OVERVIEW ABOUT AMAZON (2012,D1)

Amazon.com, dubbed "The World's Largest Choice Website," sells everything from books and
CDs to home appliances, where you can buy 28 million different items. On such a scale,
Amazon's sales in 2000 amounted to $2.7 billion. Since its opening in June 1995, Amazon has
always been one of the most popular Web sites in the world. In fact, according to Media Metrix's
May survey under the title "America's 50 Largest Web and Multimedia Properties," Amazon
ranked 9th. Amazon's website has attracted more than 20 million unique visitors entered in 1
month.

Amazon.com's greatest strength probably lies in the fact that it is the first company to retail
books on the Internet with impressive services (including new services like "1-click" shopping)
and a large number of titles giant. After a period of operation, the company has expanded the
business to add many other products.

Amazon's development history: (2012,D1)

 Amazon was founded by Jeff Bezos on July 5, 1994, in Washington DC, The USA
 July 1995 Amazon started selling books online.
 May 15, 1997 Amazon equitized the company.
 March 1998 Amazon.com Kids was born.
 In April 1998, Amazon acquired the Internet Movie Database (IMDb), allowing users to
watch movies and TV shows without charging any fees. Currently, more than 6,000
movies and TV shows are available to watch for free on Amazon. In it, there are famous
TV shows like 24, Heroes or classic movies like Some Like It Hot.
 June 11, 1998 Amazon sells more CD products.
 In August 1998, Amazon bought PlanetAll with 800,000 of its shares – a website that
offers a phone book, calendar, and reminder service. In another deal, Amazon also
acquired Junglee.com, an XML data search site, with 1.6 million of its shares. The total
value of both amounted to 280 million USD at that time.
 March 29, 1999 Amazon opens an auction site to compete with eBay.
 September 29, 1999 Amazon opened zShop.com electronic market. This is the moment.
Amazon is shifting its operations from e-retail to acting as a market-maker.
  In 2003, Amazon acquired an online music CD retailer, CD Now.
 In 2004, Amazon bought Joyo.com - a Chinese commerce website and launched A9.com,
a company specializing in researching and building breakthrough technology solutions.
 In March 2005, Amazon acquired the rights to BookSurge, a print-on-demand company,
and especially Mobipocket.com, a company specializing in providing ebook software.
 In July 2005, Amazon acquired CreateSpace (formerly CustomFlix), a DVD distributor
based in California. Since the merger, CreateSpace has expanded its online reach to
include the distribution of books, on-demand CDs and video download services.
 In May 2007, Amazon purchased dpreview.com, a London-based digital photo criticism
website, and Brilliance Audio, the largest independent audiobook publisher in the US.
 In January 2008, Amazon announced it would acquire audiobook supplier Audible.com
for $300 million in cash.
 In July 2008, IMDb - now a subsidiary of Amazon bought Box Office Mojo, a website
that statistics the number of tickets sold at cinemas.
 In August 2008, Amazon announced that it had reached an agreement to buy AbeBooks,
a dealer in rare and exotic books, both new and used. Late August was a flurry of
announcements about the acquisitions of Shelfari, LibraryThing, Bookfinder.com,
Gojaba.com and portfolio management service website FillZ, all of which are owned in
whole or in part by AbeBooks.
 4/29/09 Amazon Web Services expands services to schools with programs for faculty,
graduate students, and students.
 4/30/09 Amazon Payments system announced the accession of Leading Shopping cart
and E-commerce solution providers.
 6/5/09 launches Kindle DX with large screen - an addition to Amazon's Kindle (wireless
text reader) product line.

Vision and mission of Amazon:

1. Amazon’s Vision:
“Our vision is to be earth's most customer centric company; to build a place where people can
come to find and discover anything they might want to buy online. Amazon is guided by four
principles: customer obsession over competitor focus, passion for invention, commitment to
operational excellence, and long-term thinking. Reviews Customer's, 1-Click Shopping,
Personalized Recommendations, Prime, Amazon Fulfillment, AWS, Kindle Direct Publishing,
Kindle, Fire Tablet, Fire TV, Amazon Echo and Alexa to name a few and the service pioneered
by Amazon.”
 Core Values:
Customer obsession: Amazon leaders start with the customer and work backwards. They work to
earn and keep their customers' trust
Ownership: leaders are owners, they always have long-term strategies and never sacrifice long-
term potential for short-term. It represents the whole company and is always responsible for the
work
Invent and simplify: leaders are always looking for creativity, new inventions and always looking
for ways to simplify. Always learning from the outside and looking for new ideas everywhere.
When implementing a new strategy they are not afraid of being misunderstood in the long run.
Are right, a lot: leaders always have good judgment, see problems from many perspectives
Hire and develop the best: how to recruit and motivate employees is always improved. Finding
talent and putting the right people in the right position is the strength of Amazon leaders, training
a new generation of leaders
Think big: leaders create and communicate boldly, intensely inspiring to create a new outcome.
They think differently and look at each aspect to find ways to serve customers. 
 Core Purpose: Provide more products and services to bring customers the most
choices and convenience.
 Vision of the future: The company is cherishing the ambition to build the largest
and unique e-commerce platform in the world market "where Amazon is present".
2. Amazon’s Mission:
“Amazon's mission statement is “We strive to offer our customers the lowest possible prices, the
best available selection, and the utmost convenience.” This corporate mission promises attractive
e-commerce services to satisfy target customers' needs.”
 The company is constantly looking for new ways to meet the growing needs of different
customers:
 Individuals who shop on the company's global website
 The company's platform merchants, the developers, who use the company's infrastructure
to create businesses for them.
  The authors of the books, music, movies, games and other content the company sells
through the site.
 Give customers more of what they want: low prices, wide selection, and convenience.

The meaning of the logo:

Bezos named his company after the world's largest river - Amazon. Since 2000, Amazon's
advertising logo is a stream of letters from A to Z arranged in the shape of an arrow, with the
meaning of commitment to meet all customer needs and expressing the goal of serving from A to
Z products.

How Amazon works

Revenue from 1999 to 2008($Mil)

1999 2000 2001 2002
Revenue 1,639.80 2,762.00 3,122.90 3,932.90
COGS 1,349.20 2,106.20 2,323.90 2,940.30
Gross Profit 290.7 655.8 798.6 992.6
Net Income -720 -1,411.30 -567.3 -149.1

2003 2004 2005 2006 2007 2008

Revenue 5,263.7 6,921.10 10,711.0 14.835
0 8,490.00 0 19,166.00
COGS 4,006.5 5,319.10 8,255.00 11,482.00
0 6,451.00 14,896.00
Gross Profit 1,257.2 1,602.00 2,456.00 3,353.00
0 2,039.00 4,270.00
Net Income 35.3 588.5 359 190 476 645

PERIOD ENDING 31-Dec-08 31-Dec-07 31-Dec-06

Assets      
Current Assets      
Cash And Cash Equivalents 2,769,000   2,539,000   1,022,000  
Short Term Investments 958,000   573,000   997,000  
 Net Receivables 1,031,000   852,000   460,000  
Inventory 1,399,000   1,200,000   877,000  
Other Current Assets -  -  17,000  
Total Current Assets 6,157,000   5,164,000   3,373,000  
Long Term Investments -  -  19,000  
Property Plant and Equipment 854,000   543,000   457,000  
Goodwill 438,000   222,000   195,000  
Intangible Assets 160,000   -  21,000  
Accumulated Amortization -  -  - 
Other Assets 560,000   296,000   92,000  
Deferred Long Term Asset Charges 145,000   260,000   206,000  
Total Assets 8,314,000   6,485,000   4,363,000  
Liabilities      
Current Liabilities      
Accounts Payable 4,687,000   3,714,000   2,532,000  
Short/Current Long Term Debt 59,000   -  - 
Other Current Liabilities -  -  - 
Total Current Liabilities 4,746,000   3,714,000   2,532,000  
Long Term Debt 533,000   1,282,000   1,267,000  
Other Liabilities 363,000   292,000   133,000  
Deferred Long Term Liability Charges -   -  - 
Minority Interest -  -  - 
Negative Goodwill -  -  - 
Total Liabilities 5,642,000   5,288,000   3,932,000  

From Amazon's income statement from 1999 to 2008, we can see that the company's sales have
increased continuously over the years. Especially in the period from 2005-2008, the company's
sales increased much stronger than the period from 1999-2004. And also in the first quarter of
2009, Amazon achieved impressive sales of $4.89 billion, up 18%, beating Wall Street analysts'
expectations of $4.76 billion.
However, we can see that Amazon's net profit from 1999-2002 was negative. The reason for this
situation is because the dot.com crisis occurred during this period and the company itself is also
implementing a product expansion policy.
The crisis can be briefly described as follows: The dot-com bubble collapse in the US in 2000
was a crisis caused by a fever in the stock market with companies doing business on the Internet
often collectively referred to as the dot-com Companies. Shares of these companies are usually
invested by venture capital companies. The rapid success of a number of Internet companies
such as yahoo, Google, Amazon... has created a wave of investment in dot-com companies,
causing the shares of these companies to increase at a rapid pace capital and capital investors
become reckless in choosing where to invest capital. On March 10, 2000, the dot-com bubble
peaked, sending the NASDAQ composite index up to 5048 points, more than twice as much as a
year earlier. On the second day of the following week, there was a sell-off of stocks worth
billions of dollars from big companies like Cisco, IBM, Dell, etc., which caused the whole
market to wobble and caused a chain of sell-offs in houses investment. By March 15, 2000, the
NASDAQ index was only 4580 points. This downward trend continued and by 2001 the bubble
had blown out and many dot-com companies had gone bankrupt. Crisis dot-com led to an
economic recession in the US in a short time (first quarter of 2000 when the dot-com hit began,
the first and third quarters of 2001).
And Amazon has been one of the companies that has weathered this crisis and continues to grow
and is rated as one of the top online retailers today. Amazon's net profit has continuously
increased until the first quarter of 2009 has increased by 24%, reaching $ 177 million compared
to $ 143 million in the same period a year ago.
However, it is worth noting that Amazon's retained profit is still only a negative number. Maybe
the reason is because Amazon is still continuing its product diversification policy as well as
implementing a low price policy. There have been comments from experts about these reckless
decisions by Amazon. But according to Jeff Bezos, he has the following explanation for his
company's policies. He attributed the company's decision to put money in to lower prices and
free shipping, instead of constant TV ads to attract customers, and he also firmly asserted that his
company was willing to sow Seeds wait 7 years to pick their fruit, slowly but surely.
Amazon's biggest challenge right now is convincing investors to trust its decisions, believing that
it has not only succeeded in stopping the threat posed by other retailers, but that this has
absolutely no effect little impact on the company's profits and continue to build customer trust to
boost sales.

