Loading...

Messages

Proposals

Stuck in your homework and missing deadline? Get urgent help in $10/Page with 24 hours deadline

Get Urgent Writing Help In Your Essays, Assignments, Homeworks, Dissertation, Thesis Or Coursework & Achieve A+ Grades.

Privacy Guaranteed - 100% Plagiarism Free Writing - Free Turnitin Report - Professional And Experienced Writers - 24/7 Online Support

Apple market entry strategy in india

28/10/2021 Client: muhammad11 Deadline: 2 Day

Assess The Pros And Cons Of Amazon’s Different Market Entry Approaches. Limit Your Answer To 250

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?

The Indian E-Commerce Market
On June 5, 2013, Amazon officially entered the Indian market with its launch of Amazon.in. Although the Indian government had liberalized its strict foreign direct investment laws in September 2012, the resulting regulations still forbid foreign multi-brand retailers from having over 51% ownership.1 As a result, Amazon could not replicate its U.S. business of selling its own products in addition to serving as a selling platform for third-party vendors. In India, Amazon would only be able to function as a pure marketplace that would connect domestic sellers to buyers in the market. For Amazon, these FDI considerations would be only the first hurdle encountered in the nascent but fast-growing Indian e-commerce market.

According to World Bank data, as of 2013 India had approximately 189.1 million Internet users (15.1% of the 1.25 billion population) compared with only 60.7 million (5% of the population) just four years earlier (see Appendix E for a list of Internet users per 100 population for select countries; see Appendix F for mobile cellular subscriptions). The Associated Chambers of Commerce and Industry of India estimated the Indian e-commerce industry at $16 billion in 2013, a large increase from estimates of $8.5 billion in 2012 and $2.5 billion in 2009.2 On the other hand, Forrester Research reported that Indian e-commerce was worth only $1.6 billion in 2012 after online travel sales were factored out of the estimates.3 Fast growth was less debated; analysts from the Indian retail consultancy Technopak believed that the country’s e-commerce industry could grow 61 times over the next decade.4

Overall, mom-and-pop stores dominated India’s half-trillion-dollar retail market. According to Deloitte’s India group, organized retail in India comprised only 17% of the market versus over 85% of the market in the U.S.5 Moreover, in addition to stringent laws on FDI, India still had considerable import duties on certain foreign products. According to the International Chamber of Commerce, India ranked 64th out of 75 countries for overall trade and FDI openness in 2013.6

In terms of transportation infrastructure, many of India’s roads were in poor condition and overly congested. Even on the better roads, such as between New Delhi in the north and Mumbai on the western coast, driving took almost twice the amount of time it took to drive the same distance in the U.S., according to Google Maps. In addition, nearly 70% of India’s population lived in remote rural areas, which in some cases had limited access to major highways. Thirty-three percent of villages in India, primarily in the northern states, lacked all-weather roads, making them almost inaccessible during the monsoon season.7 Furthermore, addresses in India were notoriously difficult to find due to non-sequential numberings, lack of street signs, and narrow, winding streets. It was instead commonplace in India to describe locations with directions via landmarks.8 Retailers had tended to prefer commercial airfreight for delivery, but this option had led to increased delivery costs and a high risk of merchandise being offloaded to accommodate passengers.9

Over the past few years, India had experienced a series of major power failures allegedly due to a shoddily constructed electricity infrastructure. For example, in soaring temperatures on June 10, 2014, in New Delhi 16 million people were subject to power blackouts due to unmanageable demand.10 This power

2

( For the exclusive use of M. Tripathy, 2018. W94C01 ) ( Amazon in Emerging Markets )

failure came only two years after a record-breaking electricity crisis in 2012 in which 600 million people were left without power for two days.11

