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MARKETING

Marketing is about communicating the value of a product, service or brand to customers

or consumers for the purpose of promoting or selling that product, service, or brand. The

oldest – and perhaps simplest and most natural form of marketing – is 'word of mouth'

(WOM) marketing, in which consumers convey their experiences of a product, service or

brand in their day-to-day communications with others. These communications can of

course be either positive or negative. In recent times, the internet has provided a platform

for mass, electronic WOM marketing (e-WOM), with consumers actively engaged in

review, rating on goods and services.

In for-profit enterprise the main purpose of marketing is to increase product sales and

therefore the profits of the company. In the case of nonprofit marketing, the aim is to

increase the take-up of the organization's services by its consumers or clients.

Governments often employ social marketing to communicate messages with a social

purpose, such as a public health or safety message, to citizens. In for-profit enterprise

marketing often acts as a support for the sales team by propagating the message and

information to the desired target audience.

Marketing techniques include choosing target markets through market analysis and

market segmentation, as well as understanding consumer behavior and advertising a

product's value to the customer.

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Marketing satisfies these needs and wants through the development of exchange

processes and the building of long-term relationships. Marketing can be considered a

marriage of art and applied science (such as behavioural sciences) and makes use of

information technology. Marketing is applied in enterprise and organisations via

marketing management techniques.

Marketing Mix

The marketing mix was proposed by professor E. Jerome McCarthy in the 1960s. It

consists of four basic elements called the "four P's". Product is the first P representing the

actual Product. Price represents the process of determining the value of a product. Place

represents the variables of getting the product to the consumer such as distribution

channels, market coverage and movement organization. The last P stands for Promotion

which is the process of reaching the target market and convincing them to buy the

product.

Marketing Strategy

The field of marketing strategy considers the total marketing environment and its impacts

on a company or product or service. The emphasis is on "an in depth understanding of the

market environment, particularly the competitors and customers."

A given firm may offer numerous products or services to a marketplace, spanning

numerous and sometimes wholly unrelated industries. Accordingly, a plan is required in

order to effectively manage such products. Evidently, a company needs to weigh up and

ascertain how to utilize its finite resources. For example, a start-up car manufacturing

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firm would face little success should it attempt to rival Toyota, Ford, Nissan, Chevrolet,

or any other large global car maker. Moreover, a product may be reaching the end of its

life-cycle. Thus, the issue of divest, or a ceasing of production, may be made. Each

scenario requires a unique marketing strategy. Listed below are some prominent

marketing strategy models.

A marketing strategy differs from a marketing tactic in that a strategy looks at the longer

term view of the products, goods, or services being marketed. A tactic refers to a shorter

term view. Therefore, the mailing of a postcard or sales letter would be a tactic, but

changing marketing channels of distribution, changing the pricing, or promotional

elements used would be considered a strategic change.

A marketing strategy considers the resources a firm has, or is required to allocate in effort

to achieve an objective. Marketing Strategies include the process and planning in which a

firm may be expected to achieve their company goals, in which usually involves an effort

to increase revenues or assets, through a series of milestones or benchmarks of business

and promotional activities. Marketing strategy is the fundamental goal of increasing sales

and achieving a sustainable competitive advantage. Marketing strategy includes all basic,

short-term, and long-term activities in the field of marketing that deal with the analysis of

the strategic initial situation of a company and the formulation, evaluation and selection

of market-oriented strategies and therefore contribute to the goals of the company and its

marketing objectives.

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AMAZON.COM

INTRODUCTION

Amazon.com, Inc. is an American electronic commerce and cloud computing company

with headquarters in Seattle, Washington. It is the largest Internet-based retailer in the

United States. Amazon.com started as an online bookstore, but soon diversified, selling

DVDs, Blu-rays, CDs, video downloads/streaming, MP3 downloads/streaming, software,

video games, electronics, apparel, furniture, food, toys and jewelry. The company also

produces consumer electronics—notably, Amazon Kindle e-book readers, Fire tablets,

Fire TV and Fire Phone—and is the world's largest provider of cloud infrastructure

services (IaaS). Amazon also sells certain low-end products like USB cables under its in-

house brand AmazonBasics.

Amazon has separate retail websites for United States, United Kingdom & Ireland,

France, Canada, Germany, Italy, Spain, the Netherlands, Australia, Brazil, Japan, China,

India and Mexico. Amazon also offers international shipping to certain other countries

for some of its products. In 2011, it professed an intention to launch its websites in

Poland and Sweden.