AMAZON’S ORGANIZATION CHART

Amazon has a functional organizational structure. This structure focuses on the business
functions as the basis for defining the interrelationships between the elements of the
organization. The following characteristics are most important in Amazon's organizational
structure:

1. Global groups based on function

2. Global hierarchy

3. Geographic division
Function-based groups are the strongest characteristics of Amazon's organizational structure.
Each major business function has a dedicated team or team, along with a senior manager. The
strategic goal of having this structural feature is to enable Amazon to facilitate successful e-
commerce management across the organization. Hierarchy is a traditional organizational
structure characteristic. In Amazon's organizational structure, such characteristic is expressed in
the global system of vertical lines of command and authority that influence the online retailer.
Directives from senior managers are applied throughout the organization, affecting all relevant
corporate offices worldwide. The strategic goal of this feature of the corporate structure is to
facilitate management control over Amazon's entire organization. Amazon's organizational
structure also involves geographical divisions. In this structural feature, groups are based on
geographies and related business goals. The strategic goal of having this feature of the
organizational structure is to enable the company to address issues or concerns relevant to each
geographic region, considering the differences between markets within the region.

THE INTERNATIONAL BUSINESS STRATEGY OF

AMAZON
Expanding and maintaining a global presence is also a critical consideration in the business
strategy of Amazon. Amazon has developed and implemented numerous strategies that revolve
around localization and internationalization. It also has localized its Amazon.com storefront
through the purchase and registration of top-level domain names, thus allowing it to maintain
country-specific and language-specific versions of the websites in different countries such as
China, Japan, and Singapore, as well as the United Kingdom, Spain, the Netherlands, Mexico,
and Brazil, among others.

The main strategy of Amazon is Internationalization

Internationalization has always been a key goal of Amazon. Initially, the company sold only
books online to customers in North America (Stone, 2013, 9). However, the company has
expanded business by selling a wide consortium of consumer products and setting distribution
centers in Europe and Asian regions (Stone, 2013, 89). Customers from around the globe with
access to the Internet can also readily purchase products from the website of the company.
Acquisition is one of the techniques that the company leverages to achieve the
internationalization goal (Schermerhorn, 2010, 67). This allows the company to achieve its
internationalization goal while reducing competition through acquiring competitors.

Generic competitive strategies are one of the primary techniques that Amazon.com, Inc. has
leveraged to achieve its internationalization goal. The company has leveraged cost leadership to
catapult itself to the position of a dominant player in online retail business globally. To achieve
cost leadership, Amazon.com, Inc. has automated most of the processes in its value chain from
ordering and scheduling to dispatch. To foster sustainable cost leadership, the company heavily
invests in research and develop to integrate state-of-the-art technologies within their systems.
This maximizes operational efficiency and significantly reduces the cost of production allowing
the company to offer customers products at affordable prices. The low prices attracts customers
in masses, which in turn, compel suppliers to sell their products on the platform to benefit from
the large pool of customers. Therefore, cost leadership leads the company to fulfill its vision
statement of being “An everything store” and its mission statement of offering goods to
customers at low prices. Despite cost leadership creating a barrier to entry in an industry, cost
leadership fosters unhealthy frugality in a company that may comprise the dominance of the
company in the long run. Amazon has successfully implemented its strategy for international
business which can be replicated by other companies intending to achieve global business.

1. Amazon’s strategies in Europe market

Amazon has entered many foreign market by international strategy in most of Europe
market. Specificially, only a year after Amazon founded, Jeffrey P. Bezos planned to enter the
European market potential. The first choice is Britain and Germany. Amazon acquired two
British large companies, Bookpages and Internet Movie Database on April 27, 1998. At the same
time, Amazon also acquired a giant e-book company in Germany named Telebook, marked
Amazon's first progress when entering this market. In Speech on April 27, 1998, CEO Amazon
said: "These Acquisitions will enable Amazon.com to quickly offer European consumers the
same combination of selection, service, and value that we now provide our customers," Said
Jeffrey P. Bezos. This is one of the important keys showing Amazon Follow International
Strategy when entering these two markets. Specifically, at that time, Amazon was operating with
the world's leading online book and online service list. Amazon approached the British market
with its inherent products without too much adjustment of the product catalog. This shows that
Amazon is completely confident about his new market, without high pressure on the adaptation
to the new market. The acquisition of giant companies in the UK market also showed that
Amazon did not face high pressure on cost reduction efforts. This is similar to the German
market.

Amazon continues to implement this penetration strategy with the French market. Specifically,
Amazon penetrates the French market on April 21, 2005 through acquisition of a book trading
company and online services named Mobipocket. The acquisition of a particular company and
does not have much change in adapting to the new market also shows that Amazon's intrusion
strategy into France is International Strategy. Like other markets in the region, in Spain, the
company be able to fulfill better the need of its customers, through Amazon Family, Amazon
Prime, and Amazon Fresh. These are the core competitive advantages of the company over
competitors. In addition, distribution channel plans are implemented, through that Amazon
receives quality products for its marketplace at the lowest prices possible and stock control in its
warehouses to get benefits from its economies of scale. Besides that, Amazon has Amazon Flex,
a logistics service with part-time autonomous dispatchers to perform local services. Amazon has
installed automatic lockers in more than 120 points, many of which will be available 24 hours.

2. Amazon’s strategies in Latin America market

Canada, Mexico and Brasil are also three of biggest markets of Amazon in Latin American
market, which follows the internationalization strategy. The first is Canada. Amazon initially
entered Canada in 2002 as Indigo's main competitor in the book category. The unit of the world's
largest online retailer has gradually combined many of the categories it does business in the US,
putting it in competition with a variety of brick-and-mortar retailers including Toys R Us,
Shoppers Drug Mart, Best Buy, and Home Depot Canada, as well as their web divisions. For
example, 2013, Amazon.com.ca added toys, one of its stronger categories in the U.S, and more
and more non-book categories to its stores online such as beauty and home, pet care, lawn and
garden, luggage,... and digital book purchases grew with its customers. Amazon Prime also
launched in Canada and has expanded over the years to include additional benefits and services.
With the expansion of many product categories or services available in the US, it also shows that
Amazon follows the internationalization strategy in Canada.
Much later then, Amazon entered Mexico by offering Kindle e-books on its online website to
Mexican customers in 2013. In 2015, Amazon.com.mx launched a retail and marketplace
offering in Mexico with the widest product categories available in the US compared to any other
international Amazon website including consumer electronics, kitchen and home, sports
equipment, tools, baby, health and personal care, jewelry, music, books, movies, software and
more. Amazon Mexico also offered sellers on the Fulfillment by Amazon marketplace, in which
Amazon stores the sellers' goods and delivers them on their behalf. Amazon also launched its
other platforms such as Amazon Prime, Amazon Advertising, Amazon Handmade,... in Mexico.
Overall, the launch of most product categories and some of the services available in the parent
market shows that Amazon follows internationalization strategy in Mexico despite some changes
in payment methods, but it is not big enough.

The last is the same way with Canada or Mexico when Amazon entered Brazil in 2012, by
selling mainly e-readers, books, and then streaming movies in the rapidly growing Brazilian
market. The company has launched a full-scale retail website in the country. It has slowly
expanded over the years, adding new categories beyond books to the direct selling platform.
Amazon has launched its Prime subscription service in Brazil with free unlimited nationwide
shipping with up to 48-hour delivery time in more than 90 Brazilian cities. Subscribers can
access movies, music, books, and digital magazines on the Prime platform. In addition, Amazon
launched Amazon Advertising in the country as part of an all-out effort to increase the brand's
share of the Brazilian retail market. Overall, like the Mexican market, Amazon follows the
internationalization strategy in the Brazilian market.

3. Amazon’s strategies in some Asian markets

Following the internationalization strategy is considered being not wise when Amazon
penetrated in the Asian market. The biggest failure is in Chinese market. Amazon entered the
Chinese market in 2004 when it acquired online book retailer Jojo. Amazon said Chinese
shoppers will still be able to shop for items sold by international merchants in the US, UK,
Germany, and Japan on its global store. The company continues to sell its Kindle e-readers and
digital content to customers in China. Chinese merchants and retailers will still be able to sell
products through Amazon to customers outside China. The company will also keep offering
cloud computing through Amazon Web Services, for which China is one of the biggest markets.
Amazon China still maintains the same no-marketing strategy as in the US market. However, the
Chinese market is constantly expanding, so it requires investment in advertising to race, so
obviously with that strategy, it is understandable that Amazon China loses big. It refused to
match the offerings of local competitors: free shipping and overnight delivery. Amazon couldn't
make the free delivery math work without requiring a minimum order size (a competitive
disadvantage) because of its costly and substantial in-market structure and locked-in labor costs.
In addition, Amazon didn't localize: its website and warehouses were organized in the same
fashion as those elsewhere; so was the delivery system. The main reason why China native
Alibaba could bend Amazon’s arm was that Amazon refused to adapt to the Chinese market,
while Alibaba was a product of it. Amazon also failed to adopt local payment systems. Credit
and debit cards tend to have exorbitantly high rates. Not so much bank transfers or other prepaid
methods. For instance, AliPay. As a result, Amazon had closed the company in China.

In another rare case, Amazon initially used internationalization strategy to penetrate the
Japnanese market. However, standing in front of the threatening risks, Amazon changed its
strategy into localization. That is the case when Amazon penetrates the Japanese market.
Amazon entered Japan in 2000 by leveraging market share gained from Japanese customers who
purchased international books from Amazon.com at high import charges. Japan is the world's
second-largest book market, and given Amazon's roots in books, it's easy to see how they
thought they could approach Japan using the same strategies they used to dominate the US and
other overseas markets (by internationalization strategy). The corporation continued its tradition
of hiring non-Japanese executives, but this posed a difficulty. Amazon's efforts were hampered
by a lack of local leadership, as local executives would have better grasped the subtleties of the
local market based on their native experience, while Amazon's international executives could
only depend on theory and their US ecommerce experience. This shows that Amazon faces
pressure for local responsiveness. Amazon had problems conveying its objective to local
customers when it launched its Unicode-enabled platform for its Japanese language site in 2000,
but failed to consider how to onboard local merchants in a way that met their expectations—
something their biggest competitor and Japanese market leader Rakuten has excelled at from the
start, and which has been a key part of their dominance over Amazon. Later then, Amazon had
changed strategy and became more successful in this market.
We also continue to consider this situation with the first market in Southeast Asia of Amazon.
After a long wait, Amazon finally landed in Singapore, with the launch of its two-hour delivery
service Prime Now. For Amazon, entering Singapore is an easy first step, said Teo in his column.
TechCrunch identifies that the strategy launching in Singapore is the same with most of the
European market, where “the level of customer spend and consumer culture is more closely
aligned with Western markets.” Amazon has been quietly acquiring assets, including refrigerated
trucks, and making new hires. Those refrigerated trucks suggest Amazon would initially offer
AmazonFresh, which is a grocery delivery service currently available in most major U.S. cities,
as well as some international cities. Therefore, we can concluse that Amazon follows the
internationalization strategy in this market. However, in many recent reports, Amazon's market
share and competitiveness in Singapore are not really prominent.

