Logistics Challenges Faced by Online Retailers in India

This article discusses the logistics challenges faced by online retailers in India and explores potential solutions. It highlights the impact of logistics on the growth of online retailing and emphasizes the need for proper management and technology adoption. The challenges include increased cost, lack of infrastructure, customer expectations, lack of research and development, and poor management. The article provides insights into the Indian online retail market and offers recommendations for mitigating these challenges.

Running head: SUPPLY CHAIN MANAGEMENT & INTERNATIONAL MARKETING
SUPPLY CHAIN MANAGEMENT & INTERNATIONAL MARKETING
Name of the Student
Name of the University
Author Note

1SUPPLY CHAIN MANAGEMENT & INTERNATIONAL MARKETING
Table of Contents
Introduction................................................................................................................................3
Objective and framework...........................................................................................................3
Logistics Challenges faced by Online Retailers in India...........................................................4
Potential solutions......................................................................................................................9
References................................................................................................................................12
Introduction..............................................................................................................................15
Amazon Model.........................................................................................................................16
Amazon Development Process................................................................................................18
Reason for success...................................................................................................................21
References................................................................................................................................24

2SUPPLY CHAIN MANAGEMENT & INTERNATIONAL MARKETING
Part A

3SUPPLY CHAIN MANAGEMENT & INTERNATIONAL MARKETING
Introduction
Internet has emerged as one of the biggest technological development of the recent
era because of the ease that it had offered in almost every aspect of life (Dutton & Blank,
2015). From education to healthcare and homes all the sectors have been benefited by the
emergence of the internet. One of the sectors that have witnessed drastic change is the
business world. The association of the business and internet have given birth to different
terminologies such as e-marketing, e-filling, e-care and several others. One of the most
prominent terminologies is the e-retailing that stands for online retailing.
Online retailing refers to the B2C (business 2 consumer) format that is undertaken
through means of online (Verma, Sharma & Sheth, 2016). In simple words, online retailing is
the selling and purchasing of goods, services and actions through online means. According to
the data provided by Statista.com, the number of consumers of online retailing was around
1.66 billion in 2017. The above figure is greater than the most populous country that is China
which have a population of 1.411 billion. In terms of money, the total sales from online mode
exceeded the amount of 2.3 trillion US dollar and is projected to grow up to 4.48 trillion by
2021 ("Topic: E-commerce worldwide", 2018). Asia pacific contributed 12.1% of the total
figure discussed above. Hence, it becomes crucial to assess the market of Asia Pacific and the
paper is aimed at doing the same. Therefore, the paper has taken the second most populous
country of Asia and World as the geographical domain of study.
Objective and framework
The section above has established a base for the online retailing and selected India as
the geographical domain for the study. Hence, it is crucial to identify the factors that are
constraining the growth of online retailing in the Indian Market (Mathew & Mishra, 2014).
The barriers of online retailing in India is extensive that includes legal issues, working

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barriers, returns & cancellations along with several others. One of the most prominent
challenge that is being faced by the online retailers in India is the logistics challenge. India is
greatly dependent on the rural areas and when the logistics is unable to reach in those rural
areas, it is forcing the online sellers to limit themselves to limited zone in a very large market
of over 1.3 billion people (Thakur & Srivastava, 2015). Similarly, there are multiple other
challenges that needs to be identified and mitigated. The paper in discussion has detailed the
challenges faced by the online retailers in logistics.
The following section is dedicated towards identification of the challenges faced by
the online retailers in India. The discussed section will detail the challenges and have been
succeeded by the mitigation actions for the identified challenges before summarising the
discussion to conclude on the report.
Logistics Challenges faced by Online Retailers in India
The prominence of the online retailing has been established in the sections above
along with the challenges faced by the online retailing in India has also been established. One
of the most prominent challenge is logistics and the following paragraphs presents the
challenges faced by the online retailing industry in India because of logistics.
Increased cost is primarily the most concerning challenge for the logistics in India.
The Indian online retailing market is estimated to be of around $ 13 billion and every one of
the online sellers wants to get something out of it giving birth to high level of competition.
Hence, the firms with objectives of becoming competitive leaders in the Indian online
retailing market transports the products through airways which counts heavily on the firm’s
financial resources (Benerjee, 2019). Time is not the only issue with the choice of air
transportation but the snarled roads and lack of river transportation is also one of the
prominent reason for the choice of air transport. The Indian online retailing giant Flipkart as

