Amazon Case Study Provides Strategic Planning Insights

© Copyright, Michael W. Solomon, 2001, 2002Practical Strategic Planning 1
Section 2
Case Study

We promised to bring you a “comprehensive case study
specifically written for this class. The company reviewed
here is amazon.com. The case will be used to illustrate all
the concepts, but more importantly it will provide the
information you need to create an actual strategic plan in
the class.
Case study
“Market share now, means revenue later!”

CaseStudy
Dear participant
Thank you for choosing to attend this two-day workshop
on strategic planning.
To help you engage the subject matter in the most
practical way, I have compiled this case study on
amazon.com.
To offer you the best possible value from the class, we
thought it best to send you the case study in advance.
Please put aside an hour beforehand to do the pre-
workshop preparation. Instructions are provided on the
next page.
I look forward to meeting you and hope you will enjoy the
workshop and walk away with some new perspectives.
Good luck with your preparation.
Michael W. Solomon
Washington, DC

Case study
Table of contents

Case study
Pre-workshop preparation
Exercise: 3
Type: Self-study
Instructions
• Read the case study.
• Using the worksheet on the next page make notes on the company’s
performance. List its plus points, minus points and interesting points
(those that are neither positive nor negative).
• During module 2 we will be discussing your conclusions.
Time:
• Read: 45 minutes
• Make notes: 15 minutes

Case study
Worksheet

Case study
Company summary
Founded by Wall Street investment analyst Jeff Bezos, amazon.com, Inc. started in 1995 as an
online bookseller. Today it ranks as the world’s leading online retailer. From its website
customers can find almost anything they want. The company sells millions of items from books,
and music to consumer electronics, tools and hardware. Through its Amazon Marketplace,
Auctions and zShops services, one can sell virtually anything to the company's approximately
30 million customers, and with Amazon.com Payments, sellers can accept credit card
transactions. The company is not just a storefront, it boasts several warehouses across the
United States and at least half a dozen call centers in America and Europe. In addition to its
U.S.-based site, www.amazon.com, the company operates four international websites:
www.amazon.co.uk, www.amazon.de, www.amazon.fr and www.amazon.co.jp.

*pronounced Bay-zoes
Showing an interest in electronic gadgetry from an early age, Jeffrey Preston Bezos* was perhaps
destined to end up in the technology business.
• Born in the USA on January 12, 1964, as a child he was described as
friendly, serious and intelligent.
• He built his own toys from electrical components, and would later say
that his heroes were Thomas Edison (a brilliant innovator but a poor
businessman) and Walt Disney (a good innovator but a great
businessman).
• In high school he wrote a competition paper called: “The effect of zero
gravity on the aging rate of the common housefly”.
• Jeff went to Princeton University in 1982. During this period he had a
summer job with IBM where he rewrote a piece of software. In 1986, he
graduated summa cum laude with a BSE in electrical engineering.
• After college he spent almost two years at a small start-up firm that
developed data transfer networks for banks - foreshadowing the likes of
e-trade.
• In early 1988 he moved to Bankers’ Trust Company. Charged with
building a communications network, he would become its youngest ever
Vice-President.
• In December 1990 he accepted a position with Wall Street investment
firm D.E. Shaw & Co. to explore new markets. He became a Senior Vice
President there in 1992.

While working on Wall Street Bezos spots an opportunity and hatches the plan that will eventually
make him an icon of the new economy.
• By the end of 1993, Tim Berners-Lee has created the protocols that will open
the worldwide web to the general public and a team of students have
introduced Mosaic, a software tool that simplifies web-browsing.
• Bezos’s boss, David Shaw, recognizing the business promise of the fledgling
Internet assigns Jeff to investigate.
• Bezos finds that web usage is growing at the phenomenal rate of 2300% per
annum. He compiles a list of twenty things that will most likely sell best
online. Books and music come out in first and second place respectively.
• Music is not an attractive industry because a handful of companies control
distribution, whereas the book market has many more items to sell and has
many different players. In addition, the major distributors already have a
digital catalog of most of the books available.
• Since the Depression, publishers have taken back unsold stock from
booksellers in exchange for credit. In 1994, for every ten books sold almost
four were being returned. This represents a twofold opportunity to a would-
be book entrepreneur. If he can predict how many copies a title will sell, the
number of unsold books can be reduced. If he can sell to a broader
audience fewer copies might go unsold.
• Bezos proposes the idea of an online bookseller to Shaw, who turns it down.
Shortly afterwards, Bezos decides to resign and start such a company
himself.

