Amazon's Market Entry Strategy in Australia

This assignment requires a detailed analysis of Amazon's market entry strategy in Australia. Students must examine the competitive landscape, consumer preferences, and relevant legal and regulatory frameworks. The analysis should evaluate the effectiveness of Amazon's strategies and identify potential challenges and opportunities for future growth.

Running Head: Global Marketing
GLOBAL MARKETING

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Table of Contents
1. Introduction.........................................................................................................................4
2. Situation Analysis.................................................................................................................5
2.1. Business environment - (PESTLE).....................................................................................5
2.2 Market Analysis -.................................................................................................................8
2.3 Competitive Analysis.........................................................................................................10
2.4 Organisational Analysis –..................................................................................................11
3. SWOT Analyses –................................................................................................................12
Conclusion................................................................................................................................13
References................................................................................................................................14
Appendix..................................................................................................................................16

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Executive summary
This current report enlightens the adaptive features of Australian market to make Amazon
Company get established in their market place. Amazon Company is trying to establish their
business operations in Australian market for increasing their productivity and market
provisions. However, in addition to this Amazon Company have many innovative features
and infrastructures that they want to establish in their new business place in Australia. This
current report specifies the distinctive features and market provisions of Australian market for
increasing competition between two organisations they are existing organisation and Amazon
Company. This present report study draws the attention of the readers towards the market
opportunities of Australian market and their situation for suiting the behaviour of business
operations. This report also focuses on PESTLE analysis, SWOT analysis of Amazon
Company with respect to Australian market analysis.

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1. Introduction
● Background to the report
This report is premised on Amazon, the cloud computing and largest e-commerce company,
planning to venture into retail market in Australia. For this purpose, a detailed analysis has
been presented in this report that includes alignment with international marketing and
detailed analysis of Australian market environment, in terms of economic, political, social,
technological, legal and environmental factors. Founded by Jeff Bezos on July 5, 1994,
Amazon operates in 16 different countries and is the largest internet company in the world in
terms of revenue (Amazon.com, 2017). The company is planning to enter Australian online
market for cementing their foothold in retail industry.
● Theory of international marketing
The theory of country size is applicable for Australian market given the context Amazon is
aiming to enter its retail market. This theory proposes that size of a country determines the
volume and nature of product. Currently, Amazon’s website, maintained from US, converts
49% of Australian shoppers into sales, and this statistics clearly states that Amazon could be
highly benefitted by entering Australian retail market, given the large size (7.692 million sq.
km.) of the country. However, as Al‐Khatib et al. (2016) has contradicted, the large territorial
size of the country can cost higher in terms of transportations and logistics.
Similarly, the product life cycle (PLC) theory is also applicable in this context. As Amazon’s
online marketplace in Australia currently offers limited products (Amazon Prime, Kindle
Books, Kindle and Kindle Fire devices, Audible Audiobooks and Android apps), there is high
potential for introducing other products in the retail market. New products such as Amazon
Web Services, Amazon Video can provide significant economic return to the company while
they traverse through the initial two phases of product life-cycle (that is introduction and
growth).
● Country where product is being taken
As per this report, Amazon is ventured to enter into Australian retail market, taking their
products such as Amazon Echo, Amazon Kindle and other products.
● Brief overview of company product
Currently, Amazon a wide range of products and services that is variedly available in
different countries. Major products and services of this company includes Amazon Prime,
Echo, Alexa, Kindle Fire tablets and TV, Amazon Appstore, Amazon Web Service, Amazon

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Studio and Amazon Drive (Amazon.com, 2017). In addition, the company also had 368
million products available for sale in December 2016.
● Reasons for entering the country
a) 29% Australian shoppers spend more time in online store, therefore Amazon could
translate that customer segments into their loyal customer base through providing
retail service (Guzmodo.com.au, 2017).
b) 29% of Australian prefers an easy-return policy from online retailers - an element of
business that Amazon specialises.
c) High margin of sales by competitors such as Woolworths ($38.8 billion in 20160 and
Coles supermarkets ($29.4 billion in 2016) (Abc.net.au, 2017).
2. Situation Analysis
2.1. Business environment - (PESTLE)
Political
The stable political condition in Australia is highly favourable for foreign companies as they
could smoothly run their business operations in the country. Furthermore, Australian
government favours foreign direct investment (FDI), as the total stock of FDI valued at
AUD$735.5 billion in 2015. Naturally, this favourable political environment would be
beneficial for Amazon. As per Al‐Khatib et al. (2016), in addition to this the governmental
activities based on certain rules and laws are also followed by Amazon Company in order to
establish their business in Australian market. Henceforth, Australian market also highlights
the commercial service provinces for organisations to help them to extend their business
productivity and customer rates. Hence, due to these uncommon factors of Australian market
Amazon Company is trying their best to start their new business in Australia (Balabanis &
Siamagka, 2014).
Economical
As of 2016, Australian GDP was valued at AUD$ 1.189 trillion and the purchasing power
parity (PPP) was AUD$1.2 trillion. The country is one of the largest mixed economic powers
in the world, having a net wealth of AUD$ 8.9 trillion as of June 2016 (Abs.gov.au, 2017). In