In 2015, Amazon surpassed Walmart as the most valuable retailer in the United States by

market capitalization. Jeff Bezos, Amazon.com founder and CEO, dreamed about books.

In 1994, he created Amazon.com, Inc., which he labeled as ―Earth‘s Biggest Bookstore.‖

The ecommerce company went online in 1995 and soon expanded into other media,

including DVDs, VHS, CDs, MP3s, and eventually a wide range of other products,

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including toys, electronics, furniture and apparel. As such, the tagline soon changed to

―Earth‘s Largest Selection.‖ But books were only the beginning of Bezo‘s up-and-coming

enterprise.

Amazon.com went public in 1997. In the first shareholder letter, Bezos penned the

fundamental foundation for Amazon.com‘s success: ―Start with customers, and work

backwards … Listen to customers, but don‘t just listen to customers – also invent on their

behalf … Obsess over customers.‖ This policy was backed by a startling business

philosophy – Bezos planned on operating at a loss for 4-5 years. It was not until 2001 that

Amazon.com posted a net profit at a minuscule one-cent per share. Yet, despite its bizarre

business strategy, Amazon.com claimed over 1.4 million customers after only two years

of being online.

Now, 45 million satisfied customers shop at Amazon.com for everything from books

(most popular) to fashion apparel to fine jewelry to Christmas toys. It has one of the most

recognized brand names in the world and garners an estimated 50% of its sales from

overseas consumers. Surviving the dot-com bust of the late 1990s and early 2000s,

Amazon weathered the e-storms and now thrives in the retail marketplace, challenging

vending giants like Wal-Mart and Target. Focused on technological innovation and

centered on customer fulfillment, Amazon.com proceeds into the next decade with a

profit firmly in one hand, and the capacity to blow it out of the water in the other hand.

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HISTORY

The company was founded in 1994, spurred by what Bezos called his "regret

minimization framework," which described his efforts to fend off any regrets for not

participating sooner in the Internet business boom during that time. In 1994, Bezos left

his employment as vice-president of D. E. Shaw & Co., a Wall Street firm, and moved to

Seattle. He began to work on a business plan for what would eventually become

Amazon.com.

Jeff Bezos incorporated the company as "Cadabra" on July 5, 1994.Bezos changed the

name to Amazon a year later after a lawyer misheard its original name as "cadaver".The

company went online as Amazon.com in 1995.

Bezos selected the name Amazon by looking through the dictionary, and settled on

"Amazon" because it was a place that was "exotic and different" just as he planned for his

store to be; the Amazon river, he noted was by far the "biggest" river in the world, and he

planned to make his store the biggest in the world. Bezos placed a premium on his head

start in building a brand, telling a reporter, "There's nothing about our model that can't be

copied over time. But you know, McDonald's got copied. And it still built a huge,

multibillion-dollar company. A lot of it comes down to the brand name. Brand names are

more important online than they are in the physical world. Additionally, a name

beginning with "A" was preferential due to the probability it would occur at the top of

any list that was alphabetized.

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After reading a report about the future of the Internet which projected annual Web

commerce growth at 2,300%, Bezos created a list of 20 products which could be

marketed online. He narrowed the list to what he felt were the five most promising

products which included: compact discs, computer hardware, computer software, videos,

and books. Bezos finally decided that his new business would sell books online, due to

the large world-wide demand for literature, the low price points for books, along with the

huge number of titles available in print. Amazon was originally founded in Bezos' garage

in Bellevue, Washington.

The company began as an online bookstore, an idea spurred off with discussion with John

Ingram of Ingram Book (now called Ingram Content Group), along with Keyur Patel who

still holds a stake in Amazon.In the first two months of business, Amazon sold to all 50

states and over 45 countries. Within two months, Amazon's sales were up to

$20,000/week.While the largest brick and mortar bookstores and mail order catalogs

might offer 200,000 titles, an online bookstore could "carry" several times more, since it

would have an almost unlimited virtual (not actual) warehouse: those of the actual

product makers/suppliers.

Since June 19, 2000, Amazon's logotype has featured a curved arrow leading from A to

Z, representing that the company carries every product from A to Z, with the arrow

shaped like a smile.

