application management solution for the complete lifecycle of complex applications, including resource provisioning, configuration management, deployment, monitoring and access control. This enables developers to manage all tasks required to model, deploy, scale, and maintain their applications. Amazon.ca launched Amazon Mobile Application for iPhone, iPad, Android and
Windows Phone. This allows customers to browse and shop for products, compare prices, read reviews and make purchases on the go.
In March 2013, the company launched Kindle Fire HD with a large 8.9 inch display in in the UK,
Germany, France, Italy, Spain and Japan. In the same month, Amazon.ca launched beauty and health and personal care stores offering more than 80,000 items, including diapers and wipes, household supplies, health care and nutrition, personal care items and beauty products. Further in
March 2013, Amazon reached an agreement to acquire Goodreads, one of the world’s largest sites for readers and book recommendations.
The company launched 50+ Active and Healthy Living Store (www.amazon.com/50activeliving) featuring several nutrition, wellness, exercise and fitness, medical, personal care, beauty and entertainment items, in April 2013. In the same month, Amazon Wine Store introduced shipping to customers in Texas. In May 2013, Amazon Publishing launched Kindle Worlds, the first commercial

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History

publishing platform that will enable writers to create fan fiction based on a range of original stories and characters and earn royalties. In June 2013, the company launched Amazon Storyteller, a free online tool for writers and filmmakers, which turns scripts into storyboards. In August 2013, Amazon launched Amazon Art (www.amazon.com/art), a marketplace offering customers direct access to more than 40,000 works of fine art from over 150 galleries and dealers.
In October 2013, the company launched ‘Login and Pay with Amazon’, allowing participating companies to empower customers to browse and buy using their Amazon account information. In the same month, Amazon reached an agreement to acquire TenMarks, a company which designs web-based mathematics curriculum for students. Amazon and TenMarks will together develop educational content and applications, across multiple platforms. Further in the same month, the company’s Wine Store introduced shipping to customers in New York, Michigan, Arizona and
Louisiana. Also, in October 2013, Amazon opened a one million square feet fulfillment center in
Tracy, California as well as in Coppell, Texas. The company also announced plans to open a one million square feet fulfillment center in Baltimore, Maryland and a 1.2 million square feet fulfillment center in Moreno Valley, California.
Amazon launched the Australian Kindle Store, offering more than two million eBooks, the most
English language best sellers and more than 400,000 Kindle-exclusive titles, in November 2013.
During the same month, AWS launched Amazon WorkSpaces, a fully managed desktop computing service in the cloud. Further in the same month, AWS launched Amazon AppStream, a new service that enables developers to stream resource-intensive applications and games from the cloud to a broad range of devices.
AWS also introduced Amazon Kinesis, a fully managed service for real-time processing of high-volume, streaming data, in November 2013. It also introduced Amazon Relational Database
Service (Amazon RDS) for PostgreSQL. Amazon RDS manages complex and time-consuming administrative tasks such as PostgreSQL software installation and upgrades, storage management, replication for high-availability and back-ups for disaster recovery. Later in the month, Amazon entered into an exclusive content licensing agreement with new film studio A24 to make Prime Instant
Video the exclusive premium subscription home for all of the current and forthcoming A24 titles shortly following their release on DVD and Blu-Ray. In November 2013, Amazon announced plans to open a one million square feet fulfillment center in Windsor, Connecticut.
In December 2013, Amazon announced the availability of Amazon Cloud Player for iOS in BMW
Apps and MINI Connected-equipped vehicles from model year 2011 forward. Amazon Cloud Player customers using iPhone and iPod Touch devices can access their music using the vehicle’s controller and screen. In the same month, Amazon Publishing launched StoryFront, a new imprint offering short fiction across genres. Amazon introduced a new version of Kindle FreeTime on Kindle Fire tablets with several new educational books, apps, games and videos, including Common Core
Standard-aligned books, educational apps from developers like BrainPOP and Agnitus, and movies and TV shows.
Amazon Studios, the original film and series production arm of Amazon, introduced Amazon
Storybuilder, a new product to help writers, in December 2013. Amazon Storybuilder makes

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History

notecarding digital, giving screenwriters the ability to lay out digital notecards on a virtual corkboard to capture the beats of their story. Also, these notecards are saved online, giving users access to their projects on their computer, tablet or smartphone. In the same month, AWS announced the availability of I2 instances, the next generation of Amazon EC2 storage-optimized high I/O instances based on solid state disk (SSD) technology that provides customers with high random I/O performance. Amazon.com, Inc.
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Amazon.com, Inc.
Key Employees

KEY EMPLOYEES
Name

Job Title

Board

Jeffrey P. Bezos

President, Chief Executive Officer and Chairman of the Board

Executive Board

Tom A. Alberg

Director

Non Executive Board

John Seely Brown

Director

Non Executive Board

William B. Gordon

Director

Non Executive Board

Jamie S. Gorelick

Director

Non Executive Board

661410 USD

Alain Monie

Director

Non Executive Board

661410 USD

Jonathan J. Rubinstein

Director

Non Executive Board

Thomas O. Ryder

Director

Non Executive Board

Patricia Q. Stonesifer

Director

Non Executive Board

Jeffrey M. Blackburn

Senior Vice President, Business
Development

Senior Management

Sebastian J. Gunningham

Senior Vice President, Seller
Services

Senior Management

Andrew R. Jassy

Senior Vice President, AWS

Senior Management

Steven Kessel

Senior Vice President

Senior Management

Diego Piacentini

Senior Vice President, International Senior Management
Consumer Business

Thomas J. Szkutak

Senior Vice President and Chief
Financial Officer

H. Brian Valentine

Senior Vice President, Ecommerce Senior Management
Platform

Jeffrey A. Wilke

Senior Vice President, Consumer
Business

Shelley L. Reynolds

Vice President, Worldwide Controller Senior Management and Principal Accounting Officer

David A. Zapolsky

Vice President, General Counsel and Secretary

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Senior Management

Senior Management

Compensation
1681840 USD

661410 USD

11611680 USD

11819223 USD
8451369 USD

17727806 USD

Senior Management

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Amazon.com, Inc.
Key Employee Biographies

KEY EMPLOYEE BIOGRAPHIES
Jeffrey P. Bezos
Board: Executive Board
Job Title: President, Chief Executive Officer and Chairman of the Board
Since: 2000
Age: 49
Mr. Bezos has been the President at Amazon since 2000, the Chief Executive Officer since 1996 and the Chairman since 1994. Previously, he served as the company’s President from 1994 to 1999.

