“What else?

”
- Jeff Bezos

Situation Analysis Solution Implementation Impact Risk 1

 ”What next?”
- Jeff Bezos

Situation Analysis Solution Implementation Impact Risk 2

Disrupting the global grocery retail market

The Wolves of
Case Street
Therese Dines Michael Wachtell Mikkel Duedal Jonas Faarup

Situation Analysis Solution Implementation Impact Risk 3

The grocery retail market is growing…
Market size & growth

The total value of global grocery retail is set to grow… … as are the number of cash-less transactions

USD bn. USD bn.

CAGR of 11% 876
+6% 10,917
763
672
8,309 598

2016 2021 2018 2019 2020 2021

Source: Statista, Team Analysis

Situation Analysis Solution Implementation Impact Risk 4

… and consumers are continuously demanding
more efficient shopping experiences
Consumer trends

Customers are busy, 88% want retail to be faster

they’re in a rush, they want
good food, they want to be 67% want more localized groceries
in and out really quickly
- Kurt Schlosser December 18, 2018 75% want quality increases

Sources: Statista; Harris Poll

Situation Analysis Solution Implementation Impact Risk 5

Amazon has invented Amazon Go to disrupt the
grocery retail market and meet consumer demands
Amazon Go

The store works with an Amazon

Go application - you enter
Amazon Go, take the products
you want and, thanks to the
app, just leave again.

App-based walk-out technology Required staff reduced No checkout required

Situation Analysis Solution Implementation Impact Risk 6

Currently, Amazon Go has been rolled out in the
US with a succesful launch of 10 stores
Amazon Go Stores

4 Stores in Seattle
4 Stores in Chicago
2 Stores in San Francisco

Situation Analysis Solution Implementation Impact Risk 7

Key Question:
How can Amazon take the Amazon Go
innovation global within 5 years?

Situation Analysis Solution Implementation Impact Risk 8

We see three strategies for rolling-out the
Amazon Go innovation globally
Global strategies

1 2 3
Launch Amazon Go Stores Partner with global retailers Sell Amazon Go Technology

What

Roll-out of Amazon Go innovation Roll-out of Amazon Go innovation Roll-out of Amazon Go innovation

by launching Amazon Go Stores by utilizing partnerships with major by selling Amazon Go technology
around the world retailers around the world to retailers

Situation Analysis Solution Implementation Impact Risk 9

Firstly, Amazon could launch own Amazon Go
Stores globally
1 Strategy #1

What Global fit

• Roll-out of own
stores Synergies with other Amazon operations
• Branded as
“Amazon Go”
• Metropolitan
cities

How
• Expand where Amazon have presence
• Synergies with other Amazon brands

Amazon presence No Amazon presence

Situation Analysis Solution Implementation Impact Risk 10

A second strategy is to partner with global
retailers
2 Strategy #2

What Global fit

• Partner up and
install Amazon Synergies with other Amazon operations
Go technology
in partners’
stores
• Branded as
“Amazon Go”

How
• Partnerships with leading convenience
grocery stores. E.g. 7Eleven

Amazon presence No Amazon presence

Situation Analysis Solution Implementation Impact Risk 11

Thirdly, Amazon could sell its Amazon Go
technology and expand reach of its innovations
3 Strategy #3

What Global fit

• Amazon Go
innovation sold Access to all global markets
to other grocery
retailers
• NOT Branded
as “Amazon
Go”

How
• Sell to regional market leaders within
grocery retail

Situation Analysis Solution Implementation Impact Risk 12

The different strategies each have different pros
and cons
Pros & Cons
1 2 3
Launch Amazon Go Stores Global Partnerships Sell Amazon Go Technology

C
Consumer data Utilize partner’s capabilities Low capital requirements

Pros Aligns with Amazon retail strategy Utilize partner’s network & stores Quick scalability

Synergies with Amazon Shared investment costs Lower risks

High investments required Loss of control No synergies with Amazon business

Cons Retail is a low margin industry Shared profits Less value chain control

Less swift global expansion Less synergies with Amazon Less D2C brand value for Amazon

Situation Analysis Solution Implementation Impact Risk 13

We recommend that you roll out your own Amazon
Go stores globally
Assessment of Strategies

Financial Impact Fit with Amazon Long-term benefits

Pace of Consumer Risk of

Opex & Capex Profitability Fit with global data and Brand
Capability implementing
requirements margins Strategy expansion contact Effects strategy

Low High

Launch Amazon
Go Stores

Global
Partnerships

Sell Amazon Go
Technology

Attractive Unattractive

Situation Analysis Solution Implementation Impact Risk 14

We recommend that you roll out your own Amazon
Go stores globally
Assessment of Strategies

Financial Impact Fit with Amazon Long-term benefits

Pace of Consumer Risk of

Opex & Capex Profitability Fit with global data and Brand
Capability implementing
requirements margins Strategy expansion contact Effects strategy

Low High

Launch Amazon Expensive and high Strong strategic alignment and

Go Stores commitment strategy
C synergies with Amazon strategy

Global
Partnerships

Sell Amazon Go
Technology

Attractive Unattractive

Situation Analysis Solution Implementation Impact Risk 15

 3
Integrate
2
Integrate channels and
Target offerings into multi-channel
1 solution

Target Generation X & Y in

Expand the capital cities

Conquer Europe by
expanding into UK, Germany,
Spain, and Italy

Situation Analysis Solution Implementation Impact Risk 16

 3
Integrate
2
Integrate channels and
Target offerings into multi-channel
1 solution

Target Generation X & Y in

Expand the capital cities

Conquer Europe by
expanding into UK, Germany,
Spain, and Italy

Situation Analysis Solution Implementation Impact Risk 17

Europe and APAC are the most attractive markets
to expand Amazon Go globally beyond the US
Regional assessment
Amazon Presence Tech Savviness Market size Market growth Competition Automation advantage
% of population % Growth in Retail
Retail Market Size Presence of Tech Average labor
Region Amazon Presence with internet Market by year
in BN USD2 in Grocery stores costs3
access1 20232

North Low High

78 19
Low High Low High
12
America

Low High Low High Low High

Europe 76 22 19

Low High Low High Low High

APAC 81 30 36

Latin Low High Low High Low High

57 9 34
America

Low High Low High Low High

ROW 45 10 45

Sources: Amazon Report, Digital Adoption Index World Bank 1, Statista2, OECD Data3

Situation Analysis Solution Implementation Impact Risk 18

Of the two, Europe is the most attractive market to
commence the Amazon Go global expansion
Assessment of APAC and Europe

Why not Why

APAC? Europe?

