INTRODUCTION

Amazon is an American international e-commerce company. It was started by

Jeffrey P. And it was launched in India in june [Link] years back, Amazon had no
infrastructure in India, and now it dominates the Indian markets.

At the very start it was perception of investors that in India It will not go long like
china as in the year 2004 when Amazon entered in China it hasn’t seen much success there
with alibaba, its chinese competitor, dominating the e-commerce market.

After its bad run in China, Bezos is going all in for India. Fact behind formation of
Amazon in India was its huge number of headcounts i.e. 1.25 billion four times as big as
the U.S.’s and more than doubles Europe’s. Of these, 500 million, around 35 percent, are
internet users.

As per researches the yearly growth rate of internet users is highest in India around
six million users join every month. Researchers expect the online shopping market in India
to reach $15 billion by 2016 up from only $35 million in 2014.

Platform-based markets have become increasingly prevalent, and comprise a large

and rapidly growing share of today’s economy. Such markets are often described as multi-
sided because multiple groups of participants—such as consumers and complementary—
need to gain access to the same platform to interact with each other and a platform’s
success depend on its ability to bring them on board.

This makes India a very important market for internet giants. India will overtake
China as the world’s most populous country in just seven years, according to the UN. It is
now the world’s fastest-growing major economy, and the IMF projects 7.5% growth next
year. Online retail spending data of Indians are shown in Figure 1.

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They just required an innovative business model, beginning with finding products to sell
in India though, with FDI restrictions in Retail, Amazon launched [Link] though
the website did not allow any transaction on the site, and it helped Amazon get an insight
into the e-commerce space in India as well as to build brand loyalty. Amazon opted
marketplace model. Market place model provides small businesses a huge scaling
opportunity without having to build the technical or operational infrastructure of scale.
For example small business seller or dresses in Rajasthan, currently their reach is very
constrained and growth is much limited. But by participating in these marketplaces, this
small business can now reach all over India. All the marketplaces have specific services
for sellers’ that define onboarding, verification, tools to provide insights and fulfillment
services. For example, Amazon has Vendor services to make it very easy for a vendor to
bring their warehouses online. Apart from all these Amazon provides studio services that
support the vendor to photograph all the products and make them ready for online
selling. Through the whole life of the relationship for example, these market places
provide inventory reports, order reports and trends. The vendors need to focus on their
products and find easy ways to ship their products to the Warehouses of the Marketplace.

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OBJECTIVES:-
 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

CHALLENGES:-
Amazon has consumer market in United States but it is a growing online consumer
market in India having different challenges. The first and foremost challenge in India faced
by the amazon was restrictions on foreign companies using e-commerce to sell their
products directly to the Indian consumer.
The Indian government, however, plans to allow foreign companies that manufacture
their products in the country to sell them directly to consumers over the Internet. But
Amazon would have to start making its products in India to take advantage of the change
in the law.
Another difficulty that Amazon India faced was the limited infrastructure available to
get the goods to consumers. In India, less than 12% of people uses plastic cards i.e. credit
or debit cards, so Amazon has had to adapt to “Cash on Delivery" model, which isn't yet
available in all the areas.
There is no shortage of goods produced by Indians, but most vendors in the country are
small. Three years ago, relatively few retailers there sold their products online because
they believed e-commerce to be too complex and time consuming. And India’s cash
economy did not facilitate online transactions.

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AMAZON INDIA BUSINESS MODELS
Ecommerce business model generally consists of eight key components i.e. value
proposition, market opportunity, Revenue model, competitive environment, competitive
advantage, market strategy, organizational development, and management team (Ghosh,
1998).

Value proposition specify how product and service are put together and extended
to fulfill customer needs by Company (Kambil et al., 1996). For attracting the customer
Amazon India is doing a lot for this it has enlisted mom and-Pop store owners as partners
in its delivery platform. In small villages and remote areas where few people have internet
access, residents can go to their local store and use the owner’s internet connection to
browse and select goods from online Store. Store owners record their orders, alert
customers when their products are delivered to the store, collect the cash payment, and
pass along the money — minus a handling fee to Amazon. And store owners report
increased sales of their own while customers are on-site.