From New York City on the East Coast he treks all the way to the West Coast where he starts up his
business in the garage of a rented home.
• A friend on the West Coast, hearing of Jeff’s idea, offers to invest in the
business if it operates out of Seattle. This proves convenient since one of
the largest book distributors is located in the vicinity.
• Jeff - with wife Mackenzie in tow - moves west, where he establishes the
business in July 1994, at first calling it Cadabra Inc, but switching to
amazon.com three months later.
• Before getting started, Jeff attends a four-day seminar on bookselling
sponsored by the American Booksellers’ Association.
• The couple rent a modest house in a middle-class Seattle suburb, using the
garage as makeshift business premises, partly in homage to the two
partners who used their garage many years before to establish the now
eponymous Hewlett-Packard.
• The first, and possibly most important hire Bezos makes is Shel Kaphan, a
brilliant Californian programmer from an Apple/IBM joint venture, a veteran
of a dozen start-ups.
• Although other companies are already selling books online, after
researching the software on the market, convinced they can do it better,
they build their own using code freely available on the web.
• They develop their CC (for credit card) Motel, making it virtually impossible
for hackers to steal credit card information from their site.

The electricity needs of the new business soon exceed what the garage can deliver– to launch their
website they are forced to find real business premises.
• In late spring 1995 they begin testing their software, using hundreds of
friends and relatives to test drive the site.
• Jeff funds the operating expenses for the first 6 months out of his own
pocket, and Mackenzie does the books (as she will for the first 18 months).
• In February 1995 Jeff sells 580,000 shares to his father for $100,000. The
infusion will help them solve the growing electricity problem.
• They move into premises in the industrial section of Seattle, occupying a
400 sq. ft (barely 40m2
) warehouse.
• They elect to maintain as little inventory as possible, preferring to operate
along just-in-time delivery principles, getting books from the local distributors
when an order is placed.
• In July 1995, needing more operating capital, Jeff sells roughly 850,000
shares in amazon to his mother’s trust for $145,000.
• On 16 July 1995 the amazon website is opened to the public. Bearing the
slogan “Earth’s Biggest Bookstore” it offers a million titles. In the first week
they average six sales a day. They sell books in all 50 US states and 45
other countries during the first 30 days, without any promotion other than
word-of-mouth
• Inclusion on Yahoo and Netscape’s page generates more sales which by
October 1996 would reach 100 on a single day.

Barely out of the garage, they make the front-page of the Wall Street Journal. This fuels demand
and inspires a new mantra– Get Big Fast!
• Amazon loses $52,000 in 1994 and $303,000 the following year. Out of funds, they
enlist Hanauer’s help to find angel investors in Seattle. Twenty one invest, bringing
in almost $1m.
• Realizing that customers pay 53 days before they must settle with their suppliers,
while brick-and-mortar bookstores must cough up on average 97 days before they
sell anything, leads them to conclude that the larger the scale of the business the
lower the operating costs would become.
• In early 1996 they start getting calls from venture capitalists. They meet with L.
John Doerr from legendary Silicon Valley firm Kleiner Perkins Caufield and Beyers,
who offers them $8m and eventually joins the board, bringing Scott Cook of Intuit
with him.
• Increased demand leads to a hiring spree and pressure on their already small
office and warehouse space. They now use part of the parking garage in the
building too. By August 1996 management is forced to move out to another
building.
• By the end of 1996 they have 150 employees and $16m in sales.
• Their success draws attention from a big competitor. Leonard Riggio, CE of
America’s leading bookstore Barnes and Noble approaches Bezos. He wants to
buy a stake in amazon or at least do a joint venture. Bezos turns him down. In an
effort to stymie amazon B&N will later try to buy the distributor Ingram Book Group
Inc, one of amazon’s largest suppliers. The move would be opposed by the FTC,
America’s free enterprise watchdog.

