CASE ANALYSIS: Amazon in Emerging Markets

Name: K Sraban Kumar

Reg no: 122024101023
Sec: MBA-D (BFS)

1. Did Amazon succeed in China? What did it learn?

In China, the market for e-commerce industry is very large because of more number of
consumer prefer doing shopping at online. Due to this there is high competition in e-
commerce industry at China. There are so many big players involved in Chinese E-
Commerce industry i.e. Alibaba, Jingdong and EachNet. Amazon entered in to China by
acquiring a e-commerce firm in China called [Link]. It was the largest online retailer for
books, videos and music with customer base of 5.2 billion in Chinese market. Amazon did
not succeed in China because of so many factors. The some of important factors are as
follows:
 At first amazon didn’t do market survey based on consumer behaviour and their
preference and also didn’t do market research properly.
 They didn’t do proper competitive analysis in Chinese market it would helped amazon
for getting loopholes of Chinese e-commerce market which would have helped
amazon to take advantage of the situation.
 Amazon didn’t know about taste and preference of Chinese people. They could have
hire a local person for decision making and could have design business model as per
Chinese market.
 Amazon was more worried about how to adapt its U.S. business model to China then
develop a new and competitive advantage over his rivals in the new emerging market.
Amazon didn’t know how to play local and adapt his business to Chinese customers.
 Amazon didn’t analyzed regarding legal and political environment of China. So that it
faced so many hurdles in China due to change of political and legal rules and
regulation.
Here Amazon learned about the challenges in conquering new market and that it is important
to understand the impact that could great difference, may have in the preferences of the
customer at any market. They understand the importance of playing local and adapt company
business model to the customer needs and demand and this is also related to strategic
planning.
2. Did Amazon make sensible choices in its emerging markets entry strategies?
INDIA
Amazon entered in to India in 2013. Mostly amazon invested in technological mobilization,
designing innovative business practises and for improvement of its logistics and supply chain
for customer satisfaction.
 Here amazon faced several challenges like corruption, bureaucracy, politics and
infrastructure. Most of Indian prefer cash payment rather than debit card or credit card, so
here amazon came up with cash on delivery option.
 When government banned foreign brand retailers having 51% ownership, Amazon
encouraged its third-party seller in its platform.
 It maximised the profits by tapping Indian markets due to vast economic and financial
spending capabilities in the region.
 Amazon went in to partnership with the dominant mom-and-pop stores to remove the
burden of FDI regulations.
 In 2014 amazon invested $2 billion and in 2016 they invested $3billion to make sure
amazon continues grow in India.
 The number of seller on the [Link] platform has increased more than 250%. And
over 30 million products listed in [Link].
BRAZIL
 Amazon entered in to Brazil in 2012, Which was the right time for because at that
time more then 50% of people are internet users so it introduced Kindle as the
customer base is high.
 It faced so many challenges in terms of taxes, logistics, labour law etc. The tax rate of
Brazil is very high i.e. 68.3% in 2014. The construction of railways and roadway are
left unfinished so it faced so many logistics and transportation problem.
 It faced heavy competition from established E Commerce players like MercadoLibre,
Saraiva.

CHINA
 In China, the market for e-commerce industry is very large because of more number
of consumer prefer doing shopping at online. Due to this there is high competition in
e-commerce industry at China.
 In 2004 Amazon invested over $75million to enter in to China. But it entered in to
Chinese market at wrong time without making proper research and survey.
 Amazon entered in to China by acquiring a e-commerce firm in China called
[Link].
Amazon started its distribution from hubs of [Link]. (Those are placed at Beijing,
Shanghai, and Gaungzhou.) to 30 delivery centres across the country.

3. What are the risks and rewards for early and late movers?
There are numerous different ways to enter a foreign market. Moving early and moving late
are two different strategies for market entry and both strategies come with risk and rewards.
 Early mover: The term early mover means there is an advantage gained by being
initial first moving occupant of market segment. It scan for instant happen by technological
leadership or early purchase of resources.