4. Amazon’s strategies in some Australia market

The philosophy of joining Australia of Amazon is the same in Canadian and European markets.
Amazon’s success in this new market is closely linked to its effectiveness in bringing new
members into its Prime program. Amazon Prime, a subscription service that has more than 100
million members worldwide, launched in Australia in June 2018. And in 2019, sales from
Australia on Amazon Prime Day were only about $2 million, it was a year-over-year increase of
15. That shows a strong awareness of the Amazon brand in the country, and since Prime Day’s
core purpose is to increase awareness and gain more members, it’s hard to argue that the
‘holiday’ was anything but a success. Amazon used Amazon’s infrastructure to sell its products
in Australia and worldwide, which continues to build awareness in the country of the brand. As a
result, Australia is no different than Canada or Europe was to Amazon as it began expansion into
those markets – a slow, steady upward curve over the course of five to seven years which ends in
Amazon being one of the largest.

New trend of Amazon to penetrate international market by localization strategy

In spite of not being the main strategy, localization strategies are gradually becoming
popular in Amazon's international market penetration plan. This comes from Amazon's
lessons in other markets and the cultural characteristics of these new markets. This is typically
shown in the Indian market. Amazon continued this penetration strategy with the Indian market
in 2013. For global tech and media titans, India has emerged as a land of digital opportunities.
Amazon, which is the market leader in India's e-commerce, video streaming, and smart speaker
businesses, competes with Flipkart in e-commerce and Netflix and domestic players like Hotstar,
Zee5, and SonyLIV in video streaming. As a result, in this highly competitive climate, the
company plans to embrace localization to stay relevant and retain customers. Offering regional
language support is part of Amazon's localization strategy. The company's e-commerce app and
website are already available in five regional languages. It now intends to incorporate Hindi
voice search into its shopping app. This will allow the company to reach a broader audience,
including residents of tier two cities who prefer to communicate in regional languages. Amazon
is also localizing its virtual assistant Alexa. In 2019, Alexa began speaking Hindi. Amazon
recently partnered with Bollywood superstar Amitabh Bachchan to add his voice to Echo
devices, speaking both English and Hindi. (2021,D3)

Another case is in the UAE market. May 1st, 2019, Dubai, United Arab Emirates – Amazon and
Souq jointly announced the launch of Amazon.ae, a new local shopping experience for UAE
customers. Customers can search for their favorite products and pay in AED using local and
international credit cards or cash on delivery for a completely localized experience (COD). For
the first time, Amazon has added Arabic language support to both the mobile app and the
website to better serve customers who prefer to shop in Arabic. This is Amazon's localization
method when entering this potential market. (D2)

In the European market, a typical case for Amazon's localization strategy is in the Turkish
market. Amazon’s goal is to be the leader in e-commerce in Turkey. Which has a reasonable
price advantage, and offers the best price compared to its competitors. And it approaches the
Turkish market by acquiring a stake in the Istanbul-based online flower and gift store Cicek
Sepeti. In Turkey, Amazon has a new service, Prime Wardrobe, in which a designer selects
clothes according to your taste and body to satisfy customer needs better. And that is also the
way Amazon localized its business model in this market.

AMAZON AND KOREAN PENETRATION STRATEGY

After analyzing Amazon's penetration strategies in markets around the world, we chose the
localization strategy when Amazon entered the Korean market. There are many reasons for
choosing this strategy. In general, penetrating the Korean market with a localization strategy
stems from the lessons of Amazon in the Asian market. Typically, Amazon's failure in the
Chinese market because it applied an internationalization strategy instead of learning about the
needs of the domestic customer market. Another failure of the internationalization strategy was
in the Japanese market. Initially, Amazon Japan adopted this strategy. After that, Amazon had to
transform its business model according to the localization strategy. And this helps Amazon
succeed in Japan.

It can be seen that the trend of localization strategy is gradually gaining popularity. Amazon has
had more considerations when it comes to Asian e-commerce markets. Besides, Amazon has
excellent financial conditions that allow it to weather the fierce pressures of cost-cutting.
Therefore, the top priority in Asian markets is understanding the needs and markets. Therefore,
we choose Amazon's penetration strategy into the Korean e-commerce market as localization.
More specific reasons will be in the next analysis.

OVERVIEW OF SOUTH KOREAN MARKET

When penetrating a new market, there will be different advantages and disadvantages.
Depending on the cultural, political, economic, and geographic factors ... of that market. This is
similar to when Amazon enters the Korean market. The following will be some analysis showing
advantages and difficulties when entering this market of Amazon.

Culture
Korea has an oriental culture, family life is respected and protected. Korean culture is very rich
and diverse such as Art, architecture, literature, food, music, music, and sports. Koreans live very
optimistically, enjoy life. Korean society today is more modern and comfortable than before.

"Hurry hurry" Culture in Working 

One of the Korean working cultures is "Hurry, hurry". This is not too strange for people working
in companies, Korean or a Korean boss. The phrase "Hurry up, hurry up" is like a slogan in
Korean companies and you will hear it every day. That has the meaning of promoting the
working process, creating a strong motivation for the work and development of the employees in
the company. Therefore, the working performance of Koreans is highly appreciated, contributing
to the continuous development of this country.
Fast-paced culture is a culture that shows the quick, urgent and hasty personality of Koreans at
work and in daily life. It is easy to see the fast-paced culture in Korean people's life, such as fast
banking services, express delivery services, express trains, the fast-paced style of Koreans when
moving on the streets…
The lifestyle of the people matched this trend and continues to this day. This fast-paced culture
has been maintained for a long time, deeply ingrained in Koreans' subconscious and impacting
each individual's daily life.
⇒ From this "hurry up" culture of Korean people, Amazon has the opportunity to bring
Amazon Prime into Korea with the advantage of shipping foreign orders in 2 days and
Amazon Prime Now, providing delivery service for 2 hours free with certain items.

Network culture
In Korea, network culture has become popular. 78.5% of the country's population uses
smartphones and 82.7% uses the Internet. In the 18-24 age group, the number of people using
smartphones is 97.7%. Koreans use smartphones not only to connect with friends but also to pay
for other services such as paying for shopping at stores, watching TV, etc. The Korean
government strives to promote the internet as a tool for education and advancement — an image
that captures the imagination of Koreans and promotes widespread adoption early on.
⇒ With a popular network culture, e-commerce platforms will not become strange to Koreans,
which is also an opportunity for AMAZON to smoothly penetrate this market.

Card spending culture

South Koreans became the world's top credit card users two years ago, according to data from
the Bank of Korea. An American makes 77.9 credit card transactions in a year, a Canadian 98.6,
and a Korean 129.7. In Korea, it is illegal for someone to refuse to pay by credit card, no matter
how small the amount. The payment card usage rate in Korea is higher than any other country in
the world. Credit card spending accounts for 40% of South Korea's GDP, much higher than the
US's 18%. The main reason is that Korean society values success, flashy looks, and materialistic
lifestyles. As a result, people are reeling from fashion trends, consumer products, or things that
enhance their image with others.
The government's actions such as reducing taxes for spending with credit cards have prompted a
series of Korean consumers to open cards. Between 1999 and 2002, the average Korean adult
owned four credit cards, an increase of 100%. 
Currently, there are two main payment methods used when buying goods on Amazon, which are
using international payment cards or using gift cards. 
⇒ The Korean culture of card spending is an advantage so that when AMAZON penetrates,
payment methods will no longer be an obstacle.

Korean Language
In Korea, the main language is Korean. Koreans attach great importance to family, so they
consider the whole Republic of Korea as one family and they speak the same language. It is the
only country in the world that speaks and writes one language. Therefore, if you are a foreigner
traveling to Korea, just learn Korean, you can communicate with Koreans wherever you go.
Koreans have built their very own culture from the language they use. 
⇒ So, if AMAZON enters Korea, then designing a shopping website with the Korean language
is also an important thing to pay attention to. 
Fan culture
In Korea, fan culture is formed on a large scale around the topics of K-pop idols and actors in K-
dramas. The fandom in Korea is now seen as a mainstream culture rather than a subculture. Idols
in the understanding of the majority of young people today are celebrities in the entertainment
industry. Movie, music, sports stars, with outstanding achievements, recognized by their fans - as
ambassadors promoting their culture and country.
Thanks to the rapid spread of the media, celebrities and idols are known not only among
fans/groups in Korea but also in countries in the region and in the world. This can be seen
through the growth of the Korean (Hallyu) cultural wave. In particular, the recent prominence of
K-Pop idols has shown that the soft power of Korean popular culture has a wide influence on not
only fans but also the international community.
⇒ For idols with a certain level of popularity, they will have a strong fan base supporting
them in all activities, even commercial activities. This will be a potential aspect for Amazon
when implementing a promotional strategy in Korea. Amazon can gain a large number of
customers and significant revenue from signing advertising contracts with Korean idols.

Economy
South Korea has a capitalist economy (built on the foundation of a market economy), mixed,
free, with little government intervention, and the most developed in ASIAN. Currently, Korea
has been classified in the group of countries with developed economies in the world. Along with
the economies of the United States, the United Kingdom, Japan, Hong Kong, Singapore, and
Taiwan, the economy of Korea is considered by economists as a prime example of the interests
of capitalism operating on its own.
It is a highly developed mixed economy characterized by conglomerates owned by wealthy
families known as chaebols. South Korea is the 4th largest economy in Asia and the 10th largest
in the world by nominal GDP. This is a famous country known for its miraculous economic
growth from one of the poorest countries in the world to a high-income developed country in just
a few generations. This remarkable development is considered a miracle of the Han River as it
has brought Korea to par with countries in the OECD and G-20.
The Organization for Economic Cooperation and Development (OECD) on March 15 said that
Korea's nominal gross domestic product (GDP) in 2020 is estimated at 1.624 billion USD,
ranking 10th in the world, surpassing Russia's 11th place. ($1,403 billion) and Brazil ranked 12th
($1,394 billion), Australia 13th ($1,333 billion). 

