Amazon.com, 2019

John R. Wells; Benjamin  Weinstock; Gabriel  Ellsworth; Galen  Danskin

Case | HBS Case Collection | August 2015 (Revised October 2019)

Amazon.com, 2019

by John R. Wells, Benjamin Weinstock, Gabriel Ellsworth and Galen Danskin

Abstract

In January 2019, Amazon.com Inc (Amazon) became the most valuable company in the world, above Microsoft, Apple, and Alphabet (Google). Jeff Bezos, Amazon’s founder and CEO was now the world’s richest man. On January 31st, 2019, Amazon announced 2018 operating profits of $12.4 billion, up from $178 million in 2014, on sales of $232 billion, up from $89 billion four years earlier. The shareholders expressed their satisfaction, but not all were happy with Amazon’s meteoric rise. Many traditional retailers in the United States were going bankrupt, while major competitors such as Walmart and Best Buy were forced to invest aggressively in online retailing to prevent their market share from eroding. Every retail sector appeared to be under threat, fueling anxieties that Amazon and America’s other tech giants were becoming too big and powerful. In the United States, Amazon was drawing criticism from across the political spectrum, with calls for it to be broken up. Meanwhile, the European Union was also investigating its practices. Did Amazon’s success threaten its very existence?

Keywords: Strategic Analysis; retail; e-commerce; Amazon; internet; Amazon.com; AmazonFresh; Jeff Bezos; Cloud Computing; marketplaces; streaming; e-reader market; digital media; mobile app; online retail; shipping; database; Tablet; Kindle; Kindle Fire; smartphone; delivery; Market Platforms; Two-Sided Platforms; Competition; Internet; Corporate Strategy; Online Advertising; Business Growth and Maturation; Business Model; Business Organization; For-Profit Firms; Film Entertainment; Games, Gaming, and Gambling; Music Entertainment; Television Entertainment; Profit; Revenue; Global Strategy; Multinational Firms and Management; Taxation; Business History; Human Resources; Resignation and Termination; Books; Human Capital; Working Conditions; Business or Company Management; Goals and Objectives; Growth and Development Strategy; Growth Management; Management Practices and Processes; Industry Growth; Industry Structures; Media; Distribution; Distribution Channels; Order Taking and Fulfillment; Infrastructure; Logistics; Product Development; Supply Chain; Supply Chain Management; Organizational Culture; Public Ownership; Work-Life Balance; Problems and Challenges; Labor and Management Relations; Strategy; Adaptation; Business Strategy; Competitive Strategy; Diversification; Expansion; Integration; Horizontal Integration; Vertical Integration; Hardware; Information Technology; Mobile Technology; Online Technology; Technology Networks; Technology Platform; Web; Web Sites; Price; Software; Marketing; Marketing Strategy; Working Capital; Customer Focus and Relationships; Customer Value and Value Chain; Retail Industry; Advertising Industry; Distribution Industry; Electronics Industry; Entertainment and Recreation Industry; Information Technology Industry; Manufacturing Industry; Motion Pictures and Video Industry; Music Industry; Publishing Industry; Shipping Industry; Technology Industry; Video Game Industry; Web Services Industry; United States; Washington (state, US); Seattle;

Language: English

Format: Print

45 pages

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Citation:

Wells, John R., Benjamin Weinstock, Gabriel Ellsworth, and Galen Danskin. "Amazon.com, 2019." Harvard Business School Case 716-402, August 2015. (Revised October 2019.)

This is the first case in a three-case series on Bulb Energy Ltd. It is followed by “Bulb 2017: Launch” (719-441) and “Bulb 2018: Rapid Growth” (719-442). It describes the foundation of Bulb, a renewable energy supplier entering the highly competitive UK market in August 2015. Founders Hayden Wood and Amit Gudka were hoping to capitalize on the hundreds of thousands of customers switching their energy provider each month, by promising excellent customer service, a simple, low-price tariff, 100%-renewable electricity, and services to reduce energy consumption. At the time there were only about 250,000 households on renewable tariffs, typically paying a high price for the privilege. Gudka and Wood were convinced that many more households would opt for renewable energy and turn it into a mainstream product if prices were more reasonable. Their goal was to sign up more than 23,000 properties by March 31, 2017 to reach breakeven, and then grow to more than 69,000 properties by March 31, 2021. On Friday August 21, 2015, Gudka and Wood sent out a batch of 1,400 emails to friends and family, encouraging them to switch to Bulb. They waited anxiously for the first sign-ups.

This is the second case in a three-case series on Bulb Energy Ltd. It comes after “Bulb 2015: Foundation” (719-440) and is followed by “Bulb 2018: Rapid Growth” (719-442). It describes the launch of Bulb, a renewable energy supplier entering the highly competitive UK market in August 2015. By the end of March 2017, Bulb had grown to supply 29,311 properties, well ahead of its Launch Plan of 23,166 and beyond the point of breakeven. It had been a slow start, and growth had been volatile, reaching a rate of over 3,000 new members per week at one point, putting severe strains on service levels. Founders Hayden Wood and Amit Gudka had been forced to change many aspects of their plan and defer launching value-added services to help customers reduce energy consumption and create Bulb's vision of distributed generation. Now, the company was generating profits; enough to grow, but not at the level of the original plan. Should the founders scale back on their growth ambitions and delay adding services until they reached the scale to support them? Or should they seek more funding and accelerate growth?

Supplement | HBS Case Collection | December 2018 (Revised July 2020)

Bulb 2018: Rapid Growth

John R. Wells, Benjamin Weinstock, John R. Wells and Benjamin Weinstock

This is the third case in a three-case series on Bulb Energy Ltd. It follows “Bulb 2015: Foundation” (719-440) and “Bulb 2017: Launch” (719-441). After a wild and volatile year, Bulb, a new entrant in the UK residential energy market, ended March 2018 with 329,127 properties, 1.2% of the total residential energy market. This was 150% ahead of a plan for 130,000 properties and almost ten times the size the founders, Amit Gudka and Hayden Wood, had imagined in August 2015 when they first launched. Bulb was now one of the top 12 energy suppliers in the UK. Gudka and Wood were convinced that if they reinvested all their profits in growth, they would reach 500,000 properties by March 2019, and reach more than 1 million by March 2021. This would mean postponing the launch of a range of value-added services they had included in their original Launch Plan, but it could make Bulb number 7 in the industry and the first real challenger to the UK's "Big Six" leading energy suppliers to pass the one million-member mark. Was it time to seek more funding to really challenge the Big Six, making renewable energy mainstream? And did it make sense to delay value-added services to support energy conservation, distributed generation, and the switch to electric vehicles, or should they seek funding to support these initiatives too?

Keywords: rapid growth stage; green energy; start-up; customer acquisition; customer churn; Customer Engagement; Electricity; resources; growth strategy; B-Corp; Renewable Energy; Business Startups; Growth and Development Strategy; Business Model; Working Capital; Customers; Growth Management; Finance; Decision Making; United Kingdom;

Citation:

Wells, John R., and Benjamin Weinstock. "Bulb 2018: Rapid Growth." Harvard Business School Supplement 719-442, December 2018. (Revised July 2020.) View Details

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