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Amazon Prime 2016/7

Amazon Prime 2016/7

The share price has broken through the US$800 barrier and it keeps on rising.

Enough has been written about the incredible success story AWS that is turning the company into the infrastructure provider of the internet, we want to focus on the retail business.

Amazon’s recent profit expansion points to the first major profit harvesting, which implies a strategic change at Amazon, as this is a departure from the cycle of growth.

According to Jeff Bezos profits hinder the flywheel effects and should always be reinvested for future growth and to keep the wheel spinning faster.

Seen in this light the profit harvesting is hugely significant, Amazon basically feel that such a major strategic change won’t hurt the business, as they have become so dominant, that they have become untouchable.

This means we have entered the second phase of the ecommerce era. It’s not the day one of the internet anymore.

We are entering the Amazon age. In other words Amazon have now become so dominant, that in their very own view they have become untouchable. Amazon can now run the business in the hunt for profits. And it can do so without having to worry too much about the competition or that its shoppers could defect. Prime locks them into the ecosystem.

This has three implications:

1) The market share grab is over, the competitive barrier has been erected and as online continues to grow so will Amazon’s dominance. Amazon could well be on its way to become the most valuable company on earth.

2) Amazon needs a new definition, as it’s clearly not “day one of the internet” any longer. Amazon’s profit harvesting is a massive change. The company will turn from hunter into prey. This actually raises a host of new challenges.

3) Amazon becomes more of an utility and the infrastructure of the internet through AWS, the marketplace and its logistics footprint roll out. This invites scrutiny from the state and we expect the current investigations into its tax matters to be a foretaste of things to come. There will be much more interference from regulators going forward.


