amazon strategy management presentation competitor analysis

HYPER COMPETITIONIN E-COMMERCEAMAZON INDIA

THE INDIAN CONTEXT – UNUSUALLY ENERGETIC!

• Nearly 43% Source: Ministry of Statistics & Programme Implementation)

Young Population

• Rising Disposable Income and Improving Standard of Living

• World’s 2nd Largest Mobile Phones User Base• Impressive Gross Domestic Product record

Fastest Growing

Asian Economy

• Increasing Government Expenditure for Rural Development

• Internet Penetration through Economical Smartphones (Increased Teledensity from 1.2 in 2012 to 3.8.5 in Feb 2012) (Source: www.trai.gov.in)

• Free Basic Internet Service Eg. Internet.org

Untapped Rural Market

Source: https://data.gov.in/catalog/below-poverty-line-india

Mobile Phone Internet User Penetration to rise from 30.1% to 47.4% in 2017 Source: www.statista.com

The Net National Income has been showing a continuous growth trend

Base Year: 2004-05Source: https://data.gov.in

Decreasing Poverty Line

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

020406080

100120140160180200

NNI

NNI

https://data.gov.in/catalog/below-poverty-line-india

http://www.statista.com/

https://data.gov.in/

ON THE FLIPSIDEDemographic Transition

Decline in child population of age groups 0-6 years and 7-14 yrs

E-COMMERCE SYSTEM• Online Travel, ticketing, etc

– Ticketing for air, rail, bus, movies, events• Online Retail*

– Retail products sold through online route• Online Marketplace

– Platform where sellers and buyers transact online• Online deals

– Deals purchased online, redemption may or may not happen online

• Online Portals classified– Include car, job, property and matrimonial portals

NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III

*Goldman Sachs has projected that India's online retailing market, which is already one of the largest in the world, will expand to $69 billion in 2020 from $23 billion in 2016 - The Economic Times, March 16, 2016

Founder : Jeff Bezos

Amazon.com, Inc. founded in 5th July 1994. Is an American international electronic commerce company, headquartered in Seattle, Washington, United States

Amazon.com started as an online bookstore, but soon diversified, selling DVDs, VHSs, CDs, video and software, video games, electronics, apparel, furniture, food, toys, and jewellery

Amazon Kindle e-book reader and the Kindle Fire tablet computer.

The 4th most successful start-up company of all time by market capitalization, revenue, growth and cultural impact

“O U R VIS ION I S TO BE

EARTH 'S MOST CUSTOMER

CENTRIC COMPANY ;

T O B U I L D A P L A C E W H E R E P E O P L E C A N C O M E T O F I N D A N D

D I S C O V E R A N Y T H I N G T H E Y M I G H T WA N T T O

B U Y O N L I N E ”

“ O U R M I SS I O N I S T O L E V E RA G E

T E C H N O LO GY A N D T H E E X P E RT I S E O F I N VA LU A B L E

E M P LOY E E S A N D T O P R O V I D E C U S T O M E R W I T H T H E

B E S T S H O P P I N G E X P E R I E N C E O N T H E

I N T E R N E T ”

I t i s a r e p r e s e n t a t i o n o f t h e w i d e r a n g e o f i t e m s a v a i l a b l e f o r r e t a i l b y A m a z o n

Literal ly everything from A to Z

Yo u m i g h t h a v e n o t i c e s t h e A m a z o n l o g o l o o k s l i ke a s m i l e y f a c e b u t a s e c o n d l o o k s h o w s t h a t t h e a r r o w g o e s

f r o m A t o Z

#100 % Original Products


#On-Time Delivery

#Friendly Customer Service

#Virtually Anything

5PS OF STRATEGYPLAN


PLAN – CONT’DINTERNATIONAL PRESENCE• Australia• Brazil• Canada• China• France• Germany• Japan• Mexico• Netherlands

• Spain• United

Kingdom• United States• Italy

PLOY• International Brand• International Market Expertise• Fulfillment by Amazon• Junglee.com• Kindle – a niche market segment• Acces to nearly 19000 pincodes


POSITION


Books

DVDs/Video Downloading

Software, Games, Electronics

Apparel, Furniture, Food

PossiblyAnything


www.amazon.in

• Innovation since Inception– Kindle– Amazon Exclusive– Gift a Smile– Self Return– One click pay (yet to be introduced in India)

PATTERN


PERSPECTIVE


• Mergers and Acquisitions– Emvantage - To ensure the best in class online payment experience– Digital Wallet - Limited access to the customer’s data

• Corporate Social Responsibility– Gift A Smile

• Customer Engagement and Customer Service– One click pay– Digital wallet -To target refunds

PESTEL• Political • Economic • Social • Technological • Environmental • Legal


POLITICAL


• International policies and polices related to online purchase

• Government’s policies, politician’s interests, and the ideologies of several political parties

• Regulations are also interfering with online purchases.