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well as the international retailing giant Amazon and most of the other online sellers chose the
air transport. However, the challenge of logistic does not ends with increased cost of air
transport. The commercial airlines serving as the logistic partner for the online sellers also
remove the parcels of the online seller to make space for the customers. The statement made
by Rahul Chari, the supply chain head of Flipkart, India’s largest online retailing service can
be taken in account to understand the challenge that is faced by the online retailers of India.
He quoted “It is unfortunate, but offloading does happen and we have to make sure our
delivery promises take that into consideration” (Bose, 2014).
Hence, in summary it would be justified to state that the discussed challenge that is
the increased cost of logistics is one of the most prominent challenge that needs to be
mitigated so that the online retailers can enhance their productivity and revenue.
Adoption of new technology is also one of the primary challenge for the logistics of
the online retailers of India. The challenge is not because of lack of technology as most of the
online retailers such as Amazon, Walmart and other mega giants are using technology with
the objective of enhancing their productivity but the reason is perception and infrastructure of
India (Thiyagaranjan & Ali, 2016). The perception in discussion here refers to the perception
of the online retailers as well as the customers. The online retailers prefer the pen-paper
method which has become primitive and unorganised. Furthermore, if the firm decides to
adopt state-of-art technology for enhancing their performance and productivity, the lack of
proper change management strategy and awareness about it develops constraints for the firm.
Change management is the method that ensures that the change that is being introduced into
the firm are smooth and efficient (Kalia, Kaur & Singh, 2018). Implementation of the new
technology or processes will induct changes to the conventional approach of the business
model and day-to-say practices. Furthermore, it resistance from the end-users is also major
challenge.

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Another reason for the lack of adoption of new technology in the logistics of online
retailing services is the lack of proper infrastructure. The use of drones for logistics is one of
the approaches that had been adopted in the major countries and Amazon is one of the
frequent users is drone logistics (Ruby, 2016). However, the drone logistics in India by
Amazon is also extremely limited. The reason for the limitation can be based upon the
inadequate infrastructure for the technological adoption. India does not have a proper
regulation for the use of drones, IoT and other technologies that can offer assistance in the
logistics of online retailing. The lack of proper legal framework could be understood by the
fact that India have drafted its privacy policy in the third quarter of 2018 and it is yet to be
approved by the parliament of the country (Chakraborty & Roy Chowdhury, 2018).
Additionally, zones with low connectivity is also one of the challenges that impact the
logistics of online retailing.
Hence, it can be summarised to state that the perception and lack of proper
infrastructure is the most prominent challenges that restricts the online sellers from adopting
technology. The lack of adoption of technology is developing challenges for logistics that
could be mitigated by adoption of technology. The challenges and threats in discussion are
live-time update of the traffic, cost saving on use of drones for delivery, IoT will also prove
to be life savings as several accident cases of logistics services have been identified. So,
immediate and proper attention should be cited with objective of mitigating the challenges of
logistics.
Globalisation has also developed challenges for the logistics of online services. The
globalisations have gained attention of different mega online retailing giants into the vast
Indian Markets. The challenge that have been developed is the customer’s expectation. The
above made statement could be better understood by the example of Amazon (Banerjee,
2019). Amazon uses its services such as Amazon prime that delivers product within 2 days