Amazon targets the middle class & upper class people who have hands on
experience in technology but don’t have much time to do shopping from the physical
outlets. Taking this into consideration Amazon has successfully positioned itself as a
Glocal (Go global Act local) e-commerce giant where one can buy anything & get it
delivered at any remote locations.

Company acquired many IT & e-commerce start-ups like [Link], [Link],

[Link], [Link], [Link], Woot etc. for providing high value to their
customers using existing technology of the acquired partners at low cost.

Company’s CRM records data on customer’s buying behavior. It enables them to

offer individual items, related items or bundle them as an offer, based upon preferences
demonstrated through purchases or items visited.

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 Revenue model defines how a firm aims to generate higher return on investment
and profits. Important e-commerce revenue models include advertising, subscription,
transaction fee, sales, and affiliate revenue models (Laudon and Traver, 2009). Market
opportunity gives description of possible revenue a company is likely to generate from its
proposed marketplace.
Amazon’s strategy involves discounts, low prices and wide range of products sold
via direct selling or marketplace. In the U.S., by contrast, Amazon holds and sells its own
inventory of toys, books, and more in addition to selling goods from third-party sellers.

The Indian Government, however, plans to allow foreign companies that

manufacture their products in the country to sell them directly to consumers over the
Internet. But Amazon would have to start making its products in India to take advantage
of the change in the law.

Amazon’s model in India differs slightly from the business model in United States.
As we discussed earlier that Indian government doesn’t allow companies with major
foreign ownership to operate retail locations having their own inventory. Because of this,
Amazon serves as a middle man between sellers and buyers, and doesn’t sell any
inventory of its own.

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 But, Amazon helps sellers with warehousing and shipping goods. In the U.S., by
contrast, Amazon holds and sells its own inventory of toys, books, and more in addition to
selling goods from third-party sellers.

Competitive environment pertains to rival companies operating in same market

space, potential new entrants in the market, product substitutes available in the market and
bargaining power of customers and suppliers over your business (Porter,1979).

Market strategy is the program company designs to outline how it will get into the
market and draw in customers (Laudon and Traver, 2009).

Organizational development strikes a balance between all the functions and skills
necessary to carry out each job in a company, which require timely recruitment of suitable
candidates. Management team comprises employees at the highest level of company who
determine growth and expansion Amazon has the same business model considering all key
components.

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HOW AMAZON MODEL WORKS:-
First of all, Portals shows the Sellers List who sell the desired portfolio products
and then get customers browsing through those products. After matching seller and
customers it creates appealing discounts after that Customer Shops for the desired
products and then Seller ships the product to customer. If Product Accepted and Not
returned back then Seller gets his agreed price of the product minus the commission
charged by Amazon for doing everything they do. Thus the core bread and butter of the
Model is “X% commission on the total sale value given to the seller”. This model has
been shown by the Figure 3.

STRATEGIES FOR SELLERS:-

Amazon moved out a program “Amazon Chai Cart” these are the mobile tea
carts that navigated city streets, serving refreshments to small-business owners and teach
them the benefits of e-commerce. The Chai Cart team reportedly traveled more than 9,400
miles across 31 cities and engaged with more than 10,000 sellers.

Other move that Amazon created was Amazon Tatkal, a self-described “studio
on wheels” that provides a suite of launch services, such as registration, imaging,
cataloging, and sales training so far it has been covered in [Link] enables Small
and Medium Businesses (SMBs) to get online and sell on [Link], in less than 60
minutes. Starting with New Delhi, Amazon Tatkal will traverse the country, engaging with

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thousands of entrepreneurs, artisans, manufacturers and sellers and help them sell online
on the spot.

