Amazon India - Distribution Strategy

1. Distribution Strategy of
By Group 2

2. • 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 off as an
online book seller
• Amazon, the worldwide leader in e-commerce launched
Junglee.com
• In early June 2013, Amazon launched their Amazon India
marketplace without any marketing campaigns
Introduction

3. Products and Services

4. • 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

5. 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

6. 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

7. 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

8. Industry Eco-System

9. A run of the ecommerce exchange has a heap of distinctive players
included. They can incorporate one or the greater parts:
• Hosting Provider
• Shopping Cart
• Internet Marketplace
• Payment Gateway
• Merchant Processor
• Shipping Processor
• Business Automation Tools
Industry Eco-System

10. Channel Analysis of Amazon

11. • 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
Market Structure of Amazon

12. 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 centres
• Amazon’s Next-Day and
Same-Day Guaranteed
delivery services
• 34 fulfilment centres with
more than 61 million cubic
feet of storage capacity
Levels of Channels

13. Strategic Partners

14. • Formal alliance between 2 commercial enterprises
• Usually formalized by a business agreement
• Why is it formed?
Generally 2 companies form strategic partnership/alliance when each one of
them possesses some business strengths that may help the other
Strategic Partners

15. • Amazon partnered with P&G so that it can use P&G’s warehouses
for faster and economical product distribution
• P&G moves their products everyday from their facility to another
location from where workers of Amazon ships them
• Finances in favor of both the companies
Partnership with Procter & Gamble

16. 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 more
profitable items
• For P&G
• By cutting their transportation costs and by taking Amazon’s help in
spurring its online sales
Partnership with Procter & Gamble

17. • 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
Other Strategic Partners

18. • 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
How Amazon attracts customers

19. • 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
How Amazon attracts customers

20. Incentive Plan and
Channel Distribution

21. Incentive Plan
• India - Amazon’s 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.

22. Distribution Channel-Digital
Distribution Channel-Digital

23. • E-Books-Kindle reader
• AmazonMP3 & Cloud Player
• Instant Video
• AppStore for android
• Amazon Cloud drive
• Amazon Game Studios & Softwares
“On-line channel has significant cost benefit”
Digital Channel

24. Distribution Channel-Physical

25. • 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
Physical Channel

26. 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.

27. WHOLESALER
CUSTOMER
INFORMATION
INFORMATION PRODUCT
PRODUCT

28. Large quantity of small
parcels and packages are
involved in e-commerce
related merchandise
Variety of delivery
options, including
overnight and various
international shipping
options
WHOLESALER
CUSTOMER
INFORMATION
INFORMATION PRODUCT
PRODUCT

29. Direct Purchases
WHOLESALER
CUSTOMER
INFORMATION
INFORMATION
PRODUCT
PRODUCT
PUBLISHER/
SUPPLIER
INFORMATION

30. Gets paid before paying the distributor
WHOLESALER
CUSTOMER
INFORMATION
INFORMATION
PRODUCT
PRODUCT
PUBLISHER/
SUPPLIER
INFORMATION

31. Distributer/
manufacturer
CUSTOMER
INFORMATION
INFORMATION
PRODUCT

32. SELLERS
CENTAL
WHOLESALER
CUSTOMER
INFORMATION
INFORMATION
PRODUCT
PRODUCT
PUBLISHER/
SUPPLIER
INFORMATION
Other Sellers
INFORMATION

33. • 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.
Credit Policy & ROI

34. Promotions and
Visual Merchandising

35. • 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

36. • #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
which Indian masses would love to shop with
more options than ever before
ATL Promotions - #AurDikhao

37. ATL Promotions - The Great Indian Summer
Sale

38. Cat fight between
Flipkart vs Snapdeal vs Amazon

39. Cat fight 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

40. Cat fight between
Flipkart vs Snapdeal vs Amazon
And as the age old proverb says, in the fight between the two
cats, it’s the monkey who took the cake, it was Amazon India
which won in the end!

41. • 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
Visual Merchandising

42. Evaluation and Conclusion

43. • 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
Evaluation of the
Channel Strategies

44. • 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
Conclusion