MARKETING MANAGEMENT 1

ANALYSIS OF E-COMMERCE INDUSTRY

Interim Report

Abhishek Rathour B19062 Kushagra Agarwal B19085

Antony J Sankoorikal B19067 Sanchari Das B19103
Jadhav Chetan Bharat B19080 Shounak Ghosh B19108

GROUP 3

Our Industry | E-commerce industry

Our Product | E-marketplace model

E-COMMERCE INDUSTRY IN INDIA

Key statistics:

 India is the fastest-growing market for the e-commerce sector.

 Revenue expected to increase from USD 39 billion (2017) to USD 120 billion (2020) and
USD 200 billion by 2026 [annual growth rate is 51%].
 Policies on the inflow of FDI:
o 100% FDI is allowed in B2B e-commerce
o 100% FDI is permitted under the automatic route (no government intervention)
for the marketplace model
o Marketplace model: The e-commerce entity provides an IT platform and a digital
network which acts as a facilitator between buyer and seller. So, the entity itself
doesn’t hold any inventory. It merely acts as the medium.
o No FDI permitted in inventory-based model of e-commerce.
o It has been made illegal for an e-commerce marketplace entity to mandate a
seller to sell a product exclusively on its platform.
o In the marketplace model, the entity can enter into B2B transactions with sellers
registered on their platform.
o If the marketplace entity (or any of its subsidiaries) makes more than 25%
purchases (out of total inventory) from a vendor or holds more than 25% equity
on any seller, then such control or ownership over the inventory will render it as
an inventory-based model, and 100% FDI in the marketplace model won’t
remain valid.
 o The marketplace entity may provide support services to sellers about
warehousing, logistics, payment collection, and more.
o In the marketplace model, any warranty for goods/services sold will be the
responsibility of the seller.

Growth

The e-commerce industry has undoubtedly transformed the business scenario of our country.
The e-commerce market is likely to grow to US$ 200 billion by 2026 from US$ 38.5 billion as of
2017. Much of this growth is because of increasing internet and smartphone penetration.
Revenue from India’s E-commerce market is predicted to rise from US$ 39 billion in 2017 to
US$ 120 billion in 2020, at an annual growth rate of 51 percent, the highest in the world.

The following factors have/will lead to the growth of the E-commerce marketplace:

1. Initiatives by Indian Government: This growth has majorly been induced by the
Government of India too. The various initiatives like Digital India, Make-in-India, Start-up
India, Skill India, and Innovation fund as introduced and implemented by our Indian
Government has supported the e-commerce growth in the country immensely. The
Government of India has increased the FDI (Foreign Direct Investment) limit in the E-
commerce marketplace by 100 percent; Investments by Indian Government in the fiber
network for 5G will also help expand E-commerce in India. Moreover, e-commerce is
looking forward to its expansion in rural India. Government has allocated Rs. Eight
thousand crores to the Bharatnet project to provide broadband services to 150,000-
gram panchayats.
2. Internet localization: The E-commerce marketplace gives one the choice of language
while shopping online. One can search for the product in any language of one’s choice.
This has been confirmed by Google that the web content search in the Hindi language
increased at a rate of 155% in the 2014 and Hindi content search on smartphones
increased by 300%.
3. Growth of Mobile E-commerce: With the rising smartphone penetration, the launch of
4G and upcoming 5G networks, and rising consumer wealth, the E-commerce market
has ever since been growing rapidly. There are currently 147.8 million e-commerce
marketplace users in India.
4. Payment Options: Digital wallets like Paytm, Amazon Pay, and UPI have made it easier
for the customers to shop online by increasing the payment options. This has been in
effect of Demonetization drive that prompted the Indian citizens to go for e-payment
methods. EMI option has also induced growth in the E-commerce industry.
5. Logistics: The courier and packaging partners are also helping in the growth of E-
commerce industry by introducing the use of attractive, eco-friendly, reusable
packaging.
 6. Fierce Competition: Flipkart, Amazon, and Paytm Mall have been in fierce neck-to-neck
competition with each other which has significantly improved logistics, payment
methods, offers and has finally led to their growth in the market.

The e-commerce market is expected to touch USD 5.8 trillion in 2022 from USD 24 billion in
2017.

Market Size: With increasing smartphone penetration, 4G and 5G network launches and rise in
the consumer economy, the E-commerce market is expected to grow and touch USD 5.8 trillion
by 2022 from USD 24 billion in 2017. The retail sales in India are expected to rise by 31%, which
is led by Flipkart, Amazon, and Paytm. Presently, electronics is the most significant contributor
to online sales in our country followed by fashion and apparel.