• Internet providers are advancing which is bringing faster and more affordable internet

• Government policies promote competition through telecom liberalization, e-commerce promotion and legislation

ECONOMIC


• India Economy is stable since introduction of the industrial reform policies in 1991.

• Currency fluctuations• Reductions in industrial licensing, liberalization of

foreign capital • Internet retailing Growth between 2006 and 2011,

sales rising by 100%• 143 million of these will be in Asia-Pacific

SOCIAL


• Any changes in trends impact a business environment

• In the world the internet is restricted due to religious and ethical factors

• Internet growth rate is outstanding, With internet users increasing every year

• Social networks are booming, like Facebook, Twitter• Product category risk and financial risk decrease

online shopping

TECHNOLOGICAL


• With Amazon being an online retailer, they are forced to find innovated methods to surpass their competitors

• Internet access available through mobile device or tablet• India possesses one of the strongest IT sectors in the world, • Price comparing available for consumer is anywhere in the

world shopping. • Amazon can offer very competitive prices

ENVIRONMENTAL


• Quality of air in India affected by industrialization and urbanization

• Amazon is offering cloud storage and cloud computing• Potentially see millions of electronics like hard drives and

computer components no longer needed in mass production

• Online shopping have less pollution from vehicles• Shipping the products add unnecessary packaging for

shipment

LEGAL


• Number of legal changes have been implemented in India• selling overseas need to be aware of international laws • Separate laws depending on the state• selling multimedia over the internet require certain rights

to the media. • For e.g. Hollywood fighting sale of digital copies • 100% FDI on E-commerce business

IN A NUT SHELL• Political, economic, social, technological progress indicates an

increasing and attractive market to be exploited by Amazon.com • The Indian markets have shown exceptional growth. The use of

internet as a social networking channel has created new opportunities to be exploited, additionally , as environment awareness increased globally ,

• it is important that Amazon.com’s attractive also suggests that strategies friendly activities.

• The global nature of Amazon.com’s activities also suggest that strategies developed should comply with the different legal obligation internationally.


SWOT ANALYSIS• Well Known brand with large customer

base – Top of the mind RECALL• Diverse product offerings at Low

costs• Working with minimum profit & gaining

from Economies of scale• Experience of over a decade in online

shopping industry internationally• Superior logistics & distribution

systems

• Operating at Low Profit Margins• Diversification strategy leading to

shift of focus from core competences

• Criticism for working conditions• Dependence on vendors• Missing touch and feel of products

for purchase

• Online Security threats• Strong Indian competitors FLIPKART, MYNTRA, SNAPDEAL• Regional Low cost retailers• Flexible FDI policies enabling possible

entries of other players like Walmart, Alibaba, etc

• Customer Loyalty.

• Indian retails industry worth is huge with still growing potential

• Acquiring local small business enterprises, enabling expansion

• Opening physicals stores• Tie-ups with major players of untapped

Markets• Expand into more product segments –

Online Movies, streaming etc.


KEY STRATEGIC CHALLENGES

Find new areas of Growth

How to maintain the long term profitability


CORPORATE LEVEL STRATEGYOTHER BUSINESS’S BY AMAZON:• Amazon Web Services• Kindle• Amazon Now• Amazon Businesses• MYHABIT

ACQUISITIONS:• Junglee.com• Look.com• Audible• Diapers.com• Shopbop• DPReview• Yoyo.com• IMDb

Amazon

Consumer

Sellers Enterprises

Content Creators


BUSINESS LEVEL STRATEGY

OVERALL COST LEADERSHIP

COST FOCUS DIFFERENTIATION FOCUS

DIFFERENTIATION

HIGH COSTLOW COST

BROAD

NARROW

COM

PETI

TIVE

SCO

PECOMPETITIVE ADVANTAGE

PROFITABILITY STRATEGY

Short Term

Profitability is low due to

Large Capital investments

Long Term

Profitability is High due to high growth

market


INDUSTRY APPRAISAL

HOW DOES AMAZON EXPLOIT THE INDUSTRY STRUCTURE ?• By managing logistics efficiently• 100% original products• Customer Satisfaction• Speedy Delivery

COMPETITIVE ADVANTAGE


PORTERS 5 FORCES

Competitive Rivalry

Potential Entrants

Buyers

Substitutes

Suppliers

Threat of Entry

Bargaining Power

Threat of Substitutes

Bargaining Power

Threat of New Entrants : LOW• Virtually impossible to reach the magnitude of inventory

and status that Amazon maintains.• Difficult for a start-up to raise enough capital to compete

with Amazon.• Economies of Scale

Threat of Substitutes : HIGH• Lot of Physical Stores Available• Most companies/brand have a online store as well• The physical stores and websites may not offer the same

quality of customer service and convenience to its customers.