India also still had a highly impoverished population. In 2013, OECD researchers estimated that 42% of India’s 1.24 billion people lived on less than $1.25 a day, reflective of its $4,000 GDP per capita.12,13 Much of India’s growth in computing and consumer spending, however, came from a growing middle class of over 160 million people.14 The Brookings Institution predicted that India’s middle class consumption would surpass that of the U.S. by the year 2030.15 However, despite a growing population heavily involved in spending, cash payments remained dominant over credit or debit card payments in day-to-day commerce in India. Business Today cited that people in India averaged only six non-cash payments each year. As a result, a “cash on delivery” system had become widely accepted in the e-tailing space and accounted for roughly 50% to 80% of all e-commerce payments.16

Competition in India
The Indian e-commerce market’s promise of rapid growth had already attracted several players, domestic and international, to the Indian e-tailing scene. Some of the largest in terms of revenue and market share included Flipkart, Snapdeal, and eBay.

Flipkart

In 2007, two ex-Amazon employees, Sachin Bansal and Binny Bansal (no relation), launched Flipkart, which became the leading domestic e-tailing company in India (see Appendices G1 and G2 for Flipkart’s website and executive leadership). Having copied some of Amazon’s business model throughout the country, Flipkart’s founders had been able to capture 4.9% of the very fragmented Indian e-commerce market by 2013 (Amazon held 1.6% and eBay 1.2%).17 Flipkart found quick success by developing its own logistics network and by adopting the “cash on delivery” payment option in 2010 in order to adjust to the cash-centric payment habits of Indian consumers. Since its launch in 2007, Flipkart had been dependent primarily on funding from venture capital firms.

Flipkart used the VC investments to expand its product offerings through a string of acquisitions in the Indian online retail space. Its acquisitions included weRead (2010), a book review and recommendation site; Mime360 (2011), an Indian site for digital music, e-books, and online games; Chakpak.com’s catalogue of movies and film ratings (2011); and Letsbuy.com (2012), an Indian online electronics retailer.18 At the end of 2013, Flipkart was valued at approximately $1.6 billion and was selling 100,000 products daily to its 13.22 million unique visitors.19

In May 2014, Flipkart acquired a 100% stake in online fashion retailer Myntra.com for an estimated

$370 million, its largest acquisition. Following the acquisition, Flipkart raised $210 million from Russian venture capitalist Yuri Milner and his firm DST Global.20 This investment added to the nearly $550 million it had previously received from groups such as Dragoneer Investment Group, Accel Partners, Vulcan, Morgan Stanley, Tiger Global, Iconiq Capital, Naspers, and Sofina Capital.21,22 Similar to Flipkart, Myntra heavily relied on funding from private investors including Accel Partners, Tiger Global, Sofina Capital, and Premji Invest. With the acquisition, Flipkart became the largest online fashion retailer in India.23

Snapdeal

Although they founded Snapdeal.com as an e-coupon website in 2010 (similar to Groupon in the U.S.), Kunal Bahl and Rohit Bansal decided to revamp their site after a trip to China in 2011 during which they witnessed the dynamic growth of the Chinese e-tailing giant Alibaba. Using Alibaba for inspiration, Bahl

3

( 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. )

and Bansal re-created Snapdeal.com in 2011 as an e-commerce marketplace (see Appendices H1 and H2 for Snapdeal’s website and executive leadership). Valued at $1 billion in June 2014, Snapdeal had relied heavily on funding from its investors.24 The largest of these was American e-commerce firm eBay, which invested $50 million in 2013 and was the largest investor in Snapdeal’s approximately $134 million round of funding in the first quarter of 2014.25 Other investors in this round included Intel Capital, Saama Capital, Nexus Venture Partners, Bessemer Venture Partners, and Kalaari Capital.26

Attempting to replicate Alibaba’s business model in India, Snapdeal offered 5 million products from over 30,000 sellers—much more than Flipkart’s network of 3,000 sellers as of May 2014. Similar to Alibaba’s logistics strategy, Snapdeal opened 40 fulfillment centers in 15 cities across India with which it stored and shipped sellers’ products for a fee.27 Snapdeal planned to open 35 more within the next year.28

