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Case Study

Case Study. Amazon’s Entry To Indian e-commerce Market. Intro To Amazon. Amazon is a multinational company incorporated in 1994 by Jeff Bezos . It started as a online bookstore. Proving its worth and success in USA, Amazon head to compete in Indian e-commerce market.

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Case Study

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  1. Case Study Amazon’s Entry To Indian e-commerce Market

  2. Intro To Amazon • Amazon is a multinational company incorporated in 1994 by Jeff Bezos. • It started as a online bookstore. • Proving its worth and success in USA, Amazon head to compete in Indian e-commerce market

  3. Before Entering to India • Amazon entered India in 2012 and launched its website in June 2013. • At that time the key players in e-retail market were Flipkart, Snapdeal, Myntra and Jabong. • With Flipkart acquiring the large percentage of market share(>60%).

  4. Strategic Issues • The most significant strategy was to gain market share. • Since India is has huge diversity and culture, and tastes, desires and demands changes quickly from a region to another, so its a complete new market for Amazon to explore. • Compete with a monopolist. Flipkart had a huge market share (more than 60%) and over the year it was gaining monopoly on e-retail market.

  5. Advantages for Amazon • Groundwork already done by others The advantage for Amazon was that before its commencement in Indian e-retail market, a lot of work had already been done by the likes of Flipkart, Snapdeal, Myntra to raise the e-commerce industry. Their work paid off, in 2012 according to Forrester it was estimated that Indian market will grow at a compounded growth rate faster than any other country in the Asia-Pacific region to reach $8.8 billion in 2016. 

  6. An exhausted competitionAmazon was also entering India at a time when almost every player was struggling to conserve cash and yet grow business. After a boom in ecommerce venture funding, the two years(2011-12) had seen a progressive withering away of additional rounds. Smaller players have had to shut shop, while even larger ones were realising that catching the chimera of profit requires an almost endless source of funding.

  7. “Take Flipkart, the industry’s leader by far. After having grown at a breakneck speed using over $180 million in venture funding, the company has in recent times been forced to lay off employees, streamline operations, reduce discounts and shipping subsidies, and slash categories in an attempt to bring down the amount of money it loses every month, or ‘burn rate’. Sources say it managed to bring that down from the $8 million to about $6 million over the last six months, with around $80-85 million still left in the bank.”

  8. Brand ValueThough not much of an advantage but still would have helped Amazon a bit. Being a successful retailer in USA and a huge experience and brand value in e-commerce market would certainly help in to collect a small customer base easily.

  9. Flipkart Vs Amazon • The largest competitor for Amazon was Flipkart. Amazon knowing it, started marketing techniques to acquire market share. Amazon started with books, because globally, Amazon was known as the biggest bookseller.

  10. Having launched with books, movies and TV shows to begin with, it was attacking Flipkart’s undisputed area of strength by throwing in ‘introductory’ offers of free shipping; higher referral commissions (10 percent versus the industry’s 5-6 percent) and lower prices on many books.

  11. Amazon launched 15 categories in seven months, and already had the largest catalogue of books, e-books, watches, toys and games, and fashion jewellery. • Amazon India made a quiet entry on 5 June 2013, with two categories – books, movies and TV shows, but followed up with a very splashy blitz two months later in August (it offered 66 percent discounts on many books to mark India’s 66 years of Indian independence).

  12. The first seven months of Amazon (in 2013) and its marketing strategy can be summarised as: 1. 6 June: Launches India Operations as a marketplace, sells only books. 2. 25 June: Launches mobile and accessories, cameras and portable media player stores. 3. 12 August: Computer and accessories stores. 4. 19 September: Entry into fashion and lifestyle.

  13. It also received government approvals to provide Amazon logistics services in India. This solves and allows Amazon to compete with Flipkart by offering 1-2 day delivery options. • Amazon India started running front-page spreads touting its next-day delivery service and easy return policy.

  14. Closer to home, in India, it launched KiranaNow in March 2015, in Bengaluru, promising delivery of groceries and related items in four hours.

  15. Junglee.com • the offline piece is what gives Junglee its main relevance. Statistics: more than 90% of retail in India is unorganised; e-commerce accounts for less than 1% and organised retail is just 8% of the $500 billion Indian retail sector. Via junglee. com, Amazon is trying to organise retail in India, and bring offline stores to list online. • The big marketplaces like Flipkart and Snapdeal allow only those sellers who are capable of doing business online. Junglee is different in that it also allows sellers who operate only in the offline mode.

  16. Results So far... • Amazon, which entered India in June 2013, has stepped up the competition by cutting prices, increasing product categories, launching next-day delivery and kicking-off a high-voltage advertisement blitz. • Launched in June 2013 Amazon has acquired half the number of visitors as on Flipkart in just a small span of six months.

  17. Amazon started fashion segment in the last quarter of 2014. Amazon India saw phenomenal growth in the watch segment with sales jumping 700% in 16 months. The accessories segment saw a growth of 3000 percent in 16 months, Amazon said. • The Flipkart-Myntra deal comes amid a strong revival of interest in the Indian e-commerce market, but the trigger clearly is the need for consolidation to fight global majors Amazon.

  18. Flipkart-myntra

  19. Amazon has covered a good percentage of share of the market in a short time. Amazon India sales as of January 2015 is about $200 million (1200 crore). It took Flipkart7 years to achieve this sales numbers. • Amazon is a financially sound company and Flipkart stands nowhere in front of them. • When Flipkart received $1 billion in funding, Amazon India very next day announced additional $2 billion investment in India, to compete and remain neck-to-neck.

  20. Amazon , with its deep pockets and uncharacteristically long-term stock investors (who give it a really long rope, compared to most other ecommerce investors), can easily keep increasing its investment in India with nary a blip on its financial operations.

  21. By end of 2014

  22. Still In the Red • Globally, while its sales have been rising, Amazon has been posting huge losses. In the April-June quarter, it posted a net loss of $126 million as against a loss of $7 million in the year-ago period. • Flipkart, which has so far raised ₹15,000 crore, is also yet to turn profitable. Analysts feel that the Indian e-commerce outfit’s gross sales will touch $3 billion this fiscal year. With the market pegged to touch $30 billion by 2020, the stakes are high.

  23. II phase • How big is E-commerce market and its future scope • Effect of E-commerce on traditional market • Security problems and how mature is the IT-act

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