ENT527 Phoenix Amazon Netflix & Vitamin Shoppe Business Success Strategies Pull the financial statements of 3 companies in the industry that you are intere

ENT527 Phoenix Amazon Netflix & Vitamin Shoppe Business Success Strategies Pull the financial statements of 3 companies in the industry that you are interested in entering. Try to ?nd companies that are pursuing different strategies. Answer the following question in 300 words: -Explain what you learned about their revenue model, cost model, product mix, distribution channels, partners, target customers, and value propositionThe three companies used are Amazon, Netflix and Vitamin ShoppeThis doesn’t need to be a full paper. This is just a discussion answering the above question in about 300 words. Cite at least 1 peer reviewed reference. 9/19/2019
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10-K 1 amzn-20181231x10k.htm 10-K
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________
FORM 10-K
____________________________________
(Mark One)
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2018
or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
.
Commission File No. 000-22513
____________________________________
AMAZON.COM, INC.
(Exact name of registrant as specified in its charter)
Delaware
91-1646860
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
410 Terry Avenue North
Seattle, Washington 98109-5210
(206) 266-1000
(Address and telephone number, including area code, of registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Name of Each Exchange on Which Registered
Common Stock, par value $.01 per share
Nasdaq Global Select Market
Securities registered pursuant to Section 12(g) of the Act:
None
____________________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of
registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
Large accelerated filer
x
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
¨
Emerging growth company
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
Aggregate market value of voting stock held by non-affiliates of the registrant as of June 30, 2018
Number of shares of common stock outstanding as of January 23, 2019
$
693,894,417,636
491,202,890
____________________________________
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DOCUMENTS INCORPORATED BY REFERENCE
The information required by Part III of this Report, to the extent not set forth herein, is incorporated herein by reference from the registrant’s definitive proxy
statement relating to the Annual Meeting of Shareholders to be held in 2019, which definitive proxy statement shall be filed with the Securities and Exchange
Commission within 120 days after the end of the fiscal year to which this Report relates.
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AMAZON.COM, INC.
FORM 10-K
For the Fiscal Year Ended December 31, 2018
INDEX
Page
PART I
Item 1.
Business
3
Item 1A.
Risk Factors
6
Item 1B.
Unresolved Staff Comments
14
Item 2.
Properties
15
Item 3.
Legal Proceedings
15
Item 4.
Mine Safety Disclosures
15
Item 5.
Market for the Registrant’s Common Stock, Related Shareholder Matters, and Issuer Purchases of Equity
Securities
16
Item 6.
Selected Consolidated Financial Data
17
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
18
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
31
Item 8.
Financial Statements and Supplementary Data
34
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
70
Item 9A.
Controls and Procedures
70
Item 9B.
Other Information
72
PART II
PART III
Item 10.
Directors, Executive Officers, and Corporate Governance
72
Item 11.
Executive Compensation
72
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
72
Item 13.
Certain Relationships and Related Transactions, and Director Independence
72
Item 14.
Principal Accountant Fees and Services
72
PART IV
Item 15.
Exhibits, Financial Statement Schedules
73
Item 16.
Form 10-K Summary
73
Signatures
75
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AMAZON.COM, INC.
PART I
Item 1.
Business
This Annual Report on Form 10-K and the documents incorporated herein by reference contain forward-looking statements
based on expectations, estimates, and projections as of the date of this filing. Actual results may differ materially from those expressed
in forward-looking statements. See Item 1A of Part I — “Risk Factors.”
Amazon.com, Inc. was incorporated in 1994 in the state of Washington and reincorporated in 1996 in the state of Delaware. Our
principal corporate offices are located in Seattle, Washington. We completed our initial public offering in May 1997 and our common
stock is listed on the Nasdaq Global Select Market under the symbol “AMZN.”
As used herein, “Amazon.com,” “we,” “our,” and similar terms include Amazon.com, Inc. and its subsidiaries, unless the context
indicates otherwise.
General
We seek to be Earth’s most customer-centric company. We are guided by four principles: customer obsession rather than
competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. In each of our segments, we
serve our primary customer sets, consisting of consumers, sellers, developers, enterprises, and content creators. In addition, we provide
services, such as advertising.
We have organized our operations into three segments: North America, International, and Amazon Web Services (“AWS”).
These segments reflect the way the Company evaluates its business performance and manages its operations. Information on our net
sales is contained in Item 8 of Part II, “Financial Statements and Supplementary Data — Note 10 — Segment Information.” The
financial results of Whole Foods Market, Inc. (“Whole Foods Market”) have been included in our consolidated financial statements
from the date of acquisition on August 28, 2017.