Amazon was incorporated in 1994, in the state of Washington. In July 1995, the company

began service and sold its first book on Amazon.com: Douglas Hofstadter's Fluid

Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of

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Thought. In October 1995, the company announced itself to the public. In 1996, it was

reincorporated in Delaware. Amazon issued its initial public offering of stock on May 15,

1997, trading under the NASDAQ stock exchange symbol AMZN, at a price of

US$18.00 per share ($1.50 after three stock splits in the late 1990s).

Amazon's initial business plan was unusual; it did not expect to make a profit for four to

five years. This "slow" growth caused stockholders to complain about the company not

reaching profitability fast enough to justify investing in, or to even survive in the long-

term. When the dot-com bubble burst at the start of the 21st century, destroying many e-

companies in the process, Amazon survived, and grew on past the bubble burst to become

a huge player in online sales. It finally turned its first profit in the fourth quarter of 2001:

$5 million (i.e., 1¢ per share), on revenues of more than $1 billion. This profit margin,

though extremely modest, proved to skeptics that Bezos' unconventional business model

could succeed. In 1999, Time magazine named Bezos the Person of the Year, recognizing

the company's success in popularizing online shopping.

Barnes & Noble sued Amazon on May 12, 1997, alleging that Amazon's claim to be "the

world's largest bookstore" was false. Barnes and Noble asserted, "[It] isn't a bookstore at

all. It's a book broker." The suit was later settled out of court, and Amazon continued to

make the same claim." Walmart sued Amazon on October 16, 1998, alleging that

Amazon had stolen Walmart's trade secrets by hiring former Walmart executives.

Although this suit was also settled out of court, it caused Amazon to implement internal

restrictions and the reassignment of the former Walmart executives.

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Products of Amazon

Acquisition by Amazon

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BCG MATRIX

Marketing Strategies of Amazon

Amazon.com bases its marketing stratagem on six pillars.

1. It freely proffers products and services.

2. It uses a customer-friendly interface.

3. It scales easily from small to large.

4. It exploits its affiliate‘s products and resources.

5. It uses existing communication systems.

6. It utilizes universal behaviors and mentalities.

Apart from this 6 pillars company also focuses and execute various other

strategies.Amazon.com relies on wily online ploys, strong partner relations and a constant

declaration of quality to market itself to the masses.

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Pay Per Click Advertising

Independent Pay Per Click (PPC) advertising has been the black sheep of Amazon.com‘s

marketing campaign. Their first PPC campaign attempt, spawned by their subsidiary

company A9, was the mediocre Clickriver, a middling PPC program that kept its head

above water but certainly swam no great channels. ProductAds replaced Clickriver in

August, 2008. It allows any web merchant to purchase PPC ads on Amazon.com‘s

website, leading some pundits to sardonically comment about Amazon.com‘s possible

pursuit of Google‘s web browsing crown.

Despite its potential interest in Google‘s regime, Amazon.com continues to purchase PPC

advertisements on Google to direct browsing customers to their websites. It buys space

on the left side of Google‘s search listing results, and pays a fee for each visitor to

Amazon.com who clicks on their sponsored link. This is typical of Amazon.com‘s

marketing strategy. No big banners, loud colors, or pristine men casually conversing

about Amazon.com on America‘s tube – just a demure advertisement on a web page

which, incidentally, may wordlessly lead thousands to Amazon.com

Continual Website Improvement

In today‘s stop-and-go internet traffic, an engaging, simple and easy-to-use website is a

necessity. Amazon.com expends millions of dollars and hundreds of man-hours to

identify problems, develop solutions, and further enhance the customer‘s online

experience. Rob Enderle, head analyst at Enderle Group, states that ―Amazon.com has

always been very aggressive about analyzing its website‘s traffic to a high degree and

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making modifications based on what they see.‖ This constant pursuit of perfection lead to

Jakob Nielson‘s prestigious ranking of Amazon.com‘s website usability. In a 2001 study

of 20 ecommerce sites, Amazon.com scored 65% higher than the average of the other

nineteen sites‘ usability. It has a class-leading 99.9% mobile device availability, and

uploads several seconds faster than some of its competition. In one test, Amazon.com

uploaded in 2.4 seconds, while Target took nearly seven to finish. A navigable website

has consistently topped the priority charts of Amazon.com

Occasionally, management skirts customer relations and engages in under-the-table

investigations. Following several lawsuits from aggrieved loyal customers, who were

charged several dollars more for the same item than newcomers, Amazon.com

apologized for their underhanded differential pricing and discontinued the project.

