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two totally new
synergies in the use customer segments which
Opportunities Amazon.com explored in 2006: of activities and are underserved as to the
resources proposed offer
for new offers

KP KA VP CR CS

fulfi llment customized
it online profi les & global
infrastructure online retail recommendations consumer
& software shop market
development (north america,
& maintenance fulfi llment by europe, asia)
amazon
logistics KR amazon web developers &
companies
partners it services: s3, ec2, CH
individuals &
infrastructure sqs, other web amazon.com companies that
services
& software need fulfi llment new revenue streams with
affi liates (& countries)
global higher margins than retail
fulfi llment affi liates
infrastructure APIs
C$ R$ sales margin
marketing 215
technology & content utility computing fees
fulfi llment
fulfi llment handling fees

In 2006 Amazon.com focused on two new initiatives that satisfi ed the above require- Amazon Simple Storage Systems (Amazon S3) allows developers to use Amazon.com’s
ments and which promised to powerfully extend the existing business model. The fi rst massive data center infrastructure for their own data storage needs. Similarly, Amazon
was a service called Fulfi llment by Amazon, and the second was a series of new Amazon Elastic Compute Cloud (EC2), allows developers to “rent” servers on which to run
Web Services. Both initiatives built on the company’s core strengths—order fulfi llment their own applications. Thanks to its deep expertise and unprecedented experience
and Web IT expertise—and both addressed underserved markets. What’s more, both scaling an online shopping site, the company can offer both at cutthroat prices, yet still
initiatives promised higher margins than the company’s core online retailing business. earn higher margins compared to its online retail operations.
Fulfi llment by Amazon allows individuals and companies to use Amazon.com’s Investors and investment analysts were initially skeptical about these new long-term
fulfi llment infrastructure for their own businesses in exchange for a fee. Amazon.com growth strategies. Unconvinced that the diversifi cation made sense, they contested
stores a seller’s inventory in its warehouses, then picks, packs, and ships on the seller’s Amazon.com’s investments in even more IT infrastructure. Eventually, Amazon.com
behalf when an order is received. Sellers can sell through Amazon.com, their own Chan- overcame their skepticism. Nonetheless, the true returns from this long-term strategy
nels, or a combination of both. may not be known for several more years—and after even more investment
Amazon Web Services targets software developers and any party requiring high- in the new business model.
performance server capability by offering on-demand storage and computing capacity.

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