DISTRIBUTION STRATEGY OF AMAZON
RISHA SHARMA - 26034
SHALINI SHARMA - 26040
PRAKHAR SHARMA - 26078
SHASHANK TRIGUNAYAT - 26149
ANSHU YADAV - 26113
Distribution Strategy of Amazon
Introduction
Number of Indian customers who were using internet on a regular basis to get
information were increasing rapidly in 2012. Flipkart, an Indian e-commerce company
had started as an online bookseller. Amazon, the worldwide leader in e-commerce
launched Junglee.com. In early June 2013, Amazon launched their Amazon India
marketplace without any marketing campaigns.
Products and Services
• Amazon Device Accessories
• Baby Products (excluding apparel)
• Books
• Cameras, Camcorders, Telescopes
• Cell Phones
• Consumer Electronics
• Electronics Accessories
• Home Appliances
• Music CDs, Cassettes, Vinyl, and other sound recordings
• Musical Instruments
• Office Accessories
• Office Products Supplies, Furniture, Printers, Calculators
• Personal Computers
• Software & Computer Games
• Tools & Home Improvement
• Toys & Games
• Video Games & Video Game Consoles Types of Products
Services Offered by Amazon
Selling on Amazon:
• All types of Businesses can sell products and services on Amazon and it is one of the
fastest ways to start selling online
• Businesses can access a new sales channel
• It helps in building brand recognition
• The platform provided by amazon is trusted and secured Services offered by Amazon
Fulfilment by Amazon:
• Amazon has helped the business enterprises to sell online globally
• Reaching Prime customers available on Amazon
• Amazon Offers fast and free shipping to customers
• Trusted customer service and after sales return Services offered by Amazon
Advertise on Amazon:
• Reach millions of Amazon shoppers
• Amazon helps to drive traffic to your site
• Amazon helps the business enterprise advertise online and across screens Services
offered by Amazon
Channel Analysis of Amazon
Market structure of Amazon
• Large number of firms leads to competition in the e-commerce
• Amazon faces a monopolistic competition in India
• Consumer has a lot of choice in buying any product
• Chooses the most profitable deal for its purchase
• Companies are differentiated through selling costs
• Selling costs constitute a substantial part of the total cost under monopolistic
Competition.
Levels of Channels
Online Channel: Significant cost benefit over other traditional distribution
channels
• Kindle
• AmazonMP3 & Cloud Player
• Amazon Cloud drive
Physical Channel: Half million square feet storage capacity in distribution centers
• Amazon’s Next-Day and Same-Day Guaranteed delivery services
• 34 fulfilment centers with more than 61 million cubic feet of storage capacity.
Strategic Partners
• Formal alliance between two commercial enterprises
• Usually formalized by a business agreement
• Why is it formed? Generally, two companies form strategic partnership/alliance when
each one of them possesses some business strengths that may help the other.
Partnership with Procter & Gamble
• Amazon collaborated with P&G so that it can use P&G’s warehouses for faster and
economical product distribution
• P&G moves their products every day from their facility to another location from where
workers of Amazon ships them
• Finances in favor of both the companies
How they benefit?
• For Amazon:
• It results in reduction of cost as cumbersome products don’t have to go extra way
• Also uses the extra space in their distribution centers to store items that are more
profitable.
• For P&G
• By cutting their transportation costs and by taking Amazon’s help in spurring its online
sales.
Other Strategic Partners
• Future Group: Sells retail group's offerings online 40 brands are exclusively retailed
online through Amazon
• SBI: Recently signed an MoU To develop better commerce solutions and smooth &
trusted payments for small businesses and end customers.
How Amazon attracts customers
• Sponsored search
• Associates program
• Email marketing campaigns
• Portal advertising
• Other initiatives include outdoor, radio and TV advertising
• View free shipping offers as effective worldwide marketing tools
• Amazon acquired companies vigorously to expand the customer base and sales
channels
• Planning to use its in-house logistics service in order to handle the delivery of all
products that its sellers sell through its e-commerce marketplace in India
• Amazon has adopted a hybrid logistics model.
Incentive Plan and Channel Distribution
Incentive Plan
• India - Amazon is third emerging market investment after Brazil and China
• Disagreement about the rate of commission may arise; hence, relationship of the
agent is important to maintain good delivery process.
• Comparative higher supply chain profits since distributor’s profit margin is the smallest.
• Third-party sites that help drive customers to the e-commerce platform for a fee
• Offers its logistics network, online seller registration, high-margin advertisement
services for sellers and brands
• Also offers positioning for a fee and display ads, across its mobile and desktop
platforms, to build loyalty with sellers and boost sales.
Distribution Channel - Digital Distribution
• E-Books-Kindle reader
• AmazonMP3 & Cloud Player
• Instant Video
• AppStore for android
• Amazon Cloud drive
• Amazon Game Studios & Software’s “On-line channel has significant cost benefit”
Distribution Channel - Physical
• Centralized distribution centers
• Faster response time
• Lower transportation cost
• Use a hybrid approach in stocking and pricing
• Pricing varies for delivery options
• Supply Chain Strategy
• Pure pull
• Pure push
• Push-pull
Amazon's goal is to collaborate with suppliers to increase efficiencies and improve
inventory turnover Have an holding inventory of 15 days and an inventory turnover of 26
and also a credit period of 45 days from its suppliers.
Credit Policy & ROI
• The whole distribution channel works on the system of commission and credit policy.
• Credit policy depends on the distributor and their geographical area.
• Distributors will get commission not only for delivering customers but also for other
retailers.
• Credit policy of distributors depends on the type of good sale.
Promotions and Visual Merchandising
ATL Promotions
• Launched an advertising galore in the year 2014 with a budget of INR 100-150 crores
• INR 20-25 crores was allotted for TVCs; One of the largest TV advertisers in IPL 2014
• Print media was used to advertise numerous promotional offers
• Online advertisements mainly focused on the wide range of products
ATL Promotions - #AurDikhao
• #AurDikhao Campaign launched in IPL 2015
• Conceptualized by Leo Burnett India
• Captured real life instances in Indian scenario, emphasizing on the fact that Indians
love to have a long list of options before the purchase decision
• Established Amazon India as a brand form that Indian masses would love to shop with
more options than ever before
ATL Promotions - The Great Indian Summer Sale
Catfight between Flipkart vs Snapdeal vs Amazon
Catfight between Flipkart vs Snapdeal vs Amazon Snapdeal sensed an opportunity to
take a dig at Flipkart and here is what they came up with the hoardings came into action
as well and it was a huge trolling of Flipkart by Snapdeal. As the age-old proverb says,
in the fight between the two cats, it is the monkey who took the cake; it was Amazon
India, which won in the end!
Visual Merchandising
• Virtual Store; Visual Merchandising is done at the POS, the website
• In terms of the look and feel of website
• The background and the theme is changed
• According to the festive occasions in India
• According to the ongoing sale or ad campaign
Evaluation and Conclusion
Evaluation of the Channel Strategies
• Value proposition of next day or same day delivery
• Has been using a hybrid model of delivery system
• Evaluation of this model is not an easy job as it does have its share of benefits and
limitations
• Amazon has lower control over their outbound transportation capacity
• The In-store logistic arm is doing a significant work in helping Amazon offer next day
or same day delivery
Conclusion
• Amazon India’s decision to build a fully-grown in house logistic arm in two years
• Plans to dramatically multiply its headcount in logistics and conveyance space in
seven months
• Amazon's more extensive method of reinforcing its 'Easy Ship' offering
• Top e-business players Amazon, Flipkart and Snapdeal are all reinforcing their
transportation benefits
