Marketing Planning

Project

Study of E-commerce Marketplace

Team 1
• Aayush Chelawat (15P121)
• Arjun Phookan (15P131)
• Harsh Pathak (15P141)
• Rahul Malani (15P161)
• Sidika Anand (15P171)
• Akash Saxena (15P173)

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 Contents
Sl.No. Title Page Number

1 Purpose and Objective 3

2 Justification and Significance 4

3 SWOT Analysis 5

4 PEST Analysis 10

5 Project Outline 12

6 Five Forces Model Analysis 13

7 Customer Behavior 15

8 Literature Review 21

9 Methodology 26

10 Positioning Strategy 27

11 Research Foresights 28

12 Future Scope 31

13 References 33

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 Purpose and Objective
 Understanding the e-commerce marketplace in India: E-Commerce in India is a booming
market. It was worth about $3.8 billion in 2009, it went up to $12.6 billion in 2013. In
2013, the e-retail segment was worth US$2.3 billion
 Studying the key drivers of Indian e-commerce which has led to the popularity of online
shopping: Many factors like high Internet penetration, increase in number of
Smartphone users, competitive prices etc. have contributed towards the popularity of
E-Commerce in India
 Understanding the business model of e-commerce companies: Doing a detailed study
on how the E-Commerce companies function and generate revenue
 Analyzing the competition in the e-commerce marketplace: With the increasing
popularity of e-Commerce a number of players have sprung up and thus the
marketplace has become highly competitive
 Predicting the future of e-commerce marketplace in India

In this project we will study the E-commerce marketplace in India taking into perspective the E-
commerce player Amazon.in as an exemplum.

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 Justification and Significance
E-commerce is one of the fastest growing sectors of India’s Digital Economy. Market estimates
look for the overall e-commerce market to grow from US$22bn in 2014 to US$86bn in
2018(40%CAGR). Within just B2C e-tail, estimates are for expansion from US$4bn in 2014 to
US$18bn by 2018 (45% CAGR).

The Indian e-commerce industry comprises of two business models: B2B (90% market share)
and B2C (10% market share). B2B players don’t create inventory unlike US where the B2C
model is more prominent and the merchant owns the goods.

The unique feature of an e-marketplace is that it brings multiple buyers and sellers together in
one central market space. This unique feature creates reduction of various transaction costs in
our supply chain. Reduction of search costs as buyers need not to go to multiple places for
getting the product of their choice like in a traditional supply chain. There will also be a
reduction in the processing costs like invoices, purchase orders and payment schemes.
Efficiency in trading processes and transactions is also enhanced through B2B e-market’s ability
to process sales through online auctions. The online process improves inventory management
and logistics and supply chain management.

Another reason for the tremendous growth potential of this industry is disintermediation.
Suppliers are directly meeting the buyers and thus eliminating the intermediaries and
distributors. Transparency in pricing of goods provides is a major factor in a price-conscious
consumer market like India. The presence of large number of buyers at a single place reveals
market price info and transaction processing to participants and thus enables buyers to take
much more time in comparing prices and make better buying decisions. It reduces Sales risks
and provides ample opportunities for suppliers to establish new markets at low prices.

Through information systems’ integration like big data analytics suppliers can look and satisfy
the demands of customers in more integrated ways and can get a more insightful approach
towards consumer behavior.

All of these features highlight the importance of this new phenomenon as a field of study. This
project will give us an insight into how the e-commerce marketplace works, what are the
opportunities available for growth, how can we provide consumer satisfaction through the
business models and what are the challenges that will be faced by an entrant into the industry.
We have taken Amazon as an example to understand the next generation shopping
marketplace which has such tremendous growth potential.

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 SWOT Analysis

Strengths: Weaknesses:
 Convenience over Retail  No devoted Brand stores
 One-Stop Solution  Coping with the existing competition
 Simplified Buying and Selling  Profits
 Global Brand
 Personalized Shopping
 Strong Positioning Power
 CSR activities

Opportunities: Threats:
 Vast portion of Indian Market still untapped  Retail Brands like Croma
 Collaboration with leading Retail Stores  Ecommerce giants like Snapdeal and Flipkart
 Big Data Analytics  Entry of Walmart
 Breaking Even
 Kindle
 Technical Innovation – Drones
 Enjoyable customer experience

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Strengths:
 Convenience over Retail: Any Ecommerce set-up has this advantage over the conventional
Retail market. Customers are required to visit the stores individually, some of which may be
located at quite a distance. For Electronic products, it is possible that a customer makes visits
to several outlets in search for the best offer. There is also the doubt about availability. Will
find my product? Transportation is yet another factor. Most customers would not like the
hassle of buying and also having to think about how to get the product home. Imagine a
scenario wherein we just pay and the goods are at our doorstep in a couple of day’s time.

 One-Stop Solution: A customer only needs to decide on what one needs or wants. It is
possible to have a glance at all the different products by various brands under one roof. We
get to know all our options in a specific price range – products which were earlier not known.
Product comparison is a very big advantage. Both prices and features can be looked into.
Another value addition is the detailed insight into the product by means of the feedbacks
and suggestions by prior customers.

