GENERAL MANAGEMENT PROJECT REPORT

ON

A STUDY ON BUSINESS STRATEGY OF AMAZON

Submitted in the partial fulfilment for the award of the degree of

Masters of management studies (MMS)
(Under University of Mumbai)

Submitted By:

Name: Siddesh Mohandas Nayak

Roll No. 104

Under the guidance of

Dr. Simone Simon

2017-19

St Francis Institute Of Management And Research, Mt.Poinsur ,

S.V.P Road, Borivali (W) Mumbai.

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 CERTIFICATE

This is to certify that project titled "A Study on Business Strategy of Amazon" is successfully
completed by Mr. Siddesh Mohandas Nayak during the IV Semester, in partial fulfillment of the
Masters Degree in Management Studies recognized by the University of Mumbai for the
academic year 2018-19 through St. Francis Institute Of Management and Research. This project
work is original and not submitted earlier for the award of any degree/diploma or associate ship
of any other University/Institution.

Name – Dr. Simeon Simon

Date - (Signature of the Guide)

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 DECLARATION

I hereby declare that this Project Report submitted by me to the St. Francis Institute of

Management and Research is a bonafide work undertaken by me and it is not submitted to any

other University or Institution for the award of any degree diploma/certificate or published any

time before.

Name – Siddesh Nayak

Roll no – 104 (Signature of the student)

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 ACKNOWLEDGEMENT

I am using this opportunity to express my gratitude to everyone who supported me throughout

my project.

It is a great pleasure for me to acknowledge the kind of help and guidance received by me during

my project work. I was fortunate enough to get support from a large number of people to whom I

shall always remain grateful.

I express my warm thanks to Prof. Simone Simon for his support and guidance and for provided

me with the facilities being required and conditions for my winter project.

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 Table of Content

SR.NO Particulars Page No.

1 Introduction 7-10

2 Literature Review 11

3 Need for the Study 12

4 Research Methodology& Objectives 13

5 Data Analysis 14-26

6 Finding 27

7 Conclusion 28

8 Websites & References 29

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6
 CHAPTER 1

INTRODUCTION

1.1. Business Strategy

Business strategy can be understood as the course of action or set of decisions which assist the
entrepreneurs in achieving specific business objectives. It is the master plan that the management
use to secure a competitive position in the market, carry on its operations, please customers and
achieve the desired ends of the business.

In business, it is the long-range sketch of the desired image, direction and destination of the
organisation. It is a scheme of corporate intent and action, which is carefully planned and
flexibly designed with the purpose of:

 Achieving effectiveness,
 Perceiving and utilising opportunities
 Mobilising resources,
 Securing advantageous position
 Meeting challenges and threats
A business strategy is a set of competitive moves and actions that business uses to attract
customers, compete successfully, strengthening performance, and achieve organisational goals. It
outlines how business should be carried out to reach the desired ends.Business strategy equips
the top management with an integrated framework, to discover, analyse and exploit beneficial
opportunities, to sense and meet potential threats, to make optimum use of resources and
strengths, to counterbalance weakness.

1.2. Levels of Business Strategy

1. Corporate level strategy: Corporate level strategy is long-range, action-oriented, integrated and
comprehensive plan formulated by the top management. It is used to ascertain business lines,
expansion and growth, takeovers and mergers, diversification, integration, new areas for
investment and divestment and so forth.
2. Business level strategy: The strategies that relate to a particular business are known as business
level strategies. It is developed by the general managers, who convert mission and vision into
concrete strategies. It is like a blueprint of the entire business.
3. Functional level strategy: Developed by the first line managers or supervisors, functional level
strategy involves decision making at the operational level concerning particular functional areas
like marketing, production, human resource, research and development, finance and so on.

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1.3.Company Overview
Amazon.com started as an online bookstore, but soon diversified, selling DVDs, VHSs, CDs,
video and MP3 downloads/Streaming, soft-ware, video games, Electronics, Apparel, furniture,
Food, Toy and Jewellery The company also produces consumer electronics notably, Kindle,
Fire Tablets, Fire TV and Phone and is a major provider of cloud computing services.