South Korea’s economic freedom score is 74.0, making its economy the 24th freest in the 2021
Index. Its overall score is unchanged, with an improvement in the government spending score
offset by declines in investment freedom and financial freedom. South Korea is ranked 7th
among 40 countries in the Asia–Pacific region, and its overall score is above the regional and
world averages.

⇒ From the above analysis, it can be seen that Korea's free, mixed, and the developed
economy will be a great opportunity for Amazon to expand its market and acquire a huge
number of potential customers.

Politics
Democracy and multi-party are the paths that Korea has chosen since the founding of the
republic on August 15, 1948. South Korea follows a republican form of government in which the
President is the Chief of the State and the Prime Minister is the Head of Government. The
powers of the government are divided into three parts so that there is proper distribution of
responsibilities and duties.  These duties are thus shared between the Executive, Legislative, and
the Judiciary.  Like other democracies, the citizens of nature vote for their leaders, and a proper
hierarchical structure is followed both on state and central levels.
In addition, the Chaebol System has a great influence on Korean politics. Holding nearly 50% of
the Korean economy, the Chaebols naturally give themselves an invisible power to control not
only the economy but also influence politics. Many Chaebols use their financial power to support
politicians. Before taking office, politicians have built relationships with these corporations to
receive financial and political support during their campaigns. For the same reason, the Chaebol
system has become more and more powerful.
The relationship between the South Korean government and the chaebols traditionally has been a
cooperative one. While that cooperation is credited with having fueled the country’s rapid
economic growth.  Among the criticisms of the “chaebol culture” are that it has stifled creativity,
concentrated political power in the hands of leading families rather than maximizing profits,
provided an unfair playing field for small and medium-sized enterprises, and excluded women
and divergent voices from management. Chaebol involvement in politics has fostered corruption,
including the bribing of prominent South Korean politicians such as former presidents Chun
Doo-Hwan and Roh Tae-Woo during their terms in office. 
⇒ Therefore, with the growth of domestic chaebol corporations, Amazon may face obstacles
when building its brand in this country. However, at present, the relationship between the US
and South Korea is an alliance relationship, supporting each other from economy to politics.
Being a business from the United States, Amazon may still be given the opportunity by the
Korean government to develop in this country based on the friendship between the two
countries. Moreover, it is not impossible because American e-commerce enterprises have also
successfully penetrated the Korean market and gained an important foothold as eBay entered
by acquiring GMarket and Auction of Korea.

Legal
The legal system in South Korea "combines elements of continental European civil law systems,
Anglo-American law, and Chinese classical thought." The Korean legal system is a civil law
system and currently follows the European civil law system. It has changed dramatically since
1945 when Korea was under Japanese rule and followed the Japanese legal system. Legislation
introduced during the U.S. military occupation of 1945-1948 was influenced by the American
legal system. Basic laws following much of the American legal system were enforced because of
Korea's strong political and economic relations with the United States.
Today's South Korea has reached an advanced stage of democracy with freely elected local
councils and separation of powers between three branches of the national government: the
legislative, the executive, and the judiciary branch. Korea has a unitary, democratic form of
government, republican in nature with a presidential system. The President is directly elected by
the people to a single five-year term and has a wide range of powers over the central
government. 
As early as 1999, the Korean Government developed the "Basic Act on E-commerce". The
policy accompanying this act is "Comprehensive policy for e-commerce" with the goal of the
government playing an active role in the globalization of e-business, promoting e-commerce as a
means to carry out structural innovation of its industry and enhancing the competitiveness of
Korean companies.
After the comprehensive policy for e-commerce development, a number of other important
policies were issued such as: Prepare legal frameworks, e.g. prepare and streamline regulatory
frameworks for e-commerce, e-finance, electronic public, consumer protection and international
dispute resolution,...
Currently, the legal issues of electronic transactions in Korea are directly regulated in
Framework Act on Electronic Documents and Transactions in 2017 (Law of Korea) and
Enforcement Decree of the Framework Act on Electronic Documents and Transactions in 2018
(Decree of Korea).
⇒ Based on the clear laws and policies on e-commerce of Korean law, Amazon will be even
more secure when entering this market. This helps Amazon do not have to be shy or vague
when it comes to disputes.

Geographic 
South Korea has a total area of 100,363 km2 with stable geographical characteristics. Unlike
Japan or the northern provinces of China, the geology of the South Korean peninsula is relatively
stable. There are no active volcanoes (except for mountains of blanks at the border between
North Korea and China, the most recent operation in 1903) and does not have strong
earthquakes. This shows that the geographical position does not have a big impact on the
economic development of this country.
Korea has 7 key economic regions including Seoul located in the northwest, other big cities that
are Incheon in western Seoul, Daejeon in the central, Gwangju in the southwest, Daegu and
Busan in the southeast. In particular, the capital of Korea - Seoul - is the largest city as well as an
important global city, which is the 5th largest urban center in the world - is also one of the largest
urban areas with sized The biggest international today with the 5th Asia rank, ranking 17th in the
world on GDP (2020), with a population of up to 10 million people. This is also the most
developed economic center of this country. When Amazon entered the Korean market, the
selection of headquarters needs to consider these centers.
Korea has 3 seas adjacent to the sea, convenient for international maritime traffic development.
Korea has large variable ports including Incheon, Busan, Ulsan, Gwangyang... This is an
important key to helping Amazon approach closer to the Korean market. With the strength of the
seaport the widespread distribution of the country, Amazon easily creates a continuous supply
chain in this market. The distribution of international goods to Korea's geographic regions will
be more favorable than Amazon's other markets.
⇒ In general of geographic angle, Korea has favorable conditions for Amazon to access this
market. These geographic factors contribute the most important to the selection of
headquarters when approaching Amazon, which will be presented in the conclusion section.

Workforce
The Korean population reached 51.4 million people in 2021, expected to have 1 million more
people in the period from 2017 to 2030. Labor Force Participation Rate in South Korea Increased
to 63.20 Percent in October from 63 percent in September of 2021. In 2020, Around 26.9 Million
People Were Employed in South Korea. Estimated in 2021, Korea's GDP (PPP) increased by the
US $ 2.503 trillion, ranking 14th in the world. And in which per capita GDP gained to USD
48,309, ranked 25th worldwide. This number has increased over 2019 and 2020. This can both
bring advantages and disadvantages for Amazon when entering the Korean market.
Accordingly, the biggest disadvantage when penetrating into the Korean employer is the average
salary is quite high. Compared to other Asian markets, Amazon will have to pay higher bonus
wages and welfare than the remaining markets. This will make labor costs possible to have much
impact on Amazon's revenue in the early stages of market penetration.
However, the Korea Labor Market can also bring to Amazon many opportunities and benefits.
The first is the quality of labor and clear labor differentiation. Especially intellectual workers are
intensively trained. Most high-level workers come out from the universities with an average
fighting rate of 1:80. They are very good at professionalism as well as career skills. This helps
Amazon be able to use quality human resources in the development process in this market. The
second is the Korean professional work culture. They are able to withstand high pressure,
progressive in work, and sharp thinking. This is clearly shown in high-level workers in Korea.
Finally, the potential for consumption of the Korean labor market. With more than 63% of
laborers in the market, high average wages, we can easily see, this is also a potential and vibrant
consumer market. Suitable for the target customer object that Amazon aims to.
⇒ In general, the Korea Labor Market does not cause many major obstacles to Amazon's
ability to enter the Korean market. On the contrary, this is also a good opportunity. If Amazon
knows how to exploit this labor market, it will bring Amazon many advantages. The quality of
labor is an important factor that helps Amazon succeed when penetrating the Korean welding
market this time.
KOREAN AMAZON ORGANIZATION CHART
Korean Amazon Organization Structure
The organizational structure of the Amazon unit in Korea will be the matrix organization
structure. It forms on the basis of combining two lines of power (or decentralization) in the
enterprise: (1) vertically from functional managers and (2) horizontally from project managers.
Responsibility for maintaining a balance between the business and project sides of the
organization rests with the top leadership, usually the President. The functional manager's
responsibilities include assigning specialists to each project and ensuring they have the necessary
skills to complete the project. These managers also monitor work progress and ensure that
business standards are met. The project managers then monitor the budget and lead time of each
project.

(1) Managers by function:

Marketing: Monitor market trends and identify consumer needs and desires and develop a
marketing strategy to generate more awareness and customer purchases. In addition, the team
also performs various tasks and activities such as market research, test marketing, advertising
and branding.

Sales: Responsible for selling the company's products. The Sales Department includes business
operations and sales processes that help distribute products efficiently, support strategies, and
accomplish business-oriented goals.

R&D: Responsible for innovations in design, product and style. This department is responsible
for creating innovative new products or services that are suitable for the market.

Finance & Accounting: Responsible for ensuring effective financial management and financial
control needed to support all business operations.

Human Resources: Primarily concerned with managing people in an organization, with a focus
on policies and systems. Human resources departments are also responsible for overseeing
employee benefits in design, employee recruitment, training and development, performance
evaluation, and reward. HR is also concerned with change. organization and labor relations

Legal & Secretariat: Address legal and regulatory issues related to Amazon's diverse business,
from discovering groundbreaking new products and services to bringing Amazon's best ideas
market and operate efficiently. Amazon builds and maintains systems that support some of the
largest databases in the world and provide a solid customer experience and ensure the security of
Customer's confidential data.

Human Resources Policy

By entering the Korean market with a localization strategy, Amazon pursues a polycentric
staffing policy. This means that Amazon hires local employees, it can be for upper and middle
management, for lower-level employees, or for non-managerial employees. Not only is it
inexpensive to perform but it also helps in alleviating Cultural Myopia. It is important for
international businesses to understand the importance of hiring local employees in the business
as they are more familiar with the culture and this also avoids communication barriers. Managers
with a deep understanding of the culture of the local market will be a huge plus. Because they are
familiar with local business practices, they can read subtle hints in both spoken and unspoken
languages. They don't need to overcome any of the cultural barriers created by the image of an
"outside" person, and they also tend to understand their employees' needs better, as well as the
needs of their customers and suppliers. In particular, Korea is a country in Asia, so the culture is
also very strong and influences many business activities of the enterprise.