Seasonality: In India, it has been observed that the E-commerce marketplace flourishes during
festival months and seasons. It has also been observed that flash sale, Big Billion Day offers, and
other annual festive sales have helped significantly in the growth of the E-commerce
marketplace in our country. The month of October observes a considerable boost in the sales
right before Diwali. This also directly leads to a drop in footfall at physical shopping centers.

Profits: E-commerce is, no doubt, the fastest growing sector. It is expected that the Indian E-
commerce market will grow to USD 200 billion by 2026 from USD 48.5 billion as of 2018. This
growth has been possible because of increasing internet and smartphone penetration.

Industry leader Amazon India

Industry follower Flipkart

New entrant Paytm Mall

PESTEL ANALYSIS OF E-COMMERCE MARKETPLACE (analyzing the macro-environment factors)

Political

 The government’s relaxation of rules concerning business entities and their functioning
has provided a boost to e-commerce and the overall ease of doing business in the
country. Amazon recently opened its largest campus in Hyderabad; it is getting all
necessary approvals in a record 11 days.
 The government of India’s Make in India campaign has led to an increase in the number
of indigenous sellers in the e-commerce marketplace. The e-commerce platform
provides a very productive and efficient platform for these sellers. Seeking these
indigenous sellers who were restricted by investment and scaled the e-commerce
 platforms offered a platform for them to grow in the initial stages. The e-commerce
platform also benefits from an increase in the variety of products on its platform.
 Thanks to the unprecedented promotion of digital movement by the government, the
number of internet users in India is expected to skyrocket to 829 million by 2021. The
internet economy of India is expected to double to about 250 billion dollars by 2020
from 125 billion dollars as reported in April of 2017. Thanks to this, digital movement,
India has the highest annual growth rate of e-commerce revenue – 51 percent, and it is
expected to reach up to 120 billion dollars by 2020.

Economic

 The impact of e-commerce in the Micro, Small & Medium enterprises is significant as
they provide an indirect means of financing the MSMEs. For example, Amazon India has
a primary workforce of over 62,000 employees working with more than 120,000 sellers.
They provide employment and training to an estimated 200,000, and the cascading
effect this has is conducive for economic growth.
 Small and medium-sized businesses have been pushed by amazon to export, resulting in
over 1 billion dollars of exports. These businesses are expected to grow past 5 billion
dollars over the next three years.
 E-commerce facilitates a smooth flow of business among the states of the country. A
seller selling to another state has to go through multiple procedures and also have a tax
registration in the destination state. E-commerce allows a bypass for these and enables
smooth business for the same.

Social

 With the rise in population of the younger generation, we see a spike in purchases
through E-commerce. The younger generation loves to interact and socialize online. To
catch the attention of this segment, Amazon has introduced “Spark” in its app, where
we can network with other members.
 While coming to the rural areas, where once upon a time, E-commerce was considered
a stigma as it was deemed to be western. But, due to internet connectivity, this stigma is
losing its ground as we can see an evident growth in purchases from rural areas too.
 In India, the rate of unemployment is too high, and E-commerce is creating jobs for
unemployed individuals. This step makes E-commerce more acceptable and respectable
in the eyes of the general populous. Right now, around 1.2 million low skilled
workforces are engaged in working at E-commerce platforms.
 Coming to the demographic part, we witness a few participations of the fairer sex in the
industry. But E-commerce is not such a place as we can see a rise in working
women around 20% when compared to last year’s data. Currently, the workforce is over
40,000.
  To integrate different demographic entities- Google collaborated with Tata Trust in a
project named “Internet Saathi,” which will improve the penetration of internet facilities
amidst women living in rural areas.

Technological

 The introduction of digital wallets has boosted the e-commerce sector by providing
customers with readily accessible methods of payment. The bulk of the customers using
e-commerce portals prefer digital payments over cash on delivery, the primary reason
being the scarcity of real money. The major e-commerce portals like Amazon, Flipkart
have their own digital wallets system, Amazon Pay, and PhonePe, respectively. They also
attract customers through cashback offers, discount offers, and also serve as a source of
data collection by providing the spending patterns of every customer to the parent
company. This data is then used to find shopping patterns of the customers in a region,
enabling a variety of optimizations including that of inventory handling for the
merchants involved with the e-commerce platform reducing their costs and contributing
to economic growth.
 Chatbots have seen a rise in their usage in the e-commerce platform. They are
employed to improve customer experience by providing a quick resolution to the
customer queries and grievances. They have been only recently employed in e-
commerce platforms such as in IRCTC, and it is expected to be utilized in many more
such platforms soon. The chatbots minimize the time spent by the customer on the
website as they quickly direct the customer to the desired product among a list of
thousands of products, thus ensuring that the customer will return for the next visit.
 E-commerce portals make use of data analytics and artificial intelligence to predict what
a consumer would purchase and provide personalized suggestions to enhance the
customer experience, indirectly marketing the products and promoting their sales. In
recent times e-commerce giant Amazon has developed Amazon Forecast, which uses
machine learning to predict demand patterns of millions of its products, enabling it to
enhance its marketing and selling potential further.

