PRINCIPLES OF MARKETING S2 2021 | Ms Dang Thi Uyen Thao

HOMEWORK BONUS 1

In this homework the super-giant Amazon is analyzed under BCG’s matrix, specifically with five
of its main categories of (non-seller fee) business’s units: Amazon AWS, Amazon Online
Stores, Amazon Physical Stores, Amazon Subscription Service and Amazon Echo with Alexa
and one trending service post Covid-19 Amazon Live-streaming.
Before placing each of these products in one of the four quadrants of the BCG growth-share
matrix (cash cows, question marks, dogs and stars), we need to gather the latest information
on market size, product market share and market growth rate.

AMAZON LIVE-
AWS STREAMING
AMAZON PRIME

ONLINE STORES
PHYSICAL STORES
ALEXA

AMAZON ONLINE STORES

Amazon’s primary profit maker, and what they’re best known for, is the online retail stores connected
through Amazon.com.

Amazon online store market – E-commerce market

According to the Visual Capitalist, their online sales from stores resulted in nearly $163 Billion in revenue
in 2020. This represents nearly 38.7% of the total market share for online retailers. Their closest
competitor, Walmart, is far behind at ~5.3% market share.
PRINCIPLES OF MARKETING S2 2021 | Ms Dang Thi Uyen Thao

Due to this, and a market growth rate of about 23%, Amazon’s online retail can be normally considered
a “Cash cow” under the BCG Matrix model. However, the basis of E-commerce market is expected to
rise over time, consequently, development of this segment is not limited at the present. Thus, the
promising future expand of e-commerce may raise online retail stores of Amazon again become the
“Star”.

Market growth rate

According to the latest reports, the global e-commerce market is expected to rebound by 5.2%
in 2021 and have the promising growth rate when the economy eases up after COVID-19
pandemic. Despite not having an exact forecast but, surely the expand of E-commerce is
unstoppable at least in next decade.
Amazon in general, the growth rate is proved roundly 17% annually.
Conclusion
As the monopoly in this field, and the stable growth rate, Amazon Online Stores can be
classified as both CASH COW & STAR.
AMAZON AWS
Amazon Web Services (AWS) is the company’s cloud platform, offering over 200 fully-featured
services from data centers globally.
AWS offers reliable, scalable, and inexpensive cloud computing services.
AWS Market – Cloud computing services
PRINCIPLES OF MARKETING S2 2021 | Ms Dang Thi Uyen Thao

The global cloud computing market size was valued at $266.0 billion in 2019 and is expected to
expand at a Compound Annual Growth Rate (CAGR) of 14.9% from 2020 to 2027(1).
The market is comprised of three services: IaaS (Infrastructure as a Service), PaaS (Platform as a
Service), and SaaS (Software as a Service).
AWS is developed with a combination of infrastructure as a service (IaaS), platform as a service
(PaaS) and packaged software as a service (SaaS) offering.
In 2020, AWS brought $45.3 billion in revenue, up nearly 30% year-over-year(2). 13% of
Amazon’s sales and a whopping 62% of its operating income was generated by AWS sales.
AWS Market share – 32%
AWS has 33% of the market, followed by Azure at 20%, Google at 7% with Alibaba Cloud close
behind.
PRINCIPLES OF MARKETING S2 2021 | Ms Dang Thi Uyen Thao

AWS market growth rate – 30%

According to the latest reports, the global cloud computing market is expected to grow by
14.9% annually.
Conclusion
With a 32% market share, growing nearly 30% year on year, Amazon AWS is a STAR.
AMAZON SUBSCRIPTION SERVICE
Amazon is often recognized for its success as an online retailer, but another one of the
company's core business units is its extensive list of subscription services. Amazon subscription
services totaled $19.21 billion in 2019 revenue, which represents 6.8% of the company's total
PRINCIPLES OF MARKETING S2 2021 | Ms Dang Thi Uyen Thao

yearly earnings. Subscription services include monthly and annual Prime fees, as well as
audiobook, digital video, digital music, e-book and other subscription services. For this
segment, we focus on the potential product of Amazon competing on Video streaming market,
Amazon Prime Video.
Amazon Prime Video is a video streaming service available for Amazon Prime members.
Amazon Video Market – The video streaming service market (SVOD)
According to Statista, revenue in the video streaming market (SVoD) is projected to reach $71
billion in 2021.
User penetration will be 14.3% in 2021 and is expected to hit 18.2% by 2025.
In 2021, there are 1 billion users of video streaming subscriptions.
Amazon Video Market share – 22%

As of January 2020, there are 150+ million Amazon Prime Video users.  The service is available
in over 200 countries internationally.
In 2018, Amazon’s Prime Video Channels Biz generated $1.7 billion, which was expected to
reach $3.6 billion by 2020.
According to Forbes, in 2020, due to people spending more time at home, Prime Video service
emerged as another big player in the streaming wars climbing rapidly in the top 3 global video
PRINCIPLES OF MARKETING S2 2021 | Ms Dang Thi Uyen Thao

streaming service providers to a 22% market share. The company had announced plans to
spend $7 billion on content last year.

