Beyond the Amazon Effect hosted by BARR Credit Services in partnership with Richard Hastings

Seaport Global Securities LLC. Member FINRA/SIPC. 1
Beyond the Amazon
Effect: Mechanisms and
implications of the Amazon method
Prepared and Presented by:
Richard Hastings
Macro Strategist
Seaport Global Securities LLC
949.335.0686 – rhastings@seaportglobal.com
Hosted by BARR Credit Services
Webinar – February 13, 2018

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We do business the only way we know how, boldly and honestly, to
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The information contained in this presentation (the “Presentation”) has been
prepared and/or compiled by representatives of Seaport Global, is based on
currently available information obtained from sources believed to be reliable, and
may contain forward-looking statements.
Projections and/or opinions contained in the Information necessarily involve
elements of subjective judgment and analysis and are provided as of the date of this
Presentation. Seaport Global has no obligation to update this Information for
subsequent events or circumstances or to keep current any of the information
contained herein. All estimates and forecasts are subject to change and past results
are not necessarily an indication of future performance.
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About Seaport Global Disclaimer
Contact Us

Melanie Morcelle
Executive Vice President
Chief Revenue Officer
(716) 207-5207
mmorcelle@barrcredit.com
barrcredit.com

Stop touching the phone.
I’m talking to you.
Alexa’s just a part of it,
no touch, no phone.
Lyrics: My Way, Reprise Records, 1969. Image: WSJ, Sinatra vs. My Way, June 2009

Image: Devin K. Phillips. "Speed of the Human Brain." ASU - Ask A Biologist. 13 May 2015.
http://askabiologist.asu.edu/plosable/speed-human-brain.
A Model for Every Type of
Commerce, Every Type of Value?

Biggest
Brand in
the World

7
Image: Brand Finance®. Global 500 2018..

Data: Brand Finance®. Global 500 2017
Brand name
Brand value ($MM)
2017
YoY %
change
Google $109,470 24%
Apple $107,141 -27%
Amazon.com $106,396 53%
AT&T $87,016 45%
Microsoft $76,265 13%
Samsung Group $66,219 13%
Verizon $65,875 4%
Walmart $62,211 16%
Facebook $61,998 82%
ICBC $47,832 32%

Data: Brand Finance®. Global 500 2018. Prior year values were revised by Brand Finance from previous 2017 values.
Brand name
Brand value ($MM)
2018
YoY %
change
Amazon $150,811 42%
Apple $146,311 37%
Google $120,911 10%
Samsung $92,289 39%
Facebook $89,684 45%
AT&T $82,422 -5%
Microsoft $81,163 6%
Verizon $62,826 -5%
Walmart $61,480 -1%
ICBC $59,189 24%

Walmart’s brand value
went from 58.5% of
Amazon in 2017, to
40.7% in 2018.

$
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1000
Apple Amazon Spread*
Market price source: FactSet, daily, through Feb. 6, 2018. Interpretation: Seaport Global Securities
Market Value, Apple and Amazon, 2008-2018 ($/bln)

Image: The Great Wave off Kanagawa, ca. 1829-1833. Public Domain. Chris Christie, Slate.com
This is not getting
too big, right?

Amazon and
Retail Sales:
Numbers

-500%
0%
500%
1000%
1500%
2000%
2500%
Amazon total revenues Ex-autos retail sales
Data sources: Amazon.com; FactSet; Census Bureau. Interpretation: Seaport Global Securities
Relative Growth Rates, Amazon vs. Ex-autos
1,931%, as of
Q4 2017
Starting point is Q4 2005. Growth rate will vary widely by starting point.

-500%
0%
500%
1000%
1500%
2000%
2500%
Amazon total revenues Nonstore retail sales
Relative Growth Rates, Amazon vs. Nonstore Retail
Starting point is Q4 2005. Growth rate will vary widely by starting point.

Image: The Great Wave off Kanagawa, ca. 1829-1833. Public Domain. William Shakespeare, MIT.edu
I take thee at
thy word,
kinda.

1.04%
0.87%
0.74%
0.86%
1.34%
1.14%
1.04%
1.15%
1.71%
1.42%
1.31%
1.42%
2.01%
1.70%
1.56%
1.70%
2.36%
2.05%
1.83%
1.96%
2.60%
2.32%
2.17%
2.38%
3.12%
2.88%
2.77%
3.00%
3.70%
3.41%
3.32%
3.87%
4.84%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Amazon.com: % of Ex-Autos Retail Sales, Quarterly
Amazon's total sales impact upon Ex-Autos is growing faster than we
expected. The latest Q4 ratio surpassed our estimate of 4.5%.