Consumers
We serve consumers through our online and physical stores and focus on selection, price, and convenience. We design our stores
to enable hundreds of millions of unique products to be sold by us and by third parties across dozens of product categories. Customers
access our offerings through our websites, mobile apps, Alexa, and physically visiting our stores. We also manufacture and sell
electronic devices, including Kindle e-readers, Fire tablets, Fire TVs, and Echo devices, and we develop and produce media content.
We strive to offer our customers the lowest prices possible through low everyday product pricing and shipping offers, and to improve
our operating efficiencies so that we can continue to lower prices for our customers. We also provide easy-to-use functionality, fast and
reliable fulfillment, and timely customer service. In addition, we offer Amazon Prime, a membership program that includes unlimited
free shipping on over 100 million items, access to unlimited streaming of thousands of movies and TV episodes, and other benefits.
We fulfill customer orders in a number of ways, including through: North America and International fulfillment and delivery
networks that we operate; co-sourced and outsourced arrangements in certain countries; digital delivery; and through our physical
stores. We operate customer service centers globally, which are supplemented by co-sourced arrangements. See Item 2 of Part I,
“Properties.”
Sellers
We offer programs that enable sellers to grow their businesses, sell their products in our stores, and fulfill orders through us. We
are not the seller of record in these transactions. We earn fixed fees, a percentage of sales, per-unit activity fees, interest, or some
combination thereof, for our seller programs.
Developers and Enterprises
We serve developers and enterprises of all sizes, including start-ups, government agencies, and academic institutions, through our
AWS segment, which offers a broad set of global compute, storage, database, and other service offerings.
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Content Creators
We serve authors and independent publishers with Kindle Direct Publishing, an online service that lets independent authors and
publishers choose a royalty option and make their books available in the Kindle Store, along with Amazon’s own publishing arm,
Amazon Publishing. We also offer programs that allow authors, musicians, filmmakers, skill and app developers, and others to publish
and sell content.
Competition
Our businesses encompass a large variety of product types, service offerings, and delivery channels. The worldwide marketplace
in which we compete is evolving rapidly and intensely competitive, and we face a broad array of competitors from many different
industry sectors around the world. Our current and potential competitors include: (1) physical, e-commerce, and omnichannel retailers,
publishers, vendors, distributors, manufacturers, and producers of the products we offer and sell to consumers and businesses;
(2) publishers, producers, and distributors of physical, digital, and interactive media of all types and all distribution channels; (3) web
search engines, comparison shopping websites, social networks, web portals, and other online and app-based means of discovering,
using, or acquiring goods and services, either directly or in collaboration with other retailers; (4) companies that provide e-commerce
services, including website development, advertising, fulfillment, customer service, and payment processing; (5) companies that
provide fulfillment and logistics services for themselves or for third parties, whether online or offline; (6) companies that provide
information technology services or products, including on-premises or cloud-based infrastructure and other services; and (7) companies
that design, manufacture, market, or sell consumer electronics, telecommunication, and electronic devices. We believe that the
principal competitive factors in our retail businesses include selection, price, and convenience, including fast and reliable fulfillment.
Additional competitive factors for our seller and enterprise services include the quality, speed, and reliability of our services and tools,
as well as customers’ ability and willingness to change business practices. Some of our current and potential competitors have greater
resources, longer histories, more customers, greater brand recognition, and greater control over inputs critical to our various businesses.
They may secure better terms from suppliers, adopt more aggressive pricing, pursue restrictive distribution agreements that restrict our
access to supply, direct consumers to their own offerings instead of ours, lock-in potential customers with restrictive terms, and devote
more resources to technology, infrastructure, fulfillment, and marketing. Each of our businesses is also subject to rapid change and the
development of new business models and the entry of new and well-funded competitors. Other companies also may enter into business
combinations or alliances that strengthen their competitive positions.
Intellectual Property
We regard our trademarks, service marks, copyrights, patents, domain names, trade dress, trade secrets, proprietary technologies,
and similar intellectual property as critical to our success, and we rely on trademark, copyright, and patent law, trade-secret protection,
and confidentiality and/or license agreements with our employees, customers, partners, and others to protect our proprietary rights. We
have registered, or applied for the registration of, a number of U.S. and international domain names, trademarks, service marks, and
copyrights. Additionally, we have filed U.S. and international patent applications covering certain of our proprietary technology. We
have licensed in the past, and expect that we may license in the future, certain of our proprietary rights to third parties.
Seasonality
Our business is affected by seasonality, which historically has resulted in higher sales volume during our fourth quarter, which
ends December 31. We recognized 32%, 34%, and 31% of our annual revenue during the fourth quarter of 2016, 2017, and 2018.
Fourth quarter 2017 results include revenue attributable to Whole Foods Market, which we acquired on August 28, 2017.