SOME AMAZON’S POLICIES AFFECT THE EXPANSION OF A

SUBSIDIARY IN KOREA
Amazon and Policy on accession time in Korean
Why should Amazon join the Korean market at this time?
It can be seen that the decision to touch the Korean market is now very late compared to other
Asian markets. However, based on Amazon's strategic analysis as well as market assessments,
we refer to the advantages for Amazon. Amazon's late entry into the Korean market can reduce
pioneering costs, including the cost of business failure if the company makes big mistakes
because of its ignorance of the foreign environment. Pioneering also includes the costs of
promoting and setting up the product offering costs that are borne by early entrants.

Another advantage is that entering the Korean market late could help Amazon benefit by
observing and learning from the mistakes of competitors that entered early. Wal-Mart, for
example, failed in Korea because of its low price competition, Wal-Mart has been accused of
constantly forcing suppliers to buy goods at very low prices. Korean retailers also know how to
take advantage of the weaknesses of multinational retail groups like Wal-Mart, which are often
criticized by the public for exploiting and treating employees poorly as well as oppressing
business goods suppliers. On average, Wal-Mart Corporation faces thousands of lawsuits each
year from its own employees. The main reason is that these employees think that their salary is
too low while being exhausted, the working conditions are bad and they have to pay higher
insurance premiums than their colleagues in other companies and have no opportunity for career
advancement... the main reason is that Wal-Mart has failed to compete with domestic retailers
that have the ability to turn around quickly and understand the consumer preferences of Korean
consumers. (2006, D4)

Post-participation can help Amazon capitalize on newcomer investments and educate customers
by seeing how early entrants conduct the market, by avoiding costly mistakes made by early
entrants Acquire and exploit the market potential generated by an early entrant's investment in
customer education.

Why Amazon doesn't come to the Korean market sooner?

The fact that Amazon does not enter the Korean market early because Korea already has
Coupang, which is a Korean e-commerce company and the largest online market in Korea, is
also considered by Koreans as "Amazon of Korea", a reputable e-commerce platform with
preferential sales policies, diverse, genuine goods and good prices. Therefore, Amazon had to
research this competitor very carefully before entering the Korean market, Amazon may have to
participate in the "burning money" race to compete with e-commerce platforms.

Amazon may face cost risks such as advertising costs, setting up the product offering, and may
face significant missteps in investing in the Korean market. According to a Forbes article,
Coupang, a retailer in the Korean market, already has such a strong foothold in the Korean
market, so Amazon decided not to expand into Korea. Before Coupang's success, Amazon chose
not to enter the Korean market to focus on China. They keep procrastinating until another
company has such a strong lead that it is difficult to catch up. So, in essence, they haven't taken
the Korean market seriously. It would be much easier for Amazon to target more populous
countries like China or Japan. For example, Ebay is a very famous name in the Korean market
with a reasonable and timely strategy, one step ahead of Amazon. While Amazon was still
engrossed in the home yard, Ebay has spread its image in many countries and territories, creating
a huge coverage with the local people. (2018,D5)

According to research by Goodwater, shoppers are more likely to return and spend money on
Coupang than other e-commerce sites - not only compared to their Korean competitors but also
other major e-commerce players on the internet. world. As early as 2017, Coupang's performance
started to outpace Amazon, with three-year dollar retention of 346% and Amazon's 278% and
later groups improved on that. The value of these customers is not only among the best in Korea,
but possibly the highest in the world.” (2021, D6)
 In summary, Amazon choosing to enter the Korean market late will have more advantages
than joining early, reducing some of the costs incurred and can benefit by some learning from
the mistakes of competitors go first and then Amazon can learn from its own experience and
become easier and easier to develop when entering the Korean market. Amazon's late entry
into the Korean market can reduce pioneering costs, including the cost of business failure if
the company makes big mistakes because of its ignorance of the foreign environment.
Pioneering also includes the costs of promoting and setting up the product offering costs that
are borne by early entrants.

Amazon and Policy on the scale of Korean market penetration

Besides the time factor when entering Korea, Amazon needs to consider when entering this
market of 52 million people is the scale of entry. The size of market entry is greatly influenced by
cost. There are two options for Amazon when entering this market, where the rate of e-
commerce development has increased in recent times, which is small-scale and large-scale.

Consider about entry with small scale

For small-scale market penetration, Amazon will have a lot of time to learn about the Korean
consumer demand and offer products, services suitable for this market before deciding on further
strategies. Participating on a small scale requires a lower investment cost than a large scale,
which can help Amazon Korea reduce the risk of entering this market. However, this size comes
with a lack of commitment to the market, which can make it difficult to capture market share in
the competitive e-commerce market in Korea, thereby losing the edge of pioneers in business
strategies. Thereby, small-scale participation in the Korean market can limit losses but also limit
Amazon's opportunity to take advantage.

Consider about entry with large scale

The choice of entry scale must evaluate by the potential long-term benefits of the strategy. The
long-term economic benefits are a function of factors such as the size of the market, the current
and future purchasing power of Korean consumers, the state of the Korean business political
economy, especially the value that Amazon can create in Korea.
This depends on the relevance of Amazon's products and services to the Korean market and the
nature of competition in the e-commerce industry. Not all companies have the necessary
resources to enter and market on a large scale, and even a few large companies prefer to enter the
small market. In the Korean market, with the Amazon brand image over the past 26 years, large
scale is the strategy that Amazon needs to choose. Because competitors in the e-commerce
industry in Korea such as Gmarket, Coupang, Auction, TMON... have a lot of advantages points.

The large-scale market penetration will help Amazon have more opportunities to access the
market, attract a large number of potential customers and suppliers, and thereby increase
profitability. In addition, with available competitive advantages, especially in technology, it can
help Amazon stand firm in the Korean market before possible market events. Compared with a
small scale, the company's business is can better compete and adapt to many economic
situations. In addition, Amazon can gain a leading edge over competitors when accessing the
market on a large scale. So, building a brand for Korean consumers, capturing market share, and
limiting the entry of potential competitors in the e-commerce industry will be successful.

 Given its size, Amazon needs to commit to a long-term strategy. It has a long-term impact,
is difficult to plan to maintain, and especially the cost to spend on a large scale is very high,
which can affect the strategy of the parent company. Therefore, with the advantages that
Amazon can get when entering the market on a large scale, this can be considered an
appropriate strategy for this potential Korean market.
AMAZON AND MARKET PLAN FOR ENTRY IN SOUTH
KOREA
Market research: E-commerce industry scale in Korea
E-commerce potential in Korea
South Koreans are known for their high usage of new technologies and their great internet
connection. The Datareportal states that the internet penetration rate for South Korea stands at
96% in 2020. It is unsurprising that online shopping has been established quite easily in this
country. From clothes to food, South Koreans love the convenience online shopping offers.
Nevertheless, it does not only provide convenience: Mobile shopping has even become a popular
way to pass time when they are bored. In 2018, the South Korean e-commerce market was the
6th largest worldwide (behind China, the US, UK, Japan, Germany). According to Yonhap News
Agency, South Korea’s e-commerce market ranked 5th in the world in 2020 with the value of e-
commerce sales in South Korea amounting to more than 134 billion USD in 2020. The
popularity of online shopping via different e-commerce channels has continuously grown over
the last few years. This was especially true in the last year due to the effects of COVID-19, as the
South Korean e-commerce market growth experienced an unexpected increase amidst the
ongoing downward trend since 2017. In 2020, e-retail sales accounted for 27.2 percent of the
total retail sales in South Korea. As of May 2021, online sales made up around 28 percent of
retail sales, indicating further growth in online shopping.
According to Statista Paper, Online shopping is the most popular way of e-commerce, with
almost 70 percent of South Koreans using internet shopping as of September 2020. Among
those, the monthly online shopping frequency varied, but more than half of all internet shoppers
did so three or more times a month. Internet shopping is available via various devices, such as
tablets, computers, and smartphones. With the number of smartphone users in South Korea rising
(78.5% of the country's population uses smartphones and 82.7% uses the Internet. In the 18-24
age group, the number of people using smartphones is 97.7 %.), the usage of mobile shopping
has increased as well.
According to a survey in 2020, around 94.7% of respondents between 20 and 29 years had
purchased goods and services (including making reservations) over the internet within the last
year. Market expansion in South Korea is expected to continue over the next few years, as
indicated by the Statista Digital Market Outlook. It has been predicted that the compound annual
growth rate (CAGR 20-24) for the next four years will be 8%. Compared to the year-over-year
growth of 32%, this decrease suggests a moderately flooded market. Another indicator of market
saturation is the online penetration of 68% in South Korea; in other words, 68% of the South
Korean population have bought at least one product online in 2020.
The most popular categories of online shopping include consumer electronics and consumer
goods, such as food and beverages, but also clothing and household items. Now that more
transactions are being shifted to online interactions instead of purchasing from physical stores,
online grocery shopping has also become more widespread, resulting in a lot of people using
mobile grocery shopping applications. One of the main reasons why South Korean consumers
prefer online shopping is the convenience it offers. With the high usage rate of smartphones
throughout the country, it is unsurprising that mobile shopping has been established among
South Korean users. According to a survey, around 37 percent of mobile shoppers have installed
around 4 to 6 mobile shopping apps on their smartphones. In 2016, about half of all retail e-
commerce sales in KR would happen on mobile devices. This is the highest rate worldwide,
behind China only.
 Potential competitors when joining the Korean e-commerce market
Korea's e-commerce market is extremely vibrant. From the above analysis, it can be seen, this is
a very potential market. Therefore, when choosing this market, Amazon will face veteran
opponents who have long-term experience in the domestic market. Some large opponents of
Amazon if penetrating into the Korean market include:
Gmarket
Gmarket is a famous shopping and auction site in Korea not only for Korean people but a lot of
customers around the world. In May 2020, G-market was found to be the online shopping
website with the highest reach in PC, with around 8.8 million unique visitors. The website was
founded in 2000 by Interpark and became a subsidiary of eBay in 2009. Goods on the website
are sold to both national and international customers. The website functions as an online
marketplace, as G-market does not handle goods nor payment.
Coupang 
Coupang is a South Korean e-commerce website and mobile application. It was founded in 2010
and has become one of the biggest open market platforms in South Korea since. Coupang targets
national customers but has also begun expanding to other Asian countries, such as Japan,
Singapore, and Taiwan. In March 2021, Coupang made its initial public offering (IPO) in the
United States. Besides handling their own goods, Coupang also serves as an online marketplace
for numerous sellers, letting smaller businesses use their infrastructure for payments and
delivery. With Coupang's growing user numbers, its sales revenue also has been increasing
greatly in the last few years.
11Street
SK Planet launched and joined the vibrant e-commerce market track in Korea, so far 11Street is
still constantly growing and expanding to other Asian countries like Malaysia, Indonesia, and
Turkey. When shopping on the website, customers can freely choose the payment currency.
11Street provides a variety of items from clothes, jewelry, grocery products to electronics.
Auction
Like Gmarket, Auction is an online e-commerce auction company sold to ebay "big" in 2011.
Items at this site are also very diverse with many different items. The competitiveness of Auction
is not equal to other online retailers in the country, but this Korean website is still known by
many consumers by gathering data from over 3000 other e-commerce websites with comparison
purposes. Product prices help consumers choose products at a reasonable price.
TMON
Ticket Monster (TMON) was founded in 2010 and is one of the leading e-commerce companies
in Korea. Its motto is "Transfer everything from offline to online". TMON is a website with a
young, unique and easy-to-use mobile application. Unlike other pages, TMON always has sale
programs, deal HOT every day with very cheap prices, from all common items to travel,
restaurant coupon, service. This website needs domestic payment cards to pay but still attracts a
crowded buyer because there are Sale Off programs up to 95%.
 Conclusion
Thus, it can be seen that the Korean market in general and the e-commerce market in particular is
very vibrant. Amazon sets a big step in approaching the Korean market is very potential and
expected. There are not too many adverse elements that make Amazon be so weird. This
commercial market has also been exploited by e-bay, one of the e-commerce corporations
competing with Amazon. This shows that this is really a potential market and can be exploited.
The growing growth of the e-commerce industry in Korea shows that this market can still exploit
a lot, and now Amazon comes to Korea is not late.