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addition, the country is also the 25th largest exporter and 20th largest importer in the world -
signifying the massive economic strength of the country. Australian economy is largely
dominated by service sector, contributing 73% of total GDP (Abs.gov.au, 2017). Given the
highly developed infrastructure, business in Australian encounters very little friction and
therefore no such major trading blocs will be encountered by Amazon.
According to Chiva, Ghauri & Alegre (2014), the economical factors of Australia focus on
various rules and regulations such as Rule of Law that includes property rights, government
integrity and judicial effectiveness. In addition to this, companies also focus on Australian
market such as trade freedom, investment freedom and financial freedom for ensuring better
or provisions for business organisations like Amazon Company (Clarke, Owens & Ford,
2015). Hence, for all these economical factors Amazon Company is trying to establish its
business operations in Australian market for more profit and productivity.
Figure 1: PESTLE ANALYSIS
(Source: Al‐Khatib et al. 2016, p.180)
Social
With the rapid development of e-commerce activities in Australian market, users are
spending more time in online retail stores - a trend that can be highly favourable for Amazon.
A survey reports that only 21% of shoppers shop through brick-and-mortar stores, while
396% of people aged over 50 spends more time in online stores (Gizmodo.com.au, 2017).
Given the greater availability of resources and choices, people prefer to purchase through
online stores.
PESTLEANALSYSISECONOMICALPriceRATESSOCIALWealthdisparityTECHNOLOGICALInternetfacilitiesande-commercesystemsLEGALMarketfacilitiesandgovernmentrulesENVIRONEMNTALSustainability

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De Mooij (2013) stated that on the other hand, more consumerism and developed social
statues would help Amazon Company to increase their profitability and productivity. In
Australian market, increasing wealth disparity improves potential stagnation and helps in
renovating current market standard and for that Amazon Company tries to enter into this
Country (Export.gov, 2017).
Technological
Innovative practices in telecommunication, media and information technologies have
significantly minimised cost for infrastructure setup. In addition, abundant energy supply at
comparatively low cost has attracted foreign companies to expand their business in Australia
as they would not have to worry about energy resources required for managing the
technology. According to Hill, Cronk & Wickramasekera (2013), moreover, the increasing IT
efficiency of Australian market will also help Amazon Company to increase their opportunity
for exploring their business. Due to its telecommunication factors and media information,
Amazon would be benefitted for developing business operations (Heritage.org, 2017).
Legal
Rising productivity and popularity helps in innovating business operations and market
facilities. However, in case of Amazon Company, it has focused on the legal factors such as
Corporations Act 2001 of Australian market such as popularity, regulations and legislations
in order to improve their business and explore their market analysis (Jehanzeb, Rasheed &
Rasheed, 2013).
Environmental
Australia focuses on environmental sustainability factors. Therefore, Amazon can focus on
organic fabrics, organic food products to fetch the customer attention. Australian society
emphasises on calculated use of ecological resources such as water and energy. As Australia
has abundant source of both renewable (solar, wind, marine) and non-renewable (fossil fuel)
energy, industries planning to set up business in this country gains significant benefit.
Furthermore, Amazon being an internet-based company, they will not add extra burden in the
resource reserve of Australia.
Infrastructure
The strong infrastructure rate of Australia is 89% and it provides better opportunities to the
retail organisations in order to increase their growth. As per Korschun, Bhattacharya & Swain
(2014), the infrastructure of the rural sector is poor which may act as hindrance to further

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extension. Thereby, in this case Amazon may face some difficulties for improving their
market analysis. In contrast, the urban sector would provide them immense opportunities to
innovate and present new products such as Echo dot, FB products and vacuum cleaner.
Demographic trends
The demographic trends of Australian market highlight the need of the customers based on
their sex and age. According to Li et al. (2014), it has been found that in Australian market, it
has $ 80,704 number of young people those who are focusing on retail organisations for
fulfilling their needs..
2.2 Market Analysis -
Definition of the Market
Market is a place that enhances high productivity and profitability through low investments.
Market facilities should always be calm and attractive in order to increase large number of
customers. For example, Australian market fulfils all the criteria for enabling business
organisations to improve their success (Lu et al. 2014).
Market size, outlook product service and trends
In this context, it is necessary for the business organisations like Amazon Company to focus
on their market trends from where they are achieving success for their future development.
Japan
Korea
Australia
0% 10% 20% 30% 40% 50% 60%
MARKET SHARE
Figure 2: Market share
(Source: Export.gov, 2017)
Market size of Australian market value is $ 32.56 billion due to the factors of e-commerce
growth and high internet usage (Export.gov, 2017). It also enhances stronger economy as the

