AmazonWhat happened with the Fire Phone?

Donatienne Vanlandeghem – Lisa Troy – Darpan Argawal – Hami Usta

Agenda

• Introduction

• External analysis of the smartphone industry

• Amazon’s strenghts and weaknesses

• Why Amazon’s Fire Phone failed ?

• Recommendations

What is Amazon?

3 CORE BUSINESSES

« Our vision is to be

Earth’s most consumer

centric company »

107 $BN IN NET SALES

304 M ACTIVE CUSTOMER ACCOUNTS

NUMBER 1 E-TAILER IN THE US

PEST Analysis

Privacy issues

Political

ArtificialIntelligence

Technology

Online Communities

Social

Maturing Market

Economic

5 forces of the Smartphone Industry

Rivalrybetween

Competitors

Entry Barriers

Power of Buyers

Substitute Threat

Power of Suppliers

High

HighHigh

Moderate

Low

Inbound Logistics • Reduced returns

to suppliers due to forecasting abilities.

• C.R.M efficiency allows for insight on customers experience

Outbound Logistics • Global Partners

& Locations. • Availability

order Bound products

• Amazon Prime: Fast & Free Shipment

Marketing & Sales • Discounts & price

reductions.• E-commerce and

E-Marketing

through websites.

Services

• 30 days free return policy

• Effective use of C.R.M.S

• Use of Marketplace to increase channel & range of products

Operations

• Easy and Fast payment system.

• On line customer contacts and feedback centres

• Use of E.R.P.S

Company Infrastructure

Vast amounts of data available of customer's world wide to deliver required & recommended products & Strategies.

Vast no. of orders worldwide with heavy investment leveraging over suppliers resulting in cost-reduction.

Human Resource Management Offers highly skilled work benefits. Strategic Placement of storage facilities leads to reduction of overhead costs.

Technology Development Renting computing resources to other companies reduces total cost of ownership. Standardize equipment's to digitalize media for on line download. Setting up new research labs

Procurement Use E-procurement for easier and faster communication with suppliers. “Fair Procurement” Policy adopted by Amazon.

Warehouses & Distribution centres to avoid transaction cost of contracting out

Value Added -

Cost = Margin

Overview of Amazon’s Value Chain

SEC

ON

DA

RY

AC

TIV

ITIE

S

PR

IMA

RY

AC

TIV

ITIE

S

Amazon’s Competitive Advantage

• Differentiator: Process (Logistics & Operations)

• Cost Leadership – Product & Pricing

• Ecosystem with Dynamic Community

• Convenience

• Technological Capabilities

Key Resources & Capabilities

• Global partners & suppliers

• Brand Equity (Amazon)

• Employees

• Advanced R&D centres with Strong R&D team.

• Large Warehouses & fulfilment centres in different countries.

• Quality in customer support.

• Effective Market Strategy

• Total assets worth $170 billion (2015)

• Ability to integrate across functions.

• Easy & fast payment system

Flame out of Fire Phone

Customer focus

Pricing strategy

Repositioning of the brand

No value for customers

Differentiation for higher price

From a utilitarian to

a lifestyle

Why Amazon failed ?

Recommendations : two ways to go

Amazon credibility in this industryhas already been compromised

Focus ressources on more profitable businesses and projects currentlybeing developped at Amazon

Huge investment lost

Shared risks and relatively lowprobability of major losses

Speed to market

Creating a competitor in the US market

Risk on the Amazon brand

Exit the smartphone industry Strategic alliance with smartphone manufacturer

Xiaomi for a potential partnership

• Possibility to provide a top smartphone at a very competitive price : fit with Amazon brand image

• Xiaomi is consumer driven, just as Amazon. This consumer focus was what lacked in the Fire Phone.

• First step into the US and Western market

• Power of the Amazon brand and the Amazon ecosystem (TV; Kindle; Prime)

Why for Amazon ? Why for Xiaomi ?

THANK YOU FOR LISTENING !

Q & A