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and Amazon prime Now that delivers within an hour, is raising bar of expectation for the
customers. The customers have now started to expect that other online retailers will also offer
them services within a very short frame of time. Amazon with its vast resources and
technological advantage can manage the delivery but the same cannot be stated for other
online retailers. Flipkart, the biggest retailer of India is also losing its consumer base due to
the delay in delivery. The same can be stated for other small and medium online retailers.
Hence, it becomes crucial for other online retailers to adopt techniques and tools that are fast
and efficient and are capable of delivering the goods as soon as possible to the customers.
It has also led to over pressuring of the logistics services of different online retailers.
Furthermore, the over pressure on the employees of the logistics is leading to employee
turnover which is undesirable for the firms and the supply chain associates as well. The
online retailers with their own chain of logistics such as Flipkart which owns E-kart is also
witnessing a large employee turnover (Kumar, 2015). The turnover is one of the most
prominent challenge for any firm as it forces them to compromise on the quality of human
resource. The Human resources of an organisation needs to be trained and developed over
period of time and losing them due to over pressure enforces the firms to invest more time,
effort and resources in developing new talents. Furthermore, it also consumes time for the
talents to cope up with the company’s model of work and technologies.
Hence, to summarise it would be adequate to state that the challenges posed by
globalisation is one of the major challenge that needs to be coped up with so that the logistics
of the online retailers in India could leverage the vast Indian online retail market.
Lack of Research and Development is also one of the major challenges for the
logistics services of online retailers in India. Logistics can be considered as one of the
primary pillar for the business. The reason for the above made statement can be justified by

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the fact that logistics impacts all the sectors of a business. In case of the online retailing, the
logistics is one of the primary component of the business success and hence, their
development should be priority (Srivastava, Verma & Tripathi, 2017). However, in case of
the Indian online retail industry, the perception prevails that there is no need for R&D in
logistics as they just collect the goods and delivers it. The discussed perception is restricting
the development of the logistics industry. If proper R&D will be done for the logistics
industry, then the firm can identify the factors that will enable on-time delivery metrics. The
identification can then be worked upon so that proper supply chain strategy can be developed.
Researching on the logistics approaches offered by the scholars and practitioners along with
the successful supply chain in existence will determine certain enablers (Sethi, Ahuja &
Singla, 2018). Those enablers can then be compared and contrasted with the business
environment, business requirement and other crucial aspects to develop a proper logistics
management strategy.
The lack of R&D is also letting the employee turnover ratio grow higher while letting
the fall of employee satisfaction ratio. The lack of R&D is also limiting the adequate studies
on the employees that is leading to development of great level of dissatisfaction among the
employees, which is undesirable. Without proper R&D, the logistics of online retailing have
also started to fall behind in adoption of state of art technology that will be catastrophic for
the long term sustainability of the firms and the industry as well. Hence, to summarise it
would be adequate to state that logistics of online retailing in India is facing challenges
because of lack of proper R&D.
Management can be considered as the most prominent challenge for the logistics of
the Indian e-Retail Industry. Poor corporate infrastructure, unorganised truck ownership, lack
of proper documentation and several others are example of how unorganised and inefficient
is the management of the logistics in the online retail industry of India. An article authored by

9SUPPLY CHAIN MANAGEMENT & INTERNATIONAL MARKETING
Verma, Sharma & Sheth (2016), states that the value of management and its sub-operations
such as change management, inventory management, Human resource management and
similar others are given very little attention. The above discussed statement can be taken in
account to state the fact that the logistics of the Indian online retail industry also lacks proper
management. Furthermore, the contracting problems in the logistics industry of India is also
one of the major challenge. Improper logistics management leads to accidents, vehicle
breakdowns and other crucial challenge for the logistics industry (Papadopoulos et al., 2017).
Furthermore, the discussion from above can be taken in account to state that the human
resource management in the logistics is also a challenge.
The challenge of management in the logistics of the online retailing develops great
challenges for the online sellers. It leads to delay of delivery which leads to cancellation of
order and in certain cases the firm also had to incur financial penalties (Venkatesh, Rathi &
Patwa, 2015). Employee turnover due to lack of human resource management, failure of
technologies due to inadequate technology management and change management along with
several other challenges are posed to the logistics and eventually to the online retail industry
of India (Kapoor & Sharma, 2016). Hence, it is crucial that proper management strategies
should be developed so that the efficiency of the Indian online retail market can be leveraged
by making logistics as a catalyst for competitive leadership.
Potential solutions
The section above has detailed the most primary challenges of the logistics in India’s
online retail industry and the crucial importance of mitigating them have also been discussed
and hence, the discussed section is aimed at detailing the mitigation approaches that should
be adopted by the online retail industry to mitigate the challenges of logistics.