Amazon has separate retail websites for United States, United Kingdom & Ireland, France,
Canada, Germany, The Netherlands, Italy, Spain, Australia, Brazil, Japan, China, India and
Mexico, with sites for Sri Lanka and South East Asian countries coming soon. Amazon also
offers international shipping to certain other countries for some of its products. In early June
2013, Amazon.com had launched their Amazon India marketplace without any marketing
campaigns. In July,2013, Amazon had announced to invest $2 Billion (Rs 12,000Crores) in India
to expand business, after its largest Indian rival Flipkart too had announced to invest$1 Billion.

Back in 1994, Jeff Bezos was stunned after discovering the 2300% growth rate of the Internet,
which eventually led him to think about starting an online business.

“You know, things just don’t grow that fast. It’s highly unusual, and that started me about
thinking, ‘What kind of business plan might make sense in the context of that growth?’.” – Jeff
Bezos

With the financial help of $245,573 from his parents, Bezos started Amazon in his garage.
Fortunately, now their investment almost worth of $30 billion – a 12,000,000% ROI.

In 1997, three years after its launch and post-IPO, Amazon’s estimated worth was $438 Million.
The startup gradually evolved into a multinational corporation and now is worth a marvelous
$890 Billion. The E-commerce giant is the second US company to cross a trillion-dollar
valuation after Apple when their stock price reached an all-time high ($2050.50) on September 4,
2018.
Internet was surely a huge part of Amazon’s growth but technological innovation, marketing
strategy, and most importantly its business model is what makes Amazon the most innovative
company of the current era.Amazon has grown significantly since its inception as a book-selling
website and spread its wings to other areas like logistics, consumer technology, cloud computing,

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and most recently, media and entertainment – domains which did and would help Amazon tread
the path to emerge as a trillion dollar corporation.This business research study of Amazon
compiles the ideas, innovations, technological research, partnerships, and most importantly
business strategies which are responsible for growing Amazon to such heights. Besides, you will
also find their sales numbers in every segment and a brief summary of their stock prices for the
past few years.While this study will give you more information about Amazon’s business
strategy, it will also help you acquire some basic principles which could be applied to any kind
of business.

1.3.1. Amazon’s Achievements

The FastCompany magazine listed Amazon as the most innovative company of 2017 while
Forbes ranked Amazon 3rd on their list of most innovative companies of 2017. Further,
Amazon ranked 3rd in MIT’s Smart companies 2017 listing as well, following Nvidia and
SpaceX.

Source: Fortune 500

Amazon ranked 12th on Fortune 500 2017 list and this year it made the position in top 10 by
securing the 8th place – It’s the best rank ever since Amazon made its presence in the magazine
for the first time in 2002. Since then, the company has been continuously listed on the coveted
list, each time with a rank better than the previous year.

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1.3.2. Growing Revenue
In the last five years, the sales of Amazon increased by 160% – a whopping $232.88 Billion in
2018 – from $89 billion in 2014. In 2018 alone, the revenue grew 31% when compared to 2017.

Launching their services to more markets and expanding horizons, Amazon – as a result of their
eCommerce business model – increased their sales numbers and customers and hence Revenue.
Besides, its AWS business contributes hugely to Amazon’s revenue stream.
Amazon is equally expanding the operations for its three segments – North America,
International, and AWS – where it offers its products and services to consumers, sellers, as
well as developers, enterprises, and content creators.

Unsurprisingly, a big part of Amazon’s revenue comes from North America. Internationally, the
company’s revenue increased from $43.9 billion in 2016 to $65.86 billion in 2018 as Amazon
Prime has become a huge success in some of the Asian and European markets.
Further, the 11.2% revenue of $25.66 billion in 2018 was generated from Amazon Web Services
– a subsidiary to provide big consumers on-demand cloud services. In 2017, the company
rendered more than 90 services of cloud computing with the tools of the Internet of Things
(IoT). Big shotscomprising Netflix, Unilever, GE, and NASA form some of the consumer bases
that use AWS for better web services.
The business strategy of Amazon consists focusing on investing in technologies, enhancing its
logistic applications, improving its web services by fulfillment capacity, M&A strategy, AWS
segment, R&D activities in logistics, and experimenting with Fintech.