 Simplified Buying and Selling: The entire process of buying and selling, no matter what the
kind of product, has been made easy. A buyer simply needs to choose his/her product. Make
use of the comparisons and the insights available and proceed for payment. In case, he/she
wants to look at more products before proceeding to pay, the goods are stored in the “Cart”.
This makes the customer feel as if he/she is in an actual shopping center – the only
difference is that this can be done from the comfort of our beds at home. Once having done
the selections we proceed for payment online using a Debit Card or a Credit Card or even
Internet Banking. There are customers who are not comfortable with online payments
hence, the option of “Cash on Delivery” wherein we pay for the product by cash at our
chosen location of delivery. In case we have changed our mind about the product it is also
possible to reject the product then and there.

Selling has also been made a convenient experience for the customer. For example, at
Amazon a seller simply needs to follow these steps:
1. Seller lists the products on the site
2. Customer sees the product and chooses to buy it. Payment made to Amazon.
3. Seller delivers the product
4. Amazon pays the seller
There is also an option of “Amazon Easy Ship” where the seller schedules the delivery of the
product upon an order being placed. Amazon picks up the package from the seller and
delivers it to the end customer.

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 Global Brand: A big advantage for Ecommerce giants like Amazon is that they have made
their mark in the international platform. A brand name which is known world-wide for their
quality and performance. They have an experience of over a decade now and this proves
that they have seen the ups and downs. There are numerous success stories wherein they
revolutionized online shopping in several countries, especially with the launch of the Kindle
in the Book Reading sector. To a customer such a track record means Reliability and
Dependability.

 Personalized Shopping: With the advent of Big Data, it is now possible to study and track the
behavior of each customer. Visualize the trend. When a customer goes online after having
visited the site a few times earlier, offers pertaining to his interest come up. Products which
he may be interested in are displayed. A welcome note “Welcome XYZ!” is flashed. Such
things make the customer feel good and make him/her want to visit the site again.

 Strong Positioning Power: Almost everyone in today’s world goes online. Internet has itself
become the place to position and promote a product. In a single platform, it is possible to
house and display products of any kind. Big data again, helps us understand the needs of
each customer. Understanding a customer’s shopping trend enables us to predict what all
could be pitched in the future. It becomes easier to convince him/her that they actually need
or want a related product. In most case, what this leads to is that a customer ends up buying
more that what he had come for since during the visit he felt the need of something else.

 Corporate Social Responsibility: “AmazonCares” is a platform where several verified NGO’s

have been registered. Each having a wish-list. It is possible for us to select an NGO, view the
wish-list, select a product from the wish-list and make the payment. The product is then
delivered to the NGO without any deliver charge. These activities speak a lot about the
morals of the company. It shows that Amazon does care.

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Weaknesses:
 Unavailability of Devoted Brand Store: Unlike Retail Brands like Croma in Electronic goods,
who have an active online site, Amazon does not have a dedicated store in India. The
disadvantage here is that several people might be hesitant in buying goods, especially
electronics, knowing that in case of any faults it is not possible to go to a nearby store and
get it replaced or rectified. The proper online channel is to be used, which most people
perceive as inconvenient and not full-proof. Secondly, customers open up more in front of a
sales representative and this could prove to be a vital feedback in terms of where Amazon is
lacking. This can be identified as one reason as to why Amazon was initially not able to
understand and cope with the Indian Market

 Coping with the Existing Competition: Companies like Flipkart and Snapdeal have correctly
understood the Indian Market and have already capitalized on it. Their customer trust and
support base is continuously growing. This has enabled them to successfully launch products
in various domains. Amazon on the other hand had not been so successful on this initially.
Now, they have a bigger task of attaining a significant amount of market share. How does
Amazon pull customers from Flipkart and Snapdeal and generate greater support?

 Profits: Ecommerce is a comparatively low profit margin business relying mostly on the
economies of scale. For quite some time, until recently, Amazon had not made any
significant profits. With the growing competition, will it be possible for Amazon to break even
in India and make expected profits?

Opportunities:
 Un-tapped Indian Market: There is still a huge portion of the Indian population which is not
active on ecommerce. Several people, mostly the older generation, are still hesitant about
online payments and purchases. There are still people who doubt on quality and service.
What is required is a strong trust base. A strong campaign towards effective Customer
Service and After-market services may be the key.

 Retail Store Collaboration: Apart from the fact that Amazon can open its own dedicated
stores which would require quite an amount of investment, to tap the demand in retail, tie-
ups with leading stores can be very beneficial. It would give a ground level feedback of
people’s perception towards Amazon. In fields like Electronics, it could be very beneficial.
First build a strong customer base and then steer them towards online.

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  Big Data Analytics: Exploiting the advent of Big Data to predict the future needs of
customers. Develop an algorithm that would enable Amazon to know what would be needed
in the future, much prior to the customer having actually placed the order.