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1. Increased cost is one of the major challenge that is faced by the logistics of the online
retail industry and to mitigate the discussed challenge, one of the basic approach that
can be adopted is consolidating loads. The consolidating of the load with
collaborators and even with the competitors will be a win-win situation for all. It will
enable the firms to ship their product along with the products of other firm who are
transporting bulk products to a location. The small shareholder can pay some rent that
will be cost effective than hiring an entire logistic service while the large shareholder
will also gain the benefit of reduced cost. Another approach is the river transportation.
India is rich with rivers but until now, it had not been leveraged and in the most recent
case the river has been used for the transportation of goods. The firms can leverage
the river logistics opportunity as the trend is young in India so the price will be less
and it will also contribute to their corporate social responsibility (CSR) because river
logistics is considered to be sustainable logistics.
2. The online retailing industry of India should focus on the training and development of
the employees and as part of their CSR should also educate the residents of their
geographical domain in the advancements and needs of technological development.
The discussed approach will not only benefit the firm to enhance their credibility but
will also ease the path of technological adoption by changing the perception towards
technology. The infrastructural issue can be resolved by writing petitions to Indian
Government for developing proper framework. The likes of Google, Facebook and
others are also offering support to the Digital Initiative of India and young firms,
which can be leveraged to develop a better infrastructure.
3. With proper focus over the management and adding value to the operations, the firms
in online retailing business of India can cope up with the challenge of globalisation.
Tesla is one of the prime example of the firm that through its innovation have coped

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up with global brands with the limited resources it had. One of the approach that can
be accounted to attain the discussed recommendation is adoption of action centric
leadership which focuses on the task as well as the team and individual members of
the team. The discussed approach will mitigate the over pressuring of the employees
and will benefit the logistics by mitigating employee dissatisfaction and turnover
ratio.
4. The online retail industry should develop a dedicated team for research and
development while providing them with disruptive technologies and tools such as
Data analytics. The use of data analytics will enable them to understand the
challenges of logistics and propose recommendations for mitigation of the identified
challenges. Furthermore, they will also propose plans for the management of the
unorganised logistics vehicles and proper strategy for logistics management. The use
of disruptive technologies such as the IoT and cloud services for safe transportation,
identification of delivery metrics and other benefits will also be offered with
introduction of a dedicated research and development team. However, it should be
ensured that the R&D team should be skilled and in possession of state-of-art
technologies so that they can offer high level of work efficiency and feasible
solutions.
5. The online retail firms should also have a dedicated management team which
accounts for different strategies and based on the vision, mission and goals of the
organisation develop a proper management strategy for the firm. Project management
tools such as MS project, ERP, Accounting Systems and other should also be taken
into consideration so that the efficiency of the activities and strategies can be ensured.
In summary it can be stated that the logistics of the online retail industry in India is
facing certain challenges that needs to be mitigated and the proposed recommendations can

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help the firms in attaining the discussed objective. Furthermore, focus on the technology,
management and R&D will ensure the discussed objective is attained.

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References
Banerjee, M. (2019). Development of Omnichannel in India: Retail Landscape, Drivers and
Challenges. In Exploring Omnichannel Retailing (pp. 115-137). Springer, Cham.
Bose, N. (2014). Logistical challenges hit growth of online retailers in India. Retrieved from
https://www.businesstoday.in/current/economy-politics/logistical-challenges-hit-
growth-of-online-retailers-in-india/story/207073.html
Chakraborty, S., & Roy Chowdhury, A. (2018). Privacy policy: Draft data protection law has
many gaps. Retrieved from https://www.financialexpress.com/opinion/privacy-policy-
draft-data-protection-law-has-many-gaps/1386938/
Dutton, W., & Blank, G. (2015). Cultures on the Internet.
Kalia, P., Kaur, N., & Singh, T. (2018). E-Commerce in India: evolution and revolution of
online retail. In Mobile Commerce: Concepts, Methodologies, Tools, and
Applications (pp. 736-758). IGI Global.
Kapoor, A., & Sharma, D. (2016). Meta-analysis for online retail performance.
Kumar, V. R. (2015). Online Retail in India–A disruptive force. SAMVAD, 9, 45-48.
Mathew, P. M., & Mishra, S. (2014). Online retailing in India: Linking internet usage,
perceived risks, website attributes and past online purchase behaviour. The Electronic
Journal of Information Systems in Developing Countries, 65(1), 1-17.
Papadopoulos, T., Gunasekaran, A., Dubey, R., & Fosso Wamba, S. (2017). Big data and
analytics in operations and supply chain management: managerial aspects and
practical challenges. Production Planning & Control, 28(11-12), 873-876.