Tom A. Alberg
Board: Non Executive Board
Job Title: Director
Since: 1996
Age: 73
Mr. Alberg has been a Director at Amazon since 1996. He has also been a Managing Director at
Madrona Venture Group, a venture capital firm, since 1999 and a Principal at Madrona Investment
Group, a private investment firm, since 1996.

John Seely Brown
Board: Non Executive Board
Job Title: Director
Since: 2004
Age: 72
Mr. Brown has been a Director at Amazon since 2004. He has been a Visiting Scholar and Advisor to the Provost at the University of Southern California since 1996 and an Independent Co-Chairman of the Deloitte Center for Edge since 2006. Mr. Brown served as the Chief Scientist at Xerox
Corporation and as a Director at the Xerox Palo Alto Research Center in the past. He also served as a Director at Polycom from 1999 to 2007. Currently, Mr. Brown is also a Director at Corning
Incorporated and Varian Medical Systems.

William B. Gordon
Board: Non Executive Board
Job Title: Director
Since: 2003

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Key Employee Biographies

Age: 63
Mr. Gordon has been a Director at Amazon since 2003. He has also been a Partner at Kleiner Perkins
Caufield & Byers, a venture capital firm, since 2008. Mr. Gordon is a Co-founder of Electronic Arts, a software and gaming company, and served as its Executive Vice President and Chief Creative
Officer from 1998 to 2008. He is also a Director at Zynga.

Jamie S. Gorelick
Board: Non Executive Board
Job Title: Director
Since: 2012
Age: 62
Ms. Gorelick has been a Director at Amazon since 2012. She has also been a Partner with the law firm Wilmer Cutler Pickering Hale and Dorr LLP since 2003. Previously, Ms. Gorelick was Deputy
Attorney General of the US. She is also a Director at United Technologies Corporation.

Alain Monie
Board: Non Executive Board
Job Title: Director
Since: 2008
Age: 62
Mr. Monie has been a Director at Amazon since 2008. He has been the President and Chief Executive
Officer at Ingram Micro, a technology distributor, since 2012. Previously, Mr. Monie served as the
President and Chief Operating Officer at Ingram Micro from 2011 to 2012. He was the Chief Executive
Officer at APRIL Management Pte Ltd, an industrial company, from 2010 to 2011. Prior to that, Mr.
Monie was the President and Chief Operating Officer at Ingram Micro from 2007 to 2010.

Jonathan J. Rubinstein
Board: Non Executive Board
Job Title: Director
Since: 2010
Age: 56
Mr. Rubinstein has been a Director at Amazon since 2010. He was the Senior Vice President of
Product Innovation for the Personal Systems Group at Hewlett-Packard Company from 2011 to
2012. Mr. Rubinstein was also Senior Vice President and General Manager of Palm Global Business
Unit at Hewlett-Packard Company from 2010 to 2011. He was the Chief Executive Officer and
President at Palm from 2009 until its acquisition by the Hewlett-Packard Company in 2010, and was the Chairman of the Board of Directors at Palm from 2007 through the acquisition.

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Key Employee Biographies

Thomas O. Ryder
Board: Non Executive Board
Job Title: Director
Since: 2002
Age: 68
Mr. Ryder has been a Director at Amazon since 2002. He served as the Chairman of the Board of
Directors at Virgin Mobile USA from 2007 to 2009. Mr. Ryder also served as the Chairman at Reader's
Digest Association from 1998 to 2006 and was its Chief Executive Officer from 1998 to 2005. During
1984–98, he worked in several positions at American Express, including President of American
Express Travel Related Services International. Currently, Mr. Ryder is also a Director at Starwood
Hotels & Resorts Worldwide, RPX Corporation, and Quad/Graphics.

Patricia Q. Stonesifer
Board: Non Executive Board
Job Title: Director
Since: 1997
Age: 56
Ms. Stonesifer has been a Director at Amazon since 1997. She has also been the President and
Chief Executive Officer at Martha’s Table since April 2013. Previously, Ms. Stonesifer was the Vice
Chairperson of the Board of Regents at Smithsonian Institution from 2012 to January 2013 and the
Chairperson from 2009 to 2012. She also served as a Senior Advisor to the Bill and Melinda Gates
Foundation from 2008 to 2012. Previously, Ms. Stonesifer was the Chief Executive Officer at Bill and Melinda Gates Foundation from 2006 to 2008 and the President and Co-Chair from 1997 to
2006. During 1988–97, she served in many roles at Microsoft Corporation, including as the Senior
Vice President, Interactive Media division. Since 2009, Ms. Stonesifer has been a Private Philanthropy
Advisor.

Jeffrey M. Blackburn
Board: Senior Management
Job Title: Senior Vice President, Business Development
Since: 2006
Age: 43
Mr. Blackburn has been the Senior Vice President of Business Development at Amazon since 2006.
He served as the Vice President of Business Development at the company from 2004 to 2006, as the Vice President of European Customer Service from 2003 to 2004 and as the Vice President of
Operations Integration from 2002 to 2003. Prior to joining Amazon in 1998, Mr. Blackburn was
Assistant Vice President at Deutsche Morgan Grenfell.

