Marketing Strategies of Amazon in Australia

This report analyzes the marketing strategies of Amazon in Australia and provides recommendations for future growth opportunities. It highlights the challenges faced by Amazon in Australia and suggests strategies to improve market share and profit margin.

Running head: MARKETING
Marketing
Name of the student
Name of the university
Author note

1MARKETING
Executive Summary
This report had highlighted the marketing strategies of Amazon while making an entry into
Australia. It has also analyzed the current marketing strategy to provide recommendations on
future growth opportunities and strategies that could be used by Amazon. The report reflects that
Amazon in Australia is different than in other countries as it has been facing geographic
challenges and facing tough competition from the existing companies as the Australia are
indifferent towards United States Brands. However, it has been seen that even though the
organization is currently incurring losses in the market, they should implement their cost
leadership, effective supply chain management and business analytics to improve their market
share and profit margin.

2MARKETING
Table of Contents
Introduction......................................................................................................................................3
Background of Amazon...................................................................................................................3
Marketing analysis...........................................................................................................................4
Nature of Amazon Australia’s Marketing Strategies...................................................................4
Future Strategic Marketing options.............................................................................................7
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

3MARKETING
Introduction
This report has aimed to evaluate and examine the strategic practice and strategy of a real
organization. The organization that has been chosen for the investigation is Amazon.com, Inc.
The strategies pursued by the organization has been evaluated in the report where the nature of
the marketing strategy of Amazon is identified since it’s commence in Australia and the future
strategic marketing option for the organization while moving forward in the industry. The
report commences with brief introduction of the company and concludes with proving
recommendations regarding the strategies that the organization should implement to hold on their
supremacy in the market.
Background of Amazon
Amazon is the largest cloud computing and ecommerce company in the global market. It
has its headquarters in Seattle, Washington. The organization has been founded by Jeff Bezos in
the year of 1994, and has the largest share in the market and revenue among the online retailers
(Amazon.com 2018). The organization started as being a book store but diversified their product
portfolio and started selling audiobook streaming/download, video streaming/download, video
games, software, electronics, furniture, apparel, toys, jewellery and food. The organization also
diversified the product line to enter into the market of consumer electronics, echo, fire tablets
and Fire TV (Amazon.com 2018). The organization also sells their low-end products under the
brand name of Amazon Basics. The organization is largest cloud infrastructure services
providers in the world. The organization has different retail websites in different parts of the
world and uses separate websites for operating in a particular country. The organization has
separate website in India, Mexico, China, France, Australia, Netherlands, Spain, Italy, Brazil and

4MARKETING
Canada (Amazon.com 2018). The organization is one of the most valuable countries in the
world as it one of the largest employers in the global market.
Amazon entered the Australian on 5th, December, 2017 and Australians had to wait for a
longer time to avail the same services in other countries (Bach 2017). Amazon took their time to
enter the Australian market as they were lacking in warehouses so they were unable to store the
items that has to be shipped to the residents. Even the Australian sellers on Amazon faced issues
as they had the only option of sending their goods offshore. Similarly, the general population in
Australia ordering goods from Amazon had to wait for more amount of time for the goods and
had to pay excess amount for shipping when compared to the other countries (Bach 2017). The
organization has set up a distribution warehouse on the peripheries of Melbourne which will
assist in cutting down the delivery by a huge margin. Australia became the 13th country all over
the world to have a dedicated amazon site for that particular country (Bach 2017).
Marketing analysis
The marketing analysis evaluates the market dynamics and it is used for formulating
strategies for current market situations. The different dimensions that are used to perform the
market analysis are market growth rate, market size, market profitability, market trends, and
distribution channels, key factors for success and cost structure of the industry. The second part
of this section will focus on providing recommendation for future growth of Amazon in
Australia.
Nature of Amazon Australia’s Marketing Strategies in relation to marketing theories
Amazon uses psychographic and demographic segmentation to develop their target
market. The actual purchasing behavior of the consumers are analyzed by the company to