Low Amazon presence Strong Amazon presence

Unstable political landscape Easily scalable

High labor costs makes

Low automation advantage
Amazon Go feasible
Heavy tech retail competition Sophisticated consumers

Key challenge: Key challenge:

Low scalability, heavy reliance on Saturated market with heavy
partners, & competitive market competition

Situation Analysis Solution Implementation Impact Risk 19

Within Europe, UK, Spain, Germany and Italy are
the most lucrative markets
Where to play
Prioritization Map for Pilot Launch
Bubble represents Population
High
MARKET ATTRACTIVENESS

Size
Italy
UK Brand Loyalty
Market Attractiveness

Customer Trends
France
Germany Spain Tech savviness

ABILITY TO COMPETE

Amazon market share

Holland
Amazon Infrastructure

Denmark Competitive scene

Luxembourg
Low
Low High
Ability to Win
Sources: Amazon website; Case Material; Team analysis; Deloitte European Grocery Retail study; IRI European Shopper Insights report

Situation Analysis Solution Implementation Impact Risk 20

Amazon’s supply chain is well-positioned strategically
to launch Amazon Go in European Capital Cities
Analysis of Amazons EU Supply Chain

Fulfillment centers in
Fulfillment centers in
UK
Germany
Fulfilment Centers 22
Fulfilment Centers 21
Delivery Stations 45
Delivery Stations 5
Prime Hubs 12
Prime Hubs 4

Fulfillment centers in
Spain Fulfillment centers in
Fulfilment Centers 7 Italy
Prime Now Hubs 4 Fulfilment Centers 5
Delivery Stations 10 Prime Now Hubs 2
Delivery Stations 8

Sources: MWPPL Analysis of Amazon’s global fulfillment center networks

Situation Analysis Solution Implementation Impact Risk 21

Leveraging its supply chain network, Amazon can open
stores in busy areas capitalizing on busy life styles
Implementation locations

London, Oxford Street Berlin, Ku’damm Consumer trends in

Ideal Areas

Launch Amazon Go in capital cities

in busy areas

Rome, Via Del Corso Madrid, Gran Via

Ideal street locations

London, Oxford Street

Berlin, Ku'damm
Madrid, Gran Via
Rome, Via Del Corso

Situation Analysis Solution Implementation Impact Risk 22

The Amazon Go stores will be spread across
Europe within the next five years
European expansion strategy

Expansion
Stores expansion (per year) strategy

2024 88
Expand to rest of
Europe
Expand to
2023 82
adjacent countries

2022 69
Expand in
remaining country

2021 32 Expand in capital

cities

2020
Entry in capital
4
cities

2019 0
Development
phase
0 20 40 60 80 100

Situation Analysis Solution Implementation Impact Risk 23

 3
Integrate
2
Integrate channels and
Target offerings into multi-channel
1 solution

Target Generation X & Y in

Expand the capital cities

Conquer Europe by
expanding into UK, Germany,
Spain, and Italy

Situation Analysis Solution Implementation Impact Risk 24

Currently, European grocery retailers are not
catering to demands of Gen Y & X consumers…
Customer Analysis
Can I utilize
Anna: 24 y.o. Is it a convenient Is the purchase
digital payment
from Berlin process? exciting?
methods?

Convenience Curated Experiences Digital Experiences

88% 65% 72%

of shoppers want of Millennials want of Millenials want the
Consumer trend more convenience to spend on opportunity to pay
when they shop experiences with their phone

Limited Limited Limited

Situation in Europe Convenience options at Retail innovation at Payment methods
major competitors major competitors in-store
Situation Analysis Solution Implementation Impact Risk 25
… however, Amazon can win by positioning itself as
a convenience store with specialized assortment
How to Win in the European Market

KEY BUYING CRITERIA VALUE FOR CUSTOMER TAKEAWAYS

Low value High value

Ease of experience
1 No key player has the value
proposition of Amazon Go

Wide assortments (alternatives)

Food tracking
2 Due to rising health and
convenience trends, Amazon
Go can tailor its assortment

Specialized assortment (health)

Quick in-and-out 3 Position as convenience store

with foucs on health in
accordance to European
standards
Perceived value by customers

Competitors’ ability to deliver

Situation Analysis Solution Implementation Impact Risk 26

Amazon Go will be able to out-compete competition
through better quality, assortment, and convenience…
Assessment of convenience stores

Company mini-markets
Key Take
Away:
Country

Price Medium High Low Low Medium Medium

Each country
has different
Quality preferences in
terms of
quality,
Assortment High Medium High High Low High assortment,
and
convenience
Convenience Medium Medium Medium High Medium High

Sources: IRI European Shopper Insights report; Deloitte European Grocery Retail study; Team analysi

Situation Analysis Solution Implementation Impact Risk 27

.... but for Amazon Go to succeed, they must cater to
consumer demands regarding store setup and assortment
Assortment Assessment

Consumer analysis of convenience Recommendation for store setup and

store preferences: assortment strategy:

Country

Smaller stores Larger stores Smaller stores Larger stores

% value of
convenience
71% 71% 34% 30%

% value of wide
61% 47% Wide Specialized Specialized Wide
range of 55% 70% assortment assortment assortment assortment
products