Environmental

 The packaging of E-commerce companies’ products is done by heavily using thermocol

and plastic, which further goes as waste into the environment. The plastic may
sometimes find its way back in the water bodies, thus endangers the water-based
ecosystem too.
 Over the years, we have witnessed that there has been a tremendous increase in the
overall number of purchases through E-commerce sites. In effect, it has created an
increase in the number of trips made by the delivery agents. This further results in
increased emission of exhaust gas.
  Looking at the current scenario where people are becoming more aware of
environmental waste management, it can be expected that E-commerce will be
benefited only when they come up with eco-friendly ideas.

Legal

 Government has changed its previous regulations by hiking Foreign Direct Investment
(FDI) in the area of E-commerce to 100% in the Business to Business (B2B) models. This
regulation is a welcome move by GOI for various foreign giants like Alibaba, and
Walmart to invest in Indian based E-commerce platforms. It will surely have a
constructive impact on the current scenario of E-commerce.
 A regulation is present at the marketplace model in which it is stated that no E-
commerce firm can allow any influence on selling price of products. Thereby, should
offer an equal opportunity to every vendor. This regulation ensures participation of all
including small and middle business owners too.

Micro-environment analysis
Suppliers

In the e-commerce marketplace, there is a large number of suppliers connected to a large

number of customers. As per the new government regulations, an online marketplace can’t
have more than 25% of its revenues from a single seller. This restricts the power of a single
supplier in the entire marketplace. This also restricts the ability of the marketplace themselves,
limiting the number of products they sell of their own.

Amazon: Cloudtail India, Appario Retail Private Ltd, and Amazon Retail are three major
suppliers operating on their marketplace. It boasts of 120,000 sellers on its platform with a total
range of 90 million products.

Flipkart: WS Retail which is Flipkart’s counter-part to Amazon Retail is one of the major
suppliers for it. Due to the regulation, and high-cost structure, they’ve reduced their
dependency on WS Retail and instead boarded around 100,000 sellers on their platform.

Paytm Mall: Unlike Amazon and Flipkart which have boarded large sellers, Paytm is looking at
leveraging their already massive user base of Paytm payments service to board a large number
of hyperlocal shops – Kirana stores on their platform. This will help them serve both the urban
and rural customer segments.
 Customers

Amazon: They have more than 100 million registered users on their platform, which have made
purchases. Additionally, they have 10 million Prime subscribers, which shows customer loyalty
towards Amazon. These are customers who realize the differentiated value between Amazon
and Flipkart and have opted to pay Rs. 1,000 for the value-added services such as faster
delivery that Amazon has to offer including their video streaming service.

The primary customer characteristics of Amazon are:

- Want faster delivery

- Want superior customer experience
- Want a large variety of products
Flipkart: Flipkart has also focused on providing superior customer experience but has
differentiated themselves from Amazon. It boasts of about 100 million registered users, and
almost similar numbers of Phone Pe users, the payment platform acquired recently. They have
had exclusive contracts with consumer electronics manufacturers such as Xiaomi to conduct
flash sales.

The primary customer characteristics of Flipkart are:

- Want superior fashion brands

- Want exclusive consumer electronic items
- Want superior customer experience
Paytm Mall: Paytm mall is focusing on leveraging its extensive payments user to drive sales on
its e-commerce portal. Currently, it enjoys only a small 3% share of the total e-commerce
customers. They are shifting from the tradition supply chain model to the OMO model and
trying to serve more rural and tier-2 and tier-3 customers, currently not being tapped by
Amazon and Flipkart.

The primary customer characteristics of Paytm Mall are:

- Want to purchase from local sellers

- Want to have secure and ease of payment
Marketing Intermediaries

Building a robust supply chain is one of the significant pillars today for an e-commerce
marketplace. The supply chain for an Indian span a large area and requires considerable capital
expenditure. The supply chain has to be set at both the inbound side – logistics of taking
products from the 100,000 suppliers and storing them in the warehouse.
Once in the warehouse, e-commerce giants are using numerous methods to optimize the
storage, sorting, and delivery of the products to the end consumers. Flipkart has employed
thousands of AI-enhanced sorting bots in their warehouses to minimize time and costs of their
supply chain.

Amazon has 67 warehouses with a total storage capacity of 20 million cubic feet. Compared to
that, Flipkart has less than half the number of warehouses. While on the other hand Paytm
Mall, the third-largest player in the e-commerce space, is shutting down the warehouses and
adopting the hyperlocal model to improve on its distribution costs.