14SUPPLY CHAIN MANAGEMENT & INTERNATIONAL MARKETING
Ruby, K. (2016). E-tailing in India-Growth, Challenges and Opportunities. Journal of
Marketing and HR, 2(1), 102-112.
Sethi, A. P. S., Ahuja, I. P. S., & Singla, A. (2018). Shifts Between Technology Push and
Market Pull Strategies for Sustainable Development in Manufacturing Industries.
In Global Value Chains, Flexibility and Sustainability (pp. 319-331). Springer,
Singapore.
Srivastava, A., Verma, P., & Tripathi, A. (2017). Transformation and business emergence of
Indian ICT sector with reference to Indian ICT policies. Transformation, 2(6).
Thakur, R., & Srivastava, M. (2015). A study on the impact of consumer risk perception and
innovativeness on online shopping in India. International Journal of Retail &
Distribution Management, 43(2), 148-166.
Thiyagarajan, G., & Ali, S. (2016). Analysis of Reverse Logistics Implementation Barriers in
Online Retail Industry. Indian Journal of Science and Technology, 9(19).
Topic: E-commerce worldwide. (2018). Retrieved from
https://www.statista.com/topics/871/online-shopping/
Venkatesh, V. G., Rathi, S., & Patwa, S. (2015). Analysis on supply chain risks in Indian
apparel retail chains and proposal of risk prioritization model using Interpretive
structural modeling. Journal of Retailing and Consumer Services, 26, 153-167.
Verma, V., Sharma, D., & Sheth, J. (2016). Does relationship marketing matter in online
retailing? A meta-analytic approach. Journal of the Academy of Marketing
Science, 44(2), 206-217.

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Part B

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Introduction
“Fluid Concepts and Creative Analogies by Doug Hofstadte” was the first book to be
sold by Amazon on 3rd April of 1995. Since, the sales of the first book the firm have never
stopped achieving milestones (Fujiyoshi et al., 2017). The firm in its very first month sold the
discussed book to people in all of the 50 states around US and in 45 different countries
around the globe. Now, the firm is the most trusted online retailing store and is showing no
sign of slowing down (Greenberg 2017). Different factors are associated with the success of
the firm. From strong leadership to innovation and several others. One of the prime factors
for the success of the Amazon is its logistics which is considered to be one of the most
innovative and revolutionary.
Before, the intervention and redefining of the logistics by Amazon it was considered
to be as a Staid business, but now it is considered to be one of the frontline businesses that
ensured the success of the firm. Though Amazon is not solely responsible for the changing
face of logistics but it undoubtedly is one of the most prominent motivators that have
attracted attention towards the logistics business (Daugherty, Bolumole & Grawe, 2018).
Different businesses have pursued the way of logistics established by Amazon that extends
cross borders. Hence, it is crucial to identify the change and impact posed by the Amazon in
the logistic industry. To attain the objective discussed above, it is crucial that the innovation
added by the firm, approaches adopted by it to add value and several other aspects needs to
be detailed and the discussed paper aims to detail those aspects. The discussion below has
attempted to present an insight into the domain of how Amazon was able to become
successful while offering uniqueness and replicating business models around the globe. Their
innovative and value addition practices have also been evaluated to present a summarised
view.