Snapdeal had also expanded its reach through several acquisitions. In 2012 it acquired Esportbuy.com, an online sporting goods retailer, and in 2013 it bought Shopo.in, an online handicraft marketplace. In order to stake its position in the high-margin online fashion retailing space, in May 2014 Snapdeal acquired Doozton.com, a site that helped users discover popular fashion trends and lifestyle products.29

eBay

The American e-commerce giant entered the Indian market in 2005 after it acquired Baazee.com, India’s largest online marketplace at the time, for $50 million plus acquisition costs.30 Initially, eBay took a cautious approach in India while other e-commerce startups were aggressively investing to grab market share early on. In its infancy, eBay.in concentrated only in selling gift items such as chocolates and flowers from third- party traders.31 However, eBay since invested heavily to ensure its place as a leader in the Indian e-commerce market. By 2014, eBay India listed over 2,000 specific product categories from 45,000 traders.32,33 Similar to its model in the U.S., eBay was functioning solely as a marketplace in India, and offered products for auction as well as for a set price.

Much of its investment had gone into logistics options for its traders as well as into other companies. In 2012, eBay.in launched its PowerShip program option, in which eBay coordinated shipping for its member traders among its logistics partners in India—FedEx, BlueDart, DTDC, and Aramex. For set PowerShip rates, eBay’s logistics partners would pick up products packaged in eBay packing material directly from sellers and ship them to the buyers. With PowerShip, sellers could offer prepayment or cash-on-delivery options to be handled by their eBay Paisapay account, an escrow account that transfered money from buyer to seller after receipt of the purchased goods.

As mentioned above, EBay’s investments included funding Indian e-commerce retailer Snapdeal. In return for its investment, eBay acquired permission to access Snapdeal’s 20-million-person user database as well as its logistics network.34

Moving forward, eBay looked to more partnerships with Indian sellers and incorporating them into its global trading network. In April 2014, eBay partnered with the Confederation of All Indian Traders (CAIT) to be the recommended platform for small Indian sellers looking to market their products on the national and international stages. EBay planned to add more traders to its membership list and offer them the option of international export for their products.35 By partnering with eBay, member traders could sell their merchandise through any of eBay’s 39 global sites to over 145 million active eBay users worldwide.36

Amazon’s India Approach
Prior to Amazon.in, Amazon already had thousands of employees in India performing customer service,

4

software development and back office functions.37 In addition, in February 2012, Diego Piacentini and Amazon’s VP for International Expansion, Amit Agarwal, led Amazon’s investment in Junglee.com, an online product review site that listed over 10 million products, toward the Indian market in 2012. Through the site, customers could compare reviews, pricing, and shipping details for each product listed.38 Piacentini and Agarwal were determined to formulate a strategy that would best leverage their learnings from nearly a decade of operations in China. Rather than making piecemeal investments over their first few years of operation, Piacentini and Agarwal decided to invest big from the start. They recognized that their competitors had a head start of five to nine years to adapt their businesses to the Indian market, and so Amazon needed to develop a competitive strategy.

Agarwal brought local knowledge and deep company experience to this endeavor. The Mumbai-born new Vice President and Country Manager for Amazon India had joined Amazon in 1999 after earning his computer science degrees at the Indian Institute of Technology-Kanpur and Stanford University. He rose through the ranks from software development at Amazon headquarters to Managing Director of Amazon’s Development Center in Bangalore and then “Shadow and Technical Advisor” to Bezos.39

After the launch of Amazon.in in June 2013, much of Amazon’s initial Indian investments went to its core strength in logistics, as the company learned to adjust to the difficulties of distribution in India. Just prior to the launch, Amazon had completed the construction of a 150,000-square-foot fulfillment center just outside Mumbai. It later built one of similar size in Bangalore to serve southern India. With so much of India’s retail space dominated by local mom and pop shops, Agarwal and Piacentini decided to offer a “Fulfillment by Amazon” program in which Amazon enabled sellers to store their products at Amazon distribution center and have Amazon handle the delivery for a fee. Eventually three out of every four orders on Amazon.in were fulfilled by Amazon.40