Bargaining Power of Buyers : HIGH

• Indian Customers are price sensitive, less brand loyalty• They will easily switch to a competitor if he offers a

lower price

Bargaining power of Suppliers : Medium

• Inventory can be sourced from multiple suppliers• Amazon buys in bulk and hence can use their influence

over smaller suppliers.• Suppliers offer similar sales on their websites as well


Competitive Rivalry : HIGH

• With similar offerings there are 2 major competitors Flipkart and Snapdeal

• Several competitors in terms of products offered

Industry Attractiveness is Medium : HIGH


COMPETITOR ANALYSISC o m p e t i t o r i d e n t i fi c a t i o n

KEY COMPETITORS

• Flipkart • Snapdeal• eBay• Jabong• All Brick and mortar stores

COMPETITOR ANALYSIS

Source: http://economictimes.indiatimes.com

LOSS IN MARKET SHARE IN 2015

COMPETITOR ANALYSIS


AMAZON PIPS SNAPDEAL TO BECOME INDIA'S 2ND LARGEST ONLINE MARKETPLACE AFTER FLIPKART

FlipkartAmazon

SnapdealOthers

0

5

10

15

20

25

30

35

40

45

Amazon Vs Flipkart Vs Others

Share of Shipment Market Share Order Perday

COMPETITOR ANALYSIS


Amazon32%

Flipkart24%

HomeShop1824%

Infibeam12%

Crossword8%

Discount Offered uptoAmazon Flipkart HomeShop18 BookAdda Infibeam Crossword

COMPETITOR ANALYSIS

Source: http://trak.in

COMPETITOR ANALYSIS

Source: http://trak.in

COMPETITOR ANALYSIS

• The Largest Competitor as of now in India is Flipkart with Highest score

• Flipkart has 80% share of the online book market in India

• Flipkart now has a wide reach in the Indian market and the delivery time is just 2 days and sometime next day

• Flipkart 75 million registered users• Other Competitors includes – Ebay.in, Snapdeal,

Jabong, Homeshop18NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III

Mobile Tablets Laptops Camera0

10

20

30

40

50

60

70

80

90

Brands : Catalogue Size for Consumer Electronics

Amazon

COMPETITOR ANALYSIS

Source: http://www.nextbigwhat.com

Mobile Tablets Laptops Camera0

100

200

300

400

500

600

700

800

900

1000

No. of Products: Catalogue Size for Consumer Electronics

Amazon

COMPETITOR ANALYSIS


0

50

100

150

200

250Who Has Better Lifestyle Products

Amazon Flipkart

COMPETITOR ANALYSIS


Mobiles Laptops Tablets Cameras Total0

200

400

600

800

1000

1200

1400

1600

1800

Amazon SKUs Vs Flipkart SKUsAmazon Flipkart

COMPETITOR ANALYSIS


Warehouse Location

[Fulfillment Centers]

Ahmedabad, Hyderabad, Chennai, Bangalore, Mumbai, Delhi, Kolkata, Nagpur, Pune

Human Resource

Management

Diverse Culture, Various Employee Benefit - Health, Employee Assistance, Stock

Technology Developme

ntAnalytics

(e.g. Junglee.com)

VALUE CHAIN ANALYSISAmazon India

Support Activities

Inbound Logistics

• Suppliers can arrange drop-in their products • Or Schedule a Pick-up

Inventory Managemen

t

• Single unit to entire inventory• ‘Pay as you go’

Packaging• Buys packaging material from Dynaflex, a Vadodara based

company

Outbound Logistics

• Delivery of products to customer• Refunds of products• Amazon Transportation Services Private Limited

Post Sales Services

• customer service department• Returns

Primary Activities

HIGHLIGHTS OFAMAZONIN INDIA

India’s largest online market place

Brought about a change in Shopping

Experience

Bliss for all the Readers !

R U S H A B H S H R O F F 4 5J AT I N S I N G H 4 7K R U N A L T H A K K A R 4 9A M Y T H A K K E R 5 0

D E V E N D R A S I N G H4 6D H AVA L VA S A N I5 2V I R E S H V E N N A

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