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Key Employee Biographies

Sebastian J. Gunningham
Board: Senior Management
Job Title: Senior Vice President, Seller Services
Since: 2007
Mr. Gunningham has been the Senior Vice President of Seller Services at Amazon since 2007. Prior to joining the company, he was the President at First Data Utilities from 2006 to 2007. Mr. Gunningham was the Chief Executive Officer at Peace Software from 2004 to 2006 and the President and Chief
Operating Officer from 2002 to 2003. During 2003–04, he served as the Vice President of Enterprise
Sales at Apple. Prior to 2002, Mr. Gunningham held various positions at Oracle Corporation, including
Senior Vice President, North American Industrial Sector and Latin America.

Steven Kessel
Board: Senior Management
Job Title: Senior Vice President
Mr. Kessel is a Senior Vice President at Amazon. Previously, he served as the Senior Vice President of Worldwide Digital Media at the company, Vice President of Digital and Vice President of US Books,
Music, Video and DVD. Prior to joining Amazon in 1999, Mr. Kessel was a Consultant to internet companies. Diego Piacentini
Board: Senior Management
Job Title: Senior Vice President, International Consumer Business
Since: 2012
Age: 52
Mr. Piacentini has been the Senior Vice President of International Consumer Business at Amazon since 2012. From 2007 to 2012, he served as the Senior Vice President of International Retail at the company. Mr. Piacentini also served as the Senior Vice President of Worldwide Retail and
Marketing from 2001 to 2006 and as the Senior Vice President and General Manager, International from 2000 to 2001. Prior to joining Amazon, he was Vice President and General Manager of Apple
Computer Europe. Mr. Piacentini served as Sales Director for Apple Italy in 1994 and was appointed
General Manager for Apple Italy in 1995. He joined Apple Computer in 1987.

Thomas J. Szkutak
Board: Senior Management
Job Title: Senior Vice President and Chief Financial Officer
Since: 2002
Age: 52

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Key Employee Biographies

Mr. Szkutak has been a Senior Vice President and the Chief Financial Officer at Amazon since 2002.
Before joining the company, he served as the Chief Financial Officer for GE Lighting. Prior to that,
Mr. Szkutak oversaw the GE Plastics finance operations for Europe, the Middle East, Africa and
India. He was also the Executive Vice President of Finance for GE Investments in Stamford,
Connecticut.

H. Brian Valentine
Board: Senior Management
Job Title: Senior Vice President, Ecommerce Platform
Since: 2006
Age: 53
Mr. Valentine has been the Senior Vice President of Ecommerce Platform at Amazon since 2006.
Prior to joining the company, he held various positions at Microsoft Corporation, including Senior
Vice President of Windows Core Operating System Division from 2004 to 2006 and Senior Vice
President of Windows from 1999 to 2004. Prior to joining Microsoft Corporation, Mr. Valentine was a Software Engineer at Intel Corporation from 1983 to 1987.

Jeffrey A. Wilke
Board: Senior Management
Job Title: Senior Vice President, Consumer Business
Since: 2012
Age: 46
Mr. Wilke has been the Senior Vice President of Consumer Business at Amazon since 2012. He served as the Senior Vice President of North American Retail at the company from 2007 to 2012 and as the Senior Vice President of Worldwide Operations from 2002 to 2006. Mr. Wilke joined
Amazon as Vice President and General Manager, Operations in 1999.

Shelley L. Reynolds
Board: Senior Management
Job Title: Vice President, Worldwide Controller and Principal Accounting Officer
Since: 2007
Age: 48
Ms. Reynolds has been the Vice President, Worldwide Controller and Principal Accounting Officer at Amazon since 2007. She was the Vice President of Finance and Controller at the company from
2006 to 2007. Prior to joining Amazon, Ms. Reynolds was a Partner at Deloitte & Touche.

David A. Zapolsky

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Board: Senior Management
Job Title: Vice President, General Counsel and Secretary
Since: 2012
Age: 49
Mr. Zapolsky has been Vice President, General Counsel and Secretary at Amazon since 2012. He joined the company in 1999 as an Associate General Counsel for Litigation and Regulatory matters and was promoted to Vice President in 2002. Prior to joining Amazon, Mr. Zapolsky was a Partner at the Seattle offices of Dorsey & Whitney and Bogle & Gates. He also served as an Assistant District
Attorney in the Brooklyn District Attorney’s Office and later practiced law at Wachtell Lipton Rosen
& Katz.

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Major Products and Services

MAJOR PRODUCTS AND SERVICES
Amazon is one of the largest global online retailers. The company's key products and services include the following:
Products
Books:
Books
Kindle Books
Children's Books
Textbooks
Audiobooks
Magazines
Movies, music and games:
Movies
Blu-ray
Amazon instant video
MP3 downloads
Musical instruments
Video games
Digital games
Game downloads
Electronics and computers:
TVs
Home audio and theater
Camera, photo and video
Cell phones and accessories
MP3 players and accessories
Car electronics and global positioning system
Electronic accessories
Laptops, tablets and netbooks
Desktops and servers
Computer accessories and peripherals
External drives, mouse, and networking
Computer parts and components
Software
Personal computer games
Printers and ink

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Major Products and Services

Office and school supplies
Home, garden and tools:
Kitchen and dining
Furniture and decor
Bedding and bath
Appliances
Patio, lawn and garden equipment
Home improvement supplies
Power and hand tools
Lamps and light fixtures
Kitchen and bath fixtures
Hardware
Arts, crafts and sewing
Pet supplies
Grocery, health and beauty:
Grocery and gourmet food
Wine
Natural and organic food
Health and personal care products
Beauty products
Toys, kids and baby:
Toys and games
Baby products
Clothing (kids and baby)
Video games for kids
Clothing, shoes and jewelry:
Clothing
Shoes
Handbags and accessories
Luggage
Jewelry
Watches
Sports and outdoors:
Exercise and fitness equipment
Outdoor recreation
Hunting and fishing

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Major Products and Services

Cycling
Athletic and outdoor clothing
Team sports
Golf
Boating and water sports
Fan shop
All sports and outdoors
Automotive and industrial:
Automotive parts and accessories
Automotive tools and equipment
Tires and wheels
Motorcycle and ATV
Industrial and scientific
Services:
Web services
Order fulfillment
Co-branded credit cards
Brand:
Kindle