Competition/Rivalry

India’s total e-commerce market is valued with 20 Billion USD gross merchandise value which
has been taken by the two major players – Flipkart and Amazon. Paytm Mall has been falling
behind with continuous decrease in its market share now standing at about 3%. Paytm is now
looking at attacking both the market leader and challenger from flanks by increasing the sales
from local vendors and employing the OMO model instead of a larger warehousing and
distribution model.

Competitor analysis and Industry analysis

Bargaining power of buyers: HIGH

Bargaining power of suppliers: LOW
With many new e-commerce firms popping up,
Lots of suppliers in the market to choose from,
there is hardly any switching cost for customers
e-commerce brands set codes of conduct
as firms sell similar products. Brands invest a lot
related to quality and labor
in retaining customers.
Rivalry: HIGH
Due to no switching cost and lots
of entities. Firms constantly
introduce differentiators.

Threat of substitute products: HIGH Threat of new entrants: MODERATE

Customers can easily switch to the physical To set up an e-marketplace, very little
retail model, and lots of firms have similar investment is required. However, brand building
marketplace model and sell related products. with potential customers is difficult.

E-COMMERCE MARKET ANALYSIS (5 FORCES)

 Market penetration Product development
Existing New product categories are
Amazon sells existing products to
launched rapidly in Amazon, and
existing markets through user
they have also launched the
experience and personalization
Amazon Basics brand

Markets

Market development Diversification

Amazon has country-specific
New
services, and it launches products
like Prime in a scheduled manner
in different countries
With the advent of Prime Video,
Prime Music and Amazon Go
Stores in new markets, Amazon
uses this strategy to a certain
extent

Existing New
Products
Strategies adopted by Amazon (Ansoff matrix)

Product development
Market penetration Move into manufacturing for
Existing private labels to India from China,
Flipkart sells products online by
Malaysia - For eg. MarQ, Perfect
connecting important framework,
Homes, Billion and SmartBuy have
one are the sellers and suppliers
moved operations in India
- June 2019
Markets
Market development
Flipkart in a major change in Diversification
New strategy, decides to sell cheaper
priced products on 2GUD. This will Launch of free movies vides and
change the face of 2GUD from a web-series on its app - Aug 2019
refurbished -only platform to value
concious platform - Aug 2019

Existing New
Products

Strategies adopted by Flipkart (Ansoff matrix)

 Market penetration
Apart from online sellers, Paytm
Existing also focuses on offline sellers to
increase their reach into the market.
Paytm also focuses on low-price
products to target specific segments
of the market
Product development
Helping vendors set up QR codes
for the implementation of OMO
model (Read note 1), paytm has
also delisted 85,000 sellers for
quality assurance of new entrants
(Read note 2)

Markets

New Market development Diversification

New retail strategy (online merge Entering into the grocery and food
offline) - Read note 1 segment by investing in Bigbasket

Existing New
Products

Strategies adopted by Paytm Mall (Ansoff matrix)

 Note 1: The new retail strategy is implemented by partnering with offline retailers to
improve the store experience and acquiring customers who aren’t online yet. It is also
called Online Merge Offline (OMO). Customers will no longer think of these two as
separate purchasing channels but use them at the same time.
o How it works: Value-added services like insurance and extended warranties will
be sold in stores powered by Paytm mall, along with products listed on the app.
A customer can choose a product from the store’s inventory or pick a product
from the Paytm mall catalog (in the latter case, stores can sell a broader range of
goods in return for a commission).
o Why this works in India: The retail business in the depths of the country is
mostly informal with around 50 million small stores and more than 200 million
people dependent on them, so, employing this model can bring them on board
as well.
 Note 2: To boost the quality of products being offered by existing and new sellers,
Paytm Mall now requires that sellers furnish full brand authorization letters and submit
their registration number, GST number, shop location, and photos.
 CUSTOMER ANALYSIS
Study of consumer behavior

From the customer responses to the survey, we can arrive at some conclusions as below:

Preference for e-commerce portals:

From the survey, we can see that customers mostly prefer online shopping due to their ease of
purchase that also saves time. These are two characteristics of e-commerce that retailers can
never attain. Hence this is an advantage that will always remain with e-commerce.

Reasons for not choosing e-commerce

The quality of the product is one thing that customers don’t compromise on, hence the fact
that they are unable to physically see the product in the e-commerce portal causes a lack of
trust. However, this is something that can be mended in the long run by improving customer
service and ensuring the sellers sell high-quality products.

Factors affecting the decision to buy:

We can see that other customer reviews play a significant role in the decision-making process
of the customer. As an e-commerce portal ensures delivery of high-quality products
consistently, more and more positive reviews and hence a high level of confidence and trust
can be achieved.