[Link] has five crore products from 75,000 sellers. The number of sellers has
witnessed a 250 percent growth annually in 2015 and as per the officials of Amazon this
launch would help thousands of small and medium businesses in India.

The company also introduced ―Easy Ship and Seller Flex” With easy ship
Amazon couriers pick up packaged goods from a seller’s place of business and deliver
them to consumers. And with the seller flex, vendors registered under Amazon designate a
section of their own warehouses for products to be sold on the website, and Amazon
coordinates the delivery logistics. This ―neighborhood‖ approach is convenient for sellers
and has benefited Amazon by speeding up delivery of some products.

Amazon also had to adapt delivery and fulfillment. In the U.S., Amazon uses a
centralized shipping platform, which it calls Fulfillment by Amazon (FBA), to store and
distribute the products it sells. Sellers send their goods to Amazon’s fulfillment centers
and pay a fee for the corporation to store, pick, pack, and ship their wares. Amazon
implemented FBA in India as well, and to date has built nearly two dozen warehouses
there, the largest one in Kothur in Telangana.

After reading a report that in future web commerce will grow upto 2300%, Jeff
Bezos selected about top 20 products to sell them online. After that he narrowed these
products to 5 books, videos, computer software, hardware, and compact discs and then at
last selected Books. This is result of good planning and innovative thinking. The result
was just achieved in the first two month with sales rise up to $20,000/week.

Amazon is the only major player to increase its market share from 14 to 21
percent. It is consistently eating up Flipkart and Snapdeal’s share, and the $3 billion
investment will certainly help.

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Overall, Amazon only saw tepid 3% international sales growth this quarter, though the
company said that would have been 12% if it weren't for the unfavorable foreign exchange
impact. Still, even 12% is down from 14% quarterly growth in Q2 2014, and 20% in 2013
(those figures also exclude the effect of exchange rates).

In India, he faces a set of challenges unique to the country. For example, it's
incredibly mobile-first - the director of Google India predicts that by 2017, 70%-80%
online transactions will happen via smartphone. Plus, The AP reported in August 2014
that fewer than 12% of Indians had credit or debit cards, so Amazon has had to adapt to a
“Cash on Delivery" model, which isn't yet available in all areas.

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AMAZON – A ROAD AHEAD:-
Amazon started with bookstores, which soon converted to the top online retailer
across the world, and currently, even though it has a lot of competition, Amazon has a
strong base of customers who buy from the online retailer.

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FINANCES

[Link] is primarily a retail site with a sales revenue model; Amazon takes a
small percentage of the sale price of each item that is sold through its website while also
allowing companies to advertise their products by paying to be listed as featured products.
As of 2018, [Link] is ranked 8th on the Fortune 500 rankings of the largest United
States corporations by total revenue.

For the fiscal year 2021, Amazon reported earnings of US$33.36 billion, with
annual revenue of US$469.82 billion, an increase of 21.7% over the previous fiscal cycle.
Since 2007 sales increased from 14.835 billion to 469.822 billion, due to continued
business expansion.

Amazon's market capitalization went over US$1 trillion again in early February
2020 after the announcement of the fourth quarter 2019 results.

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 BOARD OF DIRECTORS
Amazon founder Jeff Bezos in 2016

As of June 2022, Amazon's boards of directors were:

 Jeff Bezos, executive chairman, [Link], Inc.

 Andy Jassy, president and CEO, [Link], Inc.
 Keith B. Alexander, CEO of IronNet Cybersecurity, former NSA director
 Edith W. Cooper, co-founder of Medley and former EVP of Goldman Sachs
 Jamie Gorelick, partner, Wilmer Cutler Pickering Hale and Dorr
 Daniel P. Huttenlocher, dean of the Schwarzman College of Computing, Massachusetts
Institute of Technology
 Judy McGrath, former CEO, MTV Networks
 Indra Nooyi, former CEO, PepsiCo
 Jon Rubinstein, former chairman and CEO, Palm, Inc.
 Patty Stonesifer, president and CEO, Martha's Table
 Wendell P. Weeks, chairman, president and CEO, Corning Inc