However, Amazon.com continues to noiselessly experiment on their website, garnering

new information and augmenting their already popular website.

Offline Advertising

Martin McClanan, CEO of upscale gift cataloger Red Envelope, notes that TV and

billboard ads are roughly 10 times less effective when compared to direct or online

marketing when concerning customer acquisition costs. Amazon.com has observed

McClanan‘s advice by reducing their offline marketing, especially during the holidays. In

1999, Amazon.com spent a gargantuan $80 million in offline advertisements during the

fourth quarter. A year later, during the same time span, the company splurged only fifty

million. Later years brought even more drastic cuts. According to Competitive Media

Reporting, Amazon.com frittered $36 million in offline advertising in 2008, but through

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August of 2009, the corporation had spent a meager $9.4 million. However, such cuts

have not negated Amazon.com‘s successes. It boasts the highest sells of any online

retailer during the holidays, especially during Black Friday. Amazon.com‘s strategy is

simple: since customers shop online, online is where they will be found.

Streamlined Ordering Process

Easy ordering is Amazon.com‘s Holy Grail. It eagerly develops technology to allow

customers to better navigate and explore their online retail mall. Jacob Lepley, in his

―Amazon Marketing Strategy: Report One,‖ notes that, ―When you visit amazon.com …

you can use [it] to find just about any item on the market at an extremely low price.

Amazon.com has made it very simple for customers to purchase items with a simple click

of the mouse … When you have everything you need, you make just one payment and

your orders are processed.‖ This simple system is the same whether a customer purchases

directly from amazon.com or from one of the Associates.

Partnerships & Web Services

Amazon.com has shook hands and signed contracts with quite a few partners. Not only

does it operate many of its own websites, including A9 and CDNOW, but it hosts and

manages retail web sites for an array of other retailers, including Target, Sears Canada,

Bebe Stores, Timex Corporation and Marks & Spencer. It previously hosted Borders

bookstores websites, but that relationship ceased in 2008. For several years, Amazon.com

partnered with ToysRUs. Typing ―ToysRUs toys‖ and similar query terms would also list

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Amazon.com‘s Toys & Games tab and products. As a result of litigation, however, this

partnership ended in 2006.

The simplicity that pervades Amazon.com‘s customer checkout extends to its partner

relations and services, of which there is no shortage. Amazon.com hosts no less than

twelve types of web services, including ecommerce, database, payment and billing, web

traffic, and computing. These web services – many of which are free – create a reliable,

scalable, and inexpensive computing platform which can revolutionize a small business‘s

online presence. For instance, Amazon.com‘s ecommerce Fulfillment By Amazon (FBA)

program allows merchants to direct inventory to Amazon‘s fulfillment centers, and after

products are purchased, Amazon.com will shoulder of the burden of packing and

shipping the merchant‘s product. This frees the merchant from a complex ordering

process while allowing them control over their inventory.

Amazon.com‘s Fulfillment Web Service (FWS) adds to FBA‘s program. FWS lets

retailers embed FBA capabilities straight into their own sites, vastly enhancing their

business capabilities. With such services, why wouldn‘t an independent merchant want to

partner with Amazon.com?

Affiliate Marketing

Keeping in line with their fourth marketing pillar, Amazon.com sponsors a wildly

successful program called Affiliate Marketing. Using Amazon Web Services (AWS)

XML service, Associates (independent retailers) and third-party sellers agree to place

links on their websites to Amazon.com or to specific Amazon.com products. If the third-

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party Associates list their own products on Amazon.com, they may create links to those

products as well. Associates receive a fee for each visitor to Amazon.com that is directed

through their links, and receive extra commissions if the visitor buys a product. However,

at the beginning of 2009, Amazon.com decided to terminate PPC referral commissions to

its North American Associates for paid search traffic. In an email sent to all Associates,

Amazon.com said, ―After careful review of how we are investing our advertising

resources, we have made the decision to no longer pay referral fees that send users ….

through keyword bidding and paid search.‖ Time will tell how the North America

Associates program reacts to this change, but with AWS, it is unlikely that Amazon.com

will lose many of its Associates. To offset this change, ion August 19, 2006,

Amazon.com released aStore, which enables Associates to embed a subset of Amazon

products within, or linked from, another site.

