Hyper Competition in E-commerce

1. HYPER
COMPETITION
IN E-COMMERCE
AMAZON INDIA

2. 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

3. 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: 2004-05
Source: https://data.gov.in
Decreasing Poverty Line
0
20
40
60
80
100
120
140
160
180
200
NNI
NNI

4. ON THE FLIPSIDE
Demographic Transition
Decline in child population of age groups 0-6 years and 7-14 yrs

5. 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

6. 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

7. “O U R V I SI ON I S
T O B E E ARTH' S MOST
CUSTOMER CE NTRI C
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
W A N T T O B U Y O N L I N E ”

8. “O U R M I S S I O N I S T O
L E V E R A G E T E C H N O L O G Y
A N D T H E E X P E R T I S E O F
I N V A L U A B L E
E M P L O Y 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 ”

9. 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
Literally everything from A to Z
Y o 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 k e 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

10. #100 % Original
Products
NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III
#On-Time Delivery
#Friendly Customer Service
#Virtually Anything
5PS OF STRATEGY
PLAN

11. NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III
PLAN – CONT’D
INTERNATIONAL PRESENCE
• Australia
• Brazil
• Canada
• China
• France
• Germany
• Japan
• Mexico
• Netherlands
• Spain
• United Kingdom
• United States
• Italy

12. PLOY
• International Brand
• International Market Expertise
• Fulfillment by Amazon
• Junglee.com
• Kindle – a niche market segment
• Acces to nearly 19000 pincodes
NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III

13. POSITION
NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III
Books
DVDs/Video
Downloading
Software,
Games,
Electronics
Apparel,
Furniture, Food
Possibly
Anything

14. NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III
www.amazon.in

15. • Innovation since Inception
– Kindle
– Amazon Exclusive
– Gift a Smile
– Self Return
– One click pay (yet to be introduced in India)
PATTERN
NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III

16. PERSPECTIVE
NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III
• 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

17. PESTEL
• Political
• Economic
• Social
• Technological
• Environmental
• Legal
NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III

18. POLITICAL
NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III
• 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

19. ECONOMIC
NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III
• 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

20. SOCIAL
NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III
• 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

21. TECHNOLOGICAL
NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III
• 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

22. ENVIRONMENTAL
NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III
• 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

23. LEGAL
NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III
• 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

24. 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.
NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III

25. 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.
NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III

26. KEY STRATEGIC CHALLENGES
Find new areas of Growth
How to maintain the long term profitability
NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III

27. CORPORATE LEVEL
STRATEGY
OTHER 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

28. NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III

29. BUSINESS LEVEL STRATEGY
OVERALL COST
LEADERSHIP
COST FOCUS
DIFFERENTIATION
FOCUS
DIFFERENTIATION
HIGH COSTLOW COST
B
R
O
A
D
N
A
R
R
O
W
COMPETITIVESCOPE COMPETITIVE ADVANTAGE

30. PROFITABILITY STRATEGY
Short Term
Profitability is low
due to Large
Capital
investments
Long Term
Profitability is
High due to high
growth market
NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III

31. INDUSTRY APPRAISAL

32. HOW DOES AMAZON EXPLOIT
THE INDUSTRY STRUCTURE ?
• By managing logistics efficiently
• 100% original products
• Customer Satisfaction
• Speedy Delivery
COMPETITIVE
ADVANTAGE
NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III

33. PORTERS 5 FORCES
Competitive
Rivalry
Potential
Entrants
Buyers
Substitutes
Suppliers
Threat of Entry
Bargaining Power
Threat of Substitutes
Bargaining Power

34. 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.
NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III

35. 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
NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III

36. 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
NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III

37. COMPETITOR ANALYSIS
C o m p e t i t o r i d e n t i f i c a t i o n
KEY COMPETITORS
• Flipkart
• Snapdeal
• eBay
• Jabong
• All Brick and mortar stores

38. COMPETITOR ANALYSIS
Source: http://economictimes.indiatimes.com
LOSS IN MARKET SHARE IN 2015

39. COMPETITOR ANALYSIS
Source: http://economictimes.indiatimes.com
AMAZON PIPS SNAPDEAL TO BECOME INDIA'S 2ND LARGEST
ONLINE MARKETPLACE AFTER FLIPKART

40. 0
5
10
15
20
25
30
35
40
45
Flipkart
Amazon
Snapdeal
Others
Amazon Vs Flipkart Vs Others
Share of Shipment Market Share Order Perday
COMPETITOR ANALYSIS
Source: http://economictimes.indiatimes.com

41. Amazon
32%
Flipkart
24%
HomeShop18
24%
BookAdda
0%
Infibeam
12%
Crossword
8%
DISCOUNT OFFERED UPTO
Amazon Flipkart HomeShop18 BookAdda Infibeam Crossword
COMPETITOR ANALYSIS
Source: http://trak.in

42. COMPETITOR ANALYSIS
Source: http://trak.in

43. COMPETITOR ANALYSIS
Source: http://trak.in

44. 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,
Homeshop18
NMIMS - PTMBA | STRATEGIC MANAGEMENT | TRIMESTER III

45. 0
10
20
30
40
50
60
70
80
90
Mobile Tablets Laptops Camera
Brands : Catalogue Size for Consumer Electronics
Amazon Flipkart
COMPETITOR ANALYSIS
Source: http://www.nextbigwhat.com

46. 0
100
200
300
400
500
600
700
800
900
1000
Mobile Tablets Laptops Camera
No. of Products: Catalogue Size for Consumer Electronics
Amazon Flipkart
COMPETITOR ANALYSIS
Source: http://www.nextbigwhat.com

47. 0
50
100
150
200
250
Who Has Better Lifestyle Products
Amazon Flipkart
COMPETITOR ANALYSIS
Source: http://www.nextbigwhat.com

48. 0
200
400
600
800
1000
1200
1400
1600
1800
Mobiles Laptops Tablets Cameras Total
Amazon SKUs Vs Flipkart SKUs Amazon Flipkart
COMPETITOR ANALYSIS
Source: http://www.nextbigwhat.com

49. 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
Development
Analytics
(e.g. Junglee.com)
VALUE CHAIN ANALYSIS
Amazon India
Support Activities

50. Inbound
Logistics
• Suppliers can arrange drop-in their products
• Or Schedule a Pick-up
Inventory
Management
• 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

51. HIGHLIGHTS OF
AMAZON
IN INDIA

52. India’s largest online market
place

53. Broughtabout a change in
Shopping Experience

54. Bliss for all the Readers !

56. R U S H A B H S H R O F F 4 5
J A T I N S I N G H 4 7
K R U N A L T H A K K A R 4 9
A M Y T H A K K E R 5 0
D E V E N D R A S I N G H 4 6
D H A V A L V A S A N I 5 2
V I R E S H V E N N A 5 3