 Kindle: India has a huge reading population. The numbers are sure to grow. A major hurdle
for such customers is the availability and the awareness of the latest books. Kindle offers the
perfect solution and can prove to be a frontline product for Amazon in the future.

 Technical Innovation - Drones: Amazon has thought of a futuristic idea of using Drones for
goods delivery within a city. Such innovations could really attract attention – a solution tried
never before. It would talk volumes of the Technological superiority of Amazon. Imagine how
this could be leveraged for the sale of Electronic goods by Amazon?

 Enjoyable Customer Experience: The whole purpose of this venture is to acquire a major
chunk of the Market share. To achieve this, Amazon can focus on an “Enjoyable Customer
Experience”. If people start liking the site and start enjoying the experience of purchasing or
selling at Amazon, they would definitely come back for more. This is a huge opportunity for
the future. What needs to be understood is how to entertain them online.

Threats:
 Retail Brands: Retails brands like Chroma who have stores at different locations in India are
tough competitors, as they have already won over the support of the local customers.
Customers are aware of their dependability and know where to go should there be an issue
in relation to Electronic goods.

 Ecommerce Competitors: With a major chunk of the Market Share already possessed by
Flipkart and Snapdeal, it would be very difficult for Amazon to make its way and drive
customers towards itself. Both Flipkart and Snapdeal have done very effective marketing, for
example, Snapdeal’s “Dil Ki Deal” featuring Aamir Khan.

 Wal-Mart Entry: With relaxed rules on the Foreign Direct Investment it would be long before
retail giants such as Wal-Mart make their way into India and bring in more stiff competition.

 Breaking Even: While working with such low profit margins and at the same time not having
such a huge customer support base; it is possible that Amazon may not find India to be a
profitable venture. Breaking Even might be a challenge. This could seriously deter chances of
survival in India.

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 PEST Analysis
Political:
The functions of Amazon India greatly depend on the tax rates, acts of legislations and political
stability of the country. Despite initial opposition for multi brand retail in the country, recent
regulations have allowed foreign players to invest in multi brand retail subject to permission
from the state governments. Moreover, uncertainty around VAT implications in different states,
the new Companies Act and indecision around the GST could cause issues. Currently, only 19%
of the population has access to internet connectivity. Given the government’s focus on Digital
India campaign, the internet penetration in rural India is bound to increase giving the company
a chance to expand its already growing customer base.

Economic:
Online business has a lot of scope in general. According to recent studies by PwC, the
ecommerce business in India has seen a CAGR of 34% since 2009 and is expected to touch 22
billion USD by 2015. This provides Amazon.com with ample business opportunities. Consumer
spending is rising along with a rise in use of online financial transactions. However, even though
the online buying is seeing an upward trend, the conservative Indian consumer is still looking at
retail stores to fulfill his buying needs. The customer still prefers to have a first-hand experience
of the product before making the purchase, rather than paying for it online and waiting for it to
be delivered to him.

Social:
Amazon offers a wide selection of products ranging from books, jewelry to electronics and
apparels. Due to this, the company has a significant advantage in that it caters to people from
different age groups and cultural background and having varying purchasing powers.
The discounts and offers available in the ecommerce platform are an attraction to people from
middle and lower income groups. This also gives the people a chance to explore various
branded products which might not be accessible to them otherwise.
One other advantage Amazon offers is the communication network with like-minded people
based on the customer review and feedback.
Amazon is also involved in CSR activities in India, and has launched an initiative with 25 NGOs
supporting various causes that allows them to create wish lists on their platform and lets their
users donate towards these wish lists.

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Technology
Services provided by Amazon allow a majority of the Indian population to shop sitting in the
comfort of their homes. The number of unique visitors to the site saw 142% increase to reach
23.6 million in 2015. The total number of mobile internet users has grown to 213 million in
2015. Moreover, with mobile apps being developed by all ecommerce platforms, people now
prefer smartphones over their PCs to fulfill their shopping needs. The dramatic price drop in the
smartphone market has enabled consumers and sellers from all over the country to connect
with each other. Sales on mobiles platform account for 41% of the total e-commerce sales in
2014. The sale of electronics products on the ecommerce platform has empowered the average
Indian to have access to latest technological products at affordable prices.
However, the threat of online fraud and data security has deterred a lot of consumers from
choosing e-commerce as the preferred mode of shopping. People are also hesitant to use
mobile payment methods, which has forced Amazon to resort to Cash-on-Delivery model which
does not work effectively in a vast country like India.

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 Project Outline

• Purpose and Objective of the project

• Establish its Justification and Significance
• Study the SWOT matrix
INTRODUCTION • Do the PEST analysis

• Apply Five Forces model

• Study and Analyse consumer behaviour
• Literature review
DESIGN/ • Methodology Adopted
METHODOLOGY • Data collection and analysis approach

• Identify Marketing Strategy

• Discuss conclusions, implications and limitations
CONCLUSION

• Discuss future scope

• Future research in this field
FUTURE SCOPE

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 FIVE FORCES MODEL ANALYSIS
Porter’s five forces model is a simple framework for assessing and evaluating the competitive
strength and position of a business organization.

