Amazon

Entering Indian Market

Group A4 Biswo Ranjan Bal Gaurav Kumar Shashank Shekhar Goswami Siv Sagar Saha Robin Kumar Sahu Ritesh Jaiswal Sarthak Rohatgi 12012 12017 12045 12048 12097 12153 12182

Introduction of Amazon

American multinational company

Incorporated in 1994 by Jeff Bezos

In July 1995, sold its first book on Amazon.com

Presence across three locations in India (Bangalore, Hyderabad, Chennai)

Vision & Mission Statement

Vision

To be earths most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.

Mission

To leverage technology and the expertise of invaluable employees and to provide customer with the best shopping experience on the internet.

Ethical issues of Amazon.com coming to India

Stakeholders: Justified returns to them has to be ensured

Suppliers: Suppliers forms an integral part for any business operations. Amazon being an online retail chain has to have good relationship with its partners.

Customers: These are the most important category for any organisation. Amazon has to make sure that it provides genuine products to its customers. Since they could not have touch feel or test facility in their type of business

Employees: Employees should not exploited. They should be trained properly. Moreover since they are expanding in India, they should focus on giving Indians more employment. As we have seen the recent issue of Infosys in U.S.A. where allegations over racial discrimination has been raised against the company.

Competitors: They should start a healthy competition with their competitors. Price wars will be there but they have to focus more on customer satisfaction. An environment should be created where there is a win-win situation for all.

Society: They should not involve in any unfair means which harms the society or the legal structure.
As in the case of Bharti Walmart where the CFO Pankaj Madan and his entire legal team has been suspended on account of alleged bribery to the government officials for getting various licenses and permissions. (Economic Times, 2013)

Strategic Issues

Amazon is basing its strategy on three pillars:

Vast selection Low price Fast delivery

Gaining market share In India, tastes and desires change drastically in every 200kms, which was unlikely in other countries

Flipkart which is the market leader in India, is the biggest hurdle in their way to success as it has gained customers confidence over the years
6

HIGH

Strategic Shift

E-Brand as barrier to entry

LESS COMPELLING

C o m p l e x ONLINE PRODUCT ASSORTM ENT

AMAZON.COM (Circa 2001) Landlord of largest Web Supermall Universal selection, one-stop Shopping, and same day customer Fulfilment = competitive Advantage Revenues: $2.7 Billion (est.) Registered Customers: 19.5 MM Items Offered: >18 MM

H I G H

ECUS TOM ER EXPE CTA TION

S i m p l e

AMAZON.COM (1998) Book E-tailer Investment in brand building Customer fulfilment largely outsourced to Ingram and Baker & Taylor Revenues: $610 MM Registered Customers: 12 MM Books Offered: 2.5 MM

L O W

LOW

CUSTOMER FULFILLMENT AS CORE-COMPETENCE

HIGH

Analysis of Strategic shift

Amazon adopted changes with time

Added new market developments

From just being an online book seller, it became an online shopping place

Expansion of business created entry barrier for competitors

Understanding Indian Market

Middle class in India is booming

India is the third largest publisher of English language books in the world
E-commerce has a huge potential in India, a country of more than 1.2 billion people

52 million active Internet users, of which 40 percent have shopped online

Indian online market is expected to grow 55% to 100 billion rupees this year

What Amazon looks to achieve in India

Customer satisfaction in India

Looking for a long term business

Considers new markets where the company could enter or additional products

that could be developed

10

SWOT Analysis of Amazon

Strengths Brand well known along with a strong customer base in many parts of the world. Diverse product offerings Free home delivery above a minimum purchase Working with minimum profit and gaining from economies of scale Strong business relationships with publishing houses, major electronic companies etc. Experience of almost a decade in online shopping industry Weakness Operates at very low margin Criticism for its working conditions KINDLE is not up to the mark of its competitors

Opportunity Acquiring more small business enterprises, enabling them to expand Opening physical stores so as to give the customers a feel of touch and experience Indian retail industry is estimated to be $450 Billion Expand into more product segments Tie ups with major players of untapped market

Threats
Online security threats Regional low-cost retailers Strong online presence of Indian competitors like Flipkart and Myntra Flexible rules against FDI enabling other major players like Wal-Mart etc. to enter 11

Competitive Profile Matrix

CPM identifies the firms major strength and weakness in relation to another firms strategic position Critical success factors (CSF) ensure success for an organization

12

Competitor Analysis
The largest competitor as of now in India is Flipkart with highest score (3.25)

Currently, product options on Amazon are limited while competitors has

expanded (Flipkart and eBay offer a wider range of products)

Flipkart has 80 per cent share of the online book market in India
Flipkart now has a wide reach in the Indian market and the delivery time is just four business days

13

SPACE MATRIX
Analyse capabilities in various fields and then select a strategy move with which to adapt to the changing market conditions Factors considered in SPACE Matrix are financial strength (FS), industry strength (IS), environment strength (ES) and competitive advantage (CA)

14

Analysis of SPACE matrix

Amazon has good Financial and Industry strength

It should aggressively enter the market

15

Quantitative Strategic Planning Matrix

Key Internal Factors
Weights Strategic Alternatives Entering into emerging market Strengthening existing market AS 4 3 3 2 TAS 1 0.3 0.45 0.2 AS 3 3 3 4 TAS 0.75 0.3 0.45 0.4

Strength Brand Awareness 0.25 Experience in business Diverse Offering Free Home Deliveries Weakness New to Asian market Low margin business Subtotal
0.10 0.15 0.10

0.20
0.20 1.00

4
3

0.8
0.6 3.35

4
3

0.8
0.6 3.3 16

Key Internal Factors

Weights

Opportunities Online Payment 0.25 system Integrating private 0.10 level Growing Asian market 0.20 Expand into more 0.05 product segments Threats Online security threats 0.20 FDI rules Regional online competitors Subtotal Total Attractiveness Score 0.10 0.10 1.00

Strategic Alternatives Entering into emerging market Strengthening existing market AS TAS AS TAS 2 0.5 3 0.75 3 4 3 0.3 0.8 0.15 3 4 0.2 0.3

4 3 3

0.8 0.3 0.3 3.15

4 3

0.8

0.3 2.35 5.65 17

6.5

Analysis of Quantitative Strategic Planning Matrix

Depending on various key internal factors:

Amazon should enter emerging market (India) rather than expanding its
existing market

18

Recommendations:Strategy Diamond

Arena

Staging & Pacing

Economic Logic
Differentiat ors

Vehicle

Arena- where will we be active? Vehicle- how will be get there? Differentiators- image,customisation,price Staging and pacing- speed and sequence of moves Economic logic- how are the returns obtained? Cost of revenue?

19

Logistic management
About 60% of online sales come from tier two cities. To reach the customers quickly company needs to have an effective logistic management. Flipkart seems to be Amazons only real competition. Flipkarts quick delivery system, along with the option of cash-on-delivery has led to large Flipkart loyalists

Diversification

Diversifying into other products will help the company to check the entry of competitors which e.g. going into food, clothes etc. so that expenses are also distributed and adverse conditions in one sector can be borne by other one.

20

Innovation Only pricing cannot be taken as a differentiating factor, innovation is also needed. The company should create a total buying experience that has been missing in the Indian context. Promotion should be done through Push and Pull strategies which will include offers and advertising.

21