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Revenue Analysis

REVENUE ANALYSIS
Overview
The company recorded revenues of $61,093 million in FY2012, an increase of 27.1% over FY2011.
For FY2012, North America, the company's largest geographic market, accounted for 57% of the total revenues.
Amazon has organized its operations into two segments, based on geographic presence. However, the company's revenues can be classified on the basis of the product categories offered. Amazon generates revenues through three product categories: electronics and other general merchandise
(63.2%* of the total revenues in FY2012), media (32.6%) and other** (4.1%).
*Percentages are rounded off.
Revenues by product category
In FY2012, the electronics and other general merchandise category recorded revenues of $38,628 million, an increase of 34.5% over FY2011.
The media category recorded revenues of $19,942 million in FY2012, an increase of 12.2% over
FY2011.
The other category recorded revenues of $2,523 million in FY2012, an increase of 59.1% over
FY2011.
**Other category includes sales from non-retail activities, such as AWS in the North America, advertising services, and Amazon's co-branded credit card agreements both in North America and international markets.
Revenues by geography
North America, Amazon's largest geographical market, accounted for 57% of the total revenues in
FY2012. Revenues from North America reached $34,813 million in FY2012, an increase of 30.4% over FY2011.
International operations accounted for 43% of the total revenues in FY2012. Revenues from international operations reached $26,280 million in FY2012, an increase of 23% over FY2011.

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SWOT Analysis

SWOT ANALYSIS
Amazon is one of the largest global online retailers. With revenues of $61,093 million in FY2012,
Amazon is much bigger in size than its close competitor eBay (revenues of $14,072 million in the financial year ended December 2012), and Barnes & Noble (revenues of $6,839 million in the financial year ended April 2013). Leading market position in online retail format enables Amazon to target a larger customer base. However, increasing pressure to collect sales tax on merchandise sold through online websites can render the company's pricing competitiveness weak and less attractive to customers. Strengths

Weaknesses

Largest online retailer
Extending product line and strengthening technical platform through strategic acquisitions Kindle builds strong presence in the eBooks space Patent infringement issues affect stakeholder confidence
Frequent outages of Amazon's web hosting and cloud computing servers

Opportunities

Threats

Increase in online retail sales
Growing emphasis on online display advertising business
Growing eBook and tablet sales
Growing demand for cloud computing services Increasing pressure to collect sales tax on merchandise sold through online websites
Intense competition in the e-reader market
Risk of foreign exchange fluctuation

Strengths

Largest online retailer
Amazon is one of the largest online retailers in the world. With revenues of $61,093 million in FY2012,
Amazon is much bigger in size than its close competitor eBay (revenues of $14,072 million in the financial year ended December 2012), and Barnes & Noble (revenues of $6,839 million in the financial year ended April 2013). Amazon was ranked among top 100 of America's largest corporations by a business magazine in 2013. It also featured among top 10 global brands in the top 500 global brands
2013 list released by a leading industry source specializing in brand valuation. Amazon was ranked among top 20 most valuable global brands in the top 100 best global brands list in 2013, as well as among top five global retail brands in the top 50 best retail brands in 2013 by another industry source specializing in brand services and activities.

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SWOT Analysis

The company offers products in various categories through its e-commerce website www.amazon.com in the US and through www.amazon.co.uk, www.amazon.de, www.amazon.fr, www.amazon.co.jp, www.amazon.ca, www.amazon.it, www.amazon.cn, www.amazon.es, www.amazon.com.br, www.amazon.in, www.amazon.com.au and www.amazon.com.mx in international markets. The online format helps Amazon to rotate its inventory rapidly and reduce its inventory management cost and thereby offer merchandise at comparatively low prices. The company's inventory turnover ratio was nine in FY2012. High inventory turnover ratio allows Amazon to generate revenue from sales before its payments to suppliers come due. Additionally, lower prices act as a compelling proposition in attracting more customers. The online retail format also enables Amazon to enhance customer satisfaction as it offers customers with a broader selection and greater access to information. Leading market position in the online retail format enables Amazon to target a larger customer base.
Extending product line and strengthening technical platform through strategic acquisitions
Amazon has been expanding its business operations and product offering through various acquisitions.
In 2009, the company acquired Zappos.com, an online apparel, footwear and accessories retailer.
This acquisition enabled Amazon to tap the internet sales of apparel, the largest online shopping category and one in which Amazon has had limited success in the past. In 2010, the company acquired Touchco, a touch screen technology company. Amazon merged Touchco's technology and staff members into its Kindle hardware division. This acquisition expanded Amazon's platform to encompass more functionality and more content on Kindle. It also helped Amazon to address some of the form-factor issues with the Kindle.
Further in 2010, the company acquired BuyVIP.com, a fashion and lifestyle online buying community with more than six million members in countries such as Spain, Germany, and Italy. This acquisition strengthened Amazon's position in retailing fashion apparel. It offers members top fashion and lifestyle products at lower price points. Later in 2010, Amazon acquired Quidsi, which operates
Diapers.com and Soap.com. Diapers.com is an online baby care specialty site, and Soap.com is an online site for everyday essentials. The acquisition of Quidsi also brought the ownership of
BeautyBar.com under Amazon. BeautyBar.com is a prestige beauty boutique. In 2011, Amazon acquired the remaining shares in LOVEFiLM International, one of the leading European subscription entertainment service providers. It offers online DVD and games rental-by-post, and streams films and TV shows over the internet to personal computers, internet enabled TVs, and Playstation3.
LOVEFiLM operates in the UK, Germany, Sweden, Norway and Denmark. In the second quarter of
FY2012, Amazon acquired Kiva Systems, one of the leading developers of material handling technology. By utilizing Kiva Systems' innovative material handling technologies, Amazon improved productivity in its fulfillment centers. The products were brought directly to employees to pick, pack and store. In the first quarter of FY2013, Amazon acquired IVONA Software, a text-to-speech technology company. IVONA Software offers voice and language portfolios with 44 voices in 17 languages. IVONA Software will enable Amazon to develop products with advanced voice solutions.
The company's focus on product expansion will enable it to gain significant market share. The strengthening of its technical platform will help Amazon reduce its operating cost and improve operational efficiency and allow it to offer more value to its customers.