FIVE FORCES MODEL

Porter’s five forces model includes the following:
 Threat of new entrants
 Threat of substitutes
 Bargaining power of buyers
 Bargaining power of suppliers
 Rivalry among existing competitors

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Amazon’s analysis using the five forces model
Threat of new entrants: Recently, e-commerce has been gaining a lot of popularity, considering
many customers are shifting towards these online retail websites for their shopping needs. Due
to this shift in the priority of customer a number of new players have emerged like Snapdeal,
Shopclues, Paytm etc. Hence the threat of new entrants in this case is high. Also the Indian
government has allowed 51% FDI in multi-brand retail and 100% FDI in single brand retail so
MNC’s can start their own retail service in India. To deal with such competition, Amazon will
have to devise new strategies to avoid this threat of new entrants.
Threat of substitutes: The substitute for Amazon is retail stores. We can say that their threat is
low for this industry because customers are going for online purchases instead of going to
physical stores since it will save time, effort and money. With the increase in penetration of
internet and smart phones the customer is shifting its base to online retail. In addition to this
there is no difference in prices between the products offered online and those in retail stores-
usually online retail stores like Amazon offer discounts on products which attract the customer.
Thus the threat of substitutes is low for Amazon
Bargaining power of suppliers: Buyers in e-retail are customers who purchase products online.
Since this industry is flooded with so many players like Amazon and its competitors like Flipkart,
Snapdeal, Jabong, eBay, buyers are having lots of options to choose from. Customer would
prefer the one who would provide goods at reasonable price deliver it fast and provide them
with other benefits like Cash on Delivery, EMI facilities, other offers etc. Hence bargaining
power of buyers is high in this case.
Bargaining power of suppliers: Here, suppliers are the manufacturers of finished products. For
any product, there are many suppliers online, so they can’t show power on online retail
companies. For example, if you take computers category, there are many suppliers like Dell,
Apple, Lenovo, and Toshiba everyone wants to sell their products through online retails like
Amazon. Selling online saves a lot of money for the manufacturers, and as many people
nowadays prefer purchasing product through online stores, Companies cannot afford to lose
this channel. So, in this industry the supplier power is low.
Rivalry among existing companies: Competition is very high in this industry with so many
players like Jabong, Snapdeal, Flipkart etc. Many competitors mean more choices for the
customer to choose from. This also increases the cost incurred by the company to stay in the
customer’s mind i.e. on Promotions and Advertisements etc. Giving the customer better deals,
making customer’s experience delightful and continuous innovation can help a company to stay
at top even with tons of competitors around.

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 Customer Behavior
Ecommerce
To study the impact of Ecommerce in society, especially with Amazon as an example, it is
important to gather information regarding the behavior of customers. The group targeted for
the research was deliberately comprised of people from various age groups - 18-52 years. It
included Engineering Students, Management Students, Corporate Employees, Architects,
House-wives, Teachers and others. The outcome was unanticipated and can be gauged by the
responses to the following questions:

1. Preference of Ecommerce over Retail?

0.6 55.18%

0.5 Never
Very Low
0.4
Low
0.3 Undecided
17.24% 17.24%
High
0.2
10.34% Very High
0.1 Always

0
Responses
From the data collected, it could be said that about 72 percent of the people questioned, were
in favor of Ecommerce over the Retail market. Of this, 17 percent of the people were very
highly inclined towards Ecommerce. An equivalent number of people could not choose a side
and were confused. A surprisingly high percentage of people (10 percent) still rely on the Retail
Market for their shopping and prefer it over Ecommerce.

Undecided

Retail

Ecommerce

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00%

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2. Factors affecting your preferences?
40.00%
35.00%
38.00% 38.00%
30.00%
Price
25.00% Customer Service
20.00% Convenience
15.00% Options
Others
10.00% 13.50% 7.00%
3.50% Do not think so much!
5.00%
0.00%
Response

76 percent of the people questioned feel that Price and Convenience are the two major
contributors to their preferences. Customer Service comes third with a percentage of 13.5%.
7% percent of the people also believe that they decide which site to shop from depending on
the options available. A small percentage of people said that they do not care, as long as they
get the product. None had any other preferences.

3. Which site comes to your mind when you think of Ecommerce?

Any Other

Myntra

Snapdeal

Amazon

Chroma

Jabong

Flipkart

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00%

Flipkart has been the obvious preferred choice amongst the majority of the people questioned.
A staggering 72 percent of the people voted for Flipkart while, Amazon stood second at a mere
14 percent. This clearly shows the vast gap that Amazon still has to cover. Although, compared
to the other Ecommerce sites Amazon has fared quite well, it does not count as a positive for
Amazon because the major chunk of the market share is still held by Flipkart. Amazon can still
be considered as a relatively new entrant in the Indian marketplace scenario. However, Jeff
Bezos, Amazon CEO, has pledged increased investment and further penetration into the Indian
market. So, we can expect the graph to shift in favor Amazon within the next few years.