Rewards:
  As the early mover it is easier to get pioneer status because there are not yet
any competitors.
 It is also easier to gain strong brand recognition and brand loyalty.
 It will be easier to control resources by having premium contract with key
suppliers and by having most talented employees.
Risks:
 Here customers need to efficiently be informed about regarding
availability of the product and features of the product.
 Extensive marketing and research is needed. This could be a significant
financial burden.
 There is high risk of flopping as these are the new products

 Late movers: The term late mover is a term used to define when a business is using
wait and see approach before entering in to a new market.

Rewards:
 They are able to take advantage of early movers failures.
 They reverse products and services to make them better and cheaper.
 There are fewer financial risk as less money and time will be put into product
and business development.
Risks:
 The risk involved in being a late mover is that their products and services can
be perceived as “a ripper off” with imitation of product.
 Significant research and time is needed to ensure that intellectual property
rights have not been violated.
Choosing whether to implement early mover or late mover strategy for market entry, a
company should consider the requirements for entering that market conditions, circumstances
under which they are entering, the company’s budget, assets and capabilities. Here Amazon
choosed late mover strategy on entering into Chinese market. It entered in to China after 4
years of competitors entrants by observing the market and acquiring [Link].

4. How should companies and investors measure success in emerging market?

Companies and investors measure the success of emerging market by following factors:
o By adapting local market in the country and knowing their wants and needs. And
satisfying them by delivering products and services to them.
o By measuring ROI (return on investment) and overall profitability of company in
emerging market.
 o By analysing demand in the market and company should produce and deliver the
good according to demand of the product
o By measuring the turnover of the company. It means total revenue generated by
selling of product.
o By measuring the adaptability with economic, legal , political, and cultural
environment in different countries.
o On the basis of brand image of company in the market.
o On the basis of service provided by company after sales of the product.

5. Considering the competitive landscape in China, India, and Latin America, how
can home-grown firms best defend and win against large multinational entrants?
The Emerging markets like China, India and Latin America have a lot of growth potential due
to advanced technology, number of people in the country. When it comes to globalization it
means integration of national economy with world economy because of this many foreign
company wants to start their operation in different country. It adversely effects the domestic
business organization of country and there will be huge competition between domestic
organizations and foreign organizations. So, it required to ensure domestic firms for retention
of customer by considering following factors:
o Identifying the customer needs and expectation at every point of time and need to
produce products accordingly.
o Continuously invest in research and development in defining innovative approach of
doing business.
o Ensure to supply better quality of products and services at reasonable price.
o Ensure better services should be provided after sale of product.
o Adapt suitable distribution model and ensure availability of product in both urban and
rural area of country.
o Create a good brand image of company in people mind.
o Define organizations ethical standards and policies and ensure to carry out its
operation in ethical manner.
o Provide more employment opportunities in country and ensure to contribute social
welfare by providing health care facility and educating poor children.

6. Should Amazon enter additional emerging markets immediately? If so, why and
where? If not, why not and where should its focus be? More broadly how
sustainable is Amazon’s simultaneous pursuit of geographic, horizontal and
vertical expansion?
Yes here in this situation it is perfect time for Amazon to enter into emerging market
across the globe because high reputation and financially stable. As amazon have good
experience in carrying out its operation in different countries by adapting their culture in
business practices, so it will be easier to carry out its operation in more emerging market
There are some important factors Amazon should consider like legal and political
conditions, Geographical terrains, scale of internet users, Labour laws etc. It will be
helpful to amazon by assessing geographic terrains for establishing various fulfilment
centres to ensure on time delivery of product in both urban and rural areas of country.
At this time Amazon should make research on countries like South Africa and Philippines
to enter into their emerging market because of growth of middle class families and more
number of internet users.
Now Amazon expanded its business operations in horizontal level by creating OTT
platform where people subscribe to its prime account to watch movies and avail different
offers. It will more helpful for amazon to enter in to new market by making available to
watch their movie in its OTT platform which indirectly attract the people to subscribe its
prime account and watch movies of their region.