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SWOT Analysis

Kindle builds strong presence in the eBooks space
Amazon has dominated the fast-growing electronic book market for the past few years through its e-reader device, Kindle. In 2007, the company launched its Kindle e-reader in the US market. Kindle is Amazon's portable reader that wirelessly downloads books, blogs, magazines and newspapers to a high-resolution electronic paper display that looks like real paper.
The US Kindle store offers more than 1,000,000 books, which includes new releases and 107 of the
111 New York Times best sellers. More than 60% of these books are offered at a fixed price of $9.99 or less. Amazon also offers more than 1.8 million free, out-of-copyright, pre-1923 books to read on
Kindle devices. Since the launch of the first version of Kindle in 2007, Amazon has launched other and more advanced versions of the e-reader device, including Kindle Touch, Kindle Touch 3G, Kindle
Keyboard and Kindle Keyboard 3G. In 2011, the company launched Kindle Fire at a price lower than
Apple's cheapest iPad. Low pricing helps Amazon to attract more customers. Within nine months of its launch, Kindle Fire accounted for 22% of the US tablet sales. In September 2012, Amazon launched Kindle Fire HD tablet with a seven inch display for $199. Kindle Fire HD tablet was the best-selling product on the company's website in 2012. In October 2012, Amazon launched Kindle
Paperwhite and Kindle Paperwhite 3G. Kindle Paperwhite is the world’s best-selling and most advanced e-reader with higher resolution (62% more pixels and 25% higher contrast), and a battery life of up to eight weeks. Kindle Paperwhite 3G has same features as that of Kindle Paperwhite except that it offers free 3G wireless. In October 2013, the company launched Kindle Fire HDX with seven inch display and exclusive features including Fire OS 3.0, including X-ray for music, second screen, prime instant video downloads, and the Mayday button. Amazon launched Kindle Fire HDX with 8.9 inch display for $379 in November 2013. This tablet is 34% lighter than last year’s model and 20% lighter than the iPad Air.
Strong presence in the eBooks space with the Kindle e-reader provides Amazon a competitive advantage over its peer group, and also enhances the revenue generation capacity of the company.

Weaknesses

Patent infringement issues affect stakeholder confidence
The company is involved in various patent infringement cases. Recently, in August 2013, Online
News Link filed a lawsuit against Amazon, alleging that the company infringed on three of its patents that describe a method of inserting links into online newspapers and other media. Earlier, in November
2012, Innovative Automation filed a complaint against Amazon in the US District Court for the Eastern
District of Texas alleging that Amazon’s products and services relating to Kindle content distribution,
Audible audiobooks, Amazon Cloud Player and compact disc (CD) and DVD duplication infringe US patents. In July 2012, Technology Properties Limited, Phoenix Digital Solutions, and Patriot Scientific
Corporation filed a complaint against Amazon for patent infringement in the US International Trade
Commission and in the US District Court for the Northern District of California. The complaint alleges that using the Kindle Fire in combination with certain peripheral devices infringes the US patent entitled ‘High Performance Microprocessor Having Variable Speed System Clock’. In January 2012,

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Nazomi Communications filed a complaint against Amazon in the US District Court for the Eastern
District of Texas alleging that the Kindle Fire infringes a patent owned by Nazomi Communications.
Patent infringement cases have affected Amazon's brand image in the past and may further harm its brand equity in the future.
Frequent outages of Amazon's web hosting and cloud computing servers
The company, through AWS, offers various information technology related products and services to customers. These include computing, content delivery, database, deployment and management, industry specific clouds, monitoring of cloud, networking, storage and web traffic among others. Of late, Amazon has been facing frequent problems with respect to its web hosting (an internet hosting service allowing individuals and organizations to make their websites accessible to people over the internet) and cloud computing (a web service allowing individuals and organizations to put their data on internet) servers in the recent times. In August 2013, Amazon reported certain problems with its
Elastic Block Store (EBS) (a provider of block level storage volumes for use with Amazon EC2 instances). This outage affected some well-known websites and applications, including Airbnb,
Facebook, Instagram and Twitter’s Vine video service. The company reported similar problems in
2012 and 2011 as well. Earlier, in October 2012, Amazon reported certain problems with its EBS.
The outage was caused due to degraded performance of some EBS volumes. As a result, websites of companies such as reddit, Imgur, and Heroku were unavailable. Earlier, in 2011, Amazon reported certain problems with its Relational Database Services (a web service that allows to set up, operate and scale a relational database in the cloud), and EC2 (a web service providing resizable compute capacity in the cloud), a cloud computing service hosted at its North Virginia data center. The outage of the service was caused due to the shifting of the network traffic to the wrong router. As a result of the disruption in services, sites of various companies such as Foursquare, Reddit, Hootsuite and
Quora were adversely affected. Additionally, certain customer data was also lost for which the company failed to give any explanation. The problem persisted for nearly 10 days before it was resolved to normal. A similar problem occurred in the same year affecting Netflix's streaming service,
Reddit, Quora, and Turntable.fm's sites.
Such outages of vital services lead to loss of confidence among the enterprise and business customers. Additionally, with a plethora of companies offering similar services, inconsistent service by Amazon can also lead to loss of customers to competitors.