Theirgrowth requires more capital and they hire an impressive chief financial officerto help amazon
raise money on the stock exchange.
• Joy Covey joins the management team as CFO. She comes from another small
technology company where she led the initial public offering. She introduces
formal accounting procedures knowing that potential shareholders will want to
see disciplined financial management.
• In January of 1997 Barnes and Noble gains exclusive rights to sell books on
AOL. Bezos quickly adds out-of-print books, something his competitor does not
sell.
• Amazon begins discussions with investment banks, eventually settling on
Deutsche Morgan Grenfell to lead the offering. Bezos and Covey go on a
roadshow to woo institutional investors in Europe and the US.
• In May 1997 Barnes and Noble launches its internet site b&n.com in
collaboration with European media giant Bertelsmann AG. Just before the
launch, Barnes and Noble sues amazon over its “Earth’s Largest Bookstore”
boast.
• Later the same month, Amazon goes public on NASDAQ (AMZN) at $18 a
share closing the first day of trading at $23.50. Jeff and his family hold 52% of
the company. Kleiner Perkins Caufield and Byers hold 11%.
• By June, Barnes and Noble and amazon are engaged in a full-scale price war.
Amazon opts to take a loss on price discounts in response to the large
purchasing power of b&n. Bezos remarks: “We’re going to obsess over our
customers and not our competitors”.

In late 1997, amazon introduces its “1-Click” technology. They patent it two years laterintroducing
a new category of competitive advantage, the business method patent.
• Amazon develops a method for securely storing user data on a web site,
allowing customers to enter their billing and shipping information once
and thereafter order items with only one click of the mouse.
• A US patent is issued for the so-called “1-Click” technology on September
28, 1999.
• Those who see the Internet as a free space are infuriated. They argue
that the patent should not have been allowed in the first place since the
technology was not really original. Many influential members of the web
community call for a boycott of amazon.
• Bezos will not recant. He says: "We spent thousands of hours to develop
our 1-Click process, and the reason we have a patent system in this
country is to encourage people to take these kinds of risks and make
these kinds of investments for customers”.
• Eventually in an open letter on the amazon site, Bezos undertakes to
lobby for reforms that will lead to better rules governing online patents.
• In December 1999 (shortly before the busy online holiday shopping
season), amazon obtains an injunction against b&n.com, forcing them to
replace their own one-click ordering system with a more complicated one.
• In late 2000, computer producer Apple announces that it has licensed
amazon’s 1-Click technology for use in its online store.

By 1998, the onset of intense competition and a clearneed foreconomy of scale drives amazon to
add new product lines and open websites in Europe
• In June 1998 amazon launches a music store, selling CD’s and tapes. By
the third quarter, it becomes the number one online music seller.
• In November 1998, they launch a video store and an enhanced holiday
gift store, offering a variety of products, including selected personal
electronics and toy products.
• By the fourth quarter of 1998, its first full quarter of online video sales,
Amazon.com becomes the number one online video seller.
• Clearly, the company has plans to continue expanding its product line.
• Perhaps in an effort to take the battle to b&n’s new partner Bertelsmann,
in April 1998, amazon.com acquires three Internet companies in the
United Kingdom and Germany. By October they re-launch two of these
under the amazon brand as www.amazon.co.uk and www.amazon.de.
• In their annual report they acknowledge that “we have relatively little
experience in purchasing, marketing and distributing products or services
for these [international] markets and may not benefit from any first-to-
market advantages”.
• By the end of 1998, the company has an accumulated deficit of $162.1
million.
• It employs approximately 2,100 regular employees and a number of
independent contractors, none of whom is represented by a union