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4. Have you shopped with Amazon before?

7.00%

Yes

93.00% No

A positive point for Amazon was that 93 percent of the people surveyed, claimed that they had
shopped at Amazon in the past. This clearly shows that although Amazon has not been able to
grab the major chunk of the market share as of yet, it definitely has created some sort of an
impact. People have identified Amazon as a prospective option.

5. Customer Satisfaction
a. Do you feel that the Prices offered by Amazon are the best?

31.00%
Yes

69.00% No

b. Are you content with Amazon's customer service?

Absolutely!

Not at all!

No

Yes

0% 20% 40% 60% 80% 100%

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Though 69 percent of the people were unhappy with the prices being offered by Amazon, a
staggering 86 percent were content with the customer service being provided by them. These
are definitely positives that Amazon can take out of this survey. However, 14 percent of
discontent people are still a huge number in a country such as, India.

6. Were you able to find everything you needed on Amazon?

3.50% 3.50%

Yes
No
38.00%
Never
55.00% Always

Over 58 percent of the people felt that they did not find what they were looking for in the
Amazon site. This is more than half the population covered and is a serious cause of concern for
Amazon. It implies that Amazon is not being able to connect with the needs of the Indian
market.

7. Rate your Amazon experience!

60.00%
52.00%
50.00%

38.00%
40.00% Extremely Bad!
Bad
30.00%
Ok
Good
20.00%
Very Good
7.00%
10.00%
3.50%

0.00%
Response

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8. I will come back to Amazon again!

False! 14.00%

True! 86.00%

0.00% 20.00% 40.00% 60.00% 80.00% 100.00%

Around 97 percent of the people did not have a negative experience with Amazon. However,
out of this only about 59 percent of the people had a pleasurable experience. This implies that
41 percent of the people did not have an enjoyable experience with Amazon yet. Another
major cause of concern for Amazon. However, on the positive side 86 percent of the people
were willing to come back to Amazon.

9. Would you like to see a few Amazon stores?

Maybe 35.00%

No 20.00%

Yes 45.00%

0.00% 10.00% 20.00% 30.00% 40.00% 50.00%

45 percent of the people are sure that they want to see a few exclusive Amazon outlets.About
35 percent are not sure as of yet but are willing to try out the stores. This implies that
considering the fact that about 80 percent of the people are willing to give the stores a chance,
Amazon can go ahead with a few exclusive retail stores. 20 percent of the population however,
feel that Amazon does not require any retail outlets.

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 Literature Review
Various business models in E-commerce
Merchant model: Merchant model transfers the old retail model to an e commerce platform
through internet. There are various types of merchant models. A typical type of merchant
model is very similar to a traditional business model that sells goods and services over the
internet. Companies like Amazon, Flipkart, Snapdeal etc. would be good examples of this type
of model. An e-business similar to Amazon uses the various tools and technologies offered by
the internet to sell its products and services directly to the consumers. Moreover, these
companies establish a brand by providing high quality products and services at reasonable
prices during a reasonable period of time.

Brokerage model: In this type of business model, the e-business gives a platform to the sellers
and buyers to come together and conduct the transactions. It charges a commission on these
transactions by using this model. The best example of this type would be an online auction site
such as eBay, gittigidiyor.com. These sites can also generate additional revenue by selling
banner advertisement on their sites.

Advertising model: This model is an extension of traditional advertising media, such as

television and radio. In this model, search engines and directories such as Google and Yahoo
provide contents (similar to radio and TV) and allow the users to access this content for free. By
creating significant traffic they achieve the economics of scale and are able to charge
advertisers for putting banner ads or leasing spots on their sites.

Info-mediary model: E-businesses that use this model collect information like demographics,
recent search history, purchase history etc. on consumers and businesses and then sell this
information to interested parties for marketing purposes. For instance, bizrate.com collect
information related to the performance of other sites and sells this information to advertisers.
Netzero.com provides free Internet access; in behavior of customers. This information is later
sold to advertisers for direct marketing.

Subscription model: In this type of business model, an e-business sells digital products to its
customers over the internet. The Wall Street Journal and Consumer Reports are two examples.
Amazon is another example of this model that sells business news and analysis, daily reports,
magazine etc based on subscription.

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Business Model followed by Amazon based on type of transaction
There are several types of e-commerce companies in use today. Based on the nature of the
transactions, they are classified as follows:
1) business-to-consumer (B2C)
2) business-to-business (B2B)
3) consumer-to-consumer (C2C)
4) consumer-to-business (C2B)
5) non-business and government, and organizational (intra-business).

Amazon follows B2C business type in India. A typical B2C model involves five major
transactions:

Info Sharing

Ordering

Payment

Fulfillment

Service and support

Info sharing: A B2C e-commerce uses following applications and technologies to share
information with customers:
A) Online advertisements
B) e-mail
C) newsgroups
D) discussion groups
E) company web site
F) online catalogs
G) message board systems
H) bulletin board systems

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 I) Multiparty conferencing.