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GDP rate is $88 thousand. Trends of Australian market focuses on young generation and their
needs. The trend is to provide them full success by delivering their products.
Figure 3: Market Analysis
(Source: Spring, 2014, p.42)
Market characteristics
Market characteristic focuses on its products and services in order to overcome the barriers
for entering into new market provisions. However, the pricing rates and practices should also
be authentic and reasonable in order to satisfy the customers. As per Pike & Page (2014), the
infrastructures of Australian market should be more attractive in order to affect the behaviour
of the customers. Government rules and regulations on reasonable price rates, safety acts and
healthy food are the provisions for maintaining government controls of the organisation
(Spring, 2014).
Target market behaviour
Target market behaviour for Amazon Company in this case will focus on the young
generation mostly. However, young people focus on fast food whereas on the other hand,
middle aged people prefer sophisticated food items. In this context, Williams, Mummalaneni
& Erramilli (2015) stated that the market behaviour of retail organisations like Amazon In
this way the market behaviour for organisations to people varies specifically. Amazon
DEFINITIONOFMARKETMARJETSIZEANDTRENDSMARKETCHARACTERISTICSTARGETMARJETBEHAVIOUR

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Company should enhance their market by focusing on target market provisions such as more
innovative food items, distinctive dresses such as coastal and traditional in order to attract
customers (Yeung & Coe, 2015).
2.3 Competitive Analysis
Primary competitors of Amazon in the Australian market would be-
a) Woolworths Ltd - largest supermarket chain in Australia having 900 supermarkets
b) Coles - second-largest supermarket having 800 stores in the country.
c) Big W - biggest discount department stores having 176 stores in the country. [refer to
appendix 1]
Existing and potential competitor
In this context, the competitive analysis of Australian market focuses on its own industries
like Woolworth. In this case, Lu et al. (2014) opined that the probability of increasing
competition level in the market clashes between retail organisations which are trying to enter
into Australian market with the remaining organisations of Australian market such as
Woolsworth which holds around 70% of the market in case of groceries. However,
competitive analysis draws the attention of the readers towards the productivity, profitability,
product quality and behaviour of the organisation (Heritage.org, 2017). The strength of this
company highlights the marketing rates such as in the year 2016 its growth rate was 27.1%
and it has successfully enhanced its products as per the need of the customers.
3%
15%
43%
37%
2%
Market Portion
Aldi
IGA
Woolworths
Coles
Other

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Figure 4: Market portion
(Source: Spring, 2014, p.78)
International competitors
As Amazon Company is a retail organisation, it focuses on the strategies of retail
organisations of Australia market such as John Lewis in order to seek their proficiency and
functions for attracting large number of customers (Clarke, Owens & Ford, 2015). The
existing and potential Australian competitors include John Lewis and Tesco who have the
tendency to compete with Amazon Company by their products, services and quality.
Figure 5: Competitive analysis
(Source: Al‐Khatib et al. 2016, p.183)
Amazon Company highlights its specific infrastructures such as low price rates with high
quality products. However, it also focuses on online selling facilities that help in increasing
large number of young customers those who feel comfortable in buying products online
(Balabanis & Siamagka, 2014). According to Li et al. (2014), the strategy of Amazon
Company is to minimize the cost structure and maximize their productivity in order to
increase profitability.
2.4 Organisational Analysis –
Previous Experiences
EXISTINGANDPOTENTIALCOMPETITOR(WOOLWORTH)INTERNATIONALCOMPETITORS(JOHNLEWISANDTESCO)

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Amazon has no previous experience in Australia. They have expanded in many other
European and Asian countries where they have experienced growth and progress in their
business.
Challenges and solution
Amazon may face issues in understanding the local culture and trends. Since the country also
consists of Aboriginal culture, the organisation needs to have a basic knowledge of the
preferences of the customers around the country. Moreover, Balabanis & Siamagka (2014)
have pointed out entering a new country requires accessing partnership with domestic brands.
3. SWOT Analyses –
Strength  Specific infrastructure
 Low cost rates
 Online selling facilities
 Strong background (Balabanis & Siamagka, 2014)
 Customer centric.
Weakness  Amazon company shrinks margins and maintain low cost
 Avoid issues regarding tax
 High debt
 Product flops sometimes
 Low profitability due to high price
Opportunit
y
 Backward integration
 Global expansion
 E- commerce facilities and systems for attracting large number of
customers
 Acquisitions (Amazon.com, 2017)
Threat  This company has low entry barriers
 Government rules
 Competitive level