With a new position in the market, during 1999 amazon makes several acquisitions, takes stakes in
otherdotcoms and effects key personnel changes.
• The company expands its capabilities and offerings through the acquisition of:
– Exchange.com - developer of Internet marketplaces and online communities
that bring together buyers and sellers of rare and hard-to-find items.
– Accept.com - an e-commerce organization, developing technology to
simplify person-to-person and business-to-consumer transactions on the
Internet.
– Alexa - a developer of a web navigation service.
– LiveBid.com - a technology provider for live, event-based auctions.
– The catalog and online commerce assets of Tool Crib - a retailer of home
improvement products.
– Back to Basics - a catalog retailer of toys
• It buys stakes in several other online concerns including Della.com,
drugstore.com, Gear.com, HomeGrocer.com, Kozmo.com, Naxon Corporation
and Pets.com.
• Joseph Galli, Jr., a 19-year Black & Decker marketing veteran is appointed to the
positions of president and chief operating officer.
• They also poach Warren C. Jenson, formerly at NBC and then at Delta Air Lines
as their new CFO. Joy Covey vacates the position to become amazon's chief
strategy officer. She will eventually leave the company in 2000.
• Time magazine’s names Jeff Bezos “Man of the Year” for 1999.

Still not profitable, with sky-rocketing debt amazon takes drastic steps in early 2001 and seems set
to go from e-tailerto full-scale online shopping mall.
• In January amazon lays off 1,300 people - 15% of its workforce - and closes
its distribution center in Georgia and its customer-service center in Seattle.
• In their 2000 annual report they promise: “As a first step, we’ve set the goal
of achieving a pro forma operating profit in the fourth quarter of 2001”.
• In June amazon starts selling downloadable research reports online from
firms like Gartner, IDC and Forrester.
• AOL Time Warner Inc., earlier a partner of Barnes & Noble, announces in
July that it will take a $100 million stake in amazon, and plans to use
amazon’s technology in AOL's shopping areas.
• In September they announce a flurry of changes:
– Electronics retailer Circuit City will allow shoppers to buy electronic
products on amazon's website and then pick them up immediately from
their nearest Circuit City store.
– Main street general retailer Target opens an online store on amazon's
home page. They will pay the e-tailer to sell products and run the
Target website.
– A travel store in collaboration with Expedia.
– “Your Store” a personalized Web page that greets customers by name
and features selections from favorite stores on their website.

Earth's
Biggest
Store?
Since its establishment, amazon has transformed itself from an online booksellerinto the world’s
leading e-tailer
“to use the Internet to
transform book buying into
the fastest, easiest, and most
enjoyable shopping
experience possible”
online bookseller
1995 1996 1997 1998 1999 2000 2001 2002 2003
Originally, in their SEC filings they
used the SIC code 2731 for:
BOOKS: PUBLISHING OR
PUBLISHING AND PRINTING
By 2001 their SEC filings showed a
new SIC code, 5961 for:
RETAIL-CATALOG & MAIL-
ORDER HOUSES
“the place to find and
discover anything you
want to buy online”
online shopping mall
A retail back
office?

Retail is the second-largest industry in the United States both in numberof establishments and
numberof employees
• Generates more than $3 trillion in sales annually, with a typical
industry gross margin of 31-33% of sales.
• Online browsing and buying are directly influencing consumer
spending in traditional stores. U.S. consumers tend to research
products on the Web and are more likely to buy in bricks and mortar
stores than make the purchase online.
• By 2005, spending on this kind of hybrid use of channels is likely to
grow to more than $199 billion online and $632 billion offline.
• While many businesses see their online and offline presence as
separate sales channels, customers do not make the same distinction.
• With FY 2000 sales of approximately $192 billion, Wal-Mart is the
world's largest retailer employing over a million people.
• Auction site eBay, is one of the few e-tailers making a profit. It does so
possibly because it never takes possession of the items sold on its
site. Instead it simply brings buyer and seller together. This lean
operating cost model may not be the only reason for its profitability,
however. Priceline.com the airline ticket and grocery auctioneer that
also holds no inventory has yet to show a profit.

