Analyze Amazon’s market entry strategies for the three emerging markets – China, India, and Brazil

Analyze Amazon’s market entry strategies for the three emerging markets – China, India, and Brazil

• Analyze Amazon’s market entry strategies for the three emerging markets – China, India, and Brazil. What were the significant similarities and differences in the strategies? (1.5-2 pages – (10 points)

There are a variety of ways in which a company can enter a new market. One market strategy is unlikely to work in all international exchanges, and as such different approaches are needed for these diverse markets. Several factors are likely to influence the choice of strategy, and this may include the degree of adaptation required, tariff rates, and transportation and marketing costs. Amazon started as an online book store and is now the world’s largest online retailer. Amazon has slowly but surely expanded worldwide and is now operating worldwide with the help of a combination of logistic platforms, globalized delivery, and localized portals. The company’s growth is proof of its competitiveness, and its expansion is a result of its intensive growth strategies.

Similarities

Amazon needed to attract customers from the vast internet users and to do this, and it rolled out cash on delivery option in China and India. Although there were debit cards, credit cards, and bank transfers, cash-on-delivery enabled customers to pay for their merchandise on delivery. However, the modern methods tended to delay payments to a week.

In India, Amazon invested big into logistics to adjust to the difficulties of a distribution. Amazon built a 150,000 square foot fulfillment center and later made another one in Bangalore to serve Southern India. In China, Amazon had to use the three fulfillment centers used by Joyo.com. It, however, expanded to 15 fulfillment centers across China and started handling deliveries in-house by hiring employees to transport the merchandise the ‘last mile’ to a customer. Due to traffic-filled roads, Amazon chose to use bicycles or scooters instead of vans or trucks.

Through the ‘fulfillment by Amazon program,’ Amazon enabled distributors to store their products at their distribution center and handle distribution at a fee. In the end, three out of four orders on Amazon.in was handled by Amazon.

Differences

Buying an existing company is the most appropriate market strategy for a company that enters i to a new market. When Amazon first entered China in 2004, it acquired Joyo.com for $75 million. Although it was costly, the company had a substantial market share, and it immediately provided Amazon with the status of being a local company and thus received the benefits of local market knowledge, an established customer base, and treatment by the local government as a local firm. Amazon operated in China for its first year under Joyo’s domain name and strived to replicate the acclaimed customer experience it delivered to customers in developed countries.

Much of India’s transportation infrastructure and roads were in poor condition and sometimes heavily congested. Even in better roads, it took twice the time it took in the US, and most of its population lived in remote areas. To differentiate itself from its competitors, Amazon became the first e-retailer to offer the next day shipping for the orders it fulfilled. The company added pin codes and landmark fields on the delivery information to ensure timely delivery. Amazon was to function solely as a marketplace, and so the company could only establish market share through seller acquisition. The company needed to attract sellers and to do this, and it offered sellers a promotion for a two-year membership agreement with the first being free of cost. It also offered to teach these sellers on Amazon’s platform and services and a pilot service for small retailers with no experience.

Additionally, these sellers could use the ‘fulfillment by Amazon’ for delivery services. To attract customers from the vast internet users, Amazon offered multiple incentives for those who referred customers and those who shopped from Amazon. It also provided free shipping and permanent free shipping on orders above Rs 499. A program that could give commission to all online publishers that directed their users to Amazon.in

In China, Amazon strived to replicate the customer experience it offered in developed countries. For instance, Piacentini liked to tell a fantastic story about the delivery of a new Harry Porter book, and the company delivered 5000 books on schedule. However, when a rival undercut the price by 5RMB, Amazon issued a refund for the difference to the customers, even those not expecting a refund, and the company gained publicity in the region. Further, Amazon in China offered free shipping to all purchases made on their site. It also provided product recommendations to customers with prior purchasing history.

In Brazil, Amazon faced challenges of labor laws, tax codes, logistic problems, and stiff competition from an already-established MercadoLibre. Although the company faced challenges with publications companies that wanted control over prices due to Amazon’s aggressive discounting strategies, it was able to launch a Kindle store. The company also faced high duties on electronic imports that led to the company retailing for R$479 and so it offered customers the offer to pay for products for up to 12 installments. It also provided free shopping on its kindle products.

