How Will Amazon.Com Thrive and Survive

1
How Will Amazon.Com Thrive and Survive?

• Presented by Team 4
• Amanda Hannah
• Kuan-Ying Lai
• Kevin Money
• Randi Rosenberg
• Steve Witham

2
Detecting the Problem

• Analyzed Amazons financial statements
• Read analyst reports from Lehman Brothers Merrill
  Lynch, and Salomon Smith Barney
  
• Newspaper and magazine articles from New York
  Times, Fortune magazine, etc

3
Pro forma Income (loss) from Operations
Amazon.com Three Months Ended March 31, 2001(in t
housands)
4
Drop Product Lines

• Drop electronics, tools, and kitchen segment
• Sell existing inventory to customers and
  wholesalers
  

5
Outsourcing

• Partnerships with Best Buy, Home Depot, and Crate
  and Barrel
  
• Amazon will process orders, market products, and
  gain a share of the sales
  
• Partners will handle all inventory and
  fulfillment

6
Distribution Centers

• Currently there are 7 domestic distribution
  centers
  
• Approximately 40 full

7
Downsize the Distribution Centers

• Downsize to four distribution centers
• Only house books, music, and video inventory
• Sell off eliminated inventory

8
International Segment

• Four international sites located in France, U.K.,
  Germany, and Japan
  
• Amazons French operations are expected to lose
  25 million in 2001
  

9
Eliminate an International Site

• Eliminate France portal site
• Consolidate inventory with other international
  distribution centers
  

10
Contribution Margin

• Currently Amazon has a negative contribution
  margin
  
• Inventory comes from a limited number of
  suppliers
  

11
Increase Prices

• Increase prices by 5
• Increase the number of suppliers

12
Price Comparison of Amazon.com and Competitors
13
Review

• Drop electronics, tools, and kitchen segment
• Downsize to 4 distribution centers
• Eliminate the French web site
• Increase prices

14
Thank You

• We are now open for any questions or comments.