The online shopping market in which amazon competes will grow to $78 billion by 2003 from a
base of $7.8 billion in 1998
Consumeronline spending
(In USDbillions)
$78.0
$53.0
$34.6
$23.1
$14.9
$7.8
1998 1999 2000 2001 2002 2003

Amazon’s strategy forthis market includes a vision statement, mission, six core values and like
most growing businesses that have yet to mature, a sometimes confusing variety of evolving plays
the world's most
customer-centric
company
bias for
action
ownership
customer
obsession
frugality
high hiring
bar
innovation
mission
“To use the Internet to transform
book buying into the fastest,
easiest, and most enjoyable
shopping experience possible”
vision
values
plays get big fast do it all ….or partner add services
have great
technology

Amazon’s business model is well suited to theirdesire to get big fast and to do it all
internal processescustomerssuppliers
Competitors
Back office
Warehouses
Web site
Delivery
system
Services
Products
& services
Consumer
Business
Customer
Producers
Wholesalers
Referral sites
Credit card
companies

This business model is expensive - since going public amazon has rapidly grown its revenue, but
has yet to make a profit
Amazon.com Inc
Income Statements: 1997 - Q3 2001
(In $000’s)

Without any profits to fund future operations, amazon has borrowed expansively in the last two
years leading to a debt ratio of 213% in the 3rd quarterof 2001
0% 50% 100% 150% 200% 250%
Q1-1997
Q3-1997
Q1-1998
Q3-1998
Q1-1999
Q3-1999
Q1-2000
Q3-2000
Q1-2001
Q3-2001
amazon’s growing debt ratio
• Shows how much money a
company owes as a percentage
of the assets it owns.
• The most solvent companies
have the lowest debt ratios.
• The industry average for Internet
companies is 51% - In the 3rd
quarter of 2001 amazon’s was
therefore four times higher.
• Formula: Total liabilities divided
by total assets expressed as a
percentage.
What is a debt ratio?

Its escalating debt and elusive profits have alienated many analysts, turning amazon from a Wall
Street belle into a dot-bomb outcast
• The stock sold at $18 on the opening day in1997, rose to a high
in the $120’s after three stock splits and closed at a low of $10 on
the Friday before Christmas 2001.
• Debt analysts are particularly gloomy. Equity analysts on the
other hand point to the company’s sales growth potential.
• Some investors believe that amazon's board is part of the
problem. Describing it as “small and clubby” with a “lack of retail
experience “. They face increasing criticism for “apparently never
having questioned Bezos on strategy, judgment, or financial
matters” and for not using traditional accounting methods. Some
feel the board has “too many venture capitalists looking to cash
out rather than build long-term shareholder value”.
• Amazon has repeatedly promised investors it will finally post a
profit in Q4-2001,although it revised its original revenue forecast
for the quarter. In spite of this, by October 2001 some analysts
still believed amazon could deliver an operating profit of $6
million for this period.

Amazon has two groups of customers: Individual consumers and corporations that want to sell to
them using amazon’s platform.
• Primary customer
– retail consumer in USA, Europe and recently
Japan
– men and women, although women will
outnumber men in e-commerce, just as they (70 -
80%) dominate offline retail shopping.
• Value proposition
– wide range of items
– 1-Click convenience
– buy, sell and auction options
– “outstanding customer value”
– “a superior shopping experience”
• Secondary customer
– retail corporations in USA
– more important as amazon becomes less of
an online department store and more of a
retailing back office.
• Value proposition
– administer websites for companies like
Borders, Target and ToysRUs, giving them
access to amazon’s existing customer base,
perhaps even offering logistics and customer
service help.
• Although such services could bring in good
margins, so far they only account for 7% of sales.
CorporationsConsumer

Although online shoppers have the money to spend, most are browsers. In addition, first-time
buyers soon drop out
• Typically, the current Internet customer comes from a household with an annual
income of $56,000, nearly double the national average of about $30,000.
• On average, only 2% of the people who visit any site make purchases.
• Evidently a large percentage of browsers seem to want to buy something but then
abandon their shopping carts. This is ascribed to high shipping costs.
• About 15% of first-time purchasers make no additional Internet purchase for at least
a year. They perhaps lose interest when the novelty wears off or are disappointed
by prices not low enough to justify the wait for delivery.
• Growth in Internet purchases over the past few years is leveling off. The industry
may thus be approaching a saturation point at which the current base of customers
is buying as much as it ever will.
• Books, CDs, and computer equipment remain the top-selling products online.
• As computer ownership gets cheaper and machines are acquired by less affluent
households, there may be a second wave of potential customers. But that group
doesn’t have as much to spend.
• Some 90% of visitors to amazon’s site do not buy anything, a percentage of
browsers much higher than in bricks-and-mortar stores.
• Market research shows that customers are impressed with amazon’s site, finding it
easier to use than Barnes & Noble’s site, for instance.
Consumer

It has become much clearerin the last two years exactly which forces are driving and inhibiting
online shopping
Sources: Accenture and The Intermarket Group
Note:
Percentages refer to number of
respondents indicating that a
specific issue mattered to
them.