Frequency of purchase:

Most of the customers use e-commerce portals monthly, implying that the goods they purchase
are not intended for regular use. These are the goods that are required on an urgent basis and
are usually purchased from a retailer directly. As e-commerce portals are in the process of
improving their delivery times (through the deployment of drones etc.) the frequency of
customer purchase can be enhanced in the long run.

Effect of advertisements:

As can be seen above, the impact of ads is profound, and hence improving on the marketing
campaign can improve both customer capture and win-back.

Customer monthly expenditure:

The monthly customer expenditure stays on an average level, implying an excellent opportunity
for e-commerce to increase its revenues. As seen before since advertisements have an acute
impact on customer decision, the monthly expenditure is something that can be improved
through marketing.
Types of products purchased:

Groceries are the least purchased products, while electronics, clothing, and books share a more
significant portion of the pie. This is happening because deliveries do take time and this
discourages customers from purchasing them. Since the development of drones and other
means of faster deliveries mechanisms, this statistic is something that would be more
normalized through an increase in purchase of groceries.

Effect of promotional offers:

The pie-charts are indicative of the fact that promotional offers like big billion days, flash sales,
etc. always help in retaining customer loyalty as well as improving customer capture.
Customer’s preference for e-commerce portals:

Most of the customer prefer Amazon, followed by Flipkart. This shows that a noteworthy
portion of the market share is controlled by these two significant players with Amazon being
the leader and Flipkart being the challenger.

MARKET SEGMENTATION
Segmentation of population into various groups or well-defined slices known as market
segments. These market segments consist of group of customers sharing similar set of needs
and wants. In its inception stages, all the major e-commerce players in India such as Flipkart,
Amazon have used the traditional geographic, demographic, psychographic and behavioral
segmentation types to segment their target customers. But in the advent of pathbreaking and
innovative technologies like Artificial Intelligence, Machine Learning and Data Analytics, the
concept of personalization emerged which involves optimizing of experiences and messages to
individuals themselves – not the group they belong to according to the segmentation
parameters. It is now possible to predict the behavior of the website visitors’ like of products,
categories, and brands based on the similarity in user behavior. The information such as views,
purchases, searches and the time of day and amount spend can give valuable insights about
relationship between different customer segments and the products that are sold online via
various sellers. These capabilities in the advent of technology have fuelled the Personalization
vs Segmentation debate further. The following table shows the traditional methods by which
the E-commerce market can be segmented:

Segmentation Segmentation
Target Customers
Type criteria
Density Urban and Rural
Geographic
Region States of Regional zones
Age Age brackets wise segments
Demographic
Gender Males and Females
 Bachelors, Newly married couples, Old couples with
Life-cycle change dependent children, Couples with independent
children, Labor force, Retired
Psychographic Social Class Lower class, working class, middle class, upper class
Resigned, Struggler, Mainstreamer, Aspirer,
Lifestyle Succeeder, Explorer, Reformer
Behavioral Personality Easy-going, determined and ambitious
Non-users, potential users, To users, regular users or
User Status
ex-users of a product
Widest range of products
Benefits sought The convenience of online purchasing
Competitive pricing
‘Hardcore loyal’
Degree of loyalty ‘Softcore loyal’
‘Switchers’

Segmentation which takes personalization into consideration is done is follows

1) Segmentation by referrer or traffic source: In this method, the inputs from the website
on which the user was previously and the source from he ended on its website is used
by the platform to suggest him products and services. The personalized AI system
employed for this intelligently places or recommends certain products in the user’s
visible area of the webpage.
2) Based on the visitor type: New visitor vs. returning visitor. This can be used in offering
discounts and referral codes.
3) Site Engagements: Customers can be segmented based on browsing time, number of
pages viewed, time of day or week.
4) Landing page: Segmentation based on if the visitor is a direct or indirect visitor to the
website. This suggests the initial intent of the customer.
5) Location: Parameters such as country, region or city, weather, and season.
6) Average order value: Based on the past buying behavior of the buyer, he can be
segmented into different categories.
7) Events and Interaction: The customer can be segmented based on the trend of the
overall activity which he does on the website. The customers are bucketed based on
these events and interactions and hence segmented separately.
 Amazon

Targeting

Amazon uses both micro-targeting and micro-targeting to sort and filter the audience which it
wants to reach. The macro-targeting part is essentially done keeping the entire globe in mind as
the target audience, which corresponds to Amazon’s mission of being planet earth’s most
customer-centric company. The micro-targeting is done through a complex AI, and ML-based
model for each customer, which tracks data from the websites visited, and the items search for
in different search engines, as well as past purchase behavior.

