Amazon Case Competition Team C^3G

Amazon’s next customer segment program: Our approach Amazon Increase Prime Subscriptions Encourage recurring purchase Customer Segment More Selection Lower Pricing Better Convenience Goals Considerations Identify New Customers Incorporate Existing Products Unmet Needs Segment Size Outcomes Increase Profits Increase Overall Brand Awareness Customer Satisfaction and Loyalty Amazon Customer Advocacy Think BigCustomer ObsessionBias for ActionDeliver Results

Researched Customer Segmentation Customer Segment Market Size Purchasing Power Recurring Purchases % Online Buyer Ease to Convert Active/Fit Baby Boomers Entrepreneurs Mothers Movers Students Yuppies Think BigCustomer ObsessionBias for ActionDeliver Results Focus on lifestyle based purchasing habits – maximize recurring purchases and minimize existing customer segment overlap

Customer Segmentation Think BigCustomer ObsessionBias for ActionDeliver Results Focus on lifestyle based purchasing habits – maximize recurring purchases and minimize existing customer segment overlap Entrepreneurs: strong purchasing power coupled with low segment overlap and strong recurring purchase potential Customer Segment Market Size Purchasing Power Recurring Purchases % Online Buyer Ease to Convert Active/Fit Baby Boomers Entrepreneurs Mothers Movers Students Yuppies

Meet Ari… Ari is a sandwich lover trying to start his own Deli I need furniture for my store I need point of sale systems I need computers, websites… “I make great sandwiches, not business purchases!” Think BigCustomer ObsessionBias for ActionDeliver Results

Meet Anne… Anne aspires to become the next Coco Chanel I need design tools I need books on newest fashion trends I need a website that I can sell my clothes on “I know fashion, not technology!” Think BigCustomer ObsessionBias for ActionDeliver Results

Anne and Ari are not alone… There are 22 million small business owners in the US that represent $218 billion in annual spending. They cover various industries and demographics They share similar pains running businesses: Tight on cash Not enough time Lack of technology expertise So we thought why not create a dedicated program to reduce some of the pains so they can focus on what they do best. Think BigCustomer ObsessionBias for ActionDeliver Results

Introducing: Amazon Entrepreneur Let us help you realize your business potential and more… Think BigCustomer ObsessionBias for ActionDeliver Results

Amazon Entrepreneur: Details Think BigCustomer ObsessionBias for ActionDeliver Results Program Offer 3 months of free Amazon Prime 10% discount on all office supplies 3 months of free tier 1 Amazon Web Services One hour of free Amazon Web Services consultation Program Benefit Savings Convenience Technology Expertise Scalability

Amazon Entrepreneur: Risks We believe that our AWS, Amazon Prime and Office Supplies segments will suffer some revenue erosion from the roll-out of the new Amazon Entrepreneur: AWS Prime Office Supplies Other Retail % % < % > 0.20% Decreases Increases Overall, the indirect revenue impact on other lines of business should not be significant. Think BigCustomer ObsessionBias for ActionDeliver Results

Amazon Entrepreneur: Program Cost Cost decreases dramatically after the first year Key assumptions 1)Marketing spend is composed of On-going Marketing Expense (estimated at 3.7% of revenue as per 10-k), plus additional advertising expense associated with the new program ($25M, mostly in cable TV and internet advertising). It also contains an additional $6M allowance for business development costs. 2)Technology & content is estimated at 9% of revenues (vs. 7.5% for all of Amazon). Think BigCustomer ObsessionBias for ActionDeliver Results

Amazon Entrepreneur: Revenue Projection 5 year benchmark Think BigCustomer ObsessionBias for ActionDeliver Results

Amazon Entrepreneur: Profit Projection Key assumptions 1)We have taken future AMZN revenue and EBITDA projections done by Morgan Stanley. 2)We have assumed an uptick from current levels of Technology & Content expense from 7.5% of sales to 10% of sales. 3)We have assumed $19M in business development & initial marketing spend on year 1, $9M on year 2 and $3M on year three. 4)COGS and fulfillment costs are assumed to maintain current levels as a percentage of retail segment revenues. 5)All estimates include erosion of current AWS and Amazon Prime account revenues. Think BigCustomer ObsessionBias for ActionDeliver Results

Thank You! Team C^3G Think BigCustomer ObsessionBias for ActionDeliver Results