Opportunities

Increase in online retail sales
The online retail sales are growing at a faster rate globally. According to the US Department of
Commerce, online retail sales (adjusted for seasonal variation) in the US increased from $142.6 billion in 2009 to $224.4 billion in 2012, representing a compound annual growth rate (CAGR) of
16%. e-commerce sales, which accounted for 5.2% of total retail sales in 2012 (4% in 2009), increased
16.3% in 2012 over the previous year. Total retail sales, on the other hand, grew by only 5.1% during
2012. e-commerce sales totaled approximately $67 billion for the third quarter of 2013, an increase

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SWOT Analysis

of 17.5% from the third quarter of 2012. According to industry estimates, online spending reached
$1.2 billion on Black Friday in 2013, an increase of 15% compared to last year’s Black Friday. Amazon was the most-visited retail website on Black Friday. In Canada, more than half of the internet users ordered products and services online in 2012 according to Statistics Canada. Canadian e-commerce sales are expected to grow at a rate of 10% during 2013–18 according to industry sources.
A similar trend was noticed in the European market. According to industry estimates, the online retail sales in Europe are expected to increase from E112 billion (approximately $150 billion) in 2012 to
E191 billion (approximately $255 billion) by 2017, representing an increase of more than 70%. The online retail sales in Asia are also estimated to grow at a strong rate. According to industry estimates, the Chinese online market, in particular, grew remarkably by over 70% during 2009–12, surpassing
$200 billion. The online retail sales in China are expected to grow at a CAGR of more than 30% during 2012–15.
Amazon is a leading player in the online retail format. By leveraging its online retailing capability,
Amazon can garner top line growth from the growing online sales globally.
Growing emphasis on online display advertising business
The company has been increasing its focus on the online display advertising business lately. Display advertising is graphical advertisements on the internet, appearing next to content on web pages, and emails among other places. The online display advertising market registered a steady growth rate in the last few years. According to industry estimates, internet advertising revenues in the US totaled $36.6 billion in 2012, an increase of 15% compared to 2011. Display-related advertising revenues, the second largest contributor to online advertising, increased 9% in 2012 compared to
2011. In the first half of 2013, display-related advertising revenues totaled $6.1 billion, accounting for 30% of the online advertising revenues, and increased by 9% compared to the first half of 2012.
The online advertising market in Europe grew by more than 11% in 2012 compared to 2011, while the display advertising market registered a 9% growth during the same period.
In order to capitalize on this growing market, Amazon has stepped up its focus on online display advertisement business. The company entered into a partnership with Triggit, a San Francisco-based company, in the year 2011 to resell online advertisement space targeted at specific user demographics using Triggit's Digital Side Platform technology. An advantage that Amazon has over its competitors is that it has a huge pool of customers and visitors data who transact on its website. The company plans to leverage this data to raise effective cost per 1,000 impressions (eCPMs*) for online display advertisements both on its own site and on third party sites. The growing market for online display advertisements and the company's efforts to strengthen its foothold in the industry would add an incremental source of revenue for Amazon. Thus, growing emphasis on online display advertising business will enhance Amazon's top-line growth.
*eCPMs is the average earning by a publisher for showing his advertisement 1,000 times on a website. Growing eBook and tablet sales

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SWOT Analysis

The demand for eBooks has been growing globally. According to industry estimates, eBook sales grew by nearly 45% in 2012 compared with the previous year. In 2012, eBook sales accounted for
20% of trade book sales revenue. In comparison, the sales of print formats (hardcover, paperback and mass market paperback) registered flat growth during the same period. Europe and the UK were the largest revenue-generating export markets for eBook sales in the US. The rising popularity of eBooks is attributable to online access to a wide range of English-language titles, growing marketing and distribution activities, and proliferation of eBook readers. Additionally, tablet sales are expected to grow globally.Tablet shipments are estimated to grow by more than 75% during 2013–17 worldwide according to industry sources.
Amazon offers eBooks under the Kindle brand name, and tablets under Kindle as well as other exclusive brands. The company can leverage its online presence to cater to a growing base of customers. Growing demand for cloud computing services
The demand for cloud computing services is expected to grow significantly in the medium to long term. Cloud computing is a computing infrastructure model, which enables delivery of software-as-a-service (SaaS). Cloud computing facilitates lower expenses related to upfront royalty or licensing payments, investment in hardware infrastructure and other operating expenses. These factors have contributed to rapid adoption of cloud computing. According to industry estimates, the spending on public cloud computing services has been increasing and is expected to grow at a
CAGR of 23% during 2013–17, from about $47 billion in 2013 to $107 billion in 2017. The public information technology (IT) cloud services are expected to account for more than 15% of the spending on IT products by 2017. Further, during 2013–17, the growth of the public cloud computing services is expected to contribute to over 50% of the growth registered across the key technology categories including applications, system infrastructure software, platform as a service (PaaS), servers and storage. AWS provides a scalable, low-cost infrastructure platform in the cloud that powers enterprise, government and startup customers businesses in 190 countries. It offers more than 30 services, including Amazon EC2, Amazon Simple Storage Service (Amazon S3) and Amazon RDS. AWS services are available to customers from data center locations in the US, Brazil, Europe, Japan,
Singapore, Australia and China. Amazon has been expanding its web services business significantly in the recent past.
The company launched AWS Elastic Beanstalk in the year 2011, enabling developers to deploy and manage their applications in the AWS cloud. It was followed with the launch of AWS CloudFormation, providing customers an easy way to create a collection of related AWS resources and provision them in an orderly manner. Most recently, in February 2013, AWS introduced AWS OpsWorks, an application management solution for the complete lifecycle of complex applications, including resource provisioning, configuration management, deployment, monitoring and access control. This enables developers to manage all tasks required to model, deploy, scale, and maintain their applications.

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SWOT Analysis

Furthermore, in November 2013, AWS launched Amazon WorkSpaces, a fully managed desktop computing service in the cloud. This allows customers to easily provision cloud-based desktops that allow end-users to access the documents, applications and resources required with various devices, including laptops, iPad, Kindle Fire and Android tablets. AWS also launched Amazon AppStream in
November 2013. This service enables developers to stream resource-intensive applications and games from the cloud to a broad range of devices. Additionally, in December 2013, AWS announced the availability of I2 instances, the next generation of Amazon EC2 storage-optimized high I/O instances based on SSD technology that provides customers with high random I/O performance.
Thus, the company can leverage the increasing demand for cloud computing services to expand its business further.