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 CHAPTER 2

LITERATURE REVIEW

India had an internet user base of about 460million as of June 2018 and is expected to cross
500 million in 2019. Despite being the second-largest user base in world, only behind china
(650 million,48% of population),the penetration of e-commerce is low compared to markets
like the united states (266 million,84%),or France (54m, 81%),but is growing at an
unprecedented rate,adding around 6million new entrants every month. The industry
consensus is that growth is at an inflection point. In India, cash on delivery is the most
preferred payment method, accumulating 75% of the e-retail activities. Demand for
international consumer products (including tail items) is growing much faster than in-country
supply from authorized distributors and e-commerce offerings. Large e-commerce companies
in India are Flipkart, Snapdeal, Amazon India,paytm.

 Martindodge.(1999),”findingthesourceofAmazon.com:examiningthehypeofthe earth’s
biggest book store”, center for advanced spatial analysis. Concluded that
Amazon.comhasbeenoneofthemostpromisinge-commercecompaniesandhas
grownrapidlybyprovidingquality service.

 Grewal et al (2002), online shopping is more efficient in meeting the consumers’ needs and
wants. It allows the consumers to easily attain knowledge about the brand’s product quality,
availability, product specifications and prices, and compare that with those of another brand.
This means they can now make more intelligent purchasing decisions in a way which is not
possible through traditional shopping.

 Haubl and Trifts (2000) also mentioned that when shopping online, consumers can compare
prices and look at alternative options. Websites such as flipkart.com aid in making this
comparison with just a few clicks. Furthermore, on online shopping websites, consumers
have access to other customers’ reviews which can guide their purchasing decision.

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 CHAPTER 3

NEED FOR THE STUDY

 The study will help researcher or students, what are the different strategies adopted by
Amazonwhich is responsible for their growth

 The study will be a reference for other organization which will help them frame their
strategies accordingly

 As a Management student, the study will help me to know what are the key benefits of
designing and implementing a full proof strategy

 As, Amazon is the world largest ecommerce platform it was a huge necessity to conduct a
research about the strengths and weakness of the company which can help where they
lack

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 CHAPTER 4

4.1. RESEARCH METHODOLOGY

It’s the way by which we collected data and used it to analysis the available fact for arriving at a
particular results and suggestion. Basically there are two ways of collecting the data primary
&secondary.

EXPLORATORY RESEARCH
Exploratory research conducted for a problem that has not been clearly defined. Exploratory
research helps determine the best research design, data collection method and selection of
subjects. It should draw definitive conclusions only with extreme caution. Exploratory research
often relies on secondary research such as reviewing available literature and/or data, or
qualitative approaches such as informal discussions with consumers, employees, management or
competitors, and more formal approaches through in-depth interviews, focus groups and
projective methods.

Data Collection: Reading online journals & information from websites and online portals

4.2. OBJECTIVES
 To study the SWOT Analysis of the Amazon

 To study the Technology Strategy & the different services offered by Amazon

 To study Marketing Strategy & Logistics strategy of Amazon

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 CHAPTER 5

DATA ANALYSIS

5.1. Investment in Technology& Various services by Amazon

 Amazon Robotics
Amazon has been investing considerably in robotic and drones technologies for the past decade
and has acquired many patents on them. Its warehouses alone house more than 45,000 robots.

In 2012, Amazon acquired Kiva Systems – a company that designs robots for picking and
packing process – for $775 million. By 2014, the company had 14,000 robots for their 10
warehouses. The following year, the count increased by 114% to 30,000 robots and in 2017 the
number increased by 50% to 45,000 robots across 20 warehouses.
In addition to acquisitions, Amazon also organizes challenges in different universities and
institutes across the world in which they offer a large sum of money for inventing a next-
generation robot. In 2017, the prize money was $250,000.

 Amazon Drones
Amazon is also researching drones for their initiative and future service of drone delivery. In
Britain, Amazon started its drone delivery service under Amazon Prime Air.
In Oct 2017, the US Federal Government approved a drone delivery program in the US as well.
The administration stated that they wanted to open new opportunities and commercial uses for
the drones for creating jobs.
Amazon has recently filed numerous drone patents on package delivery, package parachute, and
a floating airship warehouse. Also, it has patents on drone design for better maneuvering, secure
landing, and long flights.On an advanced level, they got a patent for a method to charge electric
vehicles through drones. This shows their interest in automobiles as future will require many
methods to charge an EV. Further, there would be no surprise if Amazon ventures in automobiles
domain.