% value of Slow scale and Slow scale and

Quick scale and Slow scale and
Range to super 59% 32% 34% 30% implantation implantation implantation implentation
market

Amazon Go stores should be tailored to local consumer preferences

Sources: IRI European Shopper Insights report; Deloitte European Grocery Retail study; Team analysi

Situation Analysis Solution Implementation Impact Risk 28

Amazon Go directly meets the demands of Gen Y and X
by offering a connected and convenient experience
Customer Journey

Average time
spent in Amazon Notification: Anna: Save
Go: 10 minutes 10% on Lemons! Only today Notification:
Remember to
pick up your
Based on Amazon Prime package in the
orderings Data Analytics store
can send notifications

Customer data Minutes spent at drinks

section: 4 minutes
Customer Total minutes spent: 10
notification

Situation Analysis Solution Implementation Impact Risk 29

 Amazon should brand Amazon Go as the final piece to multi-
channel integration to extend from its current offerings
Customer Acquisition

STRONGER CUSTOMER EXPERIENCE IMPROVE REVENUE STREAMS

Imagine no lines. No
Checkout. No
TRANSFORM LEVERAGE CAPTURE Seriously. Amazon
Go has transformed
The customer experience and Amazon Prime data to tailor New customers through presence
create a convenient multi-channel marketing recommendations to on Social Media as well as secure the customer
experience the targeted segments prime locations spots experience

1M Customers in Europe

Situation Analysis Solution Implementation Impact Risk 30

Furthermore, Amazon should communicate its launch of Amazon
Go through a provocative SoMe marketing campaign
Marketing

UK, Germany, Italy and Spain boasts 50 million Each day an average person spends
monthly active users on Instagram 20 minutes waiting. How do you like
to spend your time?
UK, Germany, Italy and Spain boasts 75 million
monthly active users on Youtube

Connecting the online and

Create transparency between offline retail experience
1 Amazon’s value propositions

Leverage Amazon Prime and

2 SoMe Presence
”Each day an
average person
spends 20 minutes
waiting. How
valuable is your • Patagonia utilized celebrities and ads on Social Media
time?”
Push Amazon Go through to increase customer base
3 provocative marketing • By being provocative in their way of communicating,
Patagonia’s sales took off as a result of the gimmick

Statista Social Media EU 2018

Situation Analysis Solution Implementation Impact Risk 31

 3
Integrate
2
Integrate channels and
Target offerings into multi-channel
1 solution

Target Generation X & Y in

Expand the capital cities

Conquer Europe by
expanding into UK, Germany,
Spain, and Italy

Situation Analysis Solution Implementation Impact Risk 32

Over the years, you have expanded your
presence in the value chain…
Value chain expansion
Started
Adjacent services w/ own Move into core logistics services
website
Pre-sales Online marke- Market place Online Line Ware housing/ Return
Delivery
process ting and CRM or website payment haul order prep. management

New adjacent services … … additionally bold moves to build up logistics capabilities

3rd party
sales on
Amazon Investment in Growing truck/ FMC license Building "Uber
website logistics center, trailer fleet and last to operate as for trucking"
e.g., 100K new mile operations, ocean freight app to match
jobs planned in the e.g., locker service forwarder in the shippers with truck
Off-the-shelf US & delivery US (asset-free) drivers
E-Commerce
website

Checkout
and payment Planning own First Prime Air Amazon Now Patent for under-
for e-tailers $1.5B air hub drone delivery delivery in 1h and ground transport
operating in December, 2016 Flex delivery of goods using
& more ~ 40 planes by freelancers vacuum pipes

Situation Analysis Solution Implementation Impact Risk 33

… which has enabled a full presence in the value
chain for Amazon
Value chain presence

Online value chain Offline value chain

Logistics
Warehousing Online platform Retail Logistics Warehousing
Pick-up

Situation Analysis Solution Implementation Impact Risk 34

Amazon currently has a range of brands in
Europe
Offerings in Europe by Amazon

Description Synergies Usage for Amazon Go

• AmazonFresh can be used for grocery delivery for
stores in Europe.
Grocery delivery services • Amazon Fresh can be ordered for pick-up in Amazon
Go

Virtual assistant capable of e.g. voice interaction • Alexa can be used for store navigation in Amazon Go
and controlling smart devices stores.

• AmazonPrime is to create traction by granting users

Paid subscription service that gives the users discounts in the stores
access to additional options • Can be ordered for pick-up in Amazon Go

US based supermarket chain owned by • Costs of logistics and supply chain management can
Amazon since 2017 be reduced by owning Whole Foods

Best selling private label brand under • No substantial synergy-effects

Amazon

Situation Analysis Solution Implementation Impact Risk 35

Combined with this, it can win in the European
Market by leveraging key consumer trends…
Who To Target
Key characteristics of Amazon Go’s core segment is Pairing four megatrends within grocery retail with these
defined as… consumer characteristics suggests one direction
High

18-50
Male/female Superior Experience Digitization
years old

Customer demand
Convenience Analytics Intr.
Improved Multi channel
Urban Educated Maintenance

Loyalty Program

Product Sustainability
Improved Customer Customization
Looking for Tech-savvy Service
Social Shopping
Innovation

Use more than one Want personalized Low

86% channel to purchase

groceries 74% recommendations and
offers
Low Trend impact High

Situation Analysis Solution Implementation Impact Risk 36

… which can be utilized to offer integrated multi-
channel retail solutions for customers
Multi-channel solutions

Prime customers get

Deliver food and
Alexa can help 10% discounts
Integration with grocery with drone
answer questions
Amazon Fresh

Omnichannel:
Customers can
pick-up orders

Giving Amazon the answer to the ”what else?”