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Amazon Model
Amazon was declared as the most innovative firm of 2017 and the strategy of the firm
justifies it (Carter, Kosmol & Kaufmann, 2017). Amazon’s strategy is to act locally while
thinking at a global level by leveraging its logistics capabilities, massive scale and balance
sheets. The discussed strategy is supported by certain sub-strategies and they have been listed
below.
i. Use of technology for logistics purposes. The strategy of Amazon has made it
evident that logistics is one of the primary factor for the success of the discussed firm
and the firm has adopted all measures to ensure that the efficiency of the logistic
process is increased with time and situation. The first effort to attaining the discussed
objective is introduction of state of art technology in its logistic services. One of the
prime introduction to the discussed service by Amazon is AI abbreviation for
Artificial Intelligence (Greenberg, 2017). AI is one of the most disruptive technology
that is still in its development phase and is witnessing continuous upgradation.
Furthermore, the technology in discussion is considered to be one of the most
unreliable because of its unpredictability and lack of knowledge about the technology.
However, the firm decided to adopt it and is using it for the delivery purposes. The
technology is used for searching addresses. In the country like India, the residential
addresses are often considered to be only “best guestimates of location” making
delivery of products a challenging task (Greenberg, 2017). The application provided
to the delivery associate of the firm is developed with consideration of AI and
machine learning that offers better precision of the location that includes a confidence
score between 0-100 for an address.
ii. Fulfilment centres and Expansion of logistics. Amazon is known for its innovative
and creative thinking but another one of its very notable aspect is its foreseeing of

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future capability (Christopher, 2016). The firm plans for the future and as part of
foreseeing future, the firm have adopted measures to ensure that its future is safe and
it continues to stay as a global leader both at global and local level. The firm is
developing fulfilment centres in major cities of a country that enables it to fulfil its
obligations as part of Amazon Prime and Amazon Prime Now. Fulfilment centres are
the centres established by Amazon to ensure that th delivery process to the customers
while receiving process from the sellers is easy and efficient. The firm has extended
its number of fulfilment centres in India to 67 (Das & Ara, 2015). It enables the firm
to deliver the products to its customer in a short frame of time. Furthermore, the firm
is also developing its logistics infrastructure by acquisition or collaboration with
major logistic service providers of the country. The extended logistic infrastructure
and easy access to the fulfilment centres is beneficial for the sellers as well. The
reason for the above mentioned statement can be justified by the fact that easy
availability of the fulfilment centres enables the sellers to deliver the goods to the firm
in a cost effective manner (Hofmann & Osterwalder, 2017). The cost effectiveness of
the seller enables the firm to offer better service and a high level of satisfaction for the
consumers.
iii. Assistance for the sellers. The point above has made it evident that Amazon is not
only concerned with the consumers but takes adequate care of its sellers as well. The
decision of Amazon is adequate because, it is aware of the fact that without sellers the
firm will not be able to satisfy its customers which will impact the sustainability of
the firm (Hong, Park & Jung, 2018). Hence, to mitigate the discussed risk, the firm
have dedicated one of its logistics department for the sellers. the discussed logistics
section is integrated with the marketing team of the firm. The logistics of the firm
along with the marketing team visits small and medium products manufacturer and

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collects product pictures and details so that they can promote the product on their
platform and earn revenue against it. Furthermore, it offers the firm with the
advantage of having a loyal seller that will benefit the firm to attain a long term
sustainability. The discussed use of logistics is one of the most promising use of
logistics and is setting example for others to follow.
iv. Dedicated Research & Development. The firm is well aware of the need for
research and development in different aspects of business. Furthermore, the firm is
also aware of the fact that research and development is heavily influenced by the
geographical domain and hence, the firm has a dedicated R&D centres in the
countries where the firm is attempting to develop a stronghold (Huang, 2015). India is
one of the primary target of the firm and hence, the firm has established its second
largest R&D centre in Bangalore, the IT hub of India after Seattle. The centre in
Bangalore is dedicated towards determination of ways and approaches through which
it can offer better user experience. The user experience of the consumers of Amazon
is greatly influenced by the delivery metrics of the products (Lasisi, McCullen &
Turner, 2015). Hence, the R&D attempts to identify ways through which it can
identify better delivery option that is beneficial for both the firm and its customers.
The AI, mapping and other areas of logistics are being focused so that it can be
improved.
Amazon Development Process
Baird analyst Colin Sebastian once quoted “We continue to expect Amazon to add
logistics primarily to meet its own growth, but over time, and in incremental fashion, we
believe it is likely that Amazon will offer this expertise to third parties to help subsidize those
costs” (Mohammed, 2016). The quotation by Sebastian has proved to be true and Amazon
has truly amazed the world with its strategy for logistics. However, the development of