Consumers who do shop at amazon may have started buying books but can now purchase almost
anything from tools and hardware to airtickets and housewares
books & magazines
electronics cars
health & beautytoys & games
music, DVD’s,
software
computers

To support this growing product line amazon’s list of partners - ortenants – has expanded to include
the likes of an online drugstore and caremporium
internet
service
provider
Books, CD's,
DVD’s etc.
travel
services
home
video
consumer
electronics
toysbaby
supplies
department
store
partners

Consequently, amazon’s competitors now range from bricks-and-mortarretailers to e-tailers in niches
and in general category retail goods
discount retail
giant
consumer
portal
general
retailer
music e-
tailer
sells PC’s
direct
internet service
provider
competitors
bookseller travel
e-tailer

• As an online bookseller, amazon originally tried to operate on
just-in-time delivery principles, keeping a small warehouse and
limiting its inventory costs. Distribution would be handled by a
variety of courier services like UPS and the US Postal
Services.
• In March 1996 they move to a 17,000sq ft location.
• Later that year they decide that they need to hold inventory
rather than rely on piecemeal orders from distributors. Dana
Brown is put in charge of the ordering department which at
first had 2 PC’s and one employee. She goes from ordering
100 books a day in July to 5000 a day by December.
• They start by keeping only the top 10 books. Later they
expand their stock to the top 25 and then top 250.
• In November of 1996 amazon moves its distribution operations
to a 93,000 sq. ft facility in Seattle.
• Two months later they hire Oswaldo-Fernando Duenas who
had helped build the FedEx distribution system. He brings
order to the distribution system.
In the beginning amazon was committed to being a just-in-time distribution operation

• Later, amazon leases a warehouse in Delaware, and in 1999 opens
five new “distribution centers” giving them 3 million sq. ft in low-or-
no-sales-tax states around the U.S. They now claim to sell 18 million
items.
• These centers often house different types of products. Customers
who order dissimilar items will most likely receive them in separate
shipments.
• In 2000 the company takes 1 million sq. ft of “fulfillment centers” in
Europe. Amazon is tied up tied up in leases until 2009 (for Germany
and France respectively) and 2025 for the facility in the UK.
• During the 2000 Christmas season, the busiest period of the
seasonal retail year amazon ships 31 million items. It claims to have
fulfilled more than 99% of orders taken for delivery by Christmas
Day.
• By 2001 observers estimate that amazon has $5 billion worth of
distribution capacity,but only use a third of it. Others maintain the
excess capacity could be used up quickly if the company continues
to grow as predicted by 40% a year.
Sales growth and product-line expansion led to full warehouse operations, creating concerns that
amazon has no control overits mounting distribution costs

However, the operational indicators that amazon reports show an efficient cash-to-cash cycle and
inventory turns that are superiorby industry standards
What the KPI’s (key performance indicators) mean
• Inventory turns (annualized) - the average number of times per year the company sells all its goods and needs to
replace them.
• A/P days (i.e. accounts payable days or creditor days) - the average number of days elapsed from the date at which
amazon receives goods from suppliers - or the date of invoice - until the date at which they pay for them.
• Inventory days - the average number of days a product spends in the warehouse until it is purchased.
• A/R days (i.e. accounts receivable days or debtor days) - the average number of days from the date at which goods
are sold or invoiced - to their customers until amazon receives payment for these.