Agarwal and Piacentini decided to further differentiate Amazon from its Indian competitors by being the first e-tailer to offer next-day shipping for the orders it fulfilled. In order to compensate for the difficulty of locating addresses and to ensure timely delivery of its sellers’ products, Agarwal also added PIN code (postal codes similar to ZIP codes in the U.S.) and landmark fields on the delivery information page, reaching 21,000 PIN codes versus other retailers’ 12,000.41

Since Amazon would function solely as a marketplace in India, seller acquisition was a major priority for establishing market share. To attract domestic sellers across India, Piacentini and Agarwal offered sellers a promotion for a two-year membership agreement with the first year free of cost. After the first year, members were only required to pay Rs 499 ($8.27) per month in addition to Amazon’s commission charge of 4%-8% (4% for most electronics, 8% for watches and jewelry) and a Rs 10 ($0.17) “closing fee” for each transaction. Piacentini and Agarwal also stressed educating Indian sellers on Amazon’s platform and services. For small retailers with little to no online selling experience, Amazon offered a pilot service called “Mainstreaming Sellers/SMEs” to teach them how to transact online, catalogue their products, and accept online payments. In addition, sellers could utilize the “Fulfillment by Amazon” option to give responsibility for delivery to Amazon.42

In order to attract buyers from India’s growing number of Internet users, Piacentini and Agarwal offered multiple incentives for those who referred customers to or bought products from Amazon.in. In the beginning stages of operation in India, Amazon offered free shipping for the orders it fulfilled. It also offered permanent free shipping on all orders fulfilled by Amazon over Rs 499.43 Piacentini and Agarwal also introduced the Amazon Associates Program, which offered a commission to all online publishers (e.g. bloggers, businesses, authors, nonprofits, and personal websites) who directed their viewers to Amazon.in via a link to a “contextually relevant product.” If a purchase was made, the commission for referrals would

5

range between 5% for consumer electronics and 10% for most other product categories, such as books and movies, and would cover all purchases made by the referred customer.44 Piacentini and Agarwal also attracted buyers by replicating the cash-on-delivery option it had offered in China. In addition to online payment options such as credit cards, debit cards, and bank transfers, cash-on-delivery would allow Amazon customers to pay for their merchandise at the time of delivery. However, this option had tended to delay payments to Amazon up to one week.45

E-retailers in India appeared to be fighting to offer the largest selection of products at the lowest cost and with the fastest delivery times. Just after Amazon introduced next day delivery, Flipkart announced that it would be offering “In-a-Day Guarantee” delivery. Soon after, both companies began to offer same day delivery in a number of cities if ordered before a certain time.46

Amazon and its competitors had further attempted to differentiate themselves through unique mobile features and by entering exclusive distribution agreements with producers. For example, in February 2014, Flipkart signed an agreement with Motorola to sell its new phone, Moto G, only online through Flipkart’s site. In addition, Snapdeal agreed to be the sole Indian seller of Oplus Technology’s (Taiwanese) newest tablet in January 2014. Snapdeal co-founder and CEO Bahl stated that 90% of its product offerings were unique to Snapdeal, concentrating the most on the “unorganized segment in categories like apparel.”47 Snapdeal further differentiated itself by being the first to launch its site in both Hindi and Tamil.48

Amazon was also competing for market share among mobile users. According to Avendus Capital, India had 67 million smartphone users in 2013, a figure that could reach 382 million by 2016.49 As of 2014, Snapdeal claimed that 30% of its business came from smartphone users; eBay claimed 31%.50,51 To cater to this demand, most e-tailers had developed comprehensive mobile apps for their sites, even offering exclusive deals to those who made purchases on their phone. Moving into India’s fiscal year 2015 (April 1-March 31), some of Amazon’s competitors had expressed interest in acquiring a mobile technology enterprise in order to exploit this market opportunity.52

While Amazon waited for its rivals to take the lead on the e-tailing side for many years in India, the firm had entered China a decade earlier in 2004.

