MENDEL UNIVERSITY – BRNO, CZECH REPUBLIC

AMAZON.COM
PRIME DAY 2019
Strategic Management

Chau Nguyen Doan Xuan, Phat Thanh Tran,

Phuong Hoai Anh Nguyen and My Doan Nguyen Hoang
12/8/2019
Abstract
In this essay, Amazon.com will be the subject of discussion. An introduction to the company
will outline some of the most important and critical points to get the most general answer to
the "What is Amazon.com?". The main topic to be analysed is the "Amazon Prime Day
2019" model, and the contents are given below is the answer to the question "What's it
about?" "How's it?" and "What's the results?". In addition, the difficulties that Amazon has
encountered to implement the "Amazon Prime Day 2019" model will also be mentioned. This
essay focuses on the U.S. market only.
Keywords: Amazon Prime Day, Logistics, Disputes over work

Company description
1. Introduction
Amazon Inc was founded by Jeff Bezos on July 5, 1994. Its headquarters is based in Seattle,
Washington. The company was originally a book seller but has expanded to sell a wide
variety of consumer goods and digital media as well as its own electronic devices. Amazon is
defined as a transactional e-commerce site that enables the purchase of products online. In
the retail industry, Amazon (Amazon.com) has taken advantage of the new internet and
information technology, and has created one of the world's largest retail businesses.

2. Mission
“We strive to offer our customers the lowest possible prices, the best available selection, and
the utmost convenience.”
This corporate mission promises attractive e-commerce services to satisfy target customers’
needs. The company targets offering the customer the best offers on three shopping factors
that include the pricing, variety and personal satisfaction.
1. Lowest prices
2. Best selection
3. Utmost convenience

3. Vision
Amazon’s corporate vision is “to be Earth’s most customer-centric company, where
customers can find and discover anything they might want to buy online.” This vision
statement underscores the business organization’s main aim of becoming the best e-commerce
company in the world. In this regard, the following characteristics are identifiable in
Amazon’s corporate vision statement:
1. Global reach
2. Customer-centric approach.
3. Widest selection of products

4. Core Values
Amazon core values include “customer obsession, ownership, invent and simplify, are right, a
lot, hire and develop the best, insist on the highest standards, think big, bias for action,
frugality, vocally self-critical, earn trust of others, dive deep, have backbone, disagree and
commit, and deliver results.”. Amazon features a long list of values to guide the operations of
its business. Several key values can, however, be singled out to have the greatest impact
among this list:
1. Customer obsession
2. Invent and simplify
3. Hire and develop the best
4. Deliver results
5. Earn trust of others

Company’s analysis

1. Products and Services

Amazon.com's product lines available at its website include several media (books, DVDs,
music CDs, videotapes and software), apparel, baby products, consumer electronics, beauty
products, gourmet food, groceries, health and personal-care items, industrial & scientific
supplies, kitchen items, jewelry, watches, lawn and garden items, musical instruments,
sporting goods, tools, automotive items and toys & games. Amazon.com has a number of
products and services available, including: Amazon Fresh, Fire tablets, Amazon Prime, Fire
TV, Amazon Web Services, Video, Alexa, Kindle Store, App store, Music, Amazon Drive,
Music Unlimited, Echo, Amazon Digital Game Store, Kindle, Amazon Studios, Amazon
Fresh, Amazon Wireless.

2. Financial Statement
The time series shows the net revenue and Profitbility of Amazon.com's e-commerce and
service sales from 1994 to 2018, in billion US dollars. In the last reported year, the
multinational e-commerce company's net revenue was 232.88 billion U.S. dollars, up from
177.86 billion US dollars in 2017.

3.Competitors
It’s clear to see that Amazon is dominant in ecommerce in U.S. market. In the last two years,
Amazon made an effort to increase their share of the total U.S. ecommerce market from 38%
to 49%. Amazon holds almost 50% of the massive $252.7 billion market – that’s more
than double the market share of the other big competitors (including eBay, Walmart, Best
Buy, Apple, etc.) combined.

4. SWOT analysis
STRENGTHS
 Strong brand name
 Differentiation and Innovation
 Largest Merchandise Selection
 Large number of third-party sellers
 Go Global and Act Local strategy
 Highest revenues in the industry
 Superior logistics and distribution systems
OPPORTUNITIES
 Opportunity to penetrate or expand its
operations in developing markets
 Expanding physical stores
 Improve technological measures
organizational policies
 More acquisitions of e-commerce companies
WEAKNESSES
 Easily imitable business model
 Tax Avoidance Controversy
 Limited brick-and-mortar presence
 Workplace conditions
THREATS
 Few controversies
 Government regulations
 Increasing cybercrime
and  Aggressive competition with big
retail firms
 Imitation

Amazon Prime day 2019

1. What is Amazon Prime day?
Prime Day is a big summer event every year for Amazon members Prime. The event started in
2015, when Amazon held a big sale to celebrate its 20th birthday. Since then, Prime Day has
grown into a great shopping event with its own style, same strong discounts for all products
across the system. Amazon Prime Day is an event organized by Amazon itself to stimulate
shopping demand at a time when purchasing power in the year is declining.
1.1 How to be qualified for this event?
This is an event for prime members only, which means you must be an Amazon Prime
customer. Being an Amazon Prime member can enjoy the fasted free delivery service, which
cost $12.99/month ($6.49 for students) or $ 99 per year.
1.2 What highlights are in this year event?
a. Time
Amazon Prime Day 2019 Prime Day launches on July 15th – July 16th, and unlike Black
Friday or Cyber Monday, deals last up to 48 hours. There are currently 18 markets hosted by
Amazon Prime Day, instead of 17 countries like last year.
b. Lightning Deals
Lightning Deals are quick offers available through Amazon's "Today’s Deals" page.
However, on Prime Day, all Lightning Deals offers are for Prime members only. These offers
will only be visible for a short period of time. Therefore, you need to hurry to ‘hunt’ for these
special offers.
c. Amazon Prime's one-day delivery service
Amazon offers a one-day free shipping service to Prime members for almost 100 million
products. One-Day Delivery is free for Prime members with no minimum purchase amount.