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 Due to high profitability of other competitors of Amazon Company like
flip kart and EBay, it reduces its customers
Table 1: SWOT analysis
(Source: Balabanis & Siamagka, 2014)
Based on the SWOT table provided above, it can be surmised that Amazon has several
positive aspects such as comparative low price of their products, online selling facilities,
effective customer service and practice of cost-leadership pricing policy. On the other hand,
competition with major retailers such as Woolworths, Coles may provide obstacle for
Amazon as a new entrant in retail market. However, state-of-the-art e-commerce
infrastructure and global presence can help Amazon to counter such obstacles. Again, it
should be noted that the governmental laws and legislations, along with low entry barriers
could pose serious threat to the business of the company in Australian soil.
Conclusion
From the above analysis, it has been found that Amazon Company is trying to establish their
business operations in Australian market for increasing their productivity and market
provisions. However, from above discussion it has also been analysed that Amazon Company
have many innovative features and infrastructures that they want to establish in their new
business place in Australia. Whereas Australian market also enhances good specifications and
better environmental provinces for organisations like Amazon Company to enhance their
business. In addition to this, this present report also draws the attention of the readers towards
the competitive analysis of existing companies of Australian market and Amazon Company
in order to specify their job profiles.

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References
Abc.net.au (2017) Amazon's $12b raid on Australian retail: Who'll feel the pain and why
consumers won't gain (too much), Retrieved on 16 Aug 2017 from
http://www.abc.net.au/news/2017-06-02/amazon-massive-raid-on-australian-retail/
8580544
Abs.gov.au (2017) Key Economic Indicators, 2017, Retrieved on 16 Aug 2017 from
http://www.abs.gov.au/AUSSTATS/abs@.nsf/mf/1345.0?opendocument
Al‐Khatib, J. A., Al‐Habib, M. I., Bogari, N., & Salamah, N. (2016). The ethical profile of
global marketing negotiators. Business Ethics: A European Review, 25(2), pp.172-
186.
Amazon.com.au: Shop for Kindle Paperwhite, Kindle Fire HDX, Kindle Books, Apps for
Android, Cloud Drive, and Audible Audiobooks.. (2017). Amazon.com.au. Retrieved
14 August 2017, from https://www.amazon.com.au/
Balabanis, G., & Siamagka, N. T. (2014, July). THE BEHAVIORAL EFFECTS OF
CONSUMER ETHNOCENTRISM: THE ROLE OF BRAND, PRODUCT
CATEGORY AND COUNTRY OF ORIGIN. In 2014 (pp. 587-588).
Chiva, R., Ghauri, P., & Alegre, J. (2014). Organizational learning, innovation and
internationalization: A complex system model. British Journal of Management, 25(4),
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Clarke, I., Owens, M., & Ford, J. B. (2015). Integrating Country of Origin into Global
Marketing Strategy: A Review of US Marking Statutes. In Global Perspectives in
Marketing for the 21st Century (pp. 373-373)
De Mooij, M. (2013). Global marketing and advertising: Understanding cultural paradoxes.
London: Sage Publications.
De Mooij, M. (2013). Global marketing and advertising: Understanding cultural paradoxes.
London: Sage Publications.
Export.gov (2017) Economic Statues Of Australia 2017, Retrieved on 16 Aug 2017 from
https://www.export.gov/article?id=Australia-political-environment

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Gizmodo.com.au (2017) Yep, Amazon Australia Is Going To Be Huge, Retrieved on 16 Aug
2017 from https://www.gizmodo.com.au/2017/06/yep-amazon-is-going-to-be-huge/
Heritage.org (2017) Status of Auatralian Market 2017, Retrieved on 16 Aug 2017 from
http://www.heritage.org/index/country/australia
Hill, C. W., Cronk, T., & Wickramasekera, R. (2013). Global business today. Sydney:
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Jehanzeb, K., Rasheed, A., & Rasheed, M. F. (2013). Organizational commitment and
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Korschun, D., Bhattacharya, C. B., & Swain, S. D. (2014). Corporate social responsibility,
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Marketing, 78(3), 20-37.
Li, Y., Chen, H., Liu, Y., & Peng, M. W. (2014). Managerial ties, organizational learning,
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Appendix
Appendix 1: Market Research Data: Major Competitors of Amazon in Australia and
their total sales (in AUD$ billions)
34.8
29.410.6
6.7
5.3
5.2
4.7 3.8
3.7 3.5
Woolworths supermarkets
Coles supermarkets
Bunnings
Aldi
Harvey Norman
Kmart
eBay
Big W
JB Hi-Fi
Target