Entry mode (FDI method): How Amazon comes in Korea

Entry mode (FDI method): Acquisition
Amazon has invested heavily in its future strategy through targeted acquisitions. Often it has
gone from the initial investment to a full acquisition and integration into Amazon. The
acquisition represents a good sign of Amazon's future as Amazon consolidates its capabilities
and enters new markets. It will also be applied in the upcoming market, Korea. Here are specific
reasons for choosing this method of penetration by Amazon.
The company's areas of activity focus on cloud computing, digital streaming, artificial
intelligence, and e-commerce. Amazon is one of the Big Four technology companies along with
Apple, Google and Facebook. Amazon is known for changing the mindset of established
industries through technological innovation and large-scale development. With such
technological strength, acquisition is the preferred method of entry as it reduces the risk of losing
control over that core competence or proprietary technological know-how compared to other
methods such as joint venture and licensing agreements.
In the Korean market, there are currently many famous e-commerce companies such as Gmarket,
Coupang, 11st, Auction,... these are the online retailers chosen by most consumers. Amazon has
partnered with 11 Street by operating a dedicated customer center for the Amazon Global Store
that handles all inquiries such as ordering, payment, shipping, returns and refunds for Amazon
products purchased at 11st are available. The launch of the Amazon Global Store on 11st's
shopping platform means that customers must sign up for 11st's app to place an order. Once
logged into the platform, customers can search for products as seen on the US Amazon website,
but the event only marks the first time Amazon has partnered with a Korean business, which not
large enough to highlight Amazon's presence as it will soon enter this market directly and
compete with many other competitors in the race of globalization. So, buying an existing
business will help Amazon increase its presence in this market faster with its factory, logistics
system, customer service system, and more available things compared to the GreenField
Venture, the method will take more time. Example is the previous acquisition in another market
such as India, to overcome local rivals Flipkart and Snapdeal in an effort to expand its presence
in the book market here, Amazon has acquired Westland Ltd of the Tada Group. Or Amazon's
acquisition of Souq, Amazon.ae offers over 30 million products from local and international
companies, including products previously available on Souq and five million from Amazon US.
Amazon.com has acquired Selz, an e-commerce platform based in Sydney, Australia. This
acquisition is the clearest signal yet that Amazon will either compete directly with Shopify, or
it's a small, local purchase aimed at expanding Amazon's reach in a new market, Australia.
In addition, as mentioned above, Amazon will enter the Korean market with a localization
strategy. With the acquisition method, Amazon will gain status as a “local” business and will
inherit the local staff, local market knowledge, and long-standing customer base and brand local
and managers' knowledge of the business environment in that country. Such knowledge can
reduce the risk of making mistakes due to lack of understanding of the national culture. It can be
seen that Amazon's failure in the Chinese market because Amazon has not met local needs such
as not offering free shipping and overnight delivery like competitors; failing to localize their
websites and warehouses or failing to adopt local payment systems leaves its rival Alibaba
outright overwhelming in China. Therefore, in order not to make the same mistake as China,
Amazon in Korea needs to implement a localization strategy, and acquisition is the most
appropriate method. It will help Amazon quickly penetrate the market here and the available
teams or good local knowledge will give Amazon good access in this market to meet customer
needs.

Choosing 11STREET for the acquisition to enter the Korean market of

Amazon

Overview of 11STREET

11Street is a well-known and widely used ecommerce platform in Korea and Malaysia. 11Street
Korea is currently owned by SK Planet that was founded in 2011. So far 11Street is still
constantly growing and expanding to other Asian countries like Malaysia, Indonesia and Turkey.
It has a wide product assortment, including Home and Furniture, Mom and Baby, Health/Diet,
Electronics, Fashion & Clothing, Accessories, Cosmetics and Beauty Products, Food and
Beverages. In September 2017, 11Street officially launched its cross-border ecommerce platform
and currently serves clients worldwide. 11Street was the second website launched in the Korean
ecommerce market and has a monthly average monthly transaction amount of around USD 590
million. You will also find 55 million products and 200,000 sellers on the website. In addition to
Korean, the 11st website also supports both English and Chinese speaking users. 11St's goods
are always of good quality and are favored by many consumers.
11Street is the first online marketplace that has adopted several systems to ensure safe and secure
transactions. Four compensation programs—the forgery 110% refund, 110% best price
guarantee, deferred delivery compensation, and a 30-day full-exchange policy—compensate
customers for any inconvenience or damages in the process of their transactions on its platform.
Customer care center and sellers’ service center are on standby around the clock to serve
customers—both buyers and sellers—at the highest level of convenience. In addition, the seller
authentication program helps enhance the credibility of sales partners. Today, 11Street has
proprietary technologies from AI-based commerce searches and big data-based customized
recommendations, offering customers a more optimized shopping experience.

11STREET's business activities in Korea

11street is one of Korea's leading electronics companies. The App also regularly has sales of
beauty products as well as other products. 11Street is being represented by many famous stars to
help the app get closer and closer to more users.
11Street became the most visited ecommerce platform in Korea in 2016. In the e-commerce
market share in 2019, the largest player, NAVER Shopping, had a market share of 12%,
followed by Coupang (10%), eBay Korea (10%), 11street (6%), Wemakeprice (5%), and TMON
(3%). 11street only commands about 6% of the e-commerce market share in South Korea with
relative position in the ranking. 

In 2021, 11street ranked 3rd with 8.41 million unique visitors, behind Gmarket (8.78 million)
and Auction (8.59 million). 
11Street has always been at the forefront of various innovative marketing and promotion
activities, including point mileage programs such as SK Pay Point and OK Cashbag, which gave
excellent bargains to consumers and led to the sale of more than 90 million products and services
to sellers, from small venders and brand makers to department stores and wholesale markets. 

Previous cooperation between 11STREET and Amazon

On August 31, 2018, the US retail group Amazon announced the launch of Amazon Global Store
on the Korean e-commerce platform 11STREET (11st). This event marks the first time Amazon
has partnered with a Korean business.
The move has made it easier to buy tens of millions of products available on Amazon's US
website, from personal computers, toys and fashion to electronics, with free shipping for
customers’ orders over 28,000 Won (24 USD). This also makes 11st “the richest bookstore” of
“the land of kimchi”, with millions of books available.
Somana Konganda, Director of Amazon Global said, “Starting today, customers in Korea will be
able to enjoy the most convenient way to shop for global products, with international shipping
service free from the US”.
11street does have an English-language website and accepts all payment providers. 11street will
expand its selection of high-demand overseas goods by using Amazon market data to determine
what to stock on its own website. And that means customers can order many of their favorite
international brands without the hefty shipping and customs fees.
The launch of the Amazon Global Store on 11st's shopping platform means that customers must
subscribe to 11st's app to place an order. Once logged in to the platform, customers can search
for products as seen on the US Amazon website or visit the main Amazon Global Store page to
view special offers and recommended items. 

Reasons why choose 11Street for Amazon’s acquisition 

 Market share is available medium and potential

It can be seen that the market share of 11Street in the Korean e-commerce industry is relatively
high. In the past few years, the market share of 11Street has been increasingly enhanced. It is
often an e-commerce floor standing in the top 05 in terms of market share as well as buying, only
after the big people like Coupang, Naver or Gmarket of eBay. The acquisition of 11Street will
bring to Amazon a relatively stable market share when entering this domestic market. With the
advantages of market share, Amazon can succeed in the Korean e-commerce market if there are
appropriate exploitation policies.
  A well-known local brand in the South Korean market
The acquisition of 11Street marks Amazon's first entry into the Korean market through a
localization strategy. A local brand with an existing market share and reputation is the perfect
choice for this deal.
 Already have a cooperation platform
In 2021, 11st Street publicly announced its partnership with Amazon and stated that the
partnership is to increase its competitive advantage in international shipping into Korea.
According to 11st, Korean consumers seeking to buy products from foreign countries had limited
options, high prices, and long shipping duration, but with 11st and Amazon alliance, ordering
products internationally will be easier. Although Amazon has not yet entered the Korean market,
11st can benefit from this deal by setting the popular e-commerce platform as the foundation for
Amazon to enter the Korean market. 
 Similarities with Amazon
All of 11st's categories are available categories that Amazon provides, which makes it easy for
Amazon to add its products to an existing catalog and expand to include other categories that
aren't available.