Netflix, the leader of the market, jumped to over 200 million streaming subscribers in 2020 and
unsurprisingly, announced a $16 billion budget for new content. Total Netflix 2020 revenue
came to $25 billion, up from $20 billion in 2019.
Amazon Video market growth rate – 23%
Revenue for the global video streaming services market is expected to show an annual growth
rate for the period 2021-2025 of 11%, resulting in a projected market volume of $108billion by
2025.
The latest reports submit that in 2020, Prime Video subscriptions accounted for 23% of SVOD
subscriptions, a sharp increase from its previous 14% last quarter (3).
Conclusion
Amazon Video has been growing steadily over the past few years and in 2020 the number of
subscribers received a boost. Currently the 2nd most popular video streaming service provider,
Amazon Video has still a long way to go and a lot of money to invest. According to the BCG
growth-share matrix, Amazon Prime is a star.
AMAZON PHYSICAL STORES
Amazon Physical stores market share – 0.42%
Amazon still has brick and mortar stores. Their physical retail sales is by far their least
competitive in terms of market share. Physical retail sales in the US is approximately $4.04
PRINCIPLES OF MARKETING S2 2021 | Ms Dang Thi Uyen Thao

Trillion in 2020. So, with Amazon’s retail revenue of about $17 billion, they represent just 0.42%
of market share. Their largest competitor is probably Walmart, which represents 27% of total
market share of physical retail stores.
Market growth rate
With an industry growth of 3.7%, Amazon’s physical stores are considered “Dogs” under the
BCG Matrix model. Unlike Amazon Prime, which is also technically considered a “Dog”,
Amazon’s retail stores can be considered ‘real’ Dogs, as they do not have the benefit of synergy
with Amazon’s massive revenue.
AMAZON ECHO + ALEXA
The Amazon Echo with Alexa, the virtual assistant is a smart speaker.
In January 2019, Amazon’s devices team announced that they had sold over 100 million Alexa-
enabled devices.
Amazon generated about $1.4 million in Alexa “skill” revenue in 2019 — about 25% of the
forecasted $5.5 million. Despite its success with homeowners, Amazon Echo with Alexa is yet to
prove a financial success.
PRINCIPLES OF MARKETING S2 2021 | Ms Dang Thi Uyen Thao
PRINCIPLES OF MARKETING S2 2021 | Ms Dang Thi Uyen Thao

Amazon Echo + Alexa – Smart speakers market

Amid the COVID-19 crisis, the global market for Smart Speaker was estimated at $2.7 billion in
the year 2020. The market is projected to reach a revised size of $19 billion by 2027, growing at
a CAGR of 32% over the analysis period 2020-2027.
Amazon Echo + Alexa market share – 21,6%
Amazon was the leading vendor in the global smart speaker market, having a market share of
%21.6% in the second quarter of 2020.
Google is Amazon’s closest competitor, with a share of 17.1% in the same quarter. Chinese
vendors Baidu, Alibaba and Xiaomi have become strong players in recent quarters, thanks to
growing demand in the Chinese domestic market.
Amazon Echo + Alexa market growth rate – 32%
The smart speaker market is growing at a CAGR of 32%.
Conclusion
In 2017, Amazon Alexa had a market share of almost 80%. Google began developing and
investing in its own smart speaker and gnawing at Amazon’s lead. Currently with a shrinking
21,6% market share, negative market growth and underperforming revenue, in a growing
market, Amazon Alexa is a dog type of product.
AMAZON LIVE
PRINCIPLES OF MARKETING S2 2021 | Ms Dang Thi Uyen Thao

Amazon Live is a live streaming service that allows sellers to “promote discovery” of their
products by hosting their own livestreams for customers on Amazon.
According to data from Sensor Tower, Amazon Live was released in February 2019.
Amazon Live is the company’s second attempt at live-streaming. Back in March 2016, Amazon
launched its first foray into live stream shopping, Style Code Live. Style Code Live was focused
on fashion-related Amazon products.

Amazon Live – live commerce market

Live commerce is growing rapidly. It’s estimated to already be $60 billion annually. Last year
over 430 million people, about 30% of China’s population, viewed livestreams, and in 2020, it’s
projected to reach 560 million, or around 39%. Sales from live streams are expected to grow
more than 100% in 2020 vs. 2019.
Live-streaming is rapidly transforming into a standard feature for e-commerce. Taobao’s live
commerce surged in 2019, achieving a growth rate for live-streaming-prompted-sales of over
150% for three consecutive years, making it the fastest growth model of e-commerce globally.
In China, the latest reports show that the live commerce market has reached $66 billion in 2019
and is expected to double in 2020.
PRINCIPLES OF MARKETING S2 2021 | Ms Dang Thi Uyen Thao

During last year’s Singles Day, Taobao saw an increase of more than 220% in the number of
merchants participating in live streaming over the past 12 months. Gross merchandise value
(GMV) sold during the 2020 Singles Day reached $74billion.
Amazon Live market share – N/A
Amazon Live is just starting out so I couldn’t find statistics related to its market share.
Amazon Live market growth rate – N/A
Sales from live streams are expected to grow globally more than 100% in 2020 vs. 2019.
Although live shopping has been reported to increase sales, Amazon hasn’t released any
statistics on how many sellers use its Live platform yet. To be on the safe side, let’s assume the
live platform to have a low market growth.
Conclusion
Live e-commerce is growing exponentially. Remember the internet boom in the early 1990s?
This is the stage we are at with shop Streaming and China is the spearhead. With a low
market share and low market growth, in a hyper-growth market, Amazon Live is a question
mark type of product. With the right resources and strategy, Amazon Live could transform
into a star. But if the market conditions are not assessed correctly, it could downgrade into a
dog type of product.