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Amazon in the field of logistics have raised a question that needs to be answered. The
question in discussion is regarding the process that had been adopted by the discussed firm to
keep its logistics service fresh and effective at the same instance. The answer to the above
discussed answer is the four step of development process. The discussed development
process steps of the firm have been detailed in the following points.
i. Identification of the inefficiencies. Amazon has always considered the future aspect
and as part of it, they have developed itself to be over the time to cope up with the
changing nature of the market and the perception of its consumers. The first step
towards attaining the discussed measure is the identification of the inefficiencies in
the logistics process of the firm (Yu et al., 2016). The above statement does not rely
on the idea that there are flaws in the logistic approach on the firm but instead
supports the idea that the changing time demands the change of approach for a high
level of satisfaction. If the changes are not indulged in the process, then it leads to
development of inefficiencies. So, to mitigate the discussed threat the firm has
designated its R&D team to identify the inefficiencies in the logistic process of the
firm (Liu & Hong, 2016). It may be due to internal factors or may even be due to
changing time. The identification of the inefficiencies enables the firm to work
towards determination of the solutions for mitigating the challenges.
ii. Development of technological solution. The discussion above has made it evident
that Amazon is one of those firms who greatly rely on technology for resolution of all
its issues. Hence, when the R&D team identified any inefficiency, the first approach
adopted by the firm is to look technological solution (Lierow, Janssen & D’Inca,
2016). Two of the companies that have established themselves as the most innovative
firms are Tesla and Amazon and both the firms are technology driven. Furthermore,
both the firms believe in in-house technologies (Daugherty, Bolumole & Grawe,

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2018). One of the prime example of the technology driven solutions is the
development of Amazon Web Services (AWS), which is now the biggest vendor of
cloud services that accounts for over 35% of market share. It was developed for the
internal inefficiencies of the firm and was later promoted to a global context.
Similarly, in case of the logistics the firm faced challenges and hence, they
approached technology for solution. The inefficiency in discussion is the locating of
addresses in India and similar country and the firm found solution in the form of AI
and Machine learning (Huang, 2015). They inducted the discussed technology in the
form of mobile application that have greatly improved their logistics in the discussed
situation.
iii. Scaling of the solution into the platform. The identification of inefficiency leads to
the development of the technological solution is not the end to the development
process of the firm as they take further steps to ensure the success of the adopted
solution. The first objective that they adopt to ensure the success is to present the
solution in the simplest form to the end-users (Hong et al., 2018). To attain the
discussed objective, the firm, scale the technological solution in a platform. In case of
the logistic challenge of identifying the addresses, the technological solution was the
introduction of the AI and machine learning. However, the end-users that is the
logistic associates were unable to use the technologies directly due to limited skills
and knowledge. Hence, the company scaled the technology in the form of mobile
application which was end-user friendly and offered solution to the inefficiency (Chiu
et al., 2017). The introduction of AI and Machine learning is not the first instance
when the firm had attempted the trick. The company had earlier taken similar
measures which is evident from the supply chain process of the firm. The supply
chain action starts from the product development followed by inbound shipping,

22SUPPLY CHAIN MANAGEMENT & INTERNATIONAL MARKETING
warehousing, inventory management, e-commerce sales, payment, pick-n-pick and
fulfilment & return (Carter, Kosmol & Kaufmann, 2017). The sequence discussed
above presents the summary of the supply chain and is a representation of the
different steps where the firm had made technological changes to cope up with
inefficiency and all the solution are scaled into a platform.
iv. Offering the platform as a solution to third parties. Amazon had one of the best
logistics mind and the most prominent reason for the discussed reason can be
supported by the fact that the firm determines approaches to earn profit from its own
inefficiencies. The company believes in the ideology that if the firm is facing an
inefficiency other firms may face it too and they may be looking for solution
(Christopher, 2016). Hence, the first step that the firm adopts is to identify the
inefficiency and post identification the firm develops solution which it scales into a
platform mitigating its problem. However, the firm does not let go of the idea and
leverages it by selling or renting the solution to other needful. The selling and renting
of the solution benefits the logistics of the firm as the firm uses its own logistic
solution to deliver the solution.
Reason for success
The discussion above has offered an insight into the approach, strategy and model that
is pursued by the firm in discussion. The key identification from the discussion are the factors
that make Amazon unique from its competitors. Some of the primary factors have been listed
below:
i. Motivation of continuous improvement. The discussion above has made it evident
that the reason for the success and sustainability of the firm is its attitude of accepting
change and improving it to attain high level. The firm has dedicated R&D team that is
designated with the responsibility of identifying change and propose solution. To