Situation Analysis Solution Implementation Impact Risk 37

This 360° multi-channel strategy enables Amazon
to become an integrated part of customers’ lives
Customer satisfaction

Going home
Time Morning Going to work Evening
from work
No cereal Thirsty for Coffee Pick up package Shopping

Anna: 24 y.o. Need

from Berlin

Amazon
Service Order through Buy at Amazon Pick up at Buy online at
Alexa Go store Amazon Go store Amazon.com

High Quick purchase –

no morning line Flexible and
convenient pick up
Customer
Satisfaction

Low

Situation Analysis Solution Implementation Impact Risk 38

Amazon has three must win battles to overcome
in order to secure a successful strategy
Implementation plan and timeline
Legend Must-win Battle 1 Must-win Battle 2 Must-win Battle
Leverage analytics Customers are
Evaluation Point 1 Get traction for initial
stores to prove 2 and data from 3 exposed to areas of the
attractiveness of existing presence in 360 degrees Amazon
Implement action
concept Europe business model
Execute pending
prior success 2019 2020 2021 2022 2023 2024

Conceptualize Launch in Capital cities in UK, GE, SP & IT Increase presence in initial markets and gradually scale out to rest of Europe
Where to Play
Build initial
Update assortment and technology
stores

Tap into
existing data
Who to Target on target
Continuously leverage data to be able to offer target segments a convenient and comfortable shopping experience
segments

Combine
Amazon offerings Market Amazon as an integrated multi-channel customer experience
in Europe
How to Win
Improve co-operation between different Amazon offerings

Team Analysis

Situation Analysis Solution Implementation Impact Risk 39

Amazon needs to invest 4.4 bn USD in order to
enable the implementation of the strategy
Investment requirements
Key Assumptions Required overall investments amount to 4.4 bn USD with 1bn USD of initial investment
1 2

mUSD
$1 million per new store 4,500 4,384
411
4,000
Technology investment is the only relevant 614
capital expenditure to be considered 3,500

3,000 823
Only capex are considered
2,500
782
2,000
Initial investment of 1bn
1,500
754
1,000
1,000

500

0
2019 2020 2021 2022 2023 2024 Total

Situation Analysis Solution Implementation Impact Risk 40

The intiatives will grant an NPV of 46.7 bn USD
with an initial investment of 1 bn USD…
Net Present Value
Key Assumptions Expanding Amazon Go yields a Net Present Value of 46.7 bn USD
1a 2
mSGD
7 year straight line depreciation Project NPV of 46.7 bn USD
50,000
46,711
Discount rate (WACC) averaged at 12.34% 45,000
40,000
Perpetual growth at 5%
35,000
Funded equity primarily 30,000
39,582
25,000
Cost Drivers
1b 20,000
Initial investment of $1 bn
15,000

No change in NWC 10,000

5,000 3,363
Initial investment of $1bn 2,474
0
-1,002 179 679 1,437
Ongoing Capex as required capital -5,000
2019 2020 2021 2022 2023 2024 TV NPV

Situation Analysis Solution Implementation Impact Risk 41

… and yield incremental revenues of 53 bn USD
by 2024 with prospects for scalable growth
Incremental Revenue
Key Assumptions This yields incremental revenues of 53bn USD by 2024 with a growing bottom line
1a 2
700 average daily customers per store with $25 mSGD
spent per customer 1,343
16,000
Stores are open 279 days a year 15,000 913
14,000
7 line straight line depreciation
13,000
12,000 513
Main Cost Drivers
1b 11,000
Annual rent per store $3m in capital cities and $2m 10,000
outside capital cities
9,000
Initiative-specific Assumptions 8,000 176
1c 7,000 14,652
13,432
US Expansion 6,000
10,991
5,000
Around 750 new stores annually from 2020 toward
2024 4,000 20
7,329
Ignores Synergy effects 3,000
2,000 3,667
European Expansion 1,000
0
276 stores in Europe by 2024
-1,000
2019 2020 2021 2022 2023 2024
2,000 new customers per store
European Expansion US Expansion (+ 1 UK store) Profit
Situation Analysis Solution Implementation Impact Risk 42
 3
Integrate
2
Integrate channels and
Target offerings into multi-channel
1 solution

Target Generation X & Y in

Expand the capital cities

Conquer Europe by
expanding into UK, Germany,
Spain, and Italy

Situation Analysis Solution Implementation Impact Risk 43

Appendix overview
Analysis Expand Target Integrate Financial implications
• Current Amazon Go stores • Regional assessment • Current pain points • Value chain expansion • Implementation
• Three global strategies • Why Europe? • How to win? • Value chain presence • Investment requiremens
• Strategy #1 • Country assessment • Assessment of convenience • Offerings in Europe • Net present value
• Strategy #2 • Amazon’s European supply stores • Trends to leverage • Incremental revenue
• Strategy #3 chain network • Consumer differences • Multi-channel solution
• Pros & Cons • Capital city locations • Customer journey • Customer satisfaction
• Strategy assessment • European expansion • Customer acquisition
strategy • Marketing

Appendix
• Risk assessment • Amazon retail offerings • Pro forma income statement • Revenues from European expansion
• Future store formats • Amazon Go European population reach • Cost break-down – assumptions • Revenue from existing stores
• Customer segment assessment • Competitive landscape • Cost break-down – number of stores • Depreciation break-down
• Amazon Go – Missing piece • Provocative marketing • Cost break-down – Capex and Opex – • Accumulated customer break-down
• Digitization stages • Case Study: Ali Baba’s Hema Stores European expansion • Project Net Present Value
• Digital capabilities • Extensive list of pros • Cost break-down – Capex and Opex – US • Capital requirements
• Gartner hype curve • Extensive list of cons expansion • Growth in subscriptions
• Technological compass • Non-cash transactions by region • Revenues from US and UK expansion
• Preferred grocery attributes • Grocery retail sales by region
• Customer segment information

Appendix 44
There are three major risks that must be mitigated
to achieve the geographical and financial impact
Risk mapping

Risk Scenarios Heat map Risk mitigation initiatives Proof of concept

1 2 3

High
Leverage brand name and
Grab-and—Go technology is
existing presence in Europe to
not being entirely trusted by
1 Critical 1
convince European audience
European customers
risk line

