Introduction of Amazon.

Amazon was founded by Jeff Bezos. Prior to starting Amazon, Bezos

worked in New York as a vice president at D. E. Shaw & Co., a global
investment management firm, but decided to quit his job and move to
Seattle to take advantage of the incredible growth of the Internet. The
Amazon website launched on July16, 1995.

Amazon began as an online bookstore, but the company had innovative

strategies that set it apart from competitors. It offered discounts up to
30%, allowed customers to post their own book reviews on its website,
and continually worked to improve the ease of placing orders with
technological features like, “1-Click” shopping. These strategies derived
from Amazon’s customer-focused mission statement.

Amazon is known for its disruption of well-established industries through

technological innovation and mass scale. It is the world's largest online
marketplace, AI assistant provider, and cloud computing platform as
measured by revenue and market capitalization. Amazon is the largest
Internet company by revenue in the world. It is the second largest private
employer in the United State and one of the world's most valuable
companies.

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 Amazon.com’s Mission Statement

Amazon’s mission statement is “We strive to offer our customers the

lowest possible prices, the best available selection, and the utmost
convenience.” This corporate mission promises attractive e-commerce
services to satisfy target customers’ needs. The company focuses on the
variables of price, selection, and convenience. In this regard, the following
characteristics are identifiable in Amazon’s corporate mission statement:

1. Lowest prices
2. Best selection
3. Utmost convenience

The “lowest prices” component of the mission statement guides the

pricing strategies included in Amazon.com Inc.’s marketing mix or 4P.
Low prices are a selling point that makes the company’s e-commerce
website and services attractive. A corresponding strategic objective is to
reduce operational costs to enable the business to minimize prices.

Amazon’s corporate mission statement also points to having the best

selection. For example, the wide array of products on the company’s
website is a factor that attracts customers.

Moreover, Amazon.com Inc.’s corporate mission emphasizes

convenience, such as in accessing the company’s products via the
Internet. This characteristic is a response to consumers’ use of
“convenience” as a criterion when evaluating the quality and
attractiveness of online retail services.

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 Amazon.com’s Corporate Vision Statement

Amazon’s corporate vision is “to be Earth’s most customer-centric

company, where customers can find and discover anything they
might want to buy online.” This vision statement underscores the
business organization’s main aim of becoming the best e-commerce
company in the world. In this regard, the following characteristics are
identifiable in Amazon’s corporate vision statement:

1. Global reach
2. Customer-centric approach
3. Widest selection of products

The “global reach” component of Amazon.com Inc.’s vision statement is

all about international leadership in the e-commerce market. For example,
in stating the “Earth” as the market, the company shows that it aims to
continue expanding globally. Thus, a corresponding strategic objective is
global expansion, especially through market penetration and market
development, which are included in Amazon.com Inc.’s generic strategy
and intensive growth strategies.

The customer-centric approach in Amazon’s corporate vision statement

shows that the company considers customers as among the most
important stakeholders in the online retail business. This consideration
agrees with Amazon.com Inc.’s corporate social responsibility strategy for
its stakeholders.

Moreover, the corporate vision indicates continuing efforts to broaden the

product mix. These efforts contribute to business growth and to making
the company’s services more attractive to target consumers

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Objective of Amazon focussing on Indian market.

India presents a unique e-commerce opportunity for several reasons. The

country currently has 1.3 billion people, about four times the population of
the U.S., and is on track to surpass China as the world's most populous
country in just five years, according to the U.N.
Its economy is growing 5% annually. Much of the population is tech-
savvy, with smartphone penetration reaching more than 30%, making it
the world's second-biggest smartphone market after China. About 10% of
Indians speak English, giving it the second-largest English-speaking
population after the U.S., and thus making it an ideal market for Amazon
Video, which the company launched internationally at the end of 2016.
Finally, India is densely populated, with 1,033 people per square mile,
compared to the U.S., which has just 85 people per square, and its retail
industry is highly fragmented, without dominant entrenched brands
occupying positions similar to what Wal-Mart, for example, holds in the
U.S.

Those two factors make the country an ideal market for an e-commerce
operator like Amazon. The high population density means shipping would
be much easier and cheaper than in the U.S., especially if the company
can master drone delivery, and the highly fragmented nature of the retail
sector makes the benefits of e-commerce even more desirable and the
competition weaker

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 Assess the issues and challenges of running Amazon in India

To study amazon business models to overcome these challenges and

become the leading ecommerce company in India.

To study expansion strategy of Amazon in India

Customer Obsession: Start with the customer and work backwards

Innovation Not listening to customers leads to failure. Only listening to
customers leads to failure

Bias for Action: It’s a time of unheralded revolution and insurmountable

opportunity provided every minute counts Jeff Bezos’ goal is to a cost leader
Committed to leveraging Amazon’s core competencies in whatever ways
found to realize the value of the company’s assets. Goals and Objectives
follow the same theme as the vision statement.

