Amazon case study/business model in India

Company profile

Amazon is a multinational conglomerate company based in Seattle. It is founded by Jeff Bezos in 1994. It is world’s largest online marketplace, AI assistant provider and cloud computing platform. Amazon has first started its business as a online book store and later added categories like furniture, toys, apparel, electronics, jewellery, software etc.

Amazon entered into Indian market in February 2012.Intially it only sell books, TV and films but within a week started with camera and mobile phones. Amazon India has launched Amazon Business for small and medium businesses to procure products through online platform. It was a B2B marketplace. With this marketplace a seller from Gujarat can buy from manufacturer in Maharashtra.

Since foreign e-commerce were not allowed to hold their inventory and sell directly to consumer Amazon India launched a marketplace which enabled third party seller to trade their products.

First Amazon India launched its Indian shopping website branded as was a product comparison engine. It was bought and owned by amazon.

3 major Challenges faced by Amazon India

1. The first and foremost challenges for Amazon India was FDI means government restrictions on foreign companies to sell products directly to Indian consumer. However, government planned to allow foreign companies that manufacture their products in India were allowed to sell directly over the internet

2. Vendors are small –At that time few retailer were sold their products online because they believed e-commerce too complex and time consuming.

3. India’s cash economy didn’t facilitate online transactions: – As in India only 12 percent of population uses credit card and plastic cards which were very less as compared to other countries users. So Amazon has decided to introduce the Cash on Delivery model in India and this is the most preferred payment option for Indian consumers because of low trust in online transaction and low credit card holders.

To respond this challenges Amazon developed various programmes

Cash on delivery model– As we know cash economy didn’t facilitate online transactions and most of the users had very low trust on online transactions.

Army of suppliers and vendors– Amazon developed this program to recruit a suppliers and convince them that their product could increase the demand in the market.

Chai cart– Amazon deployed four wheeler mobile cart called chai cart to navigate in a city’s business district and served tea to business owners and suppliers in that area. The aim of the program was to spread awareness among local among local small entrepreneurs and sellers in small cities and towns

Amazon Tatkal-Amazon Tatkal was a specially designed studio-on-wheels offered a suite of launch services including registration, imaging and cataloguing services, as well as basic seller training mechanisms. It enabled thousands of interested sellers to start selling on Amazon in real time and experience the benefits of launching an online business.

Fulfillment services

Fulfillment services by Amazon were to design to take off the burden of sellers and grants them more flexibility in their selling practices. It provided storage, packaging and shipping assistance to sellers.

Delivery services-Amazon has partnered with delivery services of  the country  and also with post & cargo airline Bluedart .Later it has also set up Amazon transportation services private limited to augment delivery. It has also FBA (fulfillment BY Amazon) where it 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 products  and to date has built nearly two dozen warehouses there, the largest one in Kothur in Telangana.

Easy ship and Seller Flex

Amazon Easy Ship is a delivery service for sellers. orders are picked up from the seller’s location by an Amazon Logistics delivery associate and delivered to the buyers’ location with minimal effort from sellers. With Easy Ship, customers can track their orders and delivery date. Buyers also get an option to pay for orders at the time of delivery using the Pay on Delivery (also known as Cash on Delivery) feature through Easy Ship, and funds for the order are deposited in the seller bank account.

Mom and Pop store-

 In mom and pop store Amazon partnered with thousands of kirana stores in cities across India to store and delivers the product. It was a win-win situation for both customers and shop owners to earn some extra money. In this mom and pop store Amazon also maintained Amazon Easy program where they used to train a shopkeepers to guide a first time internet users shop online.

Experts say India has become Amazon’s most important emerging market. Amazon said it has committed more than $5 billion to India, including building more than 50 warehouses to make deliveries all over the country.

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