LOGISTICS

Amazon Transportation Services truck at an Amazon Logistics delivery station

Amazon uses many different transportation services to deliver packages. Amazon-branded

services include:

 Amazon Air, a cargo airline for bulk transport, with last-mile delivery handled either by
Amazon Flex, Amazon Logistics, or the U.S. Postal Service.
 Amazon Flex, a smartphone app that enables individuals to act as independent contractors,
delivering packages to customers from personal vehicles without uniforms. Deliveries include one or two
hours Prime Now, same or next day Amazon Fresh groceries, and standard [Link] orders, in
addition to orders from local stores that contract with Amazon.
 Amazon Logistics, in which Amazon contracts with small businesses (which it calls
"Delivery Service Partners") to perform deliveries to customers. Each business has a fleet of
approximately 20–40 Amazon-branded vans, and employees of the contractors wear Amazon uniforms.
As of December 2020, it operates in the United States, Canada, Italy, Germany, Spain, and the United
Kingdom.
 Amazon Prime Air is an experimental drone delivery service.

Amazon directly employs people to work at its warehouses, bulk distribution centers,
staffed "Amazon Hub Locker+" locations, and delivery stations where drivers pick up
packages. As of December 2020, it is not hiring delivery drivers as employees.

Rakuten Intelligence estimated that in 2020 in the United States, the proportion of last-
mile deliveries was 56% by Amazon's directly contracted services (mostly in urban areas),
30% by the U.S. Postal Service (mostly in rural areas), and 14% by UPS. In April 2021,
Amazon reported to investors it had increased its in-house delivery capacity by 50% in the
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last 12 months (which included the first year of the COVID-19 pandemic in the United
States).

AMAZON PAY

Amazon Pay is an online payments processing service owned by Amazon. Launched in

2007, Amazon Pay uses the consumer base of [Link] and focuses on giving users
the option to pay with their Amazon accounts on external merchant websites. As of March
2021, the service became available in Austria, Belgium, Cyprus, Denmark, France,
Germany, Hungary, India, Republic of Ireland, Italy, Japan, Luxembourg, Netherlands,
Portugal, Spain, Sweden, Switzerland, United Kingdom, and the United States.

Amazon Pay announced a partnership with Worldpay in 2019, allowing Worldpay clients
to enable Amazon Pay as a part of the same integration.

CONCLUSION:-
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 Amazon is an American international e-commerce company. It was started by
Jeffrey P. Bezos in the year 1994. And it was launched in India in June 2013. Three years
back, Amazon had no infrastructure in India, and now it dominates the Indian markets. So
main objective of the case is to study the challenges faced by Amazon India during initial
years and what strategy it followed to overcome the challenges. This case will also study
the Business Models of Amazon India.

At the very start it was perception of investors that in India It will not go long like
China as in the year 2004 when Amazon entered in China it hasn’t seen much success
there with Alibaba, its Chinese competitor, dominating the ecommerce market. After its
bad run in China, Bezos is going all in for India.

Fact behind formation of Amazon in India was its huge number of headcounts i.e.
1.25 billion four times as big as the U.S.’s and more than doubles Europe’s. Of these, 500
million, around 35 percent, are internet users. As per Researches the yearly growth rate of
internet users is highest in India around six million users join every month.

Researchers expect the online shopping market in India to reach $15 billion by
2016 up from only $35 million in 2014.

Amazon is known for knowledgeable products. Amazon in India work on complex

business challenges to innovate and create efficient solutions that enable various Amazon
businesses, including Amazon websites across the world as well as support Payments,
Transportation, and Digital products and services like the Kindle family of tablets, readers
and the store. Reasons of its success are the finest talent and strong leaders with proven
experience working to make Amazon the Earth’s most customer-centric company. Apart
from this Technological innovation drives the growth of Amazon, offering customers
more selection, convenient shopping, and low prices.

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