Employees
We employed approximately 647,500 full-time and part-time employees as of December 31, 2018. However, employment levels
fluctuate due to seasonal factors affecting our business. Additionally, we utilize independent contractors and temporary personnel to
supplement our workforce. We have works councils, statutory employee representation obligations, and union agreements in certain
countries outside the United States and at certain of our studio operations within the United States. We consider our employee relations
to be good. Competition for qualified personnel in our industry has historically been intense, particularly for software engineers,
computer scientists, and other technical staff.
Available Information
Our investor relations website is amazon.com/ir and we encourage investors to use it as a way of easily finding information about
us. We promptly make available on this website, free of charge, the reports that we file or furnish with the
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Securities and Exchange Commission (“SEC”), corporate governance information (including our Code of Business Conduct and
Ethics), and select press releases.
Executive Officers and Directors
The following tables set forth certain information regarding our Executive Officers and Directors as of January 23, 2019:
Executive Officers of the Registrant
Name
Age
Jeffrey P. Bezos
55
President, Chief Executive Officer, and Chairman of the Board
Position
Jeffrey M. Blackburn
49
Senior Vice President, Business Development
Andrew R. Jassy
51
CEO Amazon Web Services
Brian T. Olsavsky
55
Senior Vice President and Chief Financial Officer
Shelley L. Reynolds
54
Vice President, Worldwide Controller, and Principal Accounting Officer
Jeffrey A. Wilke
52
CEO Worldwide Consumer
David A. Zapolsky
55
Senior Vice President, General Counsel, and Secretary
Jeffrey P. Bezos. Mr. 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 of the Company from founding until June 1999 and again from October 2000 to
the present.
Jeffrey M. Blackburn. Mr. Blackburn has served as Senior Vice President, Business Development, since April 2006.
Andrew R. Jassy. Mr. Jassy has served as CEO Amazon Web Services since April 2016, and Senior Vice President, Amazon
Web Services, from April 2006 until April 2016.
Brian T. Olsavsky. Mr. Olsavsky has served as Senior Vice President and Chief Financial Officer since June 2015, Vice
President, Finance for the Global Consumer Business from December 2011 to June 2015, and numerous financial leadership roles
across Amazon with global responsibility since April 2002.
Shelley L. Reynolds. Ms. Reynolds has served as Vice President, Worldwide Controller, and Principal Accounting Officer since
April 2007.
Jeffrey A. Wilke. Mr. Wilke has served as CEO Worldwide Consumer since April 2016, Senior Vice President, Consumer
Business, from February 2012 until April 2016, and as Senior Vice President, North America Retail, from January 2007 until February
2012.
David A. Zapolsky. Mr. Zapolsky has served as Senior Vice President, General Counsel, and Secretary since May 2014, Vice
President, General Counsel, and Secretary from September 2012 to May 2014, and as Vice President and Associate General Counsel
for Litigation and Regulatory matters from April 2002 until September 2012.
Board of Directors
Name
Age
Position
Jeffrey P. Bezos
55
President, Chief Executive Officer, and Chairman of the Board
Tom A. Alberg
78
Managing Director, Madrona Venture Group
Jamie S. Gorelick
68
Partner, Wilmer Cutler Pickering Hale and Dorr LLP
Daniel P. Huttenlocher
60
Dean and Vice Provost, Cornell Tech at Cornell University
Judith A. McGrath
66
Senior Advisor, Astronauts Wanted * No experience necessary
Jonathan J. Rubinstein
62
Former co-CEO, Bridgewater Associates, LP
Thomas O. Ryder
74
Retired, Former Chairman, Reader’s Digest Association, Inc.
Patricia Q. Stonesifer
62
President and Chief Executive Officer, Martha’s Table
Wendell P. Weeks
59
Chief Executive Officer, Corning Incorporated
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Item 1A.
Risk Factors
Please carefully consider the following risk factors. If any of the following risks occur, our business, financial condition,
operating results, and cash flows could be materially adversely affected. In addition, the current global economic climate amplifies
many of these risks.
We Face Intense Competition
Our businesses are rapidly evolving and intensely competitive, and we have many competitors in different industries, including
physical, e-commerce, and omnichannel retail, e-commerce services, digital content and electronic devices, web and infrastructure
computing services, and transportation and logistics services, and across geographies, including cross-border competition. Some of our
current and potential competitors have greater resources, longer histories, more customers, and/or greater brand recognition,
particularly with our newly-launched products and services and in our newer geographic regions. They may secure better terms from
vendors, adopt more aggressive pricing, and devote more resources to technology, infrastructure, fulfillment, and marketing.
Competition may intensify, including with the development of new business models and the entry of new and well-funded
competitors, and as our competitors enter into business combinations or alliances and established companies i…
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