The document provides information about Amazon's business operations and strategies for international expansion. It discusses Amazon's founding and growth to become the largest online retailer globally. The document also analyzes Amazon's entry into different international markets like the UK, Germany, and Japan. It examines factors like culture, regulations, geography, and economics that influenced Amazon's market selection and strategies. Overall, the document reviews Amazon's performance and outlines patterns in its approach to international expansion.

2. About the Company
• Founded by Jeff Bezos on July 5, 1994
• American electronic commerce and cloud computing company based in
Seattle, Washington
• Largest Internet retailer in the world (Revenue and market capitalization)
• amazon.com started as an online bookstore and later diversified to other
categories
• Amazon has separate retail websites for the US, UK, France, Canada,
Germany, Italy, Spain, Netherlands, Australia, Brazil, Japan, China, India,
Mexico, Singapore, and Turkey
• Amazon is the second most valuable public company in the world
(behind Apple), the largest Internet company by revenue in the world,
and after Walmart, the second largest employer in the United States

3. KSF – Amazon
• Direct to consumer online model
• Low inventory risk – Strategic location, Optimum level
• Huge economies of scale – Virtual barrier for new entrants
• Presence around the world – 15+ country specific websites
• Entry through strategic acquisitions
• Diversified product mix (Retailing, AWS, Alexa, Kindle, Fire, ATS, Prime
Video, Prime Music)
• High customer retention – Customer centric approach
• Local language (amazon.in is also available in Hindi)
• First mover advantage – Online Retailing

4. SWOT Analysis - Amazon
S
• Powerful global brand
• Diversified portfolio (Products & Services)
• Customer Support (Earth’s most customer centric company)
• Presence in global landscape
T
W
O
• Third party sellers on website (Lesser Control)
• Dependence on third party logistics
• Huge Capital being wiped off due to competition (Sale)
• Stock piling (Slow moving and Non moving goods)
• Backward Integration (Amazon Basics products)
• Strategic acquisition of local players (eg. Walmart-Flipkart)
• In-house payment service Amazon pay (Developing Nations)
• Opportunities in Middle East and Africa
• Intense competition in China, a major market. Competitors
such as Alibaba, JD already have the first mover advantage.
• Low entry barriers means tough competition, price wars,
shrinking margins & losses

5. Potential New Entrants
Threat of Substitutes
Porters Five Forces – Online Retailing Industry
Suppliers Power
Buyers Power
Industry Rivalry
• No Switching cost of customer
• Well informed customers
• High cost of customer acquisition
• Between major players
• Deep-discounts for gaining market
• Low entry barriers
• Innovation in order delivery - Drones
• Retail stores selling online
• Intra-City based retail chains
• Lot of potential market untapped
• Lot of funding option available
• Low capital requirement
• Rules set by brands, suppliers follow
• Set code of conduct for suppliers
• Limited options for suppliers
Relatively High
Moderately Low
Moderately High
Moderately Low
Relatively High
With intense competition within the industry, no entry
barriers posing threat of new entrants, no product
differentiation posing huge threat from substitute
products, huge possibility for suppliers to forward
integrate and huge bargaining power of customers makes
the current E-Commerce industry unattractive.

6. Revenue vs Net Income
-500
0
500
1000
1500
2000
2500
3000
3500
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
200000
NetIncomeMillion$
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
RevenueMillion$
Revenue vs Net Income
Revenues Net Income
Doubled spending on
Purchases of property
and equipment, including
internal-use
software and website
development

7. Net Sales vs Cost of Sales
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
2010 2011 2012 2013 2014 2015 2016 2017
Million$
Axis Title
Net Sales vs Cost of Sales
Net Sales Cost of Sales

8. 0
5
10
15
20
25
Asia Pacific Australasia Eastern
Europe
Latin
America
Middle East
& Africa
North
America
Western
Europe
CAGR 2012-17
CAGR - Online Retailing Industry

9. Amazon in China
• Entry through acquisition of joyo.com – largest online retailer
of books, music and videos in China at that time
• Renamed amazon.cn, increased product offering by 32 fold,
still didn’t have profits
• Cultural, Administrative, Economic distance – customers not
willing to pay for e-books, sparse use of card payment
• Did not launch Kindle in China, leading to dominance of local
brand, low cost e-readers
• Failed to understand that no company has built a profitable
business in china around e-books
• Regulatory barriers and complications in cloud services

10. Case Questions
Why did Amazon consider international expansion in
the first place? Is international expansion a key success
factor in Online Retail industry?
• Intense competition & saturated home markets
• Internet growth, computer & smartphone outreach in
developing nations
• Strong competition from stores like WALMART in home country
• Negligible product differentiation in retailing, hence they
followed ‘Market Development’ strategy
• Mostly unorganized players (small players, mostly limited
category) in developing nations
• CAGR of Online retailing industry 20+ % in Asia, Middle East

11. Case Questions
Why did Amazon choose United Kingdom as its first foreign entry
location? Why not other countries such as Canada and Australia?
Cultural Administrative Geographical Economic
Attributes
creating
distance
• No language
barrier
(English)
• Similar social
& Cultural
Norms
• Ethnicity and
religion
similar to US
• LOW
• Ease of doing
business
• Open
economy
• Close political
ties
• Different
currency
• MODERATE
• Large physical
distance
• Developed
transportation
system
• Use of IT for
communication
• MODERATE
• Developed
economies
• Similar
disposable
income
• Developed
online book
market
• Second
highest
internet users
• LOW

12. Case Questions
What strategies did Amazon use in the United Kingdom?
Did these strategies make sense?
• Acquired Britain’s largest book retailer – bookpages.co.uk
• Gained a huge market share at once through it
• Offered more than 1.4 mn book titles in UK
• Subsequently expanded product & service offerings
• Amazon conducted a private trial of drone delivery in
Cambridge, UK called Prime Air
• UK accounts for 24.6% of Amazon’s International revenue

13. Case Questions
Why did Amazon choose to enter Japan after the United
Kingdom and Germany?
Cultural Administrative Geographical Economic
Attributes
creating
distance
• Different
social and
cultural
norms
• Different
language
• Ethnicity and
religion
dissimilar
• HIGH
• Legal
constraint on
discounts
• Regulated
market
• Fluctuating
exchange
rates
• Different
currency
• LOW
• Large physical
distance
• Developed
transportation
system
• Use of IT for
communication
• MODERATE
• Per capita
online spend
second to US
• Similar
disposable
income
• Shared market
information
• Similar
financial
resource
• LOW

14. Case Questions
What strategies did Amazon use in Japan? Did these
strategies make sense?
• Amazon.co.jp – First website in Asian language
• Japanese books were already sold at low prices
• Legal restrictions prohibited deep discounts
• Japanese consumers hesitated in using Cards Online (POD)
• Launch country specific websites (99% of population fully
comprehend website content in Japanese
• Teamed up with Red Cross for relief efforts (Tsunami-2011)

15. Case Questions
Was there any pattern across Amazon’s international
entries?
• Test Market (Export Based)
• Target countries with rapidly rising internet users
• Firstly enter as an online book retailer (Safe Bet)
• Acquire one/major retailers
• Launch country specific websites
• Generally wholly owned subsidiary

16. Case Questions
Given Amazon’s overall performance domestically and
globally, as well as the company’s mission/vision/strategic
plan, what should be its next step? Should it continue
global expansion into new markets? What should Amazon
do with its less successful international operations?
• Focus on strengthening existing operations
• Long term continuing international expansion
• Customer centricity – “Earth’s most customer centric
company”
• Exit/Redesign troubled market and markets with fierce
competition