Amazon's Strategy for Entering the Indian Market

Strategy and International
Management

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Amazon in India
In today’s time, the companies that are able to do their business in an appropriate manner are
more likely to succeed. Strategy refers to the actions that are decided and designed by the
firm so as to achieve long term success. In today’s time in order to ensure the long term
growth and sustainability, firms are crossing borders. In the process, bigger role is played by
the strategies that are made by the companies.
Amazon is one of the largest online retailers in the world established in the year 1994 (Hecht
and Cockburn, 2010). It was founded by Jeff Bezos. It started as an online book retailer and
right now it is everything store. It is the most valuable company in the United States after the
firms like Apple and Microsoft. It is a multinational technology firm based in Seattle,
Washington and does business in the areas like e-commerce, digital streaming, cloud
computing as well as artificial intelligence. It is one the big four technology firm besides
Apple, Facebook and Google. It is the second largest technology firm in terms of revenue. In
the year 2018, this firm generated revenue of USD 232.887 billion. There are more than
647,500 employees working for this firm as of 2018. This report is going to describe the
strategy of Amazon while entering into an Indian market.
In 2015, this company passed Walmart as the most valuable retailer in United States in terms
of market capitalisation (Smith and Linden, 2017). In the year 2017, this firm acquired Foods
Market for $13.4 billion that vastly increased presence of Amazon in the brick and mortar
business. In 2018, its service named Amazon prime has crossed a mark of 100 million
subscribers all across the globe. With the help of many subsidiaries all across the globe this
company expanded in selling of all kinds of products in different parts of the world. It began
its internationalisation process in the year 1998 by acquiring online seller of books in
Germany and United KingdomWith a big chain of small and big supplier and with the help of
strong and fast supply chain they are able to meet the demands of the consumers. They have
place innovation in their culture of business both in terms of the products that they sell as the
services they are providing to their customers. It’s the overall business model of the company
that separates them from their competitors. Fast and reliable services stands in the base of it.
This company has 39.5% market share in India and after its acquisition by Walmart it is the
major competitor of Amazon.
This company entered into an Indian market in the year 2013. Till 2015, this company didn’t
have any infrastructure in the Indian market but the company worked on establishing base in

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the market. Since this market did not have the proper infrastructure for the online marketing
neither the consumer behaviour pretended to be so hence most of the experts believed that
this company will fail into the market. Following their strategies of internationalisation and
keeping the pricing leadership they proved them wrong. The major motivation for Jeff Bezos
to focus on Indian market is that it is having a population of 1.3 billion with more than 800
million people having an access to mobile phone technology (Sen, 2018). In order to succeed
in the market what this company needed was an extremely efficient business model that
reduces its cost of operations as competing with the local vendors is not easy in India. It is its
strategies that now yearly growth rate of users in this nation is highest with approx. 6 million
people adding to it every month. FDI is the chosen entry mode strategy that this company has
chosen for making entry into India. This firm started its Indian operations with a test where in
February 2012, Amazon launched Junglee.com which was a website for comparison where
the sellers can upload the catalogue which was promoted by Amazon (Gangeshwer, 2013).
Such type of market research was necessary for the company as due to lack of understanding
of the market, this company faced debacle in the Chinese and Brazilian market. Due to its
low pricing strategy this firm was able to decrease the overall prices in the market and had
repercussion on the smaller sellers (Shrivastava, 2019). In 2014, this company reached to
these struggling sellers and asked them to register to Amazon e-commerce to sell their
products through their site. Another strategy followed by the company included “easy ship”
which helped sellers in their shipping process. However the major strategy that is used by
Amazon in the Indian market is low pricing strategy. Since India is a market where the per-
capita income is not so high and most part of the Indian population is middle-class hence this
is an effective strategy to win.
According to the Dunning’s model, the primary motive of Amazon to enter into Indian
market was Ownership advantages. This firm knew that the resource that this firm has with
them especially in terms of support from their suppliers and their effective supply chain
management they will be able to gain competitive advantage over the rivals (Sternquist,
2010). They had a huge technology infrastructure that enables them to improve their working
methodology in the country and at the same time ensure that their cost of operations in India
remains on the lower side (Rey, 2019). They found an opportunity in the Indian market as
there is large population within the country having middle class income which can act as a
stable market for the company and can provide them with growth and sales that they desired.
Another motive that this company had while entering into India is the fact that they were able

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to trade off the savings in transactions. Setting up an establishment in India could help them
in saving the cost that is related to the export that was previously done by the company in
India. Another crucial strategy that this company needs to understand is Ownership, Location
and Internalisation strategy. Following ownership, this company has specific competitive
advantage in terms of the fact that it has large numbers of international and national suppliers
which helps them to provide larger numbers of options to the people. In terms of location, it
can be said that this company provides services in many regions all across the globe and
hence it has location advantage in India (Contractor, Kumar and Dhanaraj, 2015). Amazon
also has internalisation advantage where if they do not have any product available in any
country then they avail it from cross-borders. India’s foreign policy is changing and it has
become the partners of many of the countries which is making it easier for the firms like
Amazon to do their business (Kontinen and Ojala, 2010). However, the market situation in
India is apt for doing business and there are large numbers of people that moving towards
purchase from online mediums. With government supports like making the uniform tax
systems and building rural infrastructure will improve the market situation.
In 2013: Amazon founded its Indian e-commerce platform (Ritala, Golnam and Wegmann,
2014).
In 2016: This firm launched its first service in India. After continuous investments over the
years this firm’s revenue growth of 105%.
In 2017: In the time of Diwali 10,000 sellers of the company claimed to have scored the
greatest ever sales numbers. More than 100 new sellers made more than crore rupees selling
through this site. During this time, nearly 20,000 sellers got registered on Amazon which was
a new milestone for the company.
In 2018: They have won 30% of the market share within the Indian market and has become
worth $16 billion Company.
Amazon success strategy can be understood in terms of the porter generic strategy. In order to
gain competitive advantage they are following cost leadership strategy where with the use of
resources they have they have been able to achieve cost leadership. They are having larger
numbers of low cost suppliers that are available within the market which helps them in
lowering the prices to even further lower levels. With the process automation they have been