Macro-targeting: Amazon segments and targets its customer base based on:

 Geography: People, on the whole, living in different geographic locations, are targeted
differently and shown different products which are relevant to those locations and the
lifestyles associated with them. Covering more than 100 countries, it ensures that
customers get personalized experiences based on where they stay.
 Demography: Amazon sells different kinds of products to people of different ages,
different genders, different occupations, and so on. Much of this targeting data is
acquired through past purchase behavior and search engine activities.
 Psychographic: Segmenting the market based on lifestyle and social status, Amazon
tries to identify these parameters over the long term purchasing behavior of the
customer. For example, a customer who continually buys fitness products from Amazon
will be shown fitness products in his or her main dashboard, as well as in search engine
ads.
 Behavioral: With the subscription-based model of Amazon Prime, Amazon has
segmented the market and has targeted audience based on the parameters of loyalty,
user engagement frequency and the benefits they seek. Keeping multiple tertiary
services like Amazon Video and Amazon Music, as well as early lightning deals and free
delivery model within a day, it has been successful in retaining user loyalty to a large
extent.

Micro-targeting: Amazon targets individual customers based on their Google searches, and
shows them personalized products (either on the search engine itself, as ads, or on the Amazon
main page for easy reference on the part of the customer) to each individual. Each customer’s
search behavior and buying behavior can be considered to be unique, and this is where Amazon
succeeds by analyzing the vast amount of online behavior data extracted from each user and
converting those into successful leads which can influence a potential customer.
Positioning

To buyers: Amazon positions itself as a Glocal (Go Global Act Local) e-commerce website, which
can deliver anything and everything at remote locations. Its vision and mission state its journey
to offer its customers the best shopping experience on the internet, coupled with the lowest
possible prices. Being one of the longest players to have a consolidated presence in the online
marketplace sector, about all online buyers on the planet know about Amazon. Launching a
new product category every 13 days, Amazon has consolidated its position as the e-commerce
giant. The Glocal tag ensures that Amazon maintains its brand image of a worldwide presence
yet caring about everyone at the most local level with unparalleled individual targeting, thus
giving each customer a sense of importance and belongingness.

To sellers: Even though sellers might have their e-commerce stores and websites, they might
consider selling on Amazon to leverage the wide distribution channel and connect with a far
greater number of potential customers. Moreover, Amazon offers the umbrella of trust to both
new sellers and customers. With India’s e-marketplace policy, Amazon cannot hold more than
25% equity on local sellers, so that gives the sellers a certain degree of independence as well.

Flipkart

Targeting

Since people belonging to all demography purchase items online which is available to everyone
where the delivery is possible, Flipkart uses undifferentiated targeting strategy. By employing
this strategy, they aim to reach the maximum number of consumers in the target market.

Positioning

There is fierce competition among National & Multinational E-commerce companies, and
therefore their positioning is crucial. Flipkart has positioned itself as a trustworthy and
customer friendly E-commerce brand. The advantages provided by Flipkart to its sellers and
buyers are as follows:

1) Buyers: Flipkart delivers lots of features and offers to its buyers. This is done to position
itself as a user-friendly player in the e-commerce industry. Starting from their user-
friendly interface, various attractive payment and discount options, no-cost EMI
options, e-wallet and voucher features and the most recent launch of Flipkart Plus
reiterates their intention to become a user-friendly player in the e-commerce space.
 2) Sellers: Flipkart helps the sellers to attract the customers via smart cataloging and
providing clear description and images which catches buyers attention. It also ensures a
smooth pick-up and delivery of the seller’s products through its 200+ pick-up hubs and
10000+ delivery personnel. It provides the fastest payment options to the sellers who
are under the “fulfilled” category. They conduct training and webinars for the buyers
regarding the art of selling online.

Paytm Mall

Targeting

Paytm Mall’s targeting strategy follows a new retail approach which is also implemented by
Chinese giant Alibaba, the OMO (Online Merge Offline). With this, Paytm aims for maximum
penetration in all corners of both urban and rural India. While conventional e-commerce firms
focus only on big sellers registered on their platforms, Paytm Mall aims to bring small, Kirana
shops under their scope as well.

The advantage for shops: They must keep Paytm Mall’s inventory. Since customers can choose
products from an online catalog (which is also provided by Paytm Mall) at the store, there is no
need for shelf space. The shops shall get commissions from Paytm Mall with each purchase, as
well.

The advantage for Paytm Mall: They can tap a huge potential market which consists of
customers unaware of the benefits of online shopping, and those who are skeptical about
online shopping. This segment constitutes a considerable fraction of India’s overall shoppers,
and the OMO model can finally incorporate them under Paytm’s scope.

The advantage for customers: Customers have a more extensive array of products (supplied by
Paytm Mall) in the shops’ inventory to choose from. Moreover, they can also avail discounts
and special offers powered by Paytm. This also empowers them to go cashless since the
transactions can be done through Paytm wallets.