Ordering: After going through the Companies’ portfolio of products and services, a customer
selects a product suiting his needs. He may then select the particular product on the company’s
website and makes the money transaction to pay for the product.

Payment: Credit cards, net banking, electronic checks, and digital cash are among the popular
options that the customer has as options for paying for the goods or services. Nowadays,
companies have also started coupon systems to make payments or avail discounts. A customer
may use these discounts during purchases.

Fulfillment: Fulfillment means the physical delivering the product or service from the merchant
to the customer. In case of physical products (books, videos, CDs), the filled order can be sent
to the customer using regular mails. As expected for faster delivery, the customer has to pay
additional money. In case of digital products (software, music, electronic documents), the e-
business uses digital documentations to assure security, integrity, and privacy of the product. It
may also include delivery address verification and digital warehousing that stores digital
products on a computer until they are delivered. The e-business can handle its own fulfillment
operations or out-source this function to third parties with moderate costs.

Service and support: It is much cheaper to maintain current customers than to attract new
customers. For this reason, e-businesses should do whatever they can to provide high quality
services and support to the customer. Email confirmations, periodic news flashes, online
surveys, help desks and assured secure transactions & information security are some ways to
customer satisfaction in e-commerce.

Amazon.com, Inc
Founded by Jeff Bezos, Amazon started as the “world’s largest bookstore” in July 1995. A virtual
bookstore that physically owned no books, Amazon promised to revolutionize retailing and be
the most consumer centric company in the world (Mission Statement). To fulfil this mission,
Amazon set out to create personalized store fronts for each customer by providing more useful
information and more choices than could be found in your typical neighborhood bookstore
(Product/Service).

Readers can review books and evaluate them on a one- to five-star rating scale, and browsers
can rate the reviews for helpfulness. Amazon’s personal recommendation service aggregates
data on buying patterns to infer who might like which book. The site offers peeks into books’

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contents index, and beginning pages with a “search inside the book” feature that also lets
customers search the entire text of 120,000 books (Key features and success factors).

Amazon’s one-click shopping lets buyers make purchases with one click. Over the years,
Amazon has diversified its product lines into DVDs, music CDs, computer software, video
games, electronics, apparel, furniture, food, toys, and more. Amazon continued to expand its
product offerings with the 2007 launch of Amazon Video on Demand, allowing consumers to
rent or purchase films and television shows on their computers or televisions. Later that year,
Amazon introduced Amazon MP3, which competes directly with Apple’s iTunes and has
participation from all the major music labels. The company’s most successful product launch
was the Amazon-branded Kindle, an electronic book reader that can deliver hundreds of
thousands of books, magazines, blogs, and newspapers wirelessly in a matter of seconds. It was
the number one selling product for Amazon (Product Development).

In addition, it has established separate Web sites in Canada, the United Kingdom, Germany,
France, China, and Japan (Market Development).

To overcome the lag between purchase and delivery of product, Amazon offers fast,
inexpensive shipping. In USA, for a $79 annual fee, Amazon Prime provides unlimited free
express shipping for most items. While free shipping and price cuts are sometimes unpopular
with investors, Bezos believes it builds customer satisfaction, loyalty, and frequency of
purchase orders.

Amazon has established itself as an electronic marketplace by enabling merchants of all kinds
to sell items on the site. It powers and operates retail Web sites for Target, the NBA, Timex, and
Marks & Spencer. Associates, independent sellers or businesses, can refer consumers to
Amazon through a variety of ways, including direct links and banner ads as well as Amazon
Widgets, mini applications that feature Amazon’s wide selection of products. Amazon also
launched an affiliate product called aStore, which gives Associates the ability to create an
Amazon-operated online store easily and without any programming knowledge. Amazon then
supports these merchants by providing new tools for their Web site, offering access to
Amazon’s catalog of products, and handling all payments and payment security through its Web
Services. (Partner Relationship Management)

Amazon can also “pick, pack and ship the products to the merchant’s customers anytime and to
any place” through its Fulfillment by Amazon (FBA). This essentially creates a virtual store for
the third-party merchants with low risk and no additional cost.

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One key to Amazon’s success in all these different ventures was a willingness to invest in the
latest Internet technology to make shopping online faster, easier, and more personally
rewarding for its customers and third-party merchants.

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 Methodology
Our study comprises of a detailed study of Amazon and the external factors which play a pivotal
role in shaping up the e-commerce market as we see it today. The competition from offline
retail outlets remains a threat and with the opening of brick and mortar stores, Amazon has
taken its first steps towards countering the same.
In this project, using different conceptual and analytical tools we want to list down and
evaluate the business model, the market as a whole, the competitors and also the key drivers of
the online and offline market space. We strive to get a holistic and in depth view of the same.
1. Conceptual Tools – Using Porter’s Five Forces model, we delve into the market forces
which define and help Amazon shape its market strategies and goals.
2. Analytical Tools – We have used data surveys which have been able to provide us with
valuable insights which have helped us gauge consumer’s preferences in terms of
market, competitors and also helps evaluate the product, service and customer
satisfaction aspects of Amazon.