Threats

Increasing pressure to collect sales tax on merchandise sold through online websites
The momentum for imposing internet sales tax on merchandise sold on retail websites has been gaining strength in the recent times. Many of the US state governments have been facing the problem of budget deficit. In order to compensate for the deficit, certain state governments have been expanding the items that can be brought under the taxable spectrum. Accordingly, many state governments have started collecting tax on merchandise sold through internet. Besides budget deficit, other factors such as stiff resistance from brick-and-mortar stores (including traditional retailers as big as Wal-Mart and as small as the neighborhood bookstore) have also been playing force to intensify the imposition of sales tax on merchandise sold on internet. Consequently, online retailers such as Amazon and others have come under pressure in various states. In May 2013, the US
Senate passed the Marketplace Fairness Act, which requires all online retailers with revenues of $1 billion a year or more outside their home states to collect sales taxes for the states where they ship goods. This could affect Amazon’s many sellers who do more than $1 million business in out-of-state transactions annually. Currently, Amazon collects sales taxes from 13 states, including California,
New York, and Texas.
Increasing pressure to collect sales tax on merchandise sold by Amazon through its website may render the company's pricing competitiveness weak and less attractive to customers. Lack of price difference may reduce Amazon's appeal to customers. As a result, customers may migrate to other retailers offering similar goods at comparable price, thereby adversely affecting Amazon's revenue.
Intense competition in the e-reader market
The market for e-readers is highly competitive in the US. The e-reader devices from industry players such as Barnes & Noble and Sony compete with Amazon's Kindle for a share in this growing market.
The market for e-readers has been made even more competitive as every major tablet, including the Apple iPad, and nearly every Android tablet acts as a substitute for e-reader device. In such a scenario, price competition among the industry players is inevitable.The prices of e-readers decreased

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SWOT Analysis

significantly in 2010 as competition stepped up. First Barnes & Noble slashed the price of its e-reader,
Nook, by $60, down to $199 and also started selling a Wi-Fi only Nook for $149 in June 2010.
Following this, Amazon also dropped the price of Kindle by $70, to $189. Sony also cut the price of each of its three e-reader products by $30, bringing its most expensive 3G version down to $229.
These price drops have gained prominence as effective ways to fight Apple's iPad, the dominant multi-purpose tablet that impacted the purchasing decision of many customers. During 2010, Apple sold 14.8 million iPads worldwide, representing 75% of tablet personal computer (PC) sales at the end of 2010.
In 2011, ASDA began offering its e-reader, 5in View Quest Mediabox, for £52 (about $80.3) i.e. less than half the amount charged by Amazon for Kindle. In order to beat competition, Amazon launched third generation Kindle starting at $114 in April 2011. The price offered by Amazon was $35 less than Barnes & Noble's least expensive Nook, and $66 less than Sony's least expensive e-reader.
It was also priced much below the Apple iPad. Further in 2011, Amazon launched Kindle Fire for
$199, much lower than Apple's cheapest iPad priced at $499. In spite of price reductions by Amazon,
Apple sold more than 15 million iPads as of March 2011.
Furthermore, in December 2012, Amazon reduced the price of its 8.9 inch Kindle Fire HD tablets by $50, bringing the price of 16 gigabyte Wi-Fi only version of the Kindle Fire HD to $249 and the
32 gigabyte Wi-Fi + 4G version to $449. This was a special one-day offer (for 'Green Monday').
Barnes & Noble also slashed the price of its Nook Simple Touch tablet by $20, bring it to $79 from
$99. Growing competition in the e-readers market can intensify price wars and pressurize Amazon's margins. Risk of foreign exchange fluctuation
Amazon derives a significant amount of its revenue from international operations. In FY2012, the company's international segment accounted for 43% of the total revenues. Net sales and related expenses generated from the international websites are denominated in the local currency of the corresponding websites and primarily include Euros, British Pounds, Japanese Yen and Chinese
Yuan. Additionally, Amazon also holds cash equivalents and marketable securities in these foreign currencies. The cash equivalents and marketable securities balances could substantially be less than expected if the US dollar strengthens compared to these currencies. High exposure to foreign currency makes the company highly sensitive to foreign currency exchange fluctuations. Due to this, the company's consolidated revenues might record significant gains or losses on the re-measurement of intercompany balances.

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Top Competitors

TOP COMPETITORS

The following companies are the major competitors of Amazon.com, Inc.

Barnes & Noble Inc. eBay Inc.
Hastings Entertainment, Inc.
Columbia House Company
Apple Inc.
Best Buy Co., Inc.
Books-A-Million, Inc.
Wal-Mart Stores, Inc.
Target Corporation

