An UGC Autonomous Institution
(Approved by AICTE, permanently affiliated to JNTU, Hyderabad) (NAAC Accredited Institution with ‘A’ Grade)
Vol. 8 No. 3 July-September 2019 (Special Issue)
ISSN (Online) : 2322-0449
ISSN (
) : 2277-6753
Department of Master of Business Administration
Abstract
As per Statista, India is one of the fastest growing E-commerce markets globally. This one reason is enough to think about starting online business in India. The increase in technology provides good opportunities to the entrepreneur to reach the customer in much faster, easier and in economic way. Online shopping is emerging very fast in recent years. Now a day the internet holds the attention of retail market. Millions and millions of people shop online. People are consuming things widely using online shopping. Online shopping is easier for the people and less price than the offline shopping. Therefore, starting an ecommerce business is in India is easier than setting up physical distribution, plus it is highly scalable.
E-commerce companies are creating new revenue records when it comes to online shopping. As per industry analysts, the festive season sale for 2018 for leading ecommerce companies like Amazon India and Flipkart, is estimated to have generated a whopping INR 15000 crore sales over roughly five days. That translates into 64% year-on-year growth approximately as compared to USD 1.4 billion (around Rs 10,325 crore) in the year 2017.
Amazon is the world's largest online retailer, selling over forty categories of goods, from books to electronics to groceries to jewelry to auto parts. The company is also an e-commerce and internet technology platform.
Introduction
As per Statista, India is one of the fastest growing E-commerce markets globally. This one reason is enough to think about starting online business in India. The increase in technology provides good opportunities to the entrepreneur to reach the customer in much faster, easier and in economic way. Online shopping is emerging very fast in recent years. Now a day the internet holds the attention of retail market. Millions and millions of people shop online. People are consuming things widely using online shopping. Online shopping is easier for the people and less price than the offline shopping. Therefore, starting an ecommerce business is in India is easier than setting up physical distribution, plus it is highly scalable.
E-commerce companies are creating new revenue records when it comes to online shopping. As per industry analysts, the festive season sale for 2018 for leading ecommerce companies like Amazon India and Flipkart, is estimated to have generated a whopping INR 15000 crore sales over
* SRTMU, Sub-Centre, Latur
Paradigm Shift in E-commerce - A Case Study of Amazon
roughly five days. That translates into 64% year-on-year growth approximately as compared to USD 1.4 billion (around Rs 10,325 crore) in the year 2017.
Amazon is the world's largest online retailer, selling over forty categories of goods, from books to electronics to groceries to jewelry to auto parts. The company is also an e-commerce and internet technology platform.
Amazon is one of the more innovative of online retailers, and has experienced great success and failure, a record reflect in a share price that has oscillated from a high of $106 in 1999 to $6 in 2001, rising to $60 in 2003, only to call to $27 in 2006. In recent years Amazon stock has traded above $150
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
Historical way of E-commerce
(Aldrich Archive, 1982) online shopping is invented by an English entrepreneur Micheal Aldrich in 1979. (Palmer& Kimberly, 2007) Tim Berners Lee is the one who created the first World Wide Web server in 1990. It was opened for a commercial purpose. There after many technological innovation emerged in 1994 like the online banking, the opening of online pizza shop by Pizza Hut, Netscape SSL v2 encryption standard for secure data transfer, and Internet shop's first online shopping system. In 1994 the first secure transaction was over the web either by Net market or Internet shopping. Amazon was launched in 1995, it is the first online shopping site of the world and after that eBay was introduced in 1995.Today many countries are doing online shopping but still some countries are at the starting point of the experiment of online shopping. In 1987, the merchant account was launched that helped the software developers to sell their software online easily. Swreg was the name of first software and the oldest software that is still available. Future shop is a book for how new technology will change the way of shopping and what the customer buy. It was published in the year 1992. The book consists of the topic like what will happen in the future date of e-commerce and how the internet will take place in the society. 1994 is the mouth of year of online commerce and Yahoo is launched in this year. In 1995 approx. 12000 domain names were registered in the internet. In 1998 Google entered the world of e-commerce and yahoo launched yahoo store online. The customer of online shopping should have internet and a valid method of payment in order to purchase the products from the internet. Amazon, Myntra, flipkart are some of the examples of other successful online shopping sites that use less price of the items and large stocks to attract the consumer.