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 Positioning Strategy
Jeff Bezos always wanted to position Amazon as a market place with unlimited selections. He
wanted to create “An Everything Store”. Furthermore, he wanted to give his customers a
memorable shopping experience with low prices and excellent services.
Amazon has been successful in positioning itself as a low priced marketplace by continuously
giving customers value for money. It has been able to keep its prices low by gaining higher sales
volumes, negotiating better terms with our
suppliers, and achieving better operating
efficiencies. Moreover, by constantly benchmarking
its prices with its competitors, it has been able to
ensure that it offers the same quality products as other companies at a considerably cheaper
price. The Amazon logo with a yellow arrow from A to Z shows the vast range of Products
Company offers (from A to Z). Also, the smiley formed by the yellow arrow represents the
smiling faces of Amazon’s customers.
Besides, a vast selection of items, its continuous focus on technological improvement has
helped Amazon achieve a high level of customer satisfaction and position itself as a preferred
choice for shoppers. Though it has a vast array of products, according to our surveys, people
still find it difficult to search for the products they are looking for. Amazon through its further
marketing campaigns can create an image of a user friendly interface of its site.
Amazon is also investing a lot of money to increase the reach of its distribution network and
connect more cities. Moreover, it is also trying to more areas for cash on delivery.

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 Research Foresights
Conclusions
From our study of Amazon.in as an E-commerce marketplace, the following conclusions can be
drawn:
 E-commerce marketplace model is booming in India as it provides convenience over
retail and is a one stop solution for different varieties of products. It simplifies buying
and selling by providing various options to search for products and even compare prices
online.
 A large market share of e-commerce in India is untapped and the E-commerce giants
like Amazon.in, Flipkart, Snapdeal etc. can easily tap this segment by proper positioning
and campaigning.
 As per our survey a staggering 93% of the people had shopped with Amazon although it
was also seen that 86% of them had Flipkart as their spontaneous unaided response
when asked about E-commerce.
From this we can derive that though Amazon has come a long way in the global market
it has work a lot before it can establish itself well in the Indian scenario.
 Amazon has kept its prices low by gaining higher sales volumes, negotiating better terms
with our suppliers, and achieving better operating efficiencies. This could help Amazon
strengthen its foothold in India and compete with Indian E-commerce giants like
Flipkart.

Limitations
The limitations of E-commerce marketplace can be broadly classified into 2 categories:
Technical Limitations:
 Non-availability of internet bandwidth across certain geographies
 Lack of security for systems, standards, reliability, and some communication protocols
 It is difficult to integrate the Internet and EC software with some existing applications
and databases.
 Vendors may need special Web servers and other infrastructures, in addition to the
network servers.
 Some EC software might not fit with some hardware, or may be incompatible with some
operating systems or other components.

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Non-Technical Limitations:
 Cost and Justification – High initial costs of development, logistics, warehousing etc.
make profits a difficult proposition for ecommerce companies in the short term.
Proactive planning and appropriate outsourcing needs to be done. Also, the costs of
intangibles need to be borne by the firm
 Security and Privacy – Especially in B2C areas, security is of vital importance. Ecommerce
websites have customer addresses, e-mail IDs and phone numbers. These sensitive
information need to encrypted and stored with numerous firewalls. The customers
perceive these issues as very important and the EC industry has a very long and difficult
task of convincing customers that online transactions and privacy are, in fact, very
secure
 Legal Issues – Because Ecommerce is new to India, Government is still in process of
finalizing benchmarks, regulations and legislations for the internet marketplace. Issues
like payment method (Uber) still need refinement
 Lack of Trust and User Resistance – Customers appear to be apprehensive about buying
from unknown, faceless sellers, paperless transactions and e-money. Indians will still
take some time for the transition
 Unsuitable for perishable items – Perishable items require proper storage and
warehousing. For these items, shoppers prefer conventional stores. Although some
initiatives like “Grofers” are bringing a change to the scene
 Ecommerce in still a growing and evolving scene. Many are looking for stability before
they actually enter this marketplace

Implications
Buyer’s Perspective
Providing a simplified shopping experience and a wide variety of products, the online market
place model has garnered major success over the last few years for Amazon. However, the
company is still lagging significantly behind its competitors in terms of the market share.
Moreover, there is a huge market share of offline-shopping customers that has not been
acquired by either Amazon or its competitors. Over the next decade, Amazon will fight for the
dominance over the market by offering a wider listing of product and more discounts which
essentially spells out a good time for the consumers in the times to come.