11STREET Amazon

Home and Furniture Electronic

Mom and Baby Computer
Health/Diet Smart Home
Electronics Arts & Crafts
Fashion & Clothing, Automotive
Accessories Baby
Cosmetics and Beauty Products Beauty & Personal Care
Food and Beverages Health & Household
Home & Kitchen
Industrial & Scientific
Luggage
Movies & TV
Pet Supplies
Software
Sports & Outdoors
Tools & Home, Improvement
Toys & Games
 Video Games
Gift Cards
Kindle Store
Digital Music
Fashion & Clothing
Grocery & Gourmet Food
Handmade Products

Plan about market segmentation

Amazon market segmentation
Amazon offers a wide range of products and services, successfully tapping into many segments
at once. Specifically, the online retail giant sells nearly 120 million products, meeting the needs
and desires of many customer segments. So Amazon can segment according to the following
criteria:
 Geographic segmentation: urban and rural.
  Demographic segmentation:
 Age: people from 18 years old access the Internet a lot.
 Gender: both male and female.
 Occupation: Students, employees and professionals.
 Behavioral segmentation:
 Benefits: diversified products, convenience, competitive prices.
 User status: non-user, potential, first-time, regular, or former.
 Psychographic segmentation: Social class: working, middle class, upper class.
Amazon's target market is working, middle, and upper-class (equally gendered) consumers with
home computers or smart devices between the ages of 18-44. Additionally, Amazon targets
people who like to shop online for convenience, fast delivery, and competitive prices.
 11STREET market segmentation
The 11st e-commerce platform provides mainly items from food, fashion, jewelry, to music
products, or electronics, furniture... especially cosmetics, along with buying psychology. Korean
products, so it will focus on the following 2 segments:
 Demographic segmentation:
 Age: people from 20 years old access the Internet a lot.
 Gender: both male and female.
 Behavioral segmentation: Customer Benefits: discount, competitive price.
11st's target market is people between the ages of 20 and 30, which is the group with the highest
Internet traffic according to the 2020 survey. And it also targets consumers who pursue low
prices and post-satisfaction. Purchases and consumers who want more discount benefits.

Amazon market segmentation in South Korea

Overall, 11st's market segment is quite similar to Amazon's segment, but it only belongs to a part
of Amazon. From studies on the Korean market, when Amazon penetrates and acquires this e-
commerce platform, it is possible to combine the segmentation criteria of 11st and Amazon
according to three segments: geography, demographics and behavior.
 Geographic segmentation:
Amazon always directs the delivery of goods to customers wherever they are to have the best
product or service experience. In addition to its own delivery system, Amazon works with third-
party shippers to meet those needs.
 Demographic segmentation:
 Age: from 20 onwards
Although Amazon has some typical brick-and-mortar stores, most of its revenue comes from
online orders. Along with that, Amazon seeks to target a customer base that has access to and
regularly access the internet, making the younger generation the ideal Amazon customer.
Amazon will target young people aged 20 to 30, about 94.7% of respondents in this age group
have purchased goods and services (including reservations) over the internet in the last year.
However, with the Internet continuously becoming popular, especially in Korea, the age group
from 30 onwards also has quite high Internet access, so Amazon's target age group expands to all
ages.
 Gender: male and female
Amazon and 11st's extensive product range appeals to male and female customers because they
can find anything they might need.
 Income: any income 
Korea is a high-income country, so this is also an advantage for Amazon when entering the
market. With a leading platform with low prices, customers, whether low or high income, can
access Amazon's products and services.
 Behavioral segmentation: Consumer Benefit
Amazon and 11st are both aimed at customers interested in low or competitive prices. Of course,
this is the mind of most customers when shopping. This is an advantage when Amazon is the
leading e-commerce platform with low prices. Other factors that help Amazon attract consumers
to shop are low shipping costs, discount policy, positive product reviews, and flexible return
policy.
Another reason why Amazon attracts so many customers is convenience. The Amazon website is
easy to navigate, and it can act as a one-stop shop for all the products they need, saving them the
time of running to multiple stores.
Amazon also cares about 3rd party customers, they sell their products on this platform, who they
care a lot about their value creation on the Amazon platform, a famous commerce platform,
which can easily attract more customers to buy from them.
 Psychographic segmentation: Life style
In addition, Amazon will also affect the customer segment who prefers to pay online, e-wallet is
a new trend in the future to help save costs and time for both parties. Korea is also one of the
countries that use credit cards the most, which is in line with Amazon's payment methods.
Amazon in South Korean Market: 4Ps Strategy
Products
11street is an e-commerce platform that features a wide range of products, including: Home &
Furniture, Mother & Baby, Health/Diet, Electronics, Fashion & Clothing, Accessories,
Cosmetics and Beauty Products, Food and Beverages. This acquisition helps Amazon bring tens
of millions of products available on the US Amazon website, from personal computers, toys,
fashion to electronics into Korea for easier access by customers in this country, and free shipping
for customers with orders over 28,000 Won (24 USD). Now 11Street's customers can both buy
Korean domestic goods and buy international goods at a cheaper price and more conveniently.
When Amazon entered the market, it not only offers its Amazon Kindle e-readers and Kindle
Fire tablets through 11street's website, but also expands its product catalog. 
Because Korea is famous for its idol culture, idol-related products are very sought after. From
there, Amazon can add product categories like concert tickets, documentaries, concert videos,
albums, or idol goods.
With Korea's K-pop and K-drama culture, the distribution of digital content, including music,
becomes a potential product. Through Amazon Prime Video, Korean users can watch thousands
of exclusive movies, including many award-winning movies, original shows and exclusive
concerts of famous Korean stars such as BTS, BlackPink, EXO,...The streaming service has
about 24,000 movies and more than 2,100 shows for customers to choose from. You can also
rent or buy additional movies and TV episodes not included in your subscription, and add over
100 premium channels with Prime Video.
In addition, with the advantage of 11Street's cross-border e-commerce platform plus Amazon
Prime, Korean consumers will get 2-day delivery for overseas orders and Amazon Prime Now
service delivery with free 2-hour order on certain items.
11Street features proprietary technologies from AI-powered commercial searches combined with
Amazon Web Services (AWS) which is a set of online services, including cloud storage
guaranteed to give customers a great shopping experience.
One of the most important things is that the official language of Korea is Korean, so through
11Street with the website set up in Korean language, Amazon will not have to face obstacles in
reaching customers. 
 Price
Amazon uses low prices as a way to attract customers to its e-commerce website and product
offerings. The company evaluates competitor prices as the basis for pricing AmazonBasics
products. The advantage of this pricing strategy is to make the selling price more competitive,
affordable and attractive to target consumers. It uses technology to its advantage in setting prices.
Most of the time, the price of the product is set according to a competitive pricing strategy.
Amazon offers the lowest prices, and this is made possible by their efficiency and web-based
business model. Therefore, when putting its products on 11Street, Amazon still follows a low-
cost strategy to attract customers and compete with domestic businesses.
About 11Street, goods on this web are always committed to quality assurance, always genuine
and of clear origin. The attractive point of shopping on 11Street is that the items are always
affordable compared to the market and there is a point-based purchase system that makes it easy
to buy items cheaper than the original price. When Amazon acquires 11Street, the original
pricing strategy of 11Street will be remained in the first period. Prices will vary depending on the
type of service. It regularly adjusts prices based on product type, time of day, and season.
Amazon also offers value-added services like Prime, where users pay a subscription fee for one-
day shipping and early access to deals. 
Gradually, when this acquisition works on the right track, taking advantage of Amazon's optimal
technologies and distribution channels, 11Street's pricing strategy will slowly change to low-cost
strategy to compete with competitors.

Place
11Street has launched its cross-border ecommerce platform and is now serving customers
worldwide. All consumers purchase products and services from 11Street's website and App.
Goods will be exchanged between buyers and retailers and wholesalers through the 11Street
website and app.
When a customer makes an order, 11Street leverages Amazon's distribution channel to outline
where products are purchased and stored at fulfillment centers. These are warehouses built by
Amazon in strategic locations to reach the farthest places. Those locations include Seoul to the
northwest, the other major cities of Incheon to the west of Seoul, Daejeon to the center, Gwangju
to the southwest, and Daegu and Busan to the southeast. In addition, with the strength of large
seaports such as Incheon, Busan, Ulsan, Gwangyang,... Amazon easily creates a continuous
supply chain in this market. They are categorized into gradable fulfillment centers (large and
small goods), non-sortable, customer returns, and specialty items warehouses. From these
fulfillment centers, goods are moved to distribution centers and then to customers. It will use
local courier and postal services to deliver packages.

Promotion
Although Amazon has aired television commercials, these ads are primarily in the US market.
Amazon mainly uses web based advertising and they use some billboards and smaller advertising
methods. Amazon is a very popular brand and hardly needs any introduction in today's world. So
Amazon's media advertising is not invested much. But South Korea is a new market, requiring
Amazon to promote more of its image and brand, reminding customers of its presence.
Therefore, advertising is the primary mean which 11Street connects to its target market. 
Amazon uses innovative TV advertising and social media marketing and targets customers for
11Street. The company has an affiliate program for website owners or online publishers to earn
revenue by displaying ads and corresponding links to products sold on the 11Street website. This
strategy expands the company's market reach. 
Since Korea is a country with a strong idol fan culture, the company will advertise by using
images of famous KPOP actors and idols as advertising models or exclusively brand
ambassadors.  The goal of this promotion is to promote 11Street's image to a wider audience and
increase fan purchasing power.
Amazon also uses sales promotion for 11Street as a secondary strategy to attract customers and
convince them to buy goods and services on the website. They occasionally use discounts and
special offers to generate more revenue. Amazon has mastered this art and runs effective
discount promotions on the 11Street website during the holiday and festive seasons, resulting in
high site visits.

Measurement: Will Amazon in South Korea Market be successful?

Analysis SWOT Model
It can be seen that the Korean market is one of the most potential markets that Amazon can
approach at this time. Although the biggest disadvantage is the fierce competition from
competitors in this market. However, this also shows that this market is very active and has a lot
of potential for exploitation. We have reviewed the overall market analysis of the Korean e-
commerce market over the years. We have also considered cultural, economic and political
factors for an international business to join this country. Then there are strategic conclusions,
analysis of competitive advantages and 4P recommendations for Amazon's entry into the Korean
market. In this section, we will go to the SWOT analysis. From there, give an overview of this
market penetration deal of Amazon.
STRENGTH

 Amazon is the largest e-commerce company in the world

Amazon is the largest Internet Company by revenue in the world, considered one of the Big Four
technology companies along with Google, Apple and Facebook. Amazon holds the world's
largest e-commerce marketplace, AI assistant provider, and massive cloud computing platform
by sales and market capitalization metrics. In addition, Amazon is the second largest privately
held company in the United States and the second largest technology company in the world by
revenue. This proves that Amazon has strengths in terms of market share, revenue and
capitalization. Expanding and entering a whole new market is not a big deal for Amazon either.
Amazon can fully take advantage of the financial advantages to gain the advantage of the cost of
entering the Korean market in the first time. As the world's largest e-commerce company,
Amazon enjoys the advantage of the variety of products and services available to customers.
From there, helping to reach new customers with new products or new services is not a big deal. 
 Amazon has the perfect supply chain available

Amazon owns the most perfect supply chain in the world. This is what has made Amazon so
successful so far. A perfect supply chain from warehousing, distribution, technology, and
manufacturing allows Amazon to ship goods anywhere, in the fastest time and at the most
affordable prices. This supply chain absolutely makes entering new markets easier. It plays the
role of connecting a domestic market to any other market in the world with a commitment to
100% product quality.