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Amazon Statistical Data

Amazon is the most popular shopping app in the United States. It had
150.6 million mobile users accessing the Amazon app in September 2019
(Statistic, 2019).

Customers trust Amazon. 89 percent of buyers agree that they are more
likely to buy products from Amazon than other ecommerce sites
(Feedvisor, 2019).

There were an estimated 103 million U.S. Amazon Prime subscribers, up

from 95 million in June 2018 (Statistic, 2019).

Amazon.com has a total of 119,928,851 products as of April 2019

(Scrapehero, 2019).

The electronics category was the most popular product category

purchased by Amazon shoppers in the United States. 44 percent of US
Amazon shoppers had purchased electronics via Amazon (Feedvisor,
2019).

Shoppers purchased more than 100 million products during the Amazon
Prime day in 2018 (CNBC, 2018).

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67 percent of Amazon Shoppers prefer to shop using their desktop
computer or laptop (Cpcstrategy, 2018).

On average, small and medium sized businesses (SMBs) located in the

US sell more than 4000 items per minute (Amazon, 2019).

Amazon has more than 2.5 million sellers currently active selling in the
marketplace (Marketplacepulse, 2019).

23 percent of online shoppers go first on Amazon for inspiration when

they don’t have a specific product in mind for purchase

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Strategies of Amazon

Business strategies applied for internet activity In early stage of the

Amazon.com’s journey, the business strategy of amazon.com was
very simple and forward. Their one and only strategy was to sell books
to the customer through online. They invested to the customer and offer
them a huge collection of books through online. “From the beginning
our focus has been on offering our customers compelling value. We
realized that the web was and still is the World Wide Web. Therefore
we set out to offer customer something they simply could not get any
other way and began serving them with the book.” -Amazon.com
attracted customers by offering 1-click shopping, low price and
increasing customer’s value. Creating easy to use and easy to learn
customer interfaces was a key aspect of Amazon’s strategy.

1. Smart Innovation Strategy: The main reason of the successful journey

of amazon.com so far is the innovation strategy of the company.
Amazon.com started the business by offering DVDs and CDs alongside
books. In the following year they brought auction theme to the customer.
Their strategy was to provide customer better experience of auction by
protection from the fraud to the bidder though this strategy did not bring
success to the company. Amazon followed B2C (Business to Customer)
model. But it again changed its strategy and transformed from direct sales
business model to sales and service model. Through this model amazon’s
target group was customers and other business group. Amazon.com
offered small business group to use amazon web service and platform to
offer their product to the customers. Amazon took commission on each
sell of other retailer’s product. Through this service amazon created
ecosystem in the market. Through „Amazon Associates Program‟
amazon created and developed partnership with customers and
businessman. The primary goal of the program was to acquire new
customers to boost the sales on Amazon.com. Amazon instead gave
them its affiliates a revenue share. This allowed amazon to extend it
market place into a broad section from a single product. There was a

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change in model in Amazon business strategy. It was a cyber- book
store and with the affiliates and association of the other retailer and
being a platform to the others it became a cyber-market.

2. Customer Relation Management Strategy: When a customer first

enter into Amazon.com he/she is provided „ Featured Product‟ by the
website, But when the customer visit for the second time the
recommender system automatically provide products by studying
customer interests and personality. Customer acquisition and retention
has been the most priority to Amazon.com‟s strategy. Through web
site Amazon maintain sophisticated communication that automates the
process of creating value for the customer.

Jeff Bezos 3 big idea –

1. Limitless inventory
2. Customer Care
3. High margin, lowest price.

3. Limitless Inventory: When amazon started offered books to the

customers. But over the period it increased its products from books to
music, movie, cloud storage, gaming and many more. Porter mentioned
three district sources-
1.Serving few needs of many customer 2.Serving broad needs of few
customer
3. Serving broad needs of many customers.
(Porter, 1996) Initially amazon was followed first source of serving with
few products. But it changed its strategy over time and now it fits into
third sources.

4. Customer Care: “If you do build a great experience, customer tells

each other about that. Word to mouth is very powerful” - Jeffry p. Bezos
One of the success factors of amazon.com is word of mouth. Because
of excellent customer service customers trusted Amazon. They used to
talk about Amazon.com to other. This spread rapidly by creating
increasing traffic on the web site.

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 5. High Margin, Lowest Price: Amazon.com provides products
significantly cheaper than its competitors. One of the main visions of
Amazon.com is based on the long term plan. (1997 Stockholder report)
This makes easier for amazon to take risk of low profit in order to succeed
in future. An estimate shows how it is possible for amazon to become
profitable with lowest price. A product on average gets sold in 33 days
through amazon.com. On the other side it competitors like best buy took
70 day to sell the product. Amazon keeps the best-selling product to its
own stock and longer tail items to third party sellers stock. This gives an
advantage to the company.