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Seller’s Perspective
Since entering the Indian market, Amazon has grown rapidly and expanded its offering to about
15 million products across 28 categories. According to ET, the company’s sales by volume have
increased by over 500% since FY14. The company has also on-boarded a large number of sellers
over the last year bringing the total count to 6500 as compared to 30,000 sellers on Snapdeal
and 3000 on Flipkart. Based on this trend, it is clear that retail sellers have chosen the online
marketplace model to sell their products and improve their visibility. Use of modern day
analytics and valuable feedback from customers are reasons why more and more sellers are
flocking to online market places. Amazon’s new service Easy Ship will also prove advantageous
to sellers as the orders will now be picked up from the seller's location by an Amazon Logistics
delivery associate and delivered to the buyers' location with minimal effort from sellers. This
service will help sellers reduce the costs of shipping items for the sellers which will now be
borne by Amazon.

Industry Perspective
Even though Amazon was a late entrant into the marketplace business in India, it has grown
rapidly and aggressively captured a significant share of the Indian market. Backed by its parent
company and their CEO Jeff Bezos, Amazon has had the fastest ramp up rate in India as
compared to any other entries. The future of the marketplace model will see a major
competition between the top 3 e-commerce companies unless we see a rise of another. The e-
commerce companies have also started acquiring new age startups that have the potential to
further their brand value in the market.

The companies are currently focusing more on customer acquisition and building an exhaustive
user base for themselves. This has been assisted by funds provided by venture capitalists or
parent companies. This has, therefore, led to a trade-off on profits made by the companies. As
of now neither of the e-commerce companies in the Indian market is making any profits. Unless
Amazon evolves its strategy and focuses on making profits with the help of the acquired user
base, it will face serious cash crunch in the long term future.

Another threat to Amazon’s growth rate in India is the entry of big retail brands like Big Bazaar
(Future Group) and Shopper’s Stop (Raheja Group) into the online e-commerce space to
complement their offline presence. Amazon will have to re-evaluate its strategy to counter
these threats and to preserve and grow its market share.

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 Future Scope
Considering the growth in the number of online shoppers and in the number of opportunities,
to both the seller and the buyer, the scope of Ecommerce is huge. Though Ecommerce
companies like Amazon are facing with stiff competition and there are several problems, to
which solutions are yet to be found, Ecommerce has the potential to be the major market share
holder in India, as compared to Retail. The following would and should be the key areas of
focus for a company such as, Amazon.

Faster and More Accurate Delivery

For an Ecommerce company to maintain its strong customer base and generate new markets,
accurate and timely delivery of products is of utmost importance. A quick response clubbed
with accurate and high quality delivery, go hand in hand. This has been Amazon’s USP and they
shall work towards it continuously.

Big Selection to Offer

The second in line, as per the long terms plans of Jeff Bezos, Founder and CEO of Amazon is
offering a bigger range of selection to its customers. This is crucial to ensure Amazon is
continuously at par with the rest of the industry. It is even more essential in a highly populous
country such as, India with a varied customer base.

Cost Structure
There are several small and medium sized enterprises in India which look for support.
Innovative ideas like ‘Easy Ship’ which would be assisting these enterprises in bringing out their
products into the open, have a huge scope of penetration and success. By means of an effective
collection and delivery system, the cost incurred by these enterprises in bringing the end
product to the user would reduce sufficiently. Consequently, the prices of the good can be
reduced for the customer’s benefit.

Kindle
Sale of books has a huge scope in India. Products such as, the Kindle and the Kindle Fire would
generate a lot of customers if catered to correctly. The success of Kindle in the United States of
America would certainly urge Amazon to start a similar operation in India.

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Drone Based Delivery
A futuristic idea which may not be too distant in the future. Amazon has already started the
development of Drones which would collect packages from their warehouses and get them
delivered to the customer’s door-step. Being pioneers in such innovation will ensure a strong
market hold.

Investment and Acquisitions

With the number of entrepreneurs growing in India and with funds such as, the India
Aspiration Fund started by the government, more number of successful start-ups are expected
in India. These start-ups have great ideas and very good operations, which can be funded by
Amazon. Amazon can also look to acquire such firms and optimize its own mode of operation
based on the ideas of the acquired companies.

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 References

 Customer Survey Link:

https://docs.google.com/forms/d/1ibxIQxdl_WeYDAS9PZli5ESoa1_PgrqtsaKTiVki1pU/viewform?
edit_requested=true
 https://www.pwc.in/en_IN/in/assets/pdfs/publications/2015/ecommerce-in-india-accelerating-
growth.pdf
 http://www.livemint.com/Industry/9vB8J4XkyVRB5dVGGiiy6K/A-year-on-Amazon-raises-stakes-
in-India-quickly-grows-sell.html
 http://economictimes.indiatimes.com/industry/services/retail/india-is-second-biggest-
investment-country-for-amazon/articleshow/48610417.cms
 http://articles.economictimes.indiatimes.com/2015-01-20/news/58267766_1_amazon-india-
myntra-flipkart
 http://www.businesstoday.in/magazine/cover-story/ecommerce-war-flipkart-vs-snapdeal-vs-
amazon-in-retail-space/story/218862.html

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