Amazon

Entering Indian Market

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


Introduction of Amazon
American multinational company
Incorporated in 1994 by Jeff Bezos
In July 1995, sold its first book on Amazon.com
Presence across three locations in India (Bangalore, Hyderabad, Chennai)

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

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

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Ethical issues of Amazon.com coming to
India

Stakeholders: Justified returns to them has to be ensured

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

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

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

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

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

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Strategic Issues
Amazon is basing its strategy on three pillars:
Vast selection
Low price
Fast delivery
Gaining market share
In India, tastes and desires change drastically in every 200kms, which was
unlikely in other countries
Flipkart which is the market leader in India, is the biggest hurdle in their way
to success as it has gained customers confidence over the years
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Strategic Shift
AMAZON.COM (Circa 2001)
Landlord of largest Web
Supermall
Universal selection, one-stop
Shopping, and same day customer
Fulfilment = competitive
Advantage
Revenues: $2.7 Billion (est.)
Registered Customers: 19.5 MM
Items Offered: >18 MM
AMAZON.COM (1998)
Book E-tailer
Investment in brand building
Customer fulfilment largely
outsourced to Ingram and
Baker & Taylor
Revenues: $610 MM
Registered Customers: 12 MM
Books Offered: 2.5 MM
C
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x







S
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LOW CUSTOMER FULFILLMENT AS CORE-COMPETENCE HIGH
H
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L
O
W
ONLINE
PRODUCT
ASSORTM
ENT
E-
CUS
TOM
ER
EXPE
CTA
TION

HIGH E-Brand as barrier to entry LESS COMPELLING

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Analysis of Strategic shift
Amazon adopted changes with time
Added new market developments
From just being an online book seller, it became an online shopping place
Expansion of business created entry barrier for competitors
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Understanding Indian Market
Middle class in India is booming
India is the third largest publisher of English language books in the world
E-commerce has a huge potential in India, a country of more than 1.2 billion
people
52 million active Internet users, of which 40 percent have shopped online
Indian online market is expected to grow 55% to 100 billion rupees this year

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What Amazon looks to achieve in India
Customer satisfaction in India
Looking for a long term business
Considers new markets where the company could enter or additional products
that could be developed
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SWOT Analysis of Amazon
Strengths
Brand well known along with a strong customer base in
many parts of the world.
Diverse product offerings
Free home delivery above a minimum purchase
Working with minimum profit and gaining from
economies of scale
Strong business relationships with publishing houses,
major electronic companies etc.
Experience of almost a decade in online shopping
industry
Weakness
Operates at very low margin
Criticism for its working conditions
KINDLE is not up to the mark of its competitors
Opportunity
Acquiring more small business enterprises, enabling
them to expand
Opening physical stores so as to give the customers a feel
of touch and experience
Indian retail industry is estimated to be $450 Billion
Expand into more product segments
Tie ups with major players of untapped market
Threats
Online security threats
Regional low-cost retailers
Strong online presence of Indian competitors like
Flipkart and Myntra
Flexible rules against FDI enabling other major
players like Wal-Mart etc. to enter
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Competitive Profile Matrix
CPM identifies the firms major strength and weakness in relation to
another firms strategic position
Critical success factors (CSF) ensure success for an organization
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Competitor Analysis
The largest competitor as of now in India is Flipkart with highest score (3.25)
Currently, product options on Amazon are limited while competitors has
expanded
(Flipkart and eBay offer a wider range of products)
Flipkart has 80 per cent share of the online book market in India
Flipkart now has a wide reach in the Indian market and the delivery time is
just four business days

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SPACE MATRIX
Analyse capabilities in various fields and then select a strategy move with
which to adapt to the changing market conditions

Factors considered in SPACE Matrix are financial strength (FS), industry strength (IS),
environment strength (ES) and competitive advantage (CA)

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Analysis of SPACE matrix
Amazon has good Financial and Industry strength
It should aggressively enter the market
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Quantitative Strategic Planning Matrix
Key Internal
Factors
Weights Strategic Alternatives
Entering into emerging market Strengthening existing market
Strength
AS TAS AS TAS
Brand Awareness
0.25 4 1 3 0.75
Experience in
business
0.10 3 0.3 3 0.3
Diverse Offering
0.15 3 0.45 3 0.45
Free Home
Deliveries
0.10 2 0.2 4 0.4
Weakness

New to Asian
market
0.20 4 0.8 4 0.8
Low margin
business
0.20 3 0.6 3 0.6
Subtotal
1.00 3.35 3.3
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Key Internal Factors Weights Strategic Alternatives
Entering into emerging market Strengthening existing market
Opportunities AS TAS AS TAS
Online Payment
system
0.25 2 0.5 3 0.75
Integrating private
level
0.10 3 0.3 3 0.3
Growing Asian market 0.20 4 0.8 -
Expand into more
product segments
0.05 3 0.15 4 0.2
Threats
Online security threats 0.20 4 0.8 4 0.8
FDI rules 0.10 3 0.3 -
Regional online
competitors
0.10 3 0.3 3 0.3
Subtotal 1.00 3.15 2.35
Total Attractiveness
Score

6.5
5.65
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Analysis of Quantitative Strategic
Planning Matrix
Depending on various key internal factors:
Amazon should enter emerging market (India) rather than expanding its
existing market
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Recommendations:-

Strategy Diamond
Arena- where will we be active?
Vehicle- how will be get there?
Differentiators- image,customisation,price
Staging and pacing- speed and sequence of moves
Economic logic- how are the returns obtained? Cost of revenue?
Arena
Vehicle
Staging &
Pacing
Differentiat
ors
Economic
Logic
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Logistic management
About 60% of online sales come from tier two cities. To reach the customers
quickly company needs to have an effective logistic management. Flipkart
seems to be Amazons only real competition. Flipkarts quick delivery system,
along with the option of cash-on-delivery has led to large Flipkart loyalists

Diversification
Diversifying into other products will help the company to check the
entry of competitors which e.g. going into food, clothes etc. so that
expenses are also distributed and adverse conditions in one sector can be
borne by other one.
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Innovation
Only pricing cannot be taken as a differentiating factor, innovation
is also needed. The company should create a total buying
experience that has been missing in the Indian context. Promotion
should be done through Push and Pull strategies which will
include offers and advertising.


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