23SUPPLY CHAIN MANAGEMENT & INTERNATIONAL MARKETING
attain the objective in discussion the firm identify inefficiencies and propose solutions
that are technological in nature and feasible at the same instance. The discussed
approach of the firm to look for inefficiency and improve it has offered the firm with
a chance of to pursue continuous improvement process and sustain along with it.
ii. Foreseeing is another one of the prominent factors that have enabled the firm to
sustain and emerge as the biggest corporate agency in the world. The firm takes
consideration of the future challenges and consequences along with the potential
opportunities that can be leveraged. The foreseeing helps the firm to mitigate any
threat to its sustainability before the threat becomes dire and even enables them to
leverage the solution of the threat to develop opportunity which is evident from the
case of AWS and the case of logistic.
iii. In-house solutions development attitude of the firm has also proved to be the most
prominent aspect that is reflecting towards its unique and creative approach that is
making it a global leader. The fir develops in-house solutions and post completion of
its use the firm makes the solution available for third party businesses which adds to
its value and even develops an opportunity for its logistics section.
iv. Technological adoption is also one of the primary factors that has contributed
towards the success of the firm. The technological adoption such as AI and machine
learning for determining the location is one of the most creative ideas and it is paying
well for the firm and its logistics services.
v. Customer centric nature is another one of the biggest factor that have enabled the
firm to attain the position that it is entertaining. The firm understood that the customer
hates waiting and hence, the firm developed a logistic that is efficient and fast at the
same instance. Hence, the firm expanded its logistic infrastructure and even

24SUPPLY CHAIN MANAGEMENT & INTERNATIONAL MARKETING
developed fulfilment centres that offers ease of logistics along with efficiency and
effectiveness.
vi. Assistance for the sellers. The point above has made it evident that Amazon is not
only concerned with the consumers but takes adequate care of its sellers as well. The
decision of Amazon is adequate because, it is aware of the fact that without sellers the
firm will not be able to satisfy its customers which will impact the sustainability of
the firm. Hence, to mitigate the discussed risk, the firm have dedicated one of its
logistics department for the sellers. the discussed logistics section is integrated with
the marketing team of the firm. The logistics of the firm along with the marketing
team visits small and medium products manufacturer and collects product pictures
and details so that they can promote the product on their platform and earn revenue
against it. Furthermore, it offers the firm with the advantage of having a loyal seller
that will benefit the firm to attain a long term sustainability. The discussed use of
logistics is one of the most promising use of logistics and is setting example for others
to follow.
vii. Research and development is prominently the most prominent factor that enables
the impact of Amazon and its logistics. The firm has established its R&D to support
its current operations and develop plans that will assist the firm to ensure that the
position of competitive leader that it is entertaining stays intact. The research in the
field of logistics have made the Amazon logistic as the prime example of logistics for
different firms who are pursuing the footstep of the discussed firm. The Amazon
prime and Amazon Prime Now are the most prominent examples of providing logistic
services which is offering customer satisfaction and is also saving the organisational
resources because of the establishment of the fulfilment centres.

25SUPPLY CHAIN MANAGEMENT & INTERNATIONAL MARKETING
Hence, in summary it would be justified to state that the firm has established itself as a
prime example of logistics services and should be a case that should be assessed by the
logistic service providers for a better output. The factors that have been identified can be
taken into consideration by the logistic firms to improve on their operations and attain a path
of sustainability. So, Amazon is the prime example of the how to gain leadership and
maintain the position of leadership in the logistic market.

26SUPPLY CHAIN MANAGEMENT & INTERNATIONAL MARKETING
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