Amazon's international strategy

Amazon in Emerging Markets

In the spring of 2014, Amazon.com, Inc. (“Amazon”), saw its chief competitor in China, Alibaba Group, file documents with the SEC for an initial public offering that could be one of the largest in history, its main competitor in Brazil, MercadoLibre, sustained an approximate 40% loss in stock price despite several years of profitability, and its two chief competitors in India, Flipkart and Snapdeal, formed separate mergers with other related firms. The intense battle for control of a country’s e-wallet was nothing new to Diego Piacentini, senior vice president of International Consumer Business, and Jeff Bezos, founder and CEO (see Appendix A for Amazon’s executive leadership). Their decision to launch Amazon.in in June 2013 marked Amazon’s eleventh country-specific portal after nineteen years of operation. China was Amazon’s first emerging market website, and India only its third. Compared to its experience in China and Brazil, Amazon followed a different business model and strategy in India. What led to the differing approaches and which, if any, of Amazon’s emerging markets’ strategies and investments would succeed? The case starts by examining Amazon’s entry into India and then turns to Amazon’s experience in China and Brazil.

Amazon’s International Expansion
Incorporated in 1994, Amazon had evolved from a small online vendor of books and other information- based products in 1997 into a global “customer-centric” company serving consumers, sellers, and developers with operations in twenty-two countries. Amazon’s international expansion started in 1998 when it acquired Bookseller, Ltd. (bookseller.co.uk) in the United Kingdom and Telebook, Inc. (telebuch.de) in Germany. These two sites gave rise to what became Amazon.co.uk and Amazon.de, respectively. It was early in 2000, during this initial European expansion, that Amazon hired Piacentini, who had been Apple’s general manager for Europe. Since his hiring, Amazon launched nine other country-specific websites, in Italy, France, Spain, Japan, China, Mexico, Brazil, Canada, and Australia. In other countries such as Costa Rica and South Africa, Amazon located customer service, software development, fulfillment or back office operations. (See Appendices B1 and B2 for Amazon’s global websites and operations).

In 2013, Amazon’s Germany, UK, and Japan sites accounted for 85% of total international revenues of $30.0 billion. Overall, Amazon’s international markets (excluding its Canadian site) made up 40% of

Published by WDI Publishing, a division of the William Davidson Institute (WDI) at the University of Michigan.

©2014 Amy Nguyen-Chyung and Elliot Faulk. This case was written by Elliot Faulk and Amy Nguyen-Chyung (Assistant Professor of Strategy) of the Ross School of Business at the University of Michigan. It was created as a basis for class discussion, not to illustrate either the effective or ineffective handling of a business situation. Secondary research was performed to accurately portray information about the featured organization and to extrapolate the decision points presented in the case; however, company representatives were not involved in the creation of this case.

( For the exclusive use of M. Tripathy, 2018. )

( This document is authorized for use only by Manmath Tripathy in Global Strategy - Winter 2018 taught by Gregory Theyel, California State University - East Bay from January 2018 to March 2018. )

Amazon’s total revenues of $74.4 billion (see Appendix C for consolidated financial results). However, despite a growth of 14% in net sales between 2012 and 2013, Amazon’s international business had seen a period of declining rate of growth since 2011 (see Appendices D1 and D2 for a geographic break-out). Would this declining growth rate foreshadow what was to come for Amazon’s international markets, or be merely water under the bridge according to Bezos and Amazon’s “marathon” mind-set of emphasizing customer service and long-term gains in sacrifice of short-term profits?