Probability
1
Extensive market surveys and
Product assortment and value
adaptational analysis through
proposition not attractive for
2 2
available data
European consumers

European market is large but Branding itself on a better product

maturing and customers might not Low offering than its competitors with a
3 want to change their habits Low Impact High 3 seamless customer journey

Appendix 45
In the future, Amazon Go will be able to compete
with large grocery retailers
Future
Scale

Phase II

Store formats
Phase I Larger retail stores

Store formats
Key competitors
Small express stores

Key competitors

2019 - 2025 2026 - Time

Situation Analysis Solution Implementation Impact Risk 46

Assessing the European Consumers, the generations Y
and X constitute a lucrative target segment
Appendix: Customer Assessment

Generation Y & X People aged >50

Familiar with
Amazon Brand

Keenly interested in
automated services

High Quality
Products

Technological
Know How

Extensive users of
mobile apps

Key Takeaway: Given the price customer characteristics of generation Y and X in Europe, Amazon Go should focus on these segments in
the initial launch

Situation Analysis Solution Implementation Impact Risk 47

Index
Appendix slides

Appendix 48
Amazon Go enter a new stage of digitization
Digitization stages
1st Stage 2nd Stage 3rd Stage 4st Stage
• Digital impact primarily in • Digital engagement with customers • Advanced technologies and
operations and cost increasingly important data analytics constantly
reduction • Increasing personalization of customers deployed to find competitive
• Limited digital disruption in using advanced data analytics advantages
the industry

Tech Media
Telco
Retail
Banking
Insurance

Auto
Airlines

Hotels
Education
Medtech
Transportation/Logistics
Healthcare
Consumer products
Construction Mining Oil & Utilities Pharma Manufacturing
Gas

Appendix 49
Amazon is way ahead of its competitors
A B C D
Laggard Trans- Striver Digital
Key Criteria former ist

1 Digital
up-skilling
Staffing of digital units with skilled people that have organizational
clout to bring new unit to life, complemented by teaming and training

2 Digital eco-
system building
Leveraging group or external partners' resources for additional skills
and capacity to increase speed and quality of solution development

3 Digital
vision
Full commitment of leadership team and clearly defined and aligned
vision for digital transformation as basis for organizational structure

4 Tech & business

integration
Holistic approach across technology, IT and business functions to
develop feasible 360° solutions that meet market demand

5 Cross-functional
teaming
Cross-functional teams with end-to-end responsibilities, clear align-
ment mechanisms on working level and decision-making authority

6 Seamless
customer experience
Customer focus and dedication as common denominator across
functions to provide superior, consistent digital customer experience

7 Digital
mindset
native Communication and change management to foster adoption of new
technologies, methodologies and self-conception required for digital

Competitors

Appendix 50
Different technologies have been assessed
according to the Gartner Hype Cycle
Gartner Hype Cycle
Digital Twin Plateau will be reached in:
Biochips Deep Neural Nets (Deep Learning)
Carbon Nanotube Less than 2 years
Smart Workspace
Brain-Computer Interface IoT Platform 2 to 5 years
Autonomous Mobile Robots Virtual Assistants 5 to 10 years
Smart Robotics Silicon Anode Batteries More than 10 years
Deep Neural Network ASICs Block Chain
AI PaaS
Quantum Computing
5G
Volumetric Displays
Self-healing System
Connected Home
Conversational AI
Autonomous Driving Level 5 Autonomous Driving Level 4

Edge AI Mixed Reality

Exoskeleton
Blockchain for Data Security
Autonomous Driving Level 2
Neuromorphic Hardware
Knowledge Graphs
4D Printing

Virtual Reality
Artificial General Intelligence
Smart Fabrics

Autonomous Driving Level 3

Augmented Reality
Smart Dust
Flying Autonomous Vehicles
Artificial Biotech

Peak of Inflated
Innovation Trigger Trough of Disillusionment Slope of Enlightenment Plateau of Productivity
Expectations

Source(s): Gartner Hype Cycle

Appendix 51
Technologies have been assessed based on
there time horizon and disruptiveness potential
Technological radar
Time horizon of mainstream adoption Disruptive potential of
of technology
2028
Software Hardware Little

Smart dust Medium

Quantum 4D Printing
computing
Nanotube High
electronics Brain
computer
Interface
AI & Machine Learning Blockchain
Dynamic
pricing Augmented
Reality Neuromorphic Internet of Things (IoT)
Artificial intelligence and Internet of hardware
Volumetric AI & Things (Iot)
Machine Learning bring Cognitive Machine With expectations for
display computing learning Digital
endless opportunities and are Twin IoT to reach 50bn
already disrupting certain Iot 5G Wearables Virtual reality connected objects in
industries such as Deep platforms 2020, IoT will disrupt
transportation and education reinforcement 3D Printing Autonomous
learning vehicles almost all industries
Drones
Enterprise Big data
taxonomy and Predictive
ontology software Cloud computing
management Autonomous
2018 robotics

Source(s): Team analysis

Appendix 52
\
Preferred grocery attributes
500 consumers’ preferred attributes

135
127
117
113

59
55

Prices Quality of Location Ease of shopping Staff customer Shopping

fresh products service environment/atmosphere

Appendix 53
Generations of shoppers and tech savviness
Millennials is the most tech savy group of shoppers and a

Source: Food Enginering, Team Analysis

Appendix 54
Amazon value offerings
Offerings to three different segments

Appendix 55
Within 5 years, you will be able to have reach of
56.3m people
Population reach
Tier 1 expansion

1 Expand stores within

tier 1 capital cities by
32 within
18.1 M

Tier 2 entry

2 Expand Amazon Go
stores through launch
countries by 69
25.1 M
New countries

3 Develop Amazon
throughout Europe,
starting in adjacent
56.3 M
countries by 82

Appendix 56
Although there is much competition, Amazon can
utilize digitization to differentiate itself
Competitive landscape