5MARKETING
develop their target market and position their products. The market segmentation is also based on
these purchasing behavior. The major target market for Amazon are the consumers belonging to
the middle and upper-class population (Carey 2018). These target populations have been
developed based on their disposable income and have the tendency to prefer convenience
shopping over the physical outlets.
Initially, when Amazon entered the market in Australia it had a smaller number of
offerings and the price of the products were higher. The majority of the consumers were
criticizing the initial service as only the basic features and services were in the initial phase.
Amazon strategy is based on technological disruption and their strategies are based around
consumers as they have always have been customer centric in nature (Kahn 2018.). The initial
strategy includes orchestrating a bigger investment all at once so that they can drive a bigger
return in the future. This shows that they have been developed a multi-year strategy so that they
can gain loyalty of the consumers by spending huge amount of capital. However, even though
the price of the products on a RRP search is higher adding the delivery charges which is under
$49, the organization is trying to check the loyalty of the consumers as the consumers have the
perception they will offer at minimum prices than the other local competitors and global
competitors (Kahn 2018).
Amazon used the GLOCAL strategy for entering into Australia which they have already
used while making an entry into other countries (Ryan 2016). This strategy means that they will
make their global expansion but will act as a local company. This means that their initial attempt
is to enter the market and get a grasp of it effectively before, they fully setup their operations and
make expansions in different regions in Australia. Amazon had been measuring the current
market opportunities so that they would have developed a market strategy to exploit those

6MARKETING
situations (Jager 2018). This has been done by forming partnerships with the local supply chain
companies. The organization has also cost leadership as their basic strategy for competing with
the other market competitors. Amazon has formed strategic alliance with other companies for
providing a service that is superior to the competitors in the market. Amazon launched prime in
Australia at half prices when compared to price offerings in the United States. This shows that
the organization is trying to implement a jump start strategy to increase their consumer base in
Australia (Kahn 2018.). This pricing strategy is an effective example of the cost leadership that
the organization has used to compete with the competitors and provide an added value to the
services offered by the consumers. The relationship that the organization that they have
developed with their suppliers helps them to achieve economies of scale which is the reason that
they are able to offer products and services at competitive prices (Pappas 2016).
However, even though the organization has been successful in gaining access to the
Australian market but Amazon is not as same as they are in other countries. The analysis of the
current strategies show that Amazon are facing significant challenges in sustaining in Australia.
Logistics and supply chain has been the key to their competitive advantage as they were able to
reach economies of scale due to technological disruption (Jager 2018). However, in Australia,
the organization has been facing significant delivery obstacles. As mentioned in the article by
Kahn (2018) Australia ‘s geography is a major concern for Amazon as the size of the country is
32 times bigger when compared to United Kingdom but comprise of only 40% of the population
in the United Kingdom. This has made the shipping expensive because of the sparse population
and vast distances. Geographical location of Australia makes it challenging for the company to
acquire merchandise from outside the country. This shows that the free delivery option and
aggressive pricing strategy could cause them to incur heavy costs.

7MARKETING
Moreover, the two industry giants in the Australian retail industry are Wesfarmers and
Woolworths which shows that it would take more time and capital to gain a considerable market
share as these companies will retaliate based on the aggressive strategies implemented by
Amazon. Moreover, the Australian population are reluctant on adopting of US brands which is
evident from the struggle Starbucks have to go through in order to sustain in the market. The first
year in Australia has been difficult for Amazon and they have been facing heavy losses in the
market.
Future Strategic Marketing options
Amazon will have to develop strategies to mitigate the current challenges in the market.
Firstly, the organization should increase the number of warehouse in Australia for implementing
their cost leadership strategy and implement economies of scale in the market (Ogilvie et al.
2016). The organization also faces issues in bringing in merchandise from outside the country so
they can implement backward integration to develop their own products and in house brands to
cater to the needs of the target consumers in Australia. In order to accomplish, Amazon will have
to use their superior business analytics to identify the purchasing behavior of the consumers and
the products having high demand (Watson et al. 2018).
The organization should also make use of their expertise in supply chain activities to
store those products that are high in demand which means that effective inventory management
is essential for increasing the product line. Amazon Australia has limited products amounting to
60 million products when compared to 480 million products in other countries (Kahn 2018).
Therefore, Amazon will have increase their product line in order to compete with the industry
giants in Australia. Moreover, pricing, quality and over customer satisfaction has to be increased
in order to gain the loyalty of the consumers in the market. The majority of the population in