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  Amazon Alexa
Artificial Intelligence is one tough area where despite having many competitors Amazon got a
big draw. It’s continuously focusing on AI and machine learning to enhance customerexperience.
The segment AWS and its venture Alexa Internet is a big part of their investment in AI.

In October 2017, the company announced a new research center in Germany focused on
developing AI. During the same month, the company and Microsoft partnered to roll out new
tools that will make it easier for developers to use open-source artificial intelligence software.
Developers can use Gluon, a Python-based application programming interface, to easily work
with MXNet, the AI framework backed by public cloud market leader Amazon Web Services.
Amazon’s partnership with Microsoft also ensures collaboration for researching in AI where
their personal assistants Cortana and Alexa would communicate with each other and will offer
services to the users.

 Alexa Everywhere – Strategy

Amazon launched its Alexa Everywhere strategy in 2017 and surprisingly it became a huge
success despite the presence of other top personal assistants in the market.Alexa, Amazon’s AI-
infused voice assistant, was first released with the original Amazon Echo smart speaker in
November 2014. Since then, it’s giving a head to head competition to its rival Google Home and
now Apple also has joined the race with their Siri-enabled speakers, Homepod.

In 2017, Amazon announced to install Alexa (AI) in every echo device and launched a number
of new products. Currently, Amazon Echo and Echo Dot hold 2/3 market share of smart
speakers – beating Google Home and Apple Homepod to a great margin. Amazon also
announced two major Alexa integrations for non-Echo devices. Amazon further revealed
that Alexa would be supported in BMWcars beginning of the next year.
Further, the Fire TV set-top box was launched with microphones embedded in the device so
consumers can shout Alexa commands across their homes.

 Amazon Go
In Dec 2016, Amazon demonstrated the world’s most advanced physical store.
Recently, Amazon officially opened the store to the public and showed the world that its research
in machine learning can truly eliminate jobs.

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The store has no checkout point and therefore has no cashier for making payments of your
purchases. The payment can be added automatically to cart whenever you take a product from
shelves. And after the purchase, the payment automatically gets deducted from your account or
digital wallet.

 Amazon Web Services (AWS)

Amazon has recently acquired companies in the cloud computing space and invested in
businesses based on the cloud. In early 2017, the company acquired a number of companies to
strengthen its AWS Cloud business. Some of these include GameSparks, Thinkbox Software,
and Harvest.ai. Additionally, Amazon invested in Grail which is a potential future customer of
Amazon cloud services.In order to increase the usage of its cloud technology, Amazon Web
Services (AWS) is investing some of its money to open data centers in Britain and France.In
2018, Amazon’s cloud segment, AWS, accounted for 58.8% of the company’s overall operating
income.

 Amazon Prime Video

Amazon has been investing in TV series and movies either by acquisition or production as it
strives to compete with streaming rivals Netflix, HBO, Hulu, and Disney.

Though Amazon Prime members can enjoy their streaming service as a part of the membership,
Amazon also launched the video-only plan for non-prime members for a cost of $8.99/month.
In 2017, Amazon acquired many TV shows and movies. Amazon acquired Marvel’s Inhumans
and Runaways to give good competition to Netflix — which also owns rights to stream some of
the Marvel’s shows.

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There was also news doing rounds that Amazon Studio planned to have their own web series
based on Lord of the Rings. The Studio’s head Roy Price said that Amazon Studios will refocus
on “big shows that can make the biggest difference around the world,” and specifically cited
Game of Thrones as a model.
Amazon also spent a big amount on some small budget movies that have excellent reviews. They
paid $12 Million for ‘The Big Sick’ even before its theatrical release. It’s the amazing reviews –
98% Rotten Tomatoes – that made Amazon pay the price.
Amazon has over 80 million Prime members in the U.S while Netflix has 56.71 million
subscribers. After the success of Prime in the U.S., Amazon is pushing the same playbook in
Europe.
If the shows and movies weren’t addictive enough, Amazon also offers you the option to
add HBO as a channel in your Amazon Prime Video account. A brilliant move, which would
ensure you do not leave them for their rivals.