The World’s Largest Market: China
In 2002, China had an estimated 27 million online consumers,53 rising to over 80 million in 2004.54 By 2014, the country was expected to reach 650 million online consumers.55 In 2002, China’s e-commerce market was valued at an estimated $1.3 billion, growing to over $16 billion by 2005-2006.56 At the start of 2014, China’s e-commerce market was valued at over $300 billion, expected to reach $540 billion by 2015. Growing at a compound annual rate of nearly 70%, China’s e-commerce market was scheduled to surpass the

U.S. as the largest e-commerce market in the world.57 According to World Bank data, China recorded 621.7 million Internet users in 2013, approximately 46% of China’s 1.4 billion population and more than double the amount of Internet users in the U.S. at 266.2 million.

At an investor conference in 2013, Jack Ma, founder and chairman of Chinese e-commerce giant Alibaba Group, remarked, “In other countries, e-commerce is a way to shop, in China it is a lifestyle.”58 Chinese consumers were known to use social media extensively. According to McKinsey & Co., China’s 300 million users of social media spent more than 40% of their time on the Internet browsing blogs and social networking sites.59 Using popular social media sites such as WeChat and Weibo, Chinese users often accessed and posted product reviews, got buy/don’t buy product advice from “key opinion leaders” and friends, and

6

saw advertisements of featured products from retailers.60

Chinese consumers were also becoming very active shoppers on mobile devices. With the largest volume of mobile e-commerce transactions in the world, China expected purchases via mobile device to reach $41.4 billion by 2015 from only $7.8 billion in 2012. This volume of mobile transactions attested to the Chinese consumer’s craving for fast shopping at any time of the day.61

China, however, did not represent a consistent market from region to region. KPMG International highlighted that customers in “tier-1” cities such as Beijing and Shanghai varied drastically in their shopping preferences and purchasing decisions from other consumers in smaller markets, such as Xi’an and Fuzhou. Sales volume for higher-end goods, such as cars, jewelry, and handbags, was much greater in Shanghai than in smaller coastal and inland cities. This trend was also true for brand loyalty, as consumers in China’s smaller markets favored differed products and tended to stress current fashion styles less than those in larger cities.62

By operating in a communist-led country, Amazon faced limitations on its operations that it had not encountered in its prior international experience. Chinese law regulated and restricted Amazon’s Internet content, as well as its sale of any media-related products or services. In addition, Chinese law demanded that Amazon’s website, www.amazon.cn, be operated by a Chinese-owned corporation in order to comply with local ownership laws.63

Competition in China, 2004-2014
While the Chinese online commerce market had consolidated significantly by 2014, the competitive landscape in the nascent market of 2004 was far more fragmented. All the players started with somewhat different business models that would continue to evolve. Central competitors in the early battle for Chinese market share included EachNet, Alibaba, Joyo.com, and Jingdong.

EachNet

EachNet was founded in Shanghai in 1999 by two Chinese entrepreneurs who had studied in the U.S.: Bo Shao and Haiyin Tan.64 As of 2002, EachNet had 3.5 million registered users and was the leading person- to-person online trading site in the nascent Chinese e-commerce market when eBay announced its intent to acquire a 33% stake of the company for $30 million.65 Under CEO Meg Whitman, eBay completed the transaction in 2003 and brought in a German country manager and a technology executive from the U.S. Neither understood the language or the local market. EBay invested an additional $100 million into the entity which was soon renamed eBay EachNet.66

Alibaba

Founded in 1999 by Chinese entrepreneