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Analysis & Outlook
Amazon India Strategy: Three Pillars,Vast selection, Low prices & Fast delivery to customers
Amazon.in ...
Analysis & Outlook
At the same time, Amazon’s other business in India, the price comparison website Junglee.com
will also ...
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Amazon India Strategy: Three Pillars, Vast selection, Low prices & Fast delivery to customers

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Amazon India Strategy: Three Pillars, Vast selection, Low prices & Fast delivery to customers

  1. 1. Analysis & Outlook Amazon India Strategy: Three Pillars,Vast selection, Low prices & Fast delivery to customers Amazon.in gives users access to sellers of books, movies and TV shows. The company will be increasing the range available, with cameras and mobile phones due next. This is the 10th country-specific site that Amazon has globally, apart from the main US one. For now, owing to foreign direct investment (FDI) regulations, the company has to follow the marketplace model, where they are not directly selling any of the products on the site, but are handling logistics for the sellers, with their “Fulfilled by Amazon” model. The marketplace makes about 40 per cent of Amazon's revenues globally and, on Wednesday, Amazon said it is starting with a modest 100 retailers in India. Amazon has three pillars it is basing its strategy on, according to Amit Agarwal, Vice President and Country Manager, Amazon India: a vast selection, low prices, and fast delivery to customers. The other part of the strategy is to build a highly customer centric model. A buyer can come and chose the seller, and chose the best deal. For sellers, Amazon is offering two options right now. One is selling on Amazon; there, the listing and payment is on Amazon, but logistics are handled by the seller. The second is fulfilment by Amazon, where Amazon also handles the deliveries. Sellers pay a monthly subscription fee for the merchant, along with a referral fee for successful transactions. However, for the first year, the company is offering a free subscription, and a discounted referral fee of 5%, instead of the normal 12% fee. Fulfilment by Amazon is optional, but a quick look at the site shows that a majority of sellers are using the service. But finally, to sell on the Amazon Marketplace: the seller will have to bear a monthly subscription fee of Rs 499, currently set free for a year's promotion; a transaction fee of 12 per cent of the item value (set at a promotional 5 per cent); and a closing fee of Rs 10 on every sale. Amazon is a platform, where retailers, shop owners or publishers can sell their titles - at times with help from an Amazon warehouse and logistics managed by Amazon. For buyers, too, there is a launch window where there are no delivery charges, and no cash on delivery charges. Amit Agarwal, vice-president and country manager, Amazon India said that the timeline for this decision isn’t fixed, and added, “We’re watching the consumer feedback. We’ve made the whole thing very transparent, and we won’t charge for things overnight. It’s going to be something we do base on what the customers are saying.” Agarwal also confirmed that the sellers can’t add their offerings directly yet, and said, “We look at the selection, scale and speed that the companies can offer, and help them to make the most of the system.” Some believe that the entry of Amazon is going to have a negative impact on companies such as Flipkart, which, on 4 June, reached a milestone of selling 100,000 books in a single day. Flipkart also follows a marketplace model, but Agarwal points out that sellers don’t need to be exclusive to one platform, and will only use a platform that gives them a competitive advantage.The marketplace model, which was pioneered by eBay, and is used by sites such as Flipkart, SnapDeal and Infibeam today, is quickly gaining ground in Indian e-commerce—the move gives them access to much more inventory than before, without significant investment. Rajesh Prabhakar Analyst Bio @ http://analysiscasestudy.blogspot.com/
  2. 2. Analysis & Outlook At the same time, Amazon’s other business in India, the price comparison website Junglee.com will also continue to function. Agarwal says, “In a way, Junglee is a map of the e-commerce space, and our goal is to have Amazon.in show up on that map in a good position. Junglee served to confirm and validate our views about India, about what the customer is looking for. It’s also helped us to see a lot of sellers, who aren’t well known, but are offering a great catalogue. They would make great candidates for Fulfilment by Amazon, so in that way, we see Junglee as very complementary to what we’re doing with Amazon.in.” For Amazon India is a crucial market as it is expected to grow at a good pace in the coming three to five years. Forrester estimates that the 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 from the 2012 levels of US $1.6 billion. Amazon has also entered a comparatively larger market created by Indian players like Flipkart, Jabong, Myntra and numerous others ( some of them already shutdown) who were able to increase market share through strategies like cash-on-delivery payments, liberal return policies, free or subsidized shipping and in-house logistics. Amazon understood the importance of these strategies and incorporated them in its business model along with its big strength the Market Place model. Amazon has perfectly timed its entry into the Indian market and this strategy has allowed it to use its strengths to maximum advantage. Rajesh Prabhakar Analyst Bio @ http://analysiscasestudy.blogspot.com/

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