Executive summary
Data
Data and KPIs: Net Sales & Income, Margin 2008-15, adding $18.0bn in 2015
Data and KPIs: more than $13bn added every year since 2011, profitability
Data and KPIs: US, international, AWS sales, in $m, % split, growth, 2013-2015
Data and KPIs: Sales by segments 2008-2015 in $m, growth, Media, EOM, other
Data and KPIs: Margins analysis, what is the impact of 3P’s rapid growth?
AWS
Data and KPIs: AWS, transposing the marketplace model from physical to digital
Data and KPIs: Amazon Web Services, the world’s biggest cloud provider
Revenues, Financials, KPIs, Benchmarks in Amazon geographies
Data: sales per country in €m 2008-15, Germany, UK, Japan, France
Data: Int’l sales per country in €m, China, India, Spain, Italy, Brazil, 2008-2015
Data: Sales per country in €m, Mexico, Netherlands, Australia, Canada, 2013-15
Data: International sales per country in local currencies 2011-15, Japan, UK
Data and KPIs: India and currency devaluations impact
Active customer accounts per Amazon geography and annual basket spend
Data: Active Customer accounts 2009 – 15 in m, USA, Germany, Japan, UK, France
Data and KPIs: Active Customer accounts, Analysis
Data and KPIs: Active Customer accounts, growth of AOV
Data and KPIs: Average annual spend 2011 – 15e on AMZN 1P, Analysis
Data: 1P by geography, average price, total units, customers, frequency 2015
Data: total units shipped 1P and 3P, frequency per country, Analysis
Data: average price, total units, customers, frequency per country, 2014
Data: Best seller average prices 2013 - 15 in local currency, CA, CN, ES, IT
Prime in Amazon geographies, annual spend
Prime - behind the “death of b&m loyalty”? Membership, spend and GMV share data 2015
Prime: Prime Customer accounts 2009 – 15 in m, USA, Germany, Japan, UK, France
Prime: Introduction, % share of customer accounts
Prime: Prime: What we know and what we don’t, GMV share, stops shopping around
Prime: focus on most loyal shopper to drive sales and profits
Prime: Most successful tool to get buy-in to new categories, net costs, uplifts
Prime: the 7 key prime benefits to Amazon
Prime: Prime fee income 2015 in US$m, USA, Germany, Japan, UK, France
Prime: geographic footprint for same day in the USA widened
Prime: recent developments, prime product eligibility widened
Prime: recent developments, prime only products
Prime: Sprint partnership – the possibilities for external partners to cooperate
Prime: Amazon’s attack on Netflix, (re)introducing monthly prime
Prime: VOD Germany, Amazon leads Netflix
Prime Now USA
Prime Now: introduction
Prime Now: geographic footprint in the USA – list, addressable population figures
Prime Now: geographic footprint in the USA – map
Prime Now: September 2015 Prime now launches in Seattle, selling alcohol
Prime Now: September 2015 restaurant deliveries in Seattle, a Spotlight update
Prime Now: October 2015, expansion of Prime services in several states
Prime Now: US Best sellers by region 2015
Prime Now: regional bestsellers – analysis, a procrastinator's dream
Prime Now: local store delivery – rivaling Postmates and Instacart
Prime Now: local store delivery – operational set up
Prime Now: integration of the app into the mother ship
Prime Now: Amazon partners with Sprouts for delivery service
Prime Now: Amazon daily dish
Prime Now: Amazon taking on and copying Peach
Prime Now ROW
Prime Now: geographic footprint in EU, Japan – map
Prime Now: geographic footprint in the ROW – list, population figures
Prime Now: London and the roll out in the UK
Prime Now: Prime now best sellers in the UK
Prime Now: Best sellers in Newcastle, Leeds, London, Surrey 2016/7
Prime Now: Best sellers in the UK by region, London North, South, West
Prime Now: Best sellers in the UK by region, East London
Prime Now: Prime Now UK extension, Amazon Restaurants launched in the UK
Prime Now: May 2016, Prime Now launches in Berlin, other German cities to follow
Prime Now: Germany – network to become much denser
Prime Now: Berlin – how the processes in the inner city DC are organized
Prime Now: Berlin – e-bikes, range depth, out of stocks
Prime Now: June 2016 Berlin, recruiting new partners for fresh categories
Prime Now: Berlin, suppliers and partners to Prime Now
Prime Now: France, categories split
Prime Now – Strategic considerations
Prime Now: the attraction to Amazon, others cannot replicate the offer
Prime Now: set up to minimise costs, delivery charges, tight range
Prime Now: drives extra spend from prime shoppers, a new consumer proximity
Prime Now: introducing more localised and seasonal ranges
Prime Now Data – Building out an unassailable competitive advantage
Prime Now data: which products are sold together?
Prime Now data: usage data, number of shoppers, orders, total spend – estimate
Prime Now data: 2016/7, consumer research
Prime Now data: Prime Now 2016/7, consumer research – analysis
Prime Now data: How many orders have been sent, average basket size per order