How successful is this program? Nearly one million Associates have joined with

Amazon.com, and approximately 40% of its sales result from its Affiliate Marketing

program. At the conclusion of 2007, Amazon.com reported over 1.3 million sellers

through Amazon.com‘s World Wide Web sites. It continues to expand its Affiliate

program.

The Customer’s Opinions

Amazon.com does more than pay sycophantic lip service to its customers. Each product

is available for consumer reviews, and customers may rate products on a hierarchical

scale of 1-5 stars. Amazon.com members may also comment on other member‘s reviews.

Some bemoan Amazon.com‘s consolidation of different versions of a product (e.g. DVD,

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VHS, BlueRay of a video) into a single product available for commentary. However, this

simplifies commentary and use accessibility, a preeminent concern for Amazon.com.

Email Marketing

For such a money-conscious company as Amazon.com, the lure of free and accessible e-

mail is one delectable temptation that is too potent to resist. Amazon.com engages in

permission marketing, where customers give the company permission to send them e-

mails detailing product promotions. Seth Godin, Online Marketers, writes that ―By

talking to only volunteers, Permission Marketing guarantees that consumers pay more

attention to the marketing message.‖ This strategy has acquired Amazon.com an

obsequious following. Melvin Ram, a satisfied Amazon.com customer, writes on

webdesigncompany.net that ―Looking at the e-mails I‘ve received from Amazon over the

last two years, I did not find a single e-mail that was irrelevant to me. Every single one

seemed like it was hand-picked for me based on my previous purchases.‖

Customer Service

Jeff Bezos would argue that customer service is not an addition to a corporate goal – it is

the corporate goal. He calls Amazon.com, ―The most consumer-centric company.‖ In a

lecture to Massachusetts Institute of Technology students, Bezos ―Tells of technological

advances that have not only enabled customers to find products, (and now at 28 million

items), enabled products to find customers [italics original].‖ Amazon.com focuses on the

customer experience. It wants customers to quickly access their hearts desire and obtain it

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without hassle. It has spent billions enhancing and developing its website interface and

customer relations.

There are numerous methods that Amazon.com uses to assist the customer. All customers

may send e-mails to Amazon.com requesting clarification about purchasing or other

information. Nor are all responses automated. Amazon.com engages many employees

simply to respond to customer issues by phone and e-mail.

Marketing Mix of Amazon

Product in the marketing mix of Amazon

Amazon is an international ecommerce company, using connections to the internet from

various gadgets such as phones and tablets, to allow its customers to browse and purchase

products immediately. These products are then delivered to the customer, using delivery

service companies. Amazon has built up a huge product base, and sells almost

everything, including:

• Kindle

• Books

• DVDs

• Mobile phones/tablets

• Gaming consoles and games

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• Clothes for men/women and children

• Jewelry

• Gardening equipment

Amazon initially started only with books and it is till date known as the highest book

seller in the world. This is why, Amazon also introduced Kindle. Kindly is an Ebook

reader from Amazon and it is the reason that the publishing market is having such a big

revolution of converting hard paper to digital ebooks because of he ease of reading by

Kindle. Due to success of Kindle, Amazon also introduced Kindly fire – its own tablet pc.

Type in a search entry into a search engine for a specific product, and the chances are that

Amazon will stock what you need, and will be on the search list. As they continue to

grow, more and more products are added to their inventory. Once established into books,

Amazon quickly expanded to other products to maintain its presence in the market.

Where Ebay is know for techie products, Amazon is known for knowledgeable products.

Amazon continues to expand its product base, and in July 2014 it entered the smart phone

market, releasing its very own Fire Phone. The phone followed the release a month

earlier of Amazon‘s very own set top box system – Amazon Fire TV- which allows

streaming from various channels, as well as supporting speech commands when

searching.

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Place in the marketing mix of Amazon

In the recent past, sites such as indiaplaza and allshcoolstuff were forced to close due to

the lack of trust when buying goods online. However, the brand image of Amazon

enables it to have a far and wide presence and the bottom line of the company is enough

to enable massive R&D efforts to secure the website. Amazon has customer service bases

in many of the countries where it has an online presence, with most bases being located

in the different states of the USA. Amazon employees are friendly and relaxed.