 Amazon Studios
Alone creating a video-streaming service is not going to help, that’s why Amazon went for
creating its own film and tv series production distributor, known as Amazon Studios. Currently,
the original content by Amazon is too less when compared to other services such as Netflix,
Hulu, and HBO. But Amazon has planned to produce its own content and with a great number.
Amazon studios not only focuses on English content but also working on the content related to a
particular geography.

Many of Amazon’s original content have won the major awards. For example, Manchester By
the Seawhich nominated for six Academy Awards, made the Amazon Studios to first streaming
service to nominate for the Academy Award for Best Picture. The Marvelous Mrs. Maisel is also
one of the top performing and award-winning TV series created by Amazon.

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  Prime Music

Amazon is not limited to provide video streaming as the company also has its own music
streaming platform – tough competition for Spotify, YouTube Music, Apple Music, SoundCloud
etc. Amazon has millions of songs in its library which they are offering to their prime members.
Prime Music is a kind of a gift for their prime members as the company isn’t charging any extra
cost for this music platform.Even for the better experience, Amazon integrated Alexa in its music
app which can help you find the songs you are searching for.

 Amazon Logistics App

To strengthen the logistics and delivery network, Amazon announced developing an app to help
truck drivers. Amazon hired aggressively for the project and launched it in 2017. In November
2017, they secretly launched the app, Relay. The app makes it easier for truck drivers to pick up
and drop off packages at Amazon warehouses. Besides, Amazon is also working on a second app
which could connect truck drivers with cargos.

 Amazon Drone Delivery

In March 2017, Amazon gave a public demo of its Prime Air delivery drones in the US. The
concept has multiple regulatory barriers. However, the situation may get better, as in October
2017, the Trump Government issued an order giving local governments more authority to
conduct tests of such new technologies.

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5.2. Amazon’s Supply chain strategy

To start with, Amazon’s SCM has a strategic fit with its competitive strategy of being the retailer
of choice for its customers. The combination of multi-tier inventory management, superlative
transportation, and highly efficient use of IT (Information Technology), and its wide network of
warehouses are all geared towards aligning its SCM with its competitive strategy.

The next aspect is related to its outsourcing of its inventory management. Amazon outsources the
storage and distribution of products that are not frequently purchased nor ordered for immediate
delivery as well as products where the costs of storing them exceed the marginal returns on their
sales.

On the other hand, Amazon stocks the frequently purchased and ordered items in its own
warehouses so that it can be responsive to the customer needs as well as not compromise on the
delivery times and the lead times. In other words, by segregating its inventory, Amazon is able to
be responsive to the customers as well as cut costs or cut slack where it is needed.

Amazon divides its customer segments and follows a price differentiation strategy. The
various forms of delivery are one day delivery, free super saver delivery, first class delivery, and
prime customers delivery.

For all these segments, Amazon offers the customers an option of paying more for faster delivery
or retains the traditional lead-time. Coupled with the inventory outsourcing, the customer
segmentation into price-differentiated customers offers the company a nimbleness and agility in
the market that changes with dynamic fluctuations in demand.

A key aspect of Amazon’s SCM is that it has evolved over the years in response to its growth in
the market. For instance, Amazon started off as a bookstore, which acts as an intermediary
between the buyers and the sellers and does not stock any product of its own.

Gradually, this gave way to holding some items in its own warehouses and at the
present, Amazon follows a push-pull strategy wherein the inventory is held in a push
strategy and the shipment of the orders is done in a pull strategy. Of course, even now,
Amazon follows pure pull strategies for items that it does not stock.

Any discussion on Amazon’s SCM is incomplete without an analysis of its multi-tier inventory
system. The first tier is the aggregation in the distribution centers, which ensures that Amazon
holds fewer inventories and responds to demand in a dynamic manner.

The next tier is comprised of the partner distribution centers and the wholesalers wherein
whenever an ordered product is not available in its own distribution centers; Amazon can rely on
its partners and wholesalers to supply the customer with the required product. Further, through
the use of sophisticated and real time IT, Amazon is able to leverage efficiencies in its
distribution.

The third tier is comprised of the networks of third party sellers, publishers, vendors, and
manufacturers who ensure that Amazon acts as an intermediary that fulfills orders from
customers by linking them to this tier.

