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Amazon in Emerging Markets Case Solution

Solution Id Length Case Author Case Publisher
2759 1556 Words (7 Pages) Amy Nguyen-Chyung, Elliot Faulk WDI Publishing at the University of Michigan : W94C01
This solution includes: A Word File A Word File

The case examines Amazon's entry into India before moving on to Amazon's experiences in China and Brazil. In the following case study, Amazon's prime objective is expanding the international markets. Amazon saw its main competitor in China, i.e., the Alibaba Group, submit filings with the SEC for an initial public offering (IPO) that could be one of the largest in history. Meanwhile, despite several years of prosperity, its primary competitor in Brazil, Mercado Libre, saw a drop in stock price. Furthermore, its two main Indian competitors, Flipkart and Snapdeal, conducted separate mergers with other linked firms. This case study provides us an insight into the challenges Amazon faced. Amazon launched its first website in China, while India was the third to experience it. Amazon used a different business model and approach in India than in China and Brazil. Hence, this case study examines factors that affected Amazon's growth in emerging markets. 

Following questions are answered in this case study solution

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

  2. Did Amazon make sensible choices in its emerging markets entry strategies? Consider location, entry mode, and timing.

  3. How should companies and investors measure success in emerging markets?

  4. 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?

Case Analysis for Amazon in Emerging Markets Case Solution

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

The case study suggests that Amazon failed to break into the Chinese market. Amazon's failure in China can be attributed to several factors. Before Amazon entered the Chinese market, another e-commerce giant, i.e., Alibaba, had already established a stronghold, and its name was already well-known among Chinese consumers. Second, Amazon needed to analyse more before entering the Chinese market. Attempts to cater to the peculiarities of Chinese consumers' tastes were doomed to failure due to a lack of thorough research. In addition, the company's business plan consisted of buying stock from suppliers and shops in Amazon's existing fulfilment stores, just as it did in the United States and other emerging markets. In addition, the Chinese version of Amazon's e-commerce platform fell short of the expectations of its suppliers due to its limited marketplace focus.

Moreover, because of China's vastly different transportation options, Amazon needed to maintain its competitive advantage regarding speedy deliveries. Since most deliveries in China are made by bicycle or scooter, customers have complained about the country's unusually long delivery times. Credit card use was another barrier to entry because Chinese consumers lacked experience making online purchases on credit.

Amazon worked hard to improve its reputation in China by using the lessons it gained from its past failures and making significant changes to its business operations. Amazon was the first company to modify its business model to conform to the standards of the Chinese market. To cater to the needs of Chinese customers, the company now provides complimentary shipping on all orders and a cash-on-delivery payment option for those customers who would prefer not to use credit cards. Amazon has improved the quality of its goods and services, which has increased consumer satisfaction even though the company has a minimal market share.

2. Did Amazon make sensible choices in its emerging market entry strategies? Consider location, entry mode, and timing.

Like any other company, Amazon faced challenges and difficulties while emerging in new markets. 

India: 

Amazon faced difficulties regarding legal restrictions related to foreign direct investments and the lack of a standardized system for vendors in India. Regarding location, many of India's routes were in disrepair and overloaded, which caused issues with timely deliveries. However, emerging into the Indian market is not wrong, as the Indian E-commerce market can grow up to 61 times in the foreseeable future. In the face of the massive Indian E-commerce sector, even if Amazon cannot be the dominant player with the most market share, it would still be profitable for Amazon's brand name.

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