Challenges
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 a "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.
A Case of Amazon
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. 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.
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.
Amazon Business Models
Amazon has three distinct businesses, plus a slew of nascent enterprises and developing opportunities.
Amazon Retail
Starting in books and then expanding into electronic and other goods, Amazon built an online retail business around three aims:
1. Best prices: Amazon products are generally offered at a discount.
2. Unrivaled selection: Amazon often has the largest selection of goods in a particular category, especially books.
3. Convenience: Amazon focus on the customer and try make purchasing an enjoyable experience offering:
• An attracting, easy-to-use customer interface.
• Fast and reliable delivery from vast, fully automated warehouses, first located in strategic sports in the US.
• A no-nonsense returns policy.
• Reviews by customers of the product.
• Purchasing suggestions based on previous purchases.
Amazon marketplace
Amazon also offers a third-party selling platform, Amazon marketplace, which allows merchants to offer goods and services through an online shopping mail. Amazon charges a commission based on a formula involving the sale price of the item, a shipping credit, a referral fee of 6-25% of the sale price, a variable closing fee and a $0.99 fixed closing fee. This has now been augmented or replaced by four comparable services:
1. Sell on Amazon: Merchants pay $39.99 per month, plus a commission varying as above, generally between 15% and $1.35 per item.
2. Amazon Web store: More complete service. Merchants pay $24 per month plus 2% of sales.
3. Checkout by Amazon: Similar to PayPal and Google Checkouts, but needs to integrate into shopping cart.
4. Fulfillment by Amazon: Allows merchants to use Amazon's advanced fulfillment technology.
The services are being expanded from USA, Canada, UK, and Germany to other countries. Amazon does not release information on these businesses, either revenues or usage levels.
Amazon Web Services
Computer -Related: Amazon Elastic Compute Cloud (EC2), Amazon Elastic Map Reduce, Auto Scaling.
Content Delivery: Amazon Cloud Front
Database: Amazon Simple DB, Amazon Relational Database Service (RDS)
Deployment & Management: AWS Elastic Beanstalk, AWS Cloud Formation
E-commerce: Amazon Fulfillment Web Service (FWS)
Messaging: Amazon Simple Queue Service (SQS), Amazon Simple Notification Service (SNS)
Monitoring: Amazon Cloud Watch
Networking: Amazon Route53, Amazon Virtual Private Cloud (VPC), Elastic Load Balancing
Payments & Billing: Amazon Flexible Payments Service (FPS), Amazon DevPay
Storage: Amazon Simple Storage Service (S3), Amazon Elastic Block Storage (EBS)
Support: AWS Premium Support Web, Traffic Alexa Web information Service, Alexa Top Sites
Workforce: Amazon Mechanical Truk
Amazon Indian 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. Using the catchphrase Aur Dikhao in its most recent campaign in India, it has further helped them carve a distinct space in the consumer's mind.
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 market space.
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. 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.
SWOT Analysis
Amazon is a company in transition, moving from an innovation online retailer to a broad-based web services supplier. Because Amazon provides no breakdown in annual reports, it is not easy to discern the impact of this change, but in general:
Strengths
1. A brand well respected for prices and customer convenience.
2. Online trading company that has come through the recession relatively well.
3. Accumulated technological expertise in retailing and customer management technology.
Weaknesses
1. Amazon's net margin has been positive, but no better than many bricks and mortar retailers: 3.2% in 2007, 3.4% in 2008, 3.7% in 2009 and 3.4% in 2010.
Opportunities
1. Amazon is poised to exploit the shift to cloud and third-party services.
2. Amazon's kindle, which has made e-books respectable, has conquered only a small part of the publishing industry.
Threats
1. Amazon has improved the hardware and dropped prices, but many still regard the reader and e-books as expensive.
2. Amazon web services face competition from established providers: Dell, Microsoft and Google.
3. Merchant services are in competition with a host of internet payment service provider located across the world.
Conclusion
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.
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, e-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.
References
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