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  Amazon Supply Chain: Warehousing
A big part of Amazon’s success lies in its expert warehousing strategy, which ensures products
are easily accessible from pretty much everywhere in the world.
All the company’s warehouses are strategically placed near big metros and population hubs, and
inventory is spread amongst them to ensure supply can meet demand. There are even mini-
warehouses in smaller areas to ensure orders can be sent and delivered fast, no matter what is
being purchased.
Warehouses are also optimized internally. Each with five unique storage areas, the organization
strategy allows team members and pick-and-pack robots to pull products almost instantly and
move them toward delivery.

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  Amazon Supply Chain: Delivery
One of the biggest differentiators between the Amazon supply chain strategy and other online
retailers’ is the plethora of delivery options offered.
Sure, those options include the free, two-day Prime deliveries and even the Prime Now option,
which gets products from point A to point B in two hours of less. But what’s the bigger game-
changer?

That’s the number of ways in which Amazon can make those deliveries happen.
Amazon employs a whole host of strategies – from more traditional to super high-tech – to get its
products out in lightning fast times and all over the world.There are drones that land in your
backyard or on your roof, there are Amazon-branded trucks and delivery vans and there are even
deliveries by bike in certain areas.
The retailer also leverages existing delivery routes via Fedex and UPS, too.
These wide-ranging strategies allow the company to get orders out faster, easier and more
efficiently to basically everywhere in the world – even remote and rural areas not served by
traditional options. In India, the Delivery Partner include Gati Logistics, Bluedart, UPS, Aramex,
Delhivery. Ecom Express &Fedex.

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Amazon Supply Chain: Technology
The Amazon supply chain management approach is to embrace technology. The company
utilizes countless automation and robotic solutions, both to pick and pack orders as well as
stacking and storing inventory.
These tools not only up the company’s efficiency and delivery speeds, but they also cut down on
warehouse and staffing costs – freeing up funds for other logistics or supply chain needs.
The company has also embraced drones as well, launching Amazon Prime Air.

Though the program’s not fully operational just yet, the drones will eventually allow for 30-
minute deliveries in some of the nation’s biggest markets.
All customers need is an Amazon-branded landing mat (and to live within 15 miles of the nearest
drone-enabled warehouse), and the instant air-side deliveries are within reach.
Amazon Supply Chain: Manufacturing
Amazon still allows third-party sellers, but the company seems to have learned that many of
those third-party products can be made for much cheaper – and more profitably. The retailer has
taken to manufacturing its own lower-cost products, as well as white-labeling products from
other sellers.Amazon offers branded lines in everything from household products to pets to
babies, and the list of labels just keeps growing. This allows Amazon to own the whole lifecycle
of its products – from creation to marketing to storage to shipment.

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 5.3. Amazon’s Marketing Strategy

Vision- “To leverage technology and the expertise of our invaluable employees to provide our
customers with the best shopping experience on the internet”.

Mission – “To be Earth’s most customer-centric company, where customers can find and
discover anything they might want to buy online, and endeavours to offer its customers the
lowest possible prices”.

Tagline – “#AurDikhao” in India. “From A to Z” globally.

5.3.1. SWOT Analysis of Amazon

Strengths

1. Strong background and deep pockets – Built on its early successes with books, Amazon
now has product categories that include electronics, toys, games, home and kitchen,
white goods, brown goods and much more. Amazon has evolved as a global E-
commercegiant in the last 2 decades.
2. Customer centric: Company’s robust CRM has created customer centric processes in
order to carefully record data on customer’s buying behavior. This enables them to
offer individual items, related items or bundle them as an offer, based upon preferences
demonstrated through purchases or items visited. Also, the company claims that 55% of
their customers are repeat buyers resulting in low cost of acquisition of new buyers.
3. Cost leadership: In order to differentiate itself, company has created several strategic
alliances with other companies to offer superior customer service. The most important
strategic tie ups are with logistics providers who control costs. This contributes in a
strong Value chain. Because of playing on economies of scale, Amazon is able to lower
the inventory replenishment time.
4. Efficient delivery network: With its strategic partners & due to its Amazon fulfilment
centers, Amazon has created a deep & structured distribution network in order to make the
product available even at remote locations. It also has free of cost delivery charges in
certain geographies.
5. GLOCAL strategy: By using the strategy of “Go global & act local”, Amazon is able to
fight with domestic E-commerce companies through absorbing & by forming / partnering
with supply chain companies. The branding too is done as per local taste. For example – In
India, Amazon is currently using the “AurDikhao” campaign to encourage users to browse
more of their products.
6. Acquisitions: Acquiring companies like Zappos.com, Junglee.com, IMBD.com, woot.com
etc. has proven to be a successful and revenue generating step for the E commerce giant.
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Weaknesses