• Research Amazon’s performance in China, India, and Brazil from 2014-2019. Does Amazon continue to be successful in these markets? Has there been a shift in the strategy? Provide factual and statistical evidence for your answer. (1.5-2 pages – 10 points)

Amazon may be the leading company in the US, but the case is very different overseas. The company has recently launched a third part market and a retail market in Australia and this while introducing prime in Luxembourg, Singapore, Belgium, and the Netherlands.

In comparison to the markets in India and China, these markets have been stagnant and rarely move the revenue needle for Amazon. The company manager, Jeff Bezos in 2016, announced that the company was doubling down its expansion in China while fueling the company’s growth in India. The investments are yet to return big dividends with the company directing the loss to the massive investments in Indian subsidiaries such as Flipkart, which has recently been backed by billions from investors.

On the other hand, Amazon is facing more robust competition from Alibaba, with the environment known to be harsh to foreign companies. Alibaba began the expansion into a brick and mortar retail before Amazon acquired Whole Foods. Another significant advantage that Alibaba has over Amazon is the relationship between Alibaba’s CEO and Xi Jing pin. As a result, the share of Amazon of the Chinese market has been stagnant at 1%, according to iResearch.

The company CEO is still optimistic about the market in India and China and has had a strong third quarter. The company manager has pointed out to Prime sales that allowed members with prime memberships to access exclusive deals as the reason for a successful quarter. He stated that more members had joined the Prime program in India than in any other country. As such, he added that the company would pursue the same strategies it has in North America by adding prime benefits, contents, video content, services, and other services.

• How has Amazon used technology to enhance its existing products and services and diversify into new ones? List and describe at least four such ventures. (1-1.5 pages – 5 points)

Omnichannel

Omnichannel is the use of a creative combination of physical and online channels to generate sales by providing customers consistently with the seamless experience from anywhere, be it a device or any store location. This strategy aims at building a unified brand experience for all the clients by eliminating many administrative, financial, and logistical obstacles from the system. An instance of this case is where a client buys shoes using a smartphone and is given the option of having them delivered to their location or pick them up from the nearest store. In the same respect, if they wish to return the shoes, they can mail them to their designated store. As such, the relations with Amazon flow through diverse channels, and this experience minimizes efforts and improves the quality of customers’ shopping experience.

Amazon has integrated an omnichannel strategy into its technological world and has been since optimizing it. By the use of key metrics such as logistics, marketing, and sales, the company has been able to streamline its activities through the use of various active channels. As such, Amazon has been able to merge all multiple existing channels as one entity and has achieved its mission of becoming a customer-centric center.

Logistic and supply chain management

One of the most significant expenses that Amazon faces is the shipping cost. Despite this, the company still runs a systematic supply chain and logistics network that takes care of everything from sortation, warehousing, shipping, delivery services, and even transportation. As such, a flowing logistic and supply management plays a critical role in the running of Amazon. Amazon is a logistic machine and runs 29 sortation centers, 95 warehouses, and fulfillment centers, and approximately 149 facilities outside its parent company in the US. The company’s physical footprints occupy more than 300 million square of leased space worldwide. At the inside of its fulfillment centers, it is equipped with a systematically well-coordinated slides system, lifting machines, and conveyor belts. Amazon is responsible for checking weights in boxes, attaching labels, and delivering these goods as well as shipping.

Statistically, it shipped approximately 5 billion items in 2015 through its private carriers, regional shoppers, post office, and its prime business in the US. The company is keen on launching its delivery service because 40% of its deliveries are accounted for by the post office. The company also has approximately 40 airplanes, 7000 trucks and has recently introduced its own branded vans to reinforce and minimize delivery time.

Management Information Sytems

Amazon has a unique sales strategy and has evolved through the years from a single level strategy to a multi-level e-commerce strategy. The business favored Amazon’s initial growth to client models of selling to business to business operations mode. E-commerce has recently developed, and this has enhanced the interactions between the consumer and the business, and this has made Amazon prioritize and customize its information systems to giving value and respecting customer views. It has further excluded retailers as it allows clients to buy on Amazon as a platform.

Amazon has also used an application called E2C with an S3 that serves as a storage device for the use of the internet. This tool enables users to retrieve, save, and make use of any data volume from various locations irrespective of time. In this interface, users can surf to find the products they want to purchase and uses data mining to store information about services and products.

Artificial Intelligence

Amazon innovated the use of recommending personalized products after online purchases by the use of ‘Item-based collaborative filtering.’ This tool makes the homepage of each client unique and bases them on their previous purchase as well as their interests.