10.35%
8.70%
8.34%
9.50%
12.85%
10.85%
11.45%
12.50%
15.59%
13.47%
13.64%
14.55%
17.52%
15.34%
15.73%
17.05%
19.95%
17.74%
17.79%
18.67%
20.86%
19.09%
19.68%
21.15%
23.43%
22.60%
22.86%
24.38%
25.74%
24.88%
25.87%
29.93%
32.06%
0%
5%
10%
15%
20%
25%
30%
35%
Amazon.com: % of Nonstore Retail Sales, Quarterly
Notable: Amazon's Retail Products revenues were
18.76% of US Nonstore retailing revenues, in Q4 2017.

(10.0)%
(8.0)%
(6.0)%
(4.0)%
(2.0)%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Nonstore Sales less Amazon, YoY Growth
Faster rate of penetration of Amazon into
the Nonstore sales aggregate is noted in
this downshift and in the small Q4 2017
uptick.
Quarterly, through Q4 2017

0.0%
2.5%
5.0%
7.5%
10.0%
12.5%
15.0%
Nonstore Sales % All Retail Sales
Data source: Census Bureau. Interpretation: Seaport Global Securities
Solid orange trendline is the 12-month moving average. Solid dark gray trendline is the linear regression of
all shown values. *Lining up December spikes. Through Dec. 2017.
Latest December value
(+13.48%) bounced slightly
ahead of trend.

Image: The Great Wave off Kanagawa, ca. 1829-1833. Public Domain. Chris Christie, Slate.com
Wait, Walmart is
much bigger.

0%
100%
200%
300%
400%
500%
600%
700%
800%
900%
1000%
WMT, total sales AMZN, total AMZN, services
Amazon vs. Walmart Relative Growth Rates, From Q3 2011
Data source: FactSet. Interpretation: Seaport Global Securities

0%
5%
10%
15%
20%
25%
30%
35%
40%
AMZN total sales, % WMT total sales
AMZN product sales, % WMT net sales
AMZN, services sales, % WMT total sales
Other Amazon and Walmart Sales Comparisons
Data source: FactSet. Interpretation: Seaport Global Securities

Image: The Great Wave off Kanagawa, ca. 1829-1833. Public Domain. William Shakespeare, MIT.edu
What is’t
you do?

“Amazon is guided by four
principles: customer
obsession rather than
competitor focus, passion for
invention, commitment to
operational excellence, and
long-term thinking.”
Source: Amazon.com Q4 2017 financial results news release

Neurocommerce?

They’re Dendrites:
More Than Just a Pretty Name

Amazon’s
objects
Consumer’s
brainSteady stream of
attributes is better than
pre-DTC retailing.*
*Based upon the concept of attribute flows and the brain’s appetite for attributes, in our view.

Impulse: Appealing to Instinct
Amazon’s
services
Consumer
brains
Video
Music
Altruism
Smile
AWS
Now
Entrepreneurship
Consumption
Prime Connect
FBA
Invent
Learn

The Attribute Flow
DTC
attributes
Consumer
brains
Visuals
Prices
Collective
opinions
Alternative
SKU
Complimentary
product
Audio and visual
experiences
Alexa
Return
dialogue

Web Services (AWS) as Neuron
Amazon’s
AWS as
Neuron
Business
demand
Compute
Networking
AI
AWS
Storage
Mobile
IoT

*FBA=Fulfillment by Amazon. FBM=Fulfillment by Merchant. Image: Devin K. Phillips. "Speed of the Human Brain." ASU - Ask A Biologist. 13 May
2015.http://askabiologist.asu.edu/plosable/speed-human-brain.
FBA* as Neuron
Amazon’s
FBA as
Neuron
Demand
Market
Analytics
Prime
Returns
FBA
Multi-
channel
Location
Co-brand
power
Price
option
for FBM*

Image: FactSet. Interpretation: Seaport Global Securities

 Growth within new forms of commerce is
getting faster, and it is growing from a
larger base.
 Slightly outdated methods are cycling into
obsolescence at a faster rate than before.
 Activities that reflected individuation and a
variety of choices are now evolving into
services, some of them easily automated.
 Transportation (driving) is one of the major
human processes that will be transformed
into a service, in our view.

 The world economy will be transformed
into a universe of data-emitting, data-
receiving devices and events, with instant
analytical outcomes and communication
with remote systems.
 This means the economy will begin to
resemble organic physical systems.
Precision will replace models.
 Human activities will shift towards softer
humanistic activities such as wellness and
fitness, and towards complex analytics
applied to large-scale systems.

Then
what’s
next?

Images: The Great Wave off Kanagawa, ca. 1829-1833. Public Domain. Goodfellas, 1990. Warner Bros.
No touch!

About Us
Seaport Global Securities LLC is SEC registered and a
member of FINRA and SiPC. The company is a wholly owned
subsidiary of Seaport Global Holdings LLC, a diverse
international financial services group offering a diverse set of
products and services with a global footprint in major market
centers both domestically and internationally to meet our
client needs.
www.seaportglobal.com

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