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Company View

COMPANY VIEW
A statement by Jeffrey P. Bezos, the President, Chief Executive Officer and Chairman at Amazon, is given below. The statement has been taken from the company’s Annual Report for FY2012.
To our shareowners:
As regular readers of this letter will know, our energy at Amazon comes from the desire to impress customers rather than the zeal to best competitors. We don’t take a view on which of these approaches is more likely to maximize business success. There are pros and cons to both and many examples of highly successful competitor-focused companies. We do work to pay attention to competitors and be inspired by them, but it is a fact that the customer-centric way is at this point a defining element of our culture.
One advantage – perhaps a somewhat subtle one – of a customer-driven focus is that it aids a certain type of proactivity. When we’re at our best, we don’t wait for external pressures. We are internally driven to improve our services, adding benefits and features, before we have to. We lower prices and increase value for customers before we have to. We invent before we have to. These investments are motivated by customer focus rather than by reaction to competition. We think this approach earns more trust with customers and drives rapid improvements in customer experience
– importantly – even in those areas where we are already the leader.
“Thank you. Every time I see that white paper on the front page of Amazon, I know that I’m about to get more for my money than I thought I would. I signed up for Prime for the shipping, yet now I get movies, and TV and books. You keep adding more, but not charging more. So thanks again for the additions.” We now have more than 15 million items in Prime, up 15x since we launched in 2005.
Prime Instant Video selection tripled in just over a year to more than 38,000 movies and TV episodes.
The Kindle Owners’ Lending Library has also more than tripled to over 300,000 books, including an investment of millions of dollars to make the entire Harry Potter series available as part of that selection. We didn’t “have to” make these improvements in Prime. We did so proactively. A related investment – a major, multi-year one – is Fulfillment by Amazon. FBA gives third-party sellers the option of warehousing their inventory alongside ours in our fulfillment center network. It has been a game changer for our seller customers because their items become eligible for Prime benefits, which drives their sales, while at the same time benefitting consumers with additional Prime selection.
We build automated systems that look for occasions when we’ve provided a customer experience that isn’t up to our standards, and those systems then proactively refund customers. One industry observer recently received an automated email from us that said, “We noticed that you experienced poor video playback while watching the following rental on Amazon Video On Demand: Casablanca.
We’re sorry for the inconvenience and have issued you a refund for the following amount: $2.99.
We hope to see you again soon.” Surprised by the proactive refund, he ended up writing about the experience: “Amazon ‘noticed that I experienced poor video playback…’ And they decided to give me a refund because of that? Wow…Talk about putting customers first.”

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Company View

When you pre-order something from Amazon, we guarantee you the lowest price offered by us between your order time and the end of the day of the release date. “I just received notice of a $5 refund to my credit card for pre-order price protection. What a great way to do business! Thank you very much for your fair and honest dealings.” Most customers are too busy themselves to monitor the price of an item after they pre-order it, and our policy could be to require the customer to contact us and ask for the refund. Doing it proactively is more expensive for us, but it also surprises, delights, and earns trust.
We also have authors as customers. Amazon Publishing has just announced it will start paying authors their royalties monthly, sixty days in arrears. The industry standard is twice a year, and that has been the standard for a long time. Yet when we interview authors as customers, infrequent payment is a major dissatisfier. Imagine how you’d like it if you were paid twice a year. There isn’t competitive pressure to pay authors more than once every six months, but we’re proactively doing so. By the way – though the research was taxing, I struggled through and am happy to report that I recently saw many Kindles in use at a Florida beach. There are five generations of Kindle, and I believe I saw every generation in use except for the first. Our business approach is to sell premium hardware at roughly breakeven prices. We want to make money when people use our devices – not when people buy our devices. We think this aligns us better with customers. For example, we don’t need our customers to be on the upgrade treadmill. We can be very happy to see people still using four-year-old Kindles!
I can keep going – Kindle Fire’s FreeTime, our customer service Andon Cord, Amazon MP3’s AutoRip
–but will finish up with a very clear example of internally driven motivation: Amazon Web Services.
In 2012, AWS announced 159 new features and services. We’ve reduced AWS prices 27 times since launching 7 years ago, added enterprise service support enhancements, and created innovative tools to help customers be more efficient. AWS Trusted Advisor monitors customer configurations, compares them to known best practices, and then notifies customers where opportunities exist to improve performance, enhance security, or save money. Yes, we are actively telling customers they’re paying us more than they need to. In the last 90 days, customers have saved millions of dollars through Trusted Advisor, and the service is only getting started. All of this progress comes in the context of AWS being the widely recognized leader in its area – a situation where you might worry that external motivation could fail. On the other hand, internal motivation – the drive to get the customer to say “Wow” – keeps the pace of innovation fast.
Our heavy investments in Prime, AWS, Kindle, digital media, and customer experience in general strike some as too generous, shareholder indifferent, or even at odds with being a for-profit company.
“Amazon, as far as I can tell, is a charitable organization being run by elements of the investment community for the benefit of consumers,” writes one outside observer. But I don’t think so. To me, trying to dole out improvements in a just-in- time fashion would be too clever by half. It would be risky in a world as fast-moving as the one we all live in. More fundamentally, I think long-term thinking squares the circle. Proactively delighting customers earns trust, which earns more business from those customers, even in new business arenas. Take a long-term view, and the interests of customers and shareholders align.

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Company View

As I write this, our recent stock performance has been positive, but we constantly remind ourselves of an important point – as I frequently quote famed investor Benjamin Graham in our employee all-hands meetings – “In the short run, the market is a voting machine but in the long run, it is a weighing machine.” We don’t celebrate a 10% increase in the stock price like we celebrate excellent customer experience. We aren’t 10% smarter when that happens and conversely aren’t 10% dumber when the stock goes the other way. We want to be weighed, and we’re always working to build a heavier company.
As proud as I am of our progress and our inventions, I know that we will make mistakes along the way –some will be self-inflicted, some will be served up by smart and hard-working competitors. Our passion for pioneering will drive us to explore narrow passages, and, unavoidably, many will turn out to be blind alleys. But – with a bit of good fortune – there will also be a few that open up into broad avenues.
I am incredibly lucky to be a part of this large team of outstanding missionaries who value our customers as much as I do and who demonstrate that every day with their hard work. As always, I attach a copy of our original 1997 letter. Our approach remains the same, and it’s still Day 1.

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Locations and Subsidiaries

LOCATIONS AND SUBSIDIARIES
Head Office
Amazon.com, Inc.
410 Terry Avenue North
Seattle
Washington 98109 5210
USA
P:1 206 266 1000 http://www.amazon.com Other Locations and Subsidiaries
Amazon Services LLC
Nevada
USA

Amazon Digital Services, Inc.
Delaware
USA

Amazon EU Sarl
LUX

Lovefilm UK Limited
GBR

Amazon Fulfillment Services, Inc.
Delaware
USA

Amazon Web Services, Inc.
Delaware
USA

Amazon.com LLC
Delaware
USA

Amazon Technologies, Inc.
Nevada
USA

NV Services, Inc.
Nevada
USA

Amazon.com NV Investment Holdings LLC
Nevada
USA

Amazon.com, Inc.
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