Key challenges
Positioning map
Competition has an Key players in the European Grocery Scetor
established brand High

Competition can leverage

Digitalization
scale and existing supply
chain networks to drive
down costs

Competition has deep

insights into customer
Low
assortment preferences
Low High
Presence

Appendix 57
The effects of Marketing
Provocative Marketing

Of European Millennials are intrigued by Provocative marketing

77%
Responded positively to the provocative marketing campaigns of Patagonia
60%
Added benefits of word of mouth
54%
Of online and Offline purchases are influenced by SoMe Marketing
52%
35%
Purchase content they have seen advertised on Instagram

Fstatista: Effect of Mareting on retail products

Appendix 58
Case Study: Ali Baba’s Hema Stores
Proof of Concept

We believe the future of New Retail will be a KEY CHARACTERISTICS VALUE FOR CUSTOMER
harmonious integration of online and offline, and
Low value High value
Hema is a prime example of this evolution that’s
taking place Digitized Aisles
and Barcodes
- Daniel Zhang, CEO of Ali Baba Group

Scan for Information

And Food Tracking

1 Supermarket
87 Stores in China Fulfillment Center

2 Restaurant
Cook your groceries

3 Fulfillment Center
Restaurant (with Robots)

Perceived value by customers

Hema’s ability to deliver

Appendix 59
Extensive list of pros and cons
Licensing

Pros

• Strengthen relationships and reinforce a company’s value with its existing customers and others
• Facilitate penetration into new markets and distribution channels that may have been inaccessible (without an increase in capital
expenditures or ongoing expenses)
• Allow a business to rely on the expertise, capacity and skill of a licensee to commercialize IP, which is especially valuable when a company
lacks the infrastructure, financial resources and know-how to bring a product to market independently;
• Provide access to improvements a licensee made to its licensed technology without the related research and development costs (i.e., through
“grant-back” clauses in licenses)
•
Pros
Provide a company with access to new technology or neutralize blocking technology through cross-licensing;
• Give a business some control over the technical standards set by national and international standard-setting organizations, which typically
require that patentees grant licenses for technology adopted in the standard-setting framework under fair, reasonable and nondiscriminatory
terms, or that the license be royalty-free
• Enhance the company’s brand recognition in new markets
• Convert an infringer or competitor into a collaborator by avoiding or settling IP litigation, and reduce the risks of future litigation or licensing
demands.

Appendix 60
Extensive list of pros and cons
Licensing

Cons

• Creating a Competitor. A significant downside to outbound licensing is that a licensee could become a competitor. For example, a licensee may have a
more effective go-to-market strategy than the licensor, or customers may prefer the licensee’s product. The ultimate effect of creating a competitor is that the
licensor may make less in royalties than it foregoes in lost sales to the licensee or, even worse, that the licensor yields market share to the licensee.
• Depending on a Lousy Licensee. A licensor may have to rely on the skill, ability and know-how of a licensee to fulfill its revenue goals, such as where the
licensor grants an exclusive license and its only source of revenue is royalties generated by the licensee. When a licensee is inept, the licensor could fail to
recover its investment in technology or lose a potentially profitable market opportunity it could have exploited itself.
• Exploitation of the Licensed Technology. A licensee may attempt to exploit a licensor’s IP once statutory rights have expired (such as for patents) or upon
termination of the license if the agreement does not include terms preventingProssuch abuse.
• Loss of Control Over Technology. Licensors have to surrender control over their technology to licensees and in doing so, can lose some degree of control
over their IP. This concern is most prevalent when a licensee is based overseas in a remote region.
• Diminution in the Value. Businesses that license out trademarks must invest resources in quality control measures to ensure that the licensee’s use is
compatible with brand standards and maintains the quality of the licensed products and technology.
• Litigation Risks. Several different litigation risks arise when a company licenses out technology. For instance, if license negotiations break down, a licensee
may commence legal action in court or through an administrative agency to invalidate the IP in question.

Appendix 61
Number of non-cash transactions worldwide
Non-cash transactions split into regions in billions of USD

876

763 131

CAGR of 11% 672 106

598 87 251
536 73 193
483 61 150
439 52 116 52
393 91 49
361 45 71 47 80
332 38 56 45 73
35 40 42 67
31 29 39 39 55 61
24 35 37 45 50 151
32 41 132 141
34 37 116 124
101 109
84 88 94

170 180 190 201 212

128 137 144 153 161

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
CEMEA Latin America Europe
Source: Statista
Emerging Asia Mature Asia-Pacific North America
Appendix 62
Global grocery retail sales 2016-2021 by region
Sales value of grocery retail worldwide in 2016 and 2021, by region (in billion U.S. dollars)
10,917

8,309 4,084

3,011

2,591

2,178
1,457
902
1,424
1,196
912 1,220
110 141
2016 2021
Asia Africa and Middle East Latin America
Europe North America Oceania

Appendix 63
Pro Forma Income Statement
P&L Amazon Go treated as stand-alone business
Full P&L - Amazon Go Pro Forma
USDm 2019E 2020E 2021E 2022E 2023E 2024E Assumptions
Revenue
Status quo (current stores) 18 18 18 18 18 18
Initative #1 - 20 176 513 913 1,343
Initative #2 - 3,667 7,329 10,991 13,432 14,652
Total revenue 18 3,705 7,523 11,522 14,363 16,013
Production cost
Other production costs 11.0 2213.0 3982.0 5892.0 6829.0 6983.0
% of revenue 28% 25% 21% 19% 18% 14%
Gross profit 7.41 1491.70 3540.82 5629.58 7534.20 9030.48
GM, % 40% 40% 47% 49% 52% 56% SG&A post
SG&A Rent
Marketing 1 1 5 10 22 30
Rent & utilities 9 770 1681 2735 3560 4160 Salaries
Total SG&A 9 771 1686 2745 3582 4190
R&D post
R&D Research
Investments in tech dev. 2 3 3 7 15 25
Total R&D 2.00 3.00 3.00 7.00 15 25