8MARKETING
Australia have high disposable income so earning the loyalty of the consumers are essential.
Therefore, Amazon will have to develop other loyalty programs in order ti match up to the
expectation of the consumers.
Amazon will also have to open physical stores in Australia so that they can effectively
engage their consumers and make them understand the story the organization is trying to portray
and the role they want to play in the lives of the customers (Surdu, Mellahi and Glaister 2018).
This is an effective strategy to improve their branding and develop loyal consumers by
increasing the repeat purchasing. Amazon shall also consider the option of acquiring smaller
companies in Australia to gain knowledge and facilitate effective knowledge transfer.
Conclusion
The report has shown that Amazon in Australia is still in its nascent phase and would take
some time to gain competitive advantage in this market due to the mentality and attitude of the
consumers towards US brands. The organization has been incur losses in Australia and will
continue to do so as they cannot provide the same number of products and facilities to the
consumers in the Australian market. However, the organization should use backward integration
to develop more in house products and develop effective inventory management system to offer
more products to the consumers. Cost leadership is something that the organization has been
using as a differentiating strategy but in order to reduce their losses and increase their profit
margin, the organization should develop effective logistics and supply management.

9MARKETING
References
Amazon.com 2018. Amazon International shopping and shipping made easy. [online]
Amazon.com. Available at: https://www.amazon.com/International-Shipping-Direct/b?
ie=UTF8&node=230659011 [Accessed 6 Sep. 2018].
Bach, N. 2017. http://fortune.com. [online] Fortune. Available at:
http://fortune.com/2017/12/05/amazon-au-australia-launch/ [Accessed 6 Sep. 2018].
Carey, A. 2018. ‘Amazon typically doesn’t make revenue at all in the first years’. [online]
NewsComAu. Available at: https://www.news.com.au/finance/business/retail/documents-reveal-
amazons-stunning-loss-during-first-month-of-trading-in-australia/news-story/
bf5b1181f61191f4e4f480d409c97893 [Accessed 6 Sep. 2018].
E. Kahn, B. 2018. Amazon Unveils Prime In Australia At Half-Price; Will Australian Consumers
Respond?. [online] Forbes.com. Available at:
https://www.forbes.com/sites/barbaraekahn/2018/06/24/amazon-unveils-prime-in-australia-at-
half-price-will-aussies-take-up-the-offer/#1424f96a17d1 [Accessed 6 Sep. 2018].
Jager, J. 2018. Amazon Australia: everything you need to know. [online] The Sydney Morning
Herald. Available at: https://www.smh.com.au/technology/amazon-australia-everything-you-
need-to-know-20171121-gzphez.html [Accessed 6 Sep. 2018].
Ryan, D., 2016. Understanding digital marketing: marketing strategies for engaging the digital
generation. Kogan Page Publishers.
Pappas, N., 2016. Marketing strategies, perceived risks, and consumer trust in online buying
behaviour. Journal of Retailing and Consumer Services, 29, pp.92-103.

10MARKETING
Ogilvie, J., Lindsey, K., Reynolds, K. and Northington, W.M., 2016. Examining Reactive
Customer Engagement Strategies in Online Shopping Cart Abandonment: A Regulatory Fit
Perspective. In Rediscovering the Essentiality of Marketing(pp. 755-756). Springer, Cham.
Watson IV, G.F., Weaven, S., Perkins, H., Sardana, D. and Palmatier, R.W., 2018. International
market entry strategies: Relational, digital, and hybrid approaches. Journal of International
Marketing, 26(1), pp.30-60.
Surdu, I., Mellahi, K. and Glaister, K., 2018. Emerging market multinationals’ international
equity-based entry mode strategies: Review of theoretical foundations and future
directions. International Marketing Review, 35(2), pp.342-359