1. Shrinking margins: Due to extensive delivery network & price wars Amazons margins
are shrinking, which is resulting in even losses. In India, Amazon had a loss of $359 crs in
the year 2013-14.
2. Tax Avoidance issue: Amazon has attracted negative publicity on account of Tax
Avoidance in countries like U.S & UK. Most of its revenue is generated from these well
established markets.
3. High Debt: In many developing nations Amazon is still struggling to make the business
profitable thereby affecting the overall profitability of the group resulting into High debt.
4. Product flops – Amazon launched the fire phone in the US which was a big flop. At the
same time, Kindle fire did not pick up as strongly as Kindle did. Thus, there were several
product flops which caused a dent in Amazon’s deep pockets.

Opportunities

1. Backward Integration: Amazon can come up with its In-house brands in different
product categories. They can also differentiate their offering. This will help them make
profits in highly competitive E-commerce market.
2. Global Expansion: Expansion mainly in Asian & developing economies will help
Amazon because those are the markets with low competition in E-commerce industries &
are not saturated like developed economies.
3. Acquisitions: By acquiring E-commerce companies it can decrease the competition level
& also can use the specialized capacity of the other company.
4. Opening physical stores outside U.S: By doing this Amazon can help the customers to
engage with the brand, resulting in increase in repeat purchases & increase in
loyal customer base.

Threats

1. Low entry barriers of the industry: Low entry barriers affect the current player’s
business as more & more company means tough competition, price wars, shrinking
margins & losses resulting into questioning the sustainability of the players.
2. Local competition – India has snapdeal and Flipkart who are local E commerce retailers
and are taking away majority of the market. Similarly, there are many local players who
take bites from the market share thereby making it hard for a big player like Amazon to
make profits.

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5.3.2. Marketing Campaign by Amazon
1. Television Ads:

 2 minutes film that captures various hilarious scenes from typical Indian everyday household
where everyone is asking for AurDikhao as they want more choices – was played heavily
during IPL Match.
 The video was interesting and easy to relate to with small stories – From a cake eating
husband, having forgotten about Wife’s Karvachaut (fasting festival for women), then tries to
pacify her with the choices of products with a swipe of his finger on the phone screen. Then
when a holidaying family is shown places to visits by the guides they all ask – AurDikhao, or
a baby who is being entertained by choices from the amazon site with the underlying
message that choosing is your right, Barber giving many hair cut options or to a kid in a
family gathering like any household being asked to show off his talent of copying Bollywood
Actors’ dance steps.
 The ad made by Orchard , subsidiary of Leo Burnett –who successfully was able to deliver
the message to the consumers that Amazon has more than 20 million products on offer. And
all they need to do is swipe a finger.
 The ads had the catchy “Hindustani dilkehtahai…AurDikhao…AurDikhao.” That was catchy
and stayed on with the consumer.

This campaign was extended to the social media platforms with videos on YouTube and Twitter
with the #AurDikhao.

Although the India Online Retail market is small today, it has a lot of potential and could be a
$18B market by 2018. With a $2 billion investment by CEO Jeff Bezos in 2014, Amazon has
already positioned well in the market.

 Amazon.in is the #5 Website in India. (Source : alexa.com)

 Over $1 billion in Gross Merchandise Volume (GMV)
 It currently has 20 FCs operational across 10 states covering a total area of over 1.6 million
square feet.
 At its current pace should be able to generate material contributions within 5-10 years,
potentially generating $3B in GMV, $525MM in Net Revenue, and $475MM in incremental
Gross Profit by 2018.