 Amazon has leading advantages in technology and AI

More than just an e-commerce platform, Amazon is also one of the world's largest companies in
technology and artificial intelligence. And technology is the core strength that helps Amazon
succeed in business management and development. The advantage of technology helps Amazon
adapt quickly to the changing world every day. Especially in the context that the e-commerce
market is more vibrant than ever. Available technology allows Amazon to be flexible and
innovative with ease, opening up different countries and markets. Specifically, in the Korean
market, to suit the tastes of Koreans, Amazon can easily set up a sales website with the widest
domain name and create customer database management programs so that Optimal and most
convenient.

 Amazon has headquarters in more than 16 international markets worldwide

Amazon has the largest multinational network in the world with more than 16 locations across
countries and continents. The diversity in the markets served gives Amazon expertise in business
strategy and management. This is a strength that no other e-commerce company can achieve. In
the process of dominating its world market, Amazon has also encountered many valuable
lessons. This helps Amazon to gain experience flexibility in its business strategy. A famous
lesson of this "e-commerce giant" is the failure in the Chinese market. With confidence in its
internationalization strategy in the country of "billions of people", Amazon had to close its
headquarters because it did not adapt to the needs of local customers. Or lessons on the transition
from an internationalization strategy to a localization in Japan. And all those valuable
experiences will help Amazon have many prospects in Korea.

OPPORTUNITY
 Economic, political and cultural factors create favorable conditions

Korean economic, political and cultural factors do not pose many barriers to Amazon's entry into
the market. On the contrary, it has many factors that contribute to facilitate this accession. A free
market economy allows Amazon to be welcome in this country without legal restrictions. South
Korea has also enacted a separate set of laws for international e-commerce businesses, which
Amazon can follow and protect when expanding its business in the country. The culture of
"digitization" is also an advantage for Amazon. The majority of Koreans can access and use the
Internet, making it easier than ever for Amazon to reach its target audience. In addition,
geographical, political or labor factors, as mentioned, also partly create favorable conditions for
Amazon to enter this market.

 The Korean e-commerce market is very potential and large

The analysis mentioned above shows that the size of the Korean e-commerce market is
extremely large. The proof is that in 2018, the Korean e-commerce market ranked 6th in the
world (behind China, the United States, UK, Japan, Germany) and 5th in the world with value e-
commerce sales in Korea amount to more than 159 trillion by 2020. This large scale shows a
potential for long-term growth in the future. This market is even comparable to other saturated
Amazon markets such as the UK or Japan. It can be seen that this is a great strength when
Amazon chooses Korea to expand its market in Asia in the period 2025 - 2030.

 Localization strategy, followers and lessons learned

Although Amazon's main strategy in the international market is internationalization, in the

Korean market, we choose the localization strategy. This comes from Amazon's previous
lessons, about failure in China or having to restructure and transform strategy in the Japanese
market. Cost cutting is not a big pressure for Amazon (Assuming in the absence of the COVID-
19 pandemic) thanks to the perfect supply chain available. However, in an Asian market, the
pressure of domestic adaptation brings Amazon at a disadvantage. Therefore, choosing a
localization strategy will help Amazon become stronger. As a follower, we can also see the
success of eBay with this localization strategy. In the more in-depth analysis plans, we can
analyze eBay's strategies to draw lessons. From there, helping Amazon get the right orientation
in the Korean market.

 11Street's acquisition and market share strategy

In the previous section, we have outlined the reasons for the entry strategy by acquisition.
Specifically, the acquisition of e-commerce Company 11Street. From the analysis and
evaluation, we can see that 11Street's market share is very potential and is a strength to help
Amazon reduce the pressure of competitive advantage in this country. With a market share that
has always been in the top 07 over the years, Amazon can fully utilize it to expand its business
scale. What's more, Amazon can ambitiously lead the e-commerce market in the years following
the COVID-19 pandemic. The acquisition of a domestic branded company also helps Amazon
understand the needs of customers in Korea. From there, there are appropriate development and
competition strategies.

 The great driving force for innovation and competition comes from competitors
On the analysis of competitors and competitiveness, it can be seen that Amazon will have to
compete very fiercely with rivals in this market. However, this also brings advantages to
Amazon's entry. Fierce competition is a huge driver in innovation and promotion of competitive
strategies. This lesson can be found from eBay or Shopee in often Vietnam. Although coming
late and having to compete with big names like Tiki or Lazada, Shopee has now become the
most popular e-commerce platform in Vietnam thanks to its innovation drive and competitive
efforts.

WEAKNESS
 Localization strategy is not Amazon's forte

The main strategy when entering the international market is internationalization. Although
Amazon has tended to switch to a localization strategy in recent years, Amazon has not really
achieved outstanding success with this strategy. Amazon can gain market share with the adoption
of a localization strategy in Korea, but management and operational risks may arise. However,
this is a risk that can be overcome if Amazon Korea takes note of this.

THREATEN
 Fierce competition from rivals

Korea is a large and potential rich commercial market. However, one of the biggest challenges
Amazon faces in this market is fierce competition. Currently, there are a number of domestic e-
commerce companies holding huge market shares such as Coupang or Naver. Along with that is
the market acquisition of eBay. As a “follower”, Amazon must work hard to compete for its
market share. To achieve outstanding success, Amazon needs to aim for the position of the top 3
prominent e-commerce platforms in Korea after joining.

 The relationship between economy, politics and Chaebol forces in Korea

Like other countries, Korea has economic and political "black spots". Notably, there are ties of
binding and support between the Korean government and the Chaebol forces. With the ability to
dominate nearly 50% of the country's economy, these forces can become a threat to an
international company. Amazon needs the best risk analysis and projections for worst-case
scenarios. Typically, the acquisition of market share for a domestic e-commerce platform
belongs to one of these Chaebols.

Measurement success with some financial information

Entering the Korean market with large-scale and late, Amazon confidently will draw lessons
from its predecessors. Together with the acquisition of 11 Street after a period of previous
cooperation, this shows potential in this market of Amazon, which could become the largest e-
commerce company in Korea in the coming years. Specifically, Amazon Korea aims to increase
its brand awareness in the Korean e-commerce market in the next five years, capture 25% of the
market share, and increase the number of customers visiting Amazon their website by 30%.
(Compared to 2021, Website 11 Street).

The bases on which Amazon can prove its ambition stem from the core competitive advantages
that Amazon has, especially in terms of technology, cloud data systems, and processes automated
order management. Besides, in 2018, the South Korean e-commerce market was the 6th largest
worldwide (behind China, the US, UK, Japan, Germany). Next, in 2020, e-retail sales accounted
for 27.2 percent of the total retail sales, because 68% of the South Korean population have
bought at least one product online in 2020. As of May 2021, online sales made up around 28
percent of retail sales, indicating further growth in online shopping. Proving that the demand for
e-commerce in Korea has increased in recent times, and Amazon has a lot of opportunities here.

And Our mission is: 

“We strive to offer our customers the lowest possible prices, the best available selection, and the
convenience and promise attractive e-commerce services to satisfy target customers' needs.” 

With the products and services that Amazon already has in the international market, Amazon has
had economies of scale, products, and services that are more competitively priced than other
competitors in the Korean market, thereby meeting the needs of Korean consumers.

Amazon has been familiar with the Korean market before through a partnership with 11 Street,
one of the e-commerce companies in this market. And with the acquisition strategy of 11 Street
as described above, Amazon wants to be able to take advantage of the available advantages in
terms of resources, human resources, brands, and sales of 11 Street in the coming years. to
continue to develop the Amazon brand in the Korean market and achieve the set goals.

The success of a project, besides factors such as people, products, services, methods of
promotion, etc., financial indicators also play a very important role. And in the case of Amazon's
acquisition of 11 Street, the basis for assessing the success of Korea's e-commerce penetration
strategy is greatly influenced by the results of 11 Street's business activities in recent years.

About revenue:

In 2018, 11 Street's revenue was only 228.1 billion won. Under the impact of the Covid epidemic
in the period 2019-2020, the demand for online purchases and transactions on the e-commerce
market of Koreans increased. Thereby, this company's revenue increases sharply in these 2 years.
Specifically, 2020 is 545.55 billion won - an increase of 3% compared to last year (530.48
billion won). Compared with the average revenue of the e-commerce industry in Korea, in 2020
11 Street increased by 9533%, a huge number. So Amazon can take advantage of the good
growth in revenue to grow its business.

Revenue grew well in the period 2018-2020 when it increased from 228.1 to 545.55 billion won,
but 11 Street's the production and business costs during this period were also high. In the last
three years, only 2019 was 11 Street's business profitable, but only 1.42 billion won compared to
19.6 billion won (2018) and 9.76 billion won (2019).
Net profit in the last three years is all < 0.

2018: -9.57 billion won

2019: -5.07 billion won

2020: -29.62 billion won. With its ability, the 11 Street acquisition of Amazon can change the
financial picture of 11 Street. The financial indicators of revenue and profit, especially the
market share of the e-commerce industry in Korea, will have positive changes in the future.
The business situation of 11 Street in recent years has not been good when continuously
reporting losses, although the market potential is still increasing during the Covid-19 epidemic.
This is a good signal for Amazon to buy back and have positive effects to change business
results. However, the potential of 11 Street in Korea is huge when in the ranking based on the
financial information of the Korean e-commerce industry in 2020, 11 Street company ranks in
the top 4 only behind other technology giants (EbayKorea, Yes24, Entob)
Regarding the market share of the e-commerce industry in Korea, based on 2020 revenue,
technology giant Naver ranked first with 17%, followed by eBay Korea + SSG.com and "Korea's
Amazon" - Coupang. Meanwhile, 11 Street is no less competitive when ranked above LotteOn
and Kakao with a 6% e-commerce market share in this market.
According to Niceinfo data in 2020, the business level of 11 Street is rated as normal. More
specifically, the financial capacity of this company is normal, they can cope with changes in the
financial environment, but it is highly likely to be affected by many factors, especially disease
Covid-19.
Recent data, showing that the volume of online transactions and shopping tends to increase from
Q2/2020 (37.5 trillion won) to Q2/2021 (46.9 trillion won). There is a potential association in the
Korean market for technology companies, especially e-commerce.

=>Through the above statistics, along with the experience that Amazon has globally in
general, especially the Asian market in particular, the acquisition of 11 Street, inheriting
the existing resources of 11 Street, Amazon can develop well and dominate the e-commerce
market in Korea in the future.