Prime Now data: How has the offer evolved since the launch?
Prime Now data: how is the logistics set up organised?
Prime Day
Prime Day: Prime day, essentially impossible to copy for competitors
Prime Day: Sales estimates, a worldwide shopping holiday?Prime Day: 5 key reasons from peak to device sales
Marketplace
Marketplace: 3P has overtaken 1P in value terms
Marketplace: The Key Performance Indicator
Marketplace: inventories and cash flow, marketplace as the core of the model
Marketplace: Recent developments, Seller Fulfilled Prime, lending program
Marketplace: globalising the platform
Marketplace: 3P commissions, fees, another 10% for FBA, risk of being replaceable
Marketplace: Net product, service sales, units shipped, 3P % share 2009-15
Marketplace: The main marketplace winner, 1P and 3P contribution in US $m 2010-15
Marketplace: 3P sales in US$m in 2010 – 2015, 3P bigger than 1P
Marketplace: Amazon Marketplace 2015 record year
Marketplace: UK stats, 3P and 1P units neck on neck
Marketplace Sellers Data
Marketplace: Top 10 sellers, ranked in US$m in 2015, all from USA, UK & DE
Marketplace: entertainment categories are generating biggest income
Marketplace: the space is getting crowded, competition from China
Marketplace SKU analysis
Marketplace: Asin/SKU count per category – chart
Marketplace: Asin/SKU count per category – analysis
Marketplace: Selection growth in 2015, 1P versus 3P
Future strategy Marketplace
Marketplace: 4 strategic priorities, policing the 3P space
Marketplace: brand-gating and pushing the costs on to sellers
Marketplace: creating new Marketplaces, Handmade, copying etsy
Marketplace: Home Services, Amazon’s take on the gig economy
Marketplace: how Home Services has changed the way customers shop
Marketplace: Amazon Business targeted for significant growth
Marketplace: Amazon exclusives – the need for more services marketplaces
Marketplace: creating dynamic fee structures – possible benefits
Marketplace: creating dynamic fee structures – assessing the impact of changes
Marketplace: creating dynamic fee structures – challenges for sellers
Marketplace: turning sellers into wholesalers
Stores
Amazon Book stores: the book store, what has happened so far
Amazon Book stores: should Amazon open physical stores?
Amazon Book stores: the argument in favour I
Amazon Book stores: the argument in favour II
Amazon Book stores: the argument against I
Amazon Book stores: the argument against II
Amazon Book stores: the conclusion
Amazon Book stores: the pop up stores
Outlook
Sources
Table 1 - Data and KPIs: Net Sales & Income, Margin 2008-15, adding $18.0bn in 2015
Table 2 - Data and KPIs: US, international, AWS sales, in $m, % split, growth, 2013-2015
Table 3 - Data and KPIs: Sales by segments 2008-2015 in $m, growth, Media, EOM, other
Table 4 - Data: sales per country in €m 2008-15, Germany, UK, Japan, France
Table 5 - Data: Int’l sales per country in €m, China, India, Spain, Italy, Brazil, 2008-2015
Table 6 - Data: Sales per country in €m, Mexico, Netherlands, Australia, Canada, 2013-15
Table 7 - Data: International sales per country in local currencies 2011-15, Japan, UK
Table 8 - Data: Active Customer accounts 2009 – 15 in m, USA, Germany, Japan, UK, France
Table 9 - Data: Average annual spend 11 – 15, USA, DE, Japan, UK, France in local currency
Table 10 - Data: 1P by geography, average price, total units, customers, frequency 2015
Table 11 - Data: average price, total units, customers, frequency per country, 2014
Table 12 - Data: Best seller average prices 2013 - 15 in local currency, CA, CN, ES, IT
Table 13 - Prime: Prime Customer accounts 2009 – 15 in m, USA, Germany, Japan, UK, France
Table 14 - Prime: Prime fee income 2015 in US$m, USA, Germany, Japan, UK, France
Table 15 - Prime Now: geographic footprint in the USA – list, population figures
Table 16 - Prime Now: geographic footprint in the ROW – list, population figures
Table 17 - Prime Now: usage data, number of shoppers, orders, total spend – estimate
Table 18 - Amazon: Net product, service sales, units shipped, 3P % share 2009-15
Table 19 - Marketplace: Top 10 sellers, ranked in US$m, in 2015, all from USA, UK & DE
Chart 1 – Prime Membership, spend and GMV share data 2015
Chart 2 – Prime Now: geographic footprint in the USA – map
Chart 3 – Prime Now: US Best sellers by region 2015
Chart 4 – Prime Now: geographic footprint in EU, Japan – map
Chart 5 – Prime Now: Prime now best sellers in the UK
Chart 6 – Prime Now: Best sellers in Newcastle, Leeds, London, Surrey 2016
Chart 7 – Prime Now: France, category split
Chart 8 – Data: Prime Now 2016/7, consumer research
Chart 9 – Amazon: The main marketplace winner, 1P and 3P contribution in US $m 2010-15
Chart 10 – Amazon MP: 3P sales in US$m in 2010 – 2015, 3P bigger than 1P
Chart 11 – Marketplace: Asin/SKU count per category

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