2. Successful Campaigns

#WhatteyDeal, #AurDikhao, Great India Shopping Festival #DiwaliOnAmazon,

#EkBarAmazonTryTohKar

#AurDikhao

 With the #AurDikhao campaign, Amazon has struck a chord with consumers by highlighting
the common man’s power of choice.

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 With its huge horizontal and vertical depth of products and focused targeting based on Indian
shopping patterns, it has conveyed the fact extremely well that the consumers will literally be
spoilt for choice.

Digital Marketing Strategies Implemented

Google Adwords Strategy

 PPC Search ad – Category based text ads.

 Display – Products/offers based ad images.
 Gmail – Content/Topic based Text ads

3. Social Media Strategy

The idea has been extended well on social media with meaningful engagement and creative
visuals. Connecting with Twitter influencers and building social buzz around #AurDikhao has
ensured the success of the campaign.

 Twitter Followers -195K, Facebook-5 Million likes

 Youtube-Total 15 million views on all videos. 2 Million views on the #AurDikhao campaign
ad video alone
 Presence on Instagram and Pinterest as well
 Regular updates on new Products, Offers and Discounts using appealing Videos and Images.
 Real-time Customer Service by addressing customer issues publicly and thereby ensuring
complete customer satisfaction
 Intelligent customer engagement using creative and humorous posts (e.g. #AurDikhao
memes)

4. Mobile Marketing Strategy

 Apps present on all major platforms including iOS, Android and Windows Phone.
 Over 10 Million installs on Android alone with 4.1 rating
 Increasing number of app-specific offers to increase the popularity of the app.

Celebrity Endorsement Advertising

The battle for customer acquisition has taken a fresh turn with the top online marketplace
companies Amazon and Flipkart roping in A-lister celebrities to push their brands. For the first
time since it began operations in India, Amazon has roped in Amitabh Bachchan, Alia Bhatt and
Salman Khan among a few others to promote Amazon Prime Video and its upcoming Prime Day

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 CHAPTER 6

FINDINGS

 Amazon ranks eight in Fortune 500 list with a revenue of 23,288 crore USD

 Amazon is gaining high market share due to adoption of technology at fast pace

 Implementation of AI, Robotics & Machine Learning in almost all their services, which
help the company adopt to the mindset of the customer

 Catchy Tagline for campaigns and services such as AbBadaHogaRupaiya for Amazon
Pay is a game changer for Amazon’s growth

 Robotics are also used in warehouses for packaging and material handling role

 Physical distribution is been carried out by third party logistics provider such as Aramex
& Bluedart, but Amazon is full flung to set up their own delivery service

 Shipping expenditure of Amazon in 2018 was 27.7 Billion $

 Fulfillment cost amounted to 34 billion $

 Over all Marketing Expenditure was 14.6 billion $ in 2018

 Machine Learning Marketing is a great tool followed by Amazon to indentify the

customers need and to advertise on social media sites like Instagram

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 CHAPTER 7

CONCLUSION

Amazon has always managed to stay on top, thanks to the successful implementation of
its innovative digital campaigns, intelligent advertisement and engagement strategies,
partnering with best logistics provider and investment in latest technologies. The Aur
Dikhao campaign, in particular was a major success story and a game-changer for
Amazon’s presence in India. Great India Shopping Festival campaign also helped
Amazon to attract teenagers on their platforms. Talking about technology, Amazon has
recently started with Amazon Pay, which is an e-payment application for shopping and
bill payments. Amazon’s own supply chain network will be huge plus point, as it will
reduce the error rate of delivery and also will increase the employment rate by few
percentage. Amazon’s major strength is that it’s has an online presence and can be
accessed from any corner of the world. The company should focus on better customer
service through customer engagement program and strong supply chain network.

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 WEBSITES & REFERENCES

https://businessjargons.com/business-strategy.html

https://www.cpcstrategy.com/blog/2018/07/amazon-supply-chain/

https://www.greyb.com/amazon-business-strategy/

https://www.managementstudyguide.com/amazon-supply-chain-management-practices.htm

https://www.digitalvidya.com/blog/the-success-of-aur-dikhao-campaign-of-amazon-india-
limited/

https://www.digitalvidya.com/blog/understanding-digital-marketing-strategies-leveraged-by-
amazons-innovative-campaigns/

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