Promotion in the marketing mix of Amazon

While Amazon has broadcast television commercials, these are mostly in the American

market. Amazon uses mainly web based advertising, and they make some use of

billboard and smaller methods of advertising. Amazon also uses advertising networks

online so that whenever you check something on amazon, you will see an ad for the same

thing somewhere else on some other website. Search engine marketing and getting the

company‘s name high up the search engine‘s results is also a smart promotional strategy

by Amazon. The founder of Amazon had this in mind when creating the company,

deciding that it should start with an ‗a‘.

In India, Amazon can be seen to rely on the best source of promotion there is – word of

mouth. People telling others about the site, or mentioning it in a positive way is a sure

way to have a new future customer. However, there are several print media ads to make

their presence felt to the people. However, much more is needed in the promotions

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department from Amazon in India because the traffic of Amazon is being taken over fast

by Flipkart.

Price in the marketing mix of Amazon

Amazon is competitive with its prices, and has little ways of staying ahead of its market

contemporaries. For example, if you are looking to buy a book, Amazon offers you a new

copy, or a used copy as well, complete with pricing and condition. Another initiative is to

pay to have a premium account, ensuring faster deliveries. Amazon can also keep their

prices competitive due to their use of staff. Minimum numbers – but well trained – ensure

that consumers benefit from the lack of overheads, and the result is shown in the prices

online.

As more and more people can access broadband connections in India and get online, the

competition for the likes of Amazon.com will toughen. Amazon‘s quiet entry into India

has seen some growth so far due to its brand image, and it will be looking to keep its

prices as low as possible to capture a slice of the growing market place. It faces tough

competition from the likes of eBay, flipkart and snapdeal.

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CRM OF AMAZON

Invest in customers first ―If you do build a great experience, customers tell each other about that.

Word of mouth is very powerful.‖ Jeff Bezos

Amazon created a trusted, informative and loyal relationship with its customers.

•We start with the customer and work backward.‖

•Following a bottom-up approach, every decision at Amazon is driven by the customer‟s needs.

Customer focus

•―Amazon is spending money on things that matter to customers.‖

•Frugality is part of the company‟s DNA: Amazon is continually looking for ways to do things cost-effectively

Frugality

•―I think frugality drives innovation, just like other constraints do.‖

•Amazon is always looking for simple solutionsin order to provide lower prices to its customer.

Innovation

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VALUE CHAIN

SWOT ANALYSIS

Strengths Weaknes

ses

Opportunities

Threats

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Strength – global brand, focus on research and development, customer-centric vision

(Amazon.com has sufficient product and service differentiation to keep customers loyal)

, diverse products, diversification – variety of products

Weaknesses - no physical presence, increasing variety of product could make many

problems, free delivery – expensive strategy and make customer wait with days

Opportunities – growth in movie download, social networking, growing in e-commerce

sales, growing in digital media, to increase pre-ordering of products, amazon could

innovate its platform, expanding to international markets

Threats - competitors can offer lower prices, Apple's iPad Mini is close to Kindle tablet.

e-commerce field has developed rapidly and it is highly competitive, companies such as

EBay, Wal-Mart and Google are a constant danger to the company.(both)

PESTEL ANALYSIS

Political - faster, better and more reliable internet access for the national users,

rapid expansion into new markets, Boston low taxes

Economical - Amazon may consider entering into India and China markets, -

more potential customers, Currency fluctuations , Economical tendencies.

Social - Increasing in online social networking, opportunities to increase market

share ethical and religious factors: In some cultures Internet use is not allowed

due to the fact that at some point contents may damage their cultural, ethical and

social believes. customer-centric, one store per customer

Technological - Innovation, Cloud, Kindle

Environmental - eco-packaging; warehouse near airports,

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Legal - Increases use of e-commerce for customers and businesses; copyright

management issues(external, environmental)

PORTER’S FIVE FORCES MODEL

Bargaining power of Customers -is considered to be relatively high, since customers

are able to choose from different e-commerce services, which they can use even from

their mobile devices. Amazon does not have physical store and hence offers low prices

coupled with good customer service, it manages to use power of buyers to its own

advantage; switching from amazon.com products and services to those of the competence

Bargaining power of Suppliers - Suppliers have a higher power given that

Amazon.com cannot compete with suppliers. Suppliers are important and committed to

the company.

Competitive Rivalry - in e-commerce is very strong and intensive, since this field is

developing very rapidly. These might be - physical-world retailers, publishers, vendors,

distributors, manufacturers; other online e-commerce and mobile e-commerce site;

companies that provide e-commerce services, Amazon has many competitors. Amazon

offers such an extensive selection there are more companies competing with its products

and services. Amazon.com‘s direct competitors include Barnes and Noble.com and eBay.