Target segments:

 Customers who have less knowledge of the e-commerce marketplace and hence prefer
to shop offline.
 Customers who are skeptical about shopping online due to one or more reasons as
mentioned in the survey.
  Customers who can’t be reached regularly by e-commerce companies, mostly in rural or
inaccessible areas of the country. Here, Paytm Mall has the advantage – they can deliver
goods to shops over there in a large stock at once. Over the year, they can keep
collecting revenue and delivering their products twice or thrice, to minimize logistics
costs.
 Customers who are price-conscious. Many of the products that Paytm Mall offers are
non-branded products, which cater to the segment that looks primarily at the price tag
and does a cost-benefit analysis before coming to a decision.

Positioning

Paytm Mall’s OMO Strategy makes unique propositions to both sellers and customers.

To sellers: Paytm Mall portrays itself as a means of offline distribution of sellers’ products. With
the recent boom in the e-commerce industry, offline brick-and-mortar stores face severe
threats in many product categories. This is where Paytm Mall comes in. By giving the sellers the
leverage and assurance that their products shall be displayed both in online portal and in offline
shelves, Paytm Mall reduces their risks to a large extent. Moreover, keeping certain limitations
on the quality and authenticity of the seller, Paytm Mall showcases a broad array of products
that range from international brands to not-so-well-known local brands as well, to incorporate
more customers.

To customers: Paytm Mall showcases themselves as a platform which offers the customers a
variety of discounts and prices – necessarily, different balances between branding, quality, and
price, within a product category. With the OMO model, it encourages more customers to go
cashless and use the Paytm wallet. The model also offers them a more extensive choice of
products which they, if skeptical, can easily manage to buy from the Kirana store beside their
home. The firm wants to eliminate problems which are the primary drivers behind customer
dissatisfaction, like late delivery, no real feels of product and inefficient customer service – by
giving customers a choice to use their platform to shop either online or offline.
 THE MARKETING MIX

PRODUCT

Customer Targets

Amazon targets a comprehensive range of customers. It has personalized suggestion lists that
use sophisticated algorithms for a variety of customers that uses its portal. However, through
our surveys, we have seen that most of the customers are monthly purchasers seeking for
items that are not involved in day to day use. Perishable goods are an excellent example of
what customers generally do not buy. Its primary focus is on electronics with attractive offers
present almost every day. Amazon also focuses on book readers, something that is practically
unexplored by its competitors. It mainly focuses on the book readers who are on a busy
schedule, typically in the age range of 25-40 years, where one spends much time at work and
traveling. For this purpose, they have released the Kindle; a handheld device which provides a
great reading experience and combines it with a feature in Amazon Prime which allows readers
to 'borrow' one book per month with no due date.

Competitor targets

Flipkart targets the same customer base as Amazon, with similar discounts being offered.
Flipkart Plus is a free service, in exchange for 50 coins. Each coin is earned when a customer
purchases Rs. 250, with a maximum of 10 coins earned for Rs. 2500. Through this, Flipkart
targets customers who make regular medium-sized purchases to woo them with an attractive
premium service.

Product/Service features

As was mentioned earlier, Amazon uses a policy of going global and act local, and as such its
primary services Amazon Prime and Amazon pay adds lots of value for money spent in order to
attract the Indian market.

● Amazon prime:

Amazon Prime is a yearly subscription program that offers its customers a variety of features
for a fixed annual price. It provides Video streaming services, free and fast delivery, access to its
online Kindle library, and Prime music. This puts Amazon in competition with various players,
including Flipkart, Netflix, and Gaana. While Flipkart also offers FlipKart Plus, it only offers free
delivery and early access to sales. The selling point of this is that it provides the service for free,
in exchange for 50 "coins." This translates roughly to purchases amounting to Rs. 12500 under
certain conditions. However, Flipkart has recently announced its plans to launch its video
streaming services to compete with Amazon in this service. While Amazon faces stiff
competition from Netflix and Gaana for its video and music features, it is a market dominator
concerning its kindle services offering free books (one can be borrowed per month) for prime
subscribers.

● Amazon Pay:

Amazon Pay is the company's digital wallet. It offers a plethora of cash backs and discount
offers to its customers. It faces stiff competition from numerous competitors, Google Pay,
Paytm, Phonepe of FlipKart, to name a few.

Value proposition

Amazon Prime provides for its customers' free delivery with a two-day delivery time promise.
This is the primary feature that was initially promoted; however, Amazon Prime now offers a
multitude of features including Prime video which allows customers to access their streaming
service – which faces competition from the likes of Netflix. Prime music which gives unlimited
access to music and is a competitor for Gaana. Kindle users can access the Kindle Owners
Lending Library, which allows one to borrow a book per month.