2. How do other competitors react to this Day?

When azm first entered the market, there were only 7 competitors, the number increased to
250 retailers, including many big names such as Walmart, Cosco, Target,... Amazon's major
competitors also made moves for the event like promotion events and delivery terms.
1. Target
The company also extends the promotion to two days like Amazon, and the time coincides
with Amazon Prime. While Amazon Prime is only for Prime members, who spend $119/year
to sign up for this service. Target is open to all customers who do not need to be a member.
And Target also offer free two day shipping on orders over 35 dollars.
2. Ebay
Ebay holds a Crash sale offering 80% off top brands, free shipping, and no membership
required.
3. Walmart
Walmart launchs their event before one day Amazon Prime Day and ends after 1 day.
Thousands of promotions will take place within four days. Walmart also rolls out Free next
day shipping with orders of 35$ or more.
 3. What is the result of this model?
3.1 In term of Revenue

Amazon said the Prime Day 2019 was its most popular shopping event yet, beating out last
year’s combined Black Friday and Cyber Monday. On 15th July, the first day of Amazon’s
48-hour shopping extravaganza this year, retailers earning $1 billion in annual revenues saw a
growth of 64% in their digital sales compared with an average Monday, according to Adobe
Analytics. Prime members purchased more than 175 million items on this event, per Amazon,
a 75 percent rise over the 100 million items sold last year.

CEO Jeff Bezos shared a “thank you” message to Prime members all around the world after
the huge success of Prime Day 2019, “Members purchased millions of Alexa-enabled devices,
received tens of millions of dollars in savings by shopping from Whole Foods Market and
bought more than $2 billion of products from independent small and medium-sized
businesses. Huge thank you to Amazonians everywhere who made this day possible for
customers.”

3.2 In term of Subscribers

In Prime Day 2019, Amazon had more Prime subscribers than ever before, so the event is
definitely a strong recruiting tool that helps boost its volume long term. Based on a new
study from Consumer Intelligence Research Partners, it’s estimated that Amazon’s Prime
membership program is now in more than 90 million U.S. households, approximately 63
percent of Amazon customers, goes up 38 percent compared to last year.
According to Geekwire, 10.7% of the US population registered this service, which means that
1 out of 10 people will sign up Amazon Prime. Those with a Prime account spend an average
of $ 1,300 compared to those without an account and only spend about $ 700 per year.

4. Did the campaign happen smoothly?

4.1 Technical problems
According to Business Insider,“customers complained that they couldn't add anything to their
carts on Amazon on Monday, during the company's Prime Day 2019 event.” Amazon also
struggled with technical issues on Prime Day 2018 when lot of customers could not access to
the website to make purchases. Experts made an estimation that the company lost millions of
dollars in sales due to this difficulty.

4.2 Dispute over working conditions

In recent years, Amazon has faced an onslaught of negative press about working conditions.
It’s described “ dangerous, stressful and horrible” working environment, the complaints came
from all the workers in every departments, from warehouse, Amazon Flex drivers to pilots.
Some workers said that Amazon expects them to keep up a fast, often unreasonable pace.
According to the Guardian, there was protest with demonstrations outside seven British
warehouses coincide with the retail giant’s Prime Day promotion and in seven US cities.

5. How did they do it?

Logistics network of Amazon has made a huge contribution to the success of Prime Day
2019. Amazon‘s dream has been turned into a reality when it make two-day shipping into
only one-day delivery. That is absolutely a massive advancement for retail business. Amazon
spends tens of billions on shipping every year. According to Amazon financial report 2018, in
just the last quarter of 2018, Amazon's shipping costs jumped 23%, reaching a record $9
billion. Amazon executives announced on its recent earnings call that it had set aside $800
million in the second quarter of 2019 to expand its logistics network for the one day delivery
campaign.
Amazon has been building out an network for a number of years. Amazon now has at least 50
airplanes, 300 semi-trucks, 20,000 delivery vans and it operates ocean freight services
between the U.S. and China. It now handles the shipping for 26% of online orders. Amazon
broke ground on a new 1.5 billion dollar air hub in Northern Kentucky in May 19th 2019. It
has capacity for 100 planes. Amazon also uses small business partners, some delivering out of
20,000 Amazon vans. In 2015, it launched Amazon Flex. Amazon Flex is available in about
50 U.S. cities. Anyone’s over 21, with a driver’s license, auto insurance and at least 4 door,
mid size sedan can sign up.

Faster delivery is crucial for Amazon because it faces increasing competition from traditional
retailers like Walmart, Target and newcomer such as Shopify.

6. What’s the effect of this Day?

Before Prime launched in 2005, one-day shipping was an exorbitant luxury. Now it's the
standard shipping speed for Amazon's 100 million Prime members. Amazon has changed the
game completely. They excel at is getting an object from a creator to a consumer as flawlessly
as they can and as quickly as they can. So Amazon is changing people's expectations and
they're perpetually improving those expectations.
Not only Amazon, more than 250 retailers altogether are expected to have sales going on to
try to take advantage of the surge of web traffic around Prime Day.
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