Amazon‘s Marketplace directly competes with auction web sites like eBay and Yahoo!

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Threat of substitute - The threat of substitutes for Amazon is high. With the exception

of its patented technology like 1-Click Ordering, there are quite a lot of alternatives to

Amazon‘s products and services. Most companies have an online store in addition to

physical presence stores .These are book, music CD‘s from shops, or people could listen

radio and record a song. DVD‘s could be borrowed from library, or from IKEA. There

are a lot of substitutes for purchasing apparel from Amazon.com, as there are many high

street retailer location

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Threat of new entrants – low. It will be impossible for the new company to reach the

magnitude of inventory and status that Amazon.com maintains. Amazon offers huge

amount of different product, its been on the market for many years; start-up company

can‘t compete and reach the level of Amazon, need lots of money for investments and

equipment. Amazon.com demonstrated very strong ability in detecting potential rivals,

which might pose threat to its business.; corporate level, int.

Post Marketing Effects

Amazon delivered more of the same in yesterday‘s earnings presentation as the company

continues to favor growth over profits. For years now, Amazon‘s founder and CEO Jeff

Bezos has made a point of sacrificing short-term profits in favor of investments aimed at

long-term success, as our chart nicely illustrates.

One of these long-term investments is now bearing fruit, as the company revealed in

yesterday‘s earnings report: Amazon Web Services, the company‘s quickly growing

cloud storage division, generated $1.57 billion in revenue between January and March

and is on track to generate $1 billion in profits this year. On a revenue run rate of $6+

billion per year, Amazon‘s cloud business is on par, if not bigger than those of industry

heavyweights such as IBM and Microsoft.

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Many investors and casual observers feel as if Amazon, like the river it was named for, is

a massive force, taking out everything in its path.

Recent history has shown us Amazon‘s power. Its sales grew from $15 to $74 billion

from 2007–2013, a compound annual growth rate of 31%, and are projected to more than

double by 2018—to $158 billion.

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This growth is a result of several factors, including services like Prime, new partnerships

with manufacturers and, perhaps most importantly, Amazon‘s continued encroachment

on a far larger number of product categories like home improvement and grocery.

But according to 2014 research, Amazon will not be able to co-opt every category;

retailers in high-service categories are most likely to continue to thrive and could make

compelling investments. These include luxury and lifestyle retailers, furniture, specialty

sports equipment—especially service-oriented products like bikes and skis—and

automotive parts. On average, only 16% of 1,000 consumers surveyed said they

purchased anything in any one of these four categories on Amazon over the past six

months

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But even though this number is bigger than, say, current grocery penetration, we believe

Amazon will have trouble significantly growing share in these categories. That‘s because

an average of 52% of consumers value service in these categories versus 29% in

categories that Amazon has won.

Similarly, only 2% of current purchasers said service was not meaningful in making

purchase decisions—regardless of channel —in these Amazon-resistant categories,

compared to 12% for categories Amazon has already conquered.

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Face Off

In the 90s we saw the dot com boom; do we perceive the e-commerce sector growth in

India with the same hype? Well, it‘s booming for sure but what happens next is yet to be

seen. The intense competition in this space, especially among the top 3 players is good

for the consumers. Flipkart, Amazon and Snapdeal, all of them have raised investments

or have commitments of $1 Billion or more. All 3 work on a marketplace model but have

some areas where they excel or differ from one another as to be able to grow rapidly in a

short span of time is the real aim. Flipkart follows an invite-only model to sign on sellers

which is more time-consuming. Note that Amazon doesn't sell, but it is a glorified

marketplace, for now; competing with Ebay in that space; whilst Flipkart has also

launched a similar service. Not to forget other promising entities like Yebhi, Quickr

which are also making a shout-in in other categories. In the classifieds sector the Indian

based Quickr is facing stiff competition from the OLX.

Initially, before Amazon entered the Indian market, the industry had several players

Flipkart, Myntra, Snapdeal, Let's Buy, India Times Shopping, Fashion and You and

others. With huge funding coming from foreign investors like Softbank to huge VCs

betting on them, the big fish, the piranhas started consolidating and eating up (acquiring)

smaller players like Let's Buy, Urban Touch etc.