EBITDA -4 717 1851 2878 3937 4815

EBITDA% -21% 19% 25% 25% 27% 30%

Depreciation
Depreciation of tech 0 108 113 117 81 46
EBIT -4 609 1739 2761 3857 4769
EBIT% -21% 16% 23% 24% 27% 30% Interest
0.5% of revenues
Interest expense
Interest expense 0 19 38 58 72 80
Interest 0 19 38 58 72 80

EBT -4 591 1701 2703 3785 4689

US. Tax
21%
Tax -1 124 357 568 795 985
Profits after tax -3.1 466.8 1343.8 2135.5 2990.0 3704.5
-17% 13% 18% 19% 21% 23%
Appendix 64
Cost break-down
Expenditures 1: assumptions

European Amazon Go Stores in capital cities

As s umptions Madrid Rome London Berlin
Avera ge s i ze of s tore (ft) 5,000 4,000 6,000 8,000 -
Cos t per ft $ 400 $ 700 $ 1,450 $ 800 -
Cos t of i mpl ementing technol ogy $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 -
Rent per s tore per yea r $ 2,000,000 $ 2,800,000 $ 8,700,000 $ 6,400,000

Ci ties Madrid Rome London Berlin

Cos t per s tore, fi xed $ 3,000,000 $ 3,800,000 $ 9,700,000 $ 7,400,000 -

European Amazon Go Stores outside capital cities

Assumptions Spa i n Ital y Engl a nd Germa ny Others
Avera ge s i ze of s tore (ft) 5,000 4,000 6,000 8,000 3,500
Cos t per ft $ 200 $ 400 $ 700 $ 500 $ 200
Cos t of i mpl ementing technol ogy $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000
Rent per s tore per yea r $ 1,000,000 $ 1,600,000 $ 4,200,000 $ 4,000,000 $ 700,000

Ci ties Spain Italy England Germany Others

Cos t per s tore, fi xed $ 2,000,000 $ 2,600,000 $ 5,200,000 $ 5,000,000 $ 1,700,000

Appendix 65
Cost break-down
Expenditures 2: number of stores

Assumptions Total Stores in Capital cities Stores outside capital cities

Stores i n 2019 0 0 0
Accumul a ted s tores in 2020 4 4 0
Accumul a ted s tores in 2021 36 36 0
Accumul a ted s tores in 2022 105 90 15
Accumul a ted s tores in 2023 187 142 45
Accumul a ted s tores in 2024 275 200 75

Stores in Capital cities Total Madrid Rome London Berlin

Stores i n 2019 0 0 0 0 0
Accumul a ted s tores i n 2020 4 1 1 1 1
Accumul a ted s tores i n 2021 36 9 9 9 9
Accumul a ted s tores i n 2022 90 23 23 23 23
Accumul a ted s tores i n 2023 142 36 36 36 36
Accumul a ted s tores i n 2024 200 50 50 50 50

Stores in Outside capital cities Total Spain Italy England Germany Others
Stores i n 2019 0 0 0 0 0 0
Accumul a ted s tores i n 2020 0 0 0 0 0 0
Accumul a ted s tores i n 2021 0 0 0 0 0 0
Accumul a ted s tores i n 2022 15 6 2 3 2 2
Accumul a ted s tores i n 2023 45 14 7 9 6 9
Accumul a ted s tores i n 2024 75 21 11 14 10 19

Appendix 66
Cost break-down
Capex and Opex: European expansion
CAPEX & OPEX Capital cities; rent Capital cities; tech Capital cities; total
2019 $ - $ - $ -
2020 $ 19,900,000 $ 4,000,000 $ 23,900,000
2021 $ 179,100,000 $ 32,000,000 $ 211,100,000
2022 $ 447,750,000 $ 54,000,000 $ 501,750,000
2023 $ 706,450,000 $ 52,000,000 $ 758,450,000
2024 $ 995,000,000 $ 58,000,000 $ 1,053,000,000

CAPEX & OPEX Capital cities; rent Capital cities; tech Capital cities; total
2019 $ - $ - $ -
2020 $ - $ 1,000,000 $ 1,000,000
2021 $ - $ 8,000,000 $ 8,000,000
2022 $ 31,200,000 $ 13,500,000 $ 44,700,000
2023 $ 93,300,000 $ 13,000,000 $ 106,300,000
2024 $ 150,700,000 $ 14,500,000 $ 165,200,000

Accumulated Opex 2019 2020 2021 2022 2023 2024

Rent 19,900,000 179,100,000 478,950,000 799,750,000 1,145,700,000
Other operating expenditures 250,000 2,250,000 6,016,960 10,047,111 14,393,216

Total $ 20,150,000 $ 181,350,000 $ 484,966,960 $ 809,797,111 $ 1,160,093,216

Accumulated Capex 2019 2020 2021 2022 2023 2024

Implementing technology 5,000,000 40,000,000 67,500,000 65,000,000 72,500,000

Total $ 5,000,000 $ 40,000,000 $ 67,500,000 $ 65,000,000 $ 72,500,000

Appendix 67
Cost break-down
Capex and opex: US expansion

Accumulated Opex, existing 2019 2020 2021 2022 2023 2024 Assumptions US
Rent 1,575,000,000 3,150,000,000 4,725,000,000 5,775,000,000 6,300,000,000 Average size of store (ft) 7,000
Other operating expenditures 250,000 Cost per ft $ 300
Cost of implementing technology $ 1,000,000
Total $ 1,575,250,000 $ 3,150,000,000 $ 4,725,000,000 $ 5,775,000,000 $ 6,300,000,000 Rent per store per year $ 2,100,000

Accumulated Capex 2019 2020 2021 2022 2023 2024

Implementing technology 750,000,000 750,000,000 1,500,000,000 1,250,000,000 1,750,000,000