Product positioning

Amazon position itself for its "convenience" and "low prices." Most of the products in Amazon
are of a much lower price than the same found in a retail store. Reviews and ratings usually
track the quality of the products in Amazon and Amazon have taken steps to ensure that its
customers are aware of the complex algorithms that exist to identify and remove fake reviews
and ratings. Convenience is the prime position that Amazon tries to achieve. A significant
portion of the population of the country is still reeling under lack of high-speed connections,
and hence Amazon has launched a lighter version of its app and website in order to stay
connected with these customers. It also has features such as wish list, and suggestion list to
make the overall shopping experience of the customer more convenient.

PLACE

Amazon: Amazon owns various fulfillment stores, which are home to the products bought by
customers and awaiting shipment. The ordered product moves from one fulfillment center near
to the distributor to the center near to the customer. The whole logistics of Amazon is based on
this model. To improve cost management, Amazon is considering its distribution network for
delivering products to customers.

Flipkart: It follows the Hub and Spoke model. It owns 21 warehouses for sorting and packaging
products. These products move from one warehouse to the mother hubs, from there is
delivered to customers via van or bike. Mother hubs are in the middle of 200 km radius zone of
some metro cities, as the demand is high from these cities.

Paytm Mall: The order is directly picked from the retailer and transferred to the nearby
warehouse from there it is delivered to the customer. Moreover, it has also tied up with some
of the big brands such as Red Tape. Buyer can visit these brans physical store and can make
payment of their desired product through Paytm app. This move removed the need for delivery
agents and is highly cost-efficient too.

PRICE

Amazon: The business is seasonal, with high profit is generated during the festive season sale,
which generally happens in the fourth quarter of a year. It generated around 33%, 32%, 34% of
its total revenue during this quarter in 2015, 2016, and 2017 respectively. Moreover, it also
provides hourly sales by reducing the prices of some products, which helps to generate new
customers daily. This type of strategy can be called as cost leadership. Amazon does so to beat
its competitors for all products. Whereas, it charges premium prices for its products where it
possesses a competitive advantage and significant market share such as Kindle, Amazon Echo. It
also follows other strategies, too, like price skimming, penetration pricing, product line pricing,
psychological pricing, geographical pricing, and promotional pricing. Amazon earns a fixed
commission, per-unit activity fees, a fraction of sales, and other combination of commission
from sellers.

Flipkart: It follows the Marketplace model, which reduces the price of the product, by forcing
sellers to compete amongst themselves. It charges a nominal fee if delivery packages amount to
less than Rs 500. Moreover, it charges extra fees for same-day delivery option. For revenue
generation, it charges sellers for warehouse, referral, and shipping. These charges differ from
one seller to another.

Paytm Mall: Paytm received $575 million in funding from Alibaba. After this funding, Paytm has
started giving a massive discount on various products to disrupt the market. This move is giving
tough competition e-commerce giant Amazon. Due to this reason, Amazon is also being forced
to decrease its products' prices too. Paytm earns revenue not only from sellers but also through
its app. App-based revenue is generated whenever a transaction happens on its platform or
when money is deposited in its wallet option.

PROMOTION

Amazon: It uses aggressive marketing for promoting its brand during campaigns. Amazon
ensures to touch every aspect when it comes to the promotion. Amazon usually advertises via
newspaper ads, television commercials, and also through Search Engine Optimization (SEO) on
Social Media as a part of digital marketing. Amazon has also mastered their sales promotion
during the festive season by indulging in heavy advertising. Addition to this Social Activities like
“Amazon Smile” helps in promoting the organization.

Flipkart: Flipkart came into the advertising world with their campaign, "No kissing, no worries."
In this campaign, small children were portrayed in adult roles. The campaign proved fruitful for
the Flipkart and helped it in grabbing a good market share in the e-commerce domain. Flipkart
has always followed aggressive promotion strategies and advertises similarly to Amazon.
Flipkart’s flagship sale event “Big Billion Day” generates substantial revenue by engaging
customer to purchase their desired products by attracting them through heavy discounts. It
uses the app to send pop-ups about the price drop on products that were searched by the
customer previously.

Paytm Mall: Paytm also follows aggressive advertising like Amazon and Flipkart. It has
extensively worked on promoting and spreading their catchphrase “Paytm Karo” to every single
person. Paytm became a household name after Demonetization, and every mobile user was
using it for monetary transactions. Recently, Paytm has been roped in as Indian Cricket Team’s
official sponsor, which will surely help its visibility across all over India. Moreover, most of the
retailers, supermarkets, and grocery stores have their Paytm QR code at the payment seat,
which gives strong visibility to Paytm.