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Present scenario in Amazon vs Flipkart vs Snapdeal

Market share of these sharks has increased considerably. The three major Players are

Flipkart, Amazon and Snapdeal. We can‘t envisage any new player emerging from the

mirage.

The sharks have now become bigger for the ocean as Flipkart acquired Myntra. Money is

being poured in at an alarming rate. As Flipkart announced a $1 billion financing,

Amazon decided to steal Filpkart's thunder by announcing that it would invest $2 billion

in its Indian entity. Tapping the maximum possible market is the key & obviously

demographics are a factor.

The final Scenario Only 2 major players left. Flipkart and Amazon have to survive this.

Snapdeal has an outside shot. Flipkart will go for an IPO in either US or Singapore (*

Flipkart files to become a public company). E-commerce will eventually drive towards

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profitability though, the smaller sharks will be eaten up by the bigger ones, either via

acquisitions - or we'd see plenty of mid-size sharks forming alliances.

The online commerce market in India has a very low penetration. We haven't even begun

to scorch the surface here in terms of potential. India does something around $3 billion a

year in Commerce; whilst China does something around $100+ billion major due to the

Jack Ma led Alibaba which recently got listed on NYSE .

As of today, the biggest player in this market is Flipkart, followed by the rest. Amazon

has covered a good percentage of market in a short time, but the race has just started &

Flipkart‘s already some paces ahead, for now. Flipkart's investors knew that the real e-

commerce battle in India was not Flipkart versus Infibeam or Snapdeal. They knew even

before the launch of Amazon.in that the real contender was Amazon.

Amazon India‘s sales are estimated at over $200 million (Rs 1,200 crore). It took flipkart

7 years to achieve the sales numbers, snapdeal expects to reach it this year while amazon

might clock Rs 6,000 crore by the end of March 2016.

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Amazon’s Marketing Strategy Goes Against the Current

Fireproof

Amazon‘s customer-first policy isn‘t always foolproof. The massive and unequivocal

failure of its Fire phone is evidence of that.

But the impact of such a failure on Amazon, perhaps because of the way the company is

set up and because of Bezos‘ business philosophy, is different than it might be on another

company.

―Amazon‘s shares have not suffered much, if at all, from the Fire‘s failure,‖ wrote David

Streitfeld in the New York Times. ―Nor is the phone likely to dominate analysts‘

questions when Amazon releases its third-quarter earnings Thursday afternoon.

―It is no mistake that Amazon.com is one of the longest-living online entities of the new

millennium.‖

―The phone is in the past, and Amazon is above all a story about the future, about the

glorious moment when the e-commerce giant will sell everything, whether electronic or

digital, to everybody. And so the focus in the earnings report will be on Amazon‘s huge

investments in trying to make that moment come true.‖

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Past failures will not be the last

Amazon.com has a great track record of innovating and reshaping the consumer

experience. While the company has used this success to deliver tremendous revenue

growth, it is unlikely that every venture will be a success. While it is a distant memory,

Pets.com was an Amazon.com-backed company that is often considered one of the

biggest flops of the dot-com bubble.

More recently, Amazon.com invested $175 million in Living Social to enter the daily

deal business. While Living Social still exists today, the outcome for Amazon.com was

not much better than Pets.com given that the company wrote off almost its entire

investment in Living Social in late 2012.

Each time Amazon.com expands its e-commerce empire, there's the risk of failure.

Management has taken years to fine tune the AmazonFresh grocery delivery concept to

avoid a repeat of the fate of Webvan, one of the most notable dot-com failures in history.

However, what does it mean to Amazon.com investors if grocery delivery service simply

cannot be attractive to consumers relative to brick-and-mortar competitors while also

being profitable?

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Competition will not sit still

While Amazon.com has accumulated significant market share thanks to a great customer

experience and disruptive e-commerce business model, it is naive to think that

competitors are not devising plans to combat Amazon.com's ongoing growth. Some of

these strategies will fail, like Best Buy's price-matching guarantee to combat

"showrooming" this holiday season, but others will have success.

With hundreds of retailers fighting for market share, there will be plenty of competition.

Wal-Mart is a great example; the company is testing same-day delivery including grocery

delivery services. If Wal-Mart can effectively match the services offered by

Amazon.com, Wal-Mart may have an advantage as e-commerce continues to evolve

given its existing scale. Target, grocery stores, pharmacies, and other retailers are also

working to find new ways to add the convenience of same-day delivery and in-store

pickup of online orders.