6. Marketing and Promotion Strategy: Amazon‟s marketing strategy

remains as strategy brand name, increasing customer traffic,
customer loyalty. To gain so amazon.com undergone various
promotional method. Public relation activities, online and traditional
advertising including radio, television and print media are the prominent.

7. Associate Program: To boost the customer traffic and rate of sale

amazon.com started a associate program with customers and small
businessman. Approximately 200,000 websites have enrolled in the
associate program.

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Why Amazon.com Inc. Is Investing Billions in India

The U.S. e-commerce leader has a unique opportunity in India, but taking
advantage of it will continue to be a drain on the bottom line in the near
term.

India is the world's second most populous country, its biggest democracy,
and its sixth-biggest economy. And now, it appears to be the next big
prize for Amazon.com

When Amazon spots a market opportunity, it goes all in after it. In the
past, the company has jumped on nascent markets in e-commerce, e-
books, video streaming, and cloud computing. Its ability to recognize
opportunities and take advantage of them is one of the biggest drivers of
its success.

Now, on a global scale, India may be the company's next big opportunity.
Amazon announced it would invest an additional $3 billion on the
subcontinent last year, and CEO Jeff Bezos has ordered his deputies to
"do what it takes" to win the Indian market, where the company faces stiff
competition from China's Alibaba and native players Snapdeal and
FlipKart.

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What makes India so special

India presents a unique e-commerce opportunity for several reasons. The

country currently has 1.3 billion people, about four times the population of
the U.S., and is on track to surpass China as the world's most populous
country in just five years, according to the U.N.

Its economy is growing 5% annually. Much of the population is tech-

savvy, with smartphone penetration reaching more than 30%, making it
the world's second-biggest smartphone market after China. About 10% of
Indians speak English, giving it the second-largest English-speaking
population after the U.S., and thus making it an ideal market for Amazon
Video, which the company launched internationally at the end of 2016.
Finally, India is densely populated, with 1,033 people per square mile,
compared to the U.S., which has just 85 people per square, and its retail
industry is highly fragmented, without dominant entrenched brands
occupying positions similar to what Wal-Mart, for example, holds in the
U.S.

Those two factors make the country an ideal market for an e-commerce
operator like Amazon. The high population density means shipping would
be much easier and cheaper than in the U.S., especially if the company
can master drone delivery, and the highly fragmented nature of the retail
sector makes the benefits of e-commerce even more desirable and the
competition weaker.

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What is the company doing?

In 2014, Amazon announced a $2 billion investment in India and followed

that with another $3 billion last year for a total of $5 billion. Due to Indian
regulations, Amazon operates only a marketplace in India, selling goods
through third-party vendors, but it handles the technology infrastructure
and most of its vendors' deliveries. Building out its own delivery network,
as opposed to relying on UPS or the Postal Service as it does
domestically, is costly. Amazon also seems to have learned lessons from
China, where it failed to adapt significantly to the local market and fell well
behind the competition.

The company stepped up its efforts on the subcontinent in December

when it launched its video streaming service as part of Prime, for an
annual fee of just $15. Amazon is offering a one-year trial for half that
price, just $7.50, a notable contrast with Netflix, which launched its service
globally at roughly the same $10-a-month price tag the company charges
in the U.S., as it says it's targeting elites rather than offering a mass-
market product. Amazon, as usual, is content to grab market share now
and worry about profits later.

Playing the long game

Amazon isn't the only one paying attention to the Indian market, of course.
Apple has also noticed a big opportunity, and it's increasingly touting its
growth in India on its earnings calls -- smartphone shipments grew 18% in
the country in 2016, and it sold 2.5 million iPhones there.

Amazon has always been willing to play the long game, investing for the
long term is one of Bezos' core mantras, and he promised his first
shareholders as much. The Indian e-commerce market is still small, but
it's growing fast: Sales more than doubled from $6.3 billion in 2014 to $16
billion in 2015. If Amazon can repeat its performance in the U.S., where it
controls about one quarter of e-commerce sales, its Indian operations

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could be huge in just a few years.

The company does not break out results by country, but its investments
abroad are apparent from its financial statements. While operating income
spiked in North America and in Amazon Web Services last year, its
international operating loss widened from $699 million to $1.28 billion,
evidence of investments like those it is making in India.

Though it will be several years at least until Amazon generates a profit in

the region, the company is making the right move by investing heavily in
the subcontinent. Its size and growth make it a unique opportunity for the
company, and Amazon has shown time and again that it recognizes the
wisdom of breaking into an emerging market early.

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