Total $ 750,000,000 $ 750,000,000 $ 1,500,000,000 $ 1,250,000,000 $ 1,750,000,000

Appendix 68
Revenues from intended US and UK expansion
Incremental revenue

Incremental revenues
Assumptions
Openi ng hours per da y 10
Openi ng da ys a yea r 279
Avera ge s pent per cus tomer per vi s i t $ 25
Avera ge da i l y cus tomers 700
New US Stores 3,000
UK Stores 1
Revenues per store, per year $ 4,882,500
US Stores revenues $ 14,647,500,000
UK Store revenue $ 4,882,500

Revenues 2019 2020 2021 2022 2023 2024

UK s tores 4,882,500 4,882,500 4,882,500 4,882,500 4,882,500
US s tore 3,661,875,000 7,323,750,000 10,985,625,000 13,426,875,000 14,647,500,000
Total 0 $ 3,666,757,500 $ 7,328,632,500 $ 10,990,507,500 $ 13,431,757,500 $ 14,652,382,500

Appendix 69
Revenues from proposed European expansion
Incremental revenue

Incremental revenues
Assumptions Assumptions Tota l
Openi ng hours per da y 10 Stores i n 2019 0
Openi ng da ys a yea r 279 Accumul a ted s tores in 2020 4
Avera ge s pent per cus tomer per vi s i t $ 30 Accumul a ted s tores in 2021 36
Avera ge da i l y cus tomers 800 Accumul a ted s tores in 2022 105
Accumul a ted s tores in 2023 187
Accumul a ted s tores in 2024 275

Revenues 2019 2020 2021 2022 2023 2024

Europea n s tores 19,530,000 175,770,000 512,662,500 913,027,500 1,342,687,500
Total 0 $ 19,530,000 $ 175,770,000 $ 512,662,500 $ 913,027,500 $ 1,342,687,500

Appendix 70
Revenues from existing stores
Revenue

Incremental revenues
Assumptions
Openi ng hours per da y 10
Openi ng da ys a yea r 279
Avera ge s pent per cus tomer per vi s i t $ 10
Avera ge da i l y cus tomers 600
Exi s ti ng s tores i n US 11

Revenues 2019 2020 2021 2022 2023 2024

Exi s ti ng s tores 18,414,000 18,414,000 18,414,000 18,414,000 18,414,000 18,414,000
Total $ 18,414,000 $ 18,414,000 $ 18,414,000 $ 18,414,000 $ 18,414,000 $ 18,414,000

Appendix 71
Depreciation breakdown
Straight-line depreciation

As s uming 7 years of lifetime

Depreciation of tech 2019 2020 2021 2022 2023 2024
Depreciated tech 0 107,857,143 112,857,143 116,785,714 80,714,286 46,071,429
Non-depreciated tech 0 647,142,857 677,142,857 700,714,286 484,285,714 276,428,571

Appendix 72
Accumulated customer break-down
Incremental increase in customer base

Number of customers
Assumption
Number of new cus tomers per s tore a nnua l l y, US 600
Number of new cus tomers per s tore a nnua l l y , EU 2,500

Stores 2019 2020 2021 2022 2023 2024

New Europea n s tores , expa ns i on 0 4 32 73 114 161

Intia l UK Store 1 0 0 0 0 0
New US s tores , expa ns i on 0 750 750 750 500 250
Number of customers 600 460,000 530,000 632,500 585,000 552,500

Customers 2019 2020 2021 2022 2023 2024

New Europea n s tores , expa ns i on 0 10000 80000 182500 285000 402500

10000 90000 272500 557500 960000
Intia l UK Store 600 0 0 0 0 0
New US s tores , expa ns i on 0 450000 450000 450000 300000 150000
450600 900600 1350600 1650600 1800600
Number of customers 600 470,000 620,000 905,000 1,142,500 1,512,500

Appendix 73
Project Net Present Value
Cash Flow Analysis

Cash Flow Analysis

Operating Cash flow USD
Year 2019 2020 2021 2022 2023 2024
Operating cash flow (3,063,675) 466,827,471 1,343,786,267 2,135,546,491 2,990,048,571 3,704,509,029
Depreci a tion 0 107,857,143 112,857,143 116,785,714 80,714,286 46,071,429
Operating cash flow (3,063,675) 574,684,614 1,456,643,410 2,252,332,205 3,070,762,857 3,750,580,457

Cash flows, USD Perpetual Growth 5.00% WACC 12.34%

Year 2019 2020 2021 2022 2023 2024
Opera ting Ca s h Fl ow (3,063,675) 574,684,614 1,456,643,410 2,252,332,205 3,070,762,857 3,750,580,457
CAPEX 1,000,000,000 754,000,000 782,000,000 823,000,000 614,000,000 411,000,000
Cha nge i n NWC 0 0 0 0 0
FCF (1,003,063,675) (179,315,386) 674,643,410 1,429,332,205 2,456,762,857 3,339,580,457
PV (1,003,063,675) (179,315,386) 674,643,410 1,429,332,205 2,456,762,857 3,339,580,457
NPV 46,021,143,717 Terminal value 39,303,203,849

Appendix 74
Capital requirement
Breakdown of capital expenditures

Number of new stores

2020 2021 2022 2023 2024
754 1,536 2,355 2,937 3,275
CAPEX $1m per s tore
2020 2021 2022 2023 2024
754,000,000 1,536,000,000 2,355,000,000 2,937,000,000 3,275,000,000

Assumptions
As s umi ng other CAPEX a re i rrel eva nt

Appendix 75
Growth in Subscriptions
Incremental customer growth

1,800,600 960,000
1,650,600

1,350,600

557,500
900,600

450,600 272,500

90,000
600 10,000
2019 2020 2021 2022 2023 2024 2019 2020 2021 2022 2023 2024

Envisioned US expansion New European stores, expansion

Appendix 76