Appendix
Main office bearers
Tom . Alberg has been a Director of Amazon.com since June 1996. Mr. Alberg has been a
managing director of Madrona Venture Group, L.L.C., a venture capital firm, since September
1999 and a principal in Madrona Investment Group, L.L.C., a private investment firm, since
January 1996. From April 1991 to October 1995, he was President and a director of LIN
Broadcasting Corporation, and from July 1990 to October 1995, he was Executive Vice President
of McCaw Cellular Communication, Inc. Both of those companies were providers of cellular
telephone services and are now part of AT&T Corp. Prior to 1990, Mr. Alberg was a partner of the
law firm Perkins Coie LLP, where he also served as Chairman of the firm's Executive Committee.
Mr. Alberg is also a director of Advanced Digital Information Corporation and Teledesic
Corporation and several other private companies.
Tom A. Alberg (61) Director
Jeff Bezos has been Chairman of the Board of Amazon.com since founding it in 1994, and Chief
Executive Officer since May 1996. Mr. Bezos served as President from founding until June 1999
and again from October 2000 to the present. He served as Treasurer and Secretary from May
1996 to March 1997. From December 1990 to June 1994, Mr. Bezos was employed by D.E. Shaw
& Co., a Wall Street investment firm, becoming Senior Vice President in 1992. From April 1988 to
December 1990, Mr. Bezos was employed by Bankers Trust Company, becoming Vice President
in February 1990. Mr. Bezos is also a director of drugstore.com, Inc. Total compensation* 2000 -
$82,000.
Jeffrey P. Bezos (37) Chairman of the Board, President, Chief Executive Officer
* Compensation values reflect salary, bonuses, etc

Appendix
Main office bearers
Scott Cook has been a Director of Amazon.com since January 1997. Mr. Cook co-founded Intuit,
Inc., a leading personal finance, tax and accounting Internet and software company, in 1983, and
served as President from April 1984 to April 1994 and as Chairman of the Board from April 1984
to September 1998. He has served as Chairman of the Executive Committee of Intuit since
September 1998. Prior to co-founding Intuit, Mr. Cook was a consultant for Bain & Company, a
strategy consulting firm, and a brand manager for The Procter & Gamble Company. Mr. Cook is
also a director of eBay, Inc., Intuit, Inc., and The Procter & Gamble Company.
Scott D. Cook (48) Director
L. John Doerr has been a Director of Amazon.com since June 1996. Mr. Doerr has been a
general partner of Kleiner Perkins Caufield & Byers, a venture capital firm, since September 1980.
Prior to joining Kleiner Perkins Caufield & Byers, Mr. Doerr was employed by Intel Corporation for
five years. Mr. Doerr is also a director of drugstore.com, Inc., Freemarkets, Inc., Handspring, Inc.,
Homestore.com, Inc., Intuit, Inc., Martha Stewart Living Omnimedia, Inc., Sun Microsystems, Inc.,
and WebMD Corporation, as well as several private companies.
L. John Doerr (49) Director

Appendix
Main office bearers
Mr. Hansen served as president and chief executive officer of SAM'S CLUB, a division of Wal-
Mart Stores, Inc., from 1997 through 1998. Prior to joining Wal-Mart, Hansen served in multiple
capacities from 1989 to 1997, including being president and chief executive officer of PETsMART,
Inc., a retailer of pet food, pet supplies and related products.
Mark S. Hansen (47) Director
Patricia Q. Stonesifer has been a Director of Amazon.com since February 1997. Since June 1997,
Ms. Stonesifer has served as Co-Chair of the Bill and Melinda Gates Foundation. Prior to joining
the Bill and Melinda Gates Foundation, Ms. Stonesifer ran her own management consulting firm.
From 1988 to 1997, Ms. Stonesifer worked in many roles at Microsoft Corporation, most recently
as Senior Vice President of the Interactive Media Division. Ms. Stonesifer is also a director of
Viacom, Inc.
Patricia Q. Stonesifer (44) Director
Mr. Jenson joined Amazon.com in September 1999 as Senior Vice President and Chief Financial
Officer. Before joining Amazon.com, Mr. Jenson was the Chief Financial Officer and Executive
Vice President for Delta Air Lines from April 1998 to September 1999. From September 1992 to
April 1998, Mr. Jenson served as Chief Financial Officer and Senior Vice President for the
National Broadcasting Company (NBC), a subsidiary of General Electric, and participated in the
development of MSNBC, the cable-Internet joint news venture between NBC and Microsoft. Mr.
Jenson earned his Masters of Accountancy-- Business Taxation, and B.S. in Accounting from
Brigham Young University. Total compensation* 2000 - $2,100 000.
Warren C. Jenson (44) Senior Vice President, Chief Financial Officer

Appendix
Main office bearers
Mr. Piacentini joined Amazon.com as Senior Vice President and General Manager, International in
February 2000. From April 1997 until joining Amazon.com, Mr. Piacentini was Vice President and
General Manager, Europe, of Apple Computer, Inc., with responsibility for Apple Computer's operations
in Europe, the Middle East and Africa. From April 1996 to April 1997, Mr. Piacentini was European
Sales Director of Apple Computer, Inc. From May 1995 until April 1996, Mr. Piacentini was General
Manager of Apple Computer's Italy operations, and before that, from September 1994 to May 1995,
Mr. Piacentini was Apple Computer's Sales Director for Italy. Mr. Piacentini joined Apple Computer in
1987. Prior to that time he held a financial management position at Fiatimpresit in Italy. Mr. Piacentini
received a degree in Economics from Bocconi University in Milan, Italy. Total compensation* 2000-
$2,500 000.
Diego Piacentini (40) Senior Vice President and General Manager International
Jeff Wilke has served as Senior Vice President, Operations since October 2000. He joined
Amazon.com as Vice President and General Manager, Operations in September 1999.
Previously, Mr. Wilke held a variety of positions at AlliedSignal from 1993 to 1999, including Vice
President and General Manager of the Pharmaceutical Fine Chemicals unit from March 1999 to
September 1999 and General Manager of the Carbon Materials and Technologies unit from
August 1997 to February 1999. Prior to his employment at AlliedSignal, he was an information
technology consultant with Andersen Consulting. He received a B.S.E. in chemical engineering
from Princeton University and has an M.B.A. and Master of Science in chemical engineering from
the Massachusetts Institute of Technology.
Jeffrey A. Wilke (34) Senior Vice President, Operations

Appendix
Main office bearers
Mr. Dalzell has served as Senior Vice President and Chief Information Officer since October
2000. He joined Amazon.com in August 1997 as Vice President and Chief Information Officer.
From February 1990 to August 1997, Mr. Dalzell held several management positions within the
Information Systems Division at Wal-Mart Stores, Inc., including Vice President of Information
Systems from January 1994 to August 1997. From 1987 to 1990, Mr. Dalzell acted as the
Business Development Manager for E-Systems, Inc. Prior to joining E-Systems, Inc. he served
seven years in the United States Army as a teleprocessing officer. Mr. Dalzell received a B.S. in
Engineering from the United States Military Academy, West Point.
Richard L. Dalzell (43) Senior Vice President, Chief Information Officer
Mr. Britto has served as Senior Vice President, Cross-Site Merchandising since February 2001.
He served as VP, Strategic Alliances from August 1999 to October 2000 and SVP, Marketing and
Cross-Site Merchandising from October 2000 until February 2001. From June 1999 to August
1999, Mr. Britto served as Director of Business Development. Mr. Britto joined Amazon.com in
June 1999 as part of the acquisition of Accept.com, which he co-founded in October 1998. From
October 1994 through October 1998, Mr. Britto was EVP of Credit Policy at FirstUSA Bank, where
he was responsible for their credit risk management practice. Mr. Britto received an M.S. in
Operations Research and a B.S. in Industrial Engineering and Operations Research from the
University of California at Berkeley. Total compensation* 2000 - $1,100 000.
Mark J. Britto (36) Senior Vice President, Cross-Site Merchandising

Case study
Worksheet
plus minus interesting
• Revenue growth
• Increasing gross profit
• Decreasing net loss
• Brand
• Cash-to-cash cycle and
negative operating cycle
• Industry expertise on board
of directors
• Steps taken in 2001 to
reduce costs
• Debt load
• Share price
• Online shopping inhibitors
like privacy
• Slowing revenue growth
• Warehouse utilization
• VP of Operations
• Brand extension
• 1-click patent
• Existing partnerships with
Borders, Target, Toys-R-Us
• Possible partnership with
Wal-Mart
• Still standing after the likes
of boo.com disappeared

Amazon Case Study Provides Strategic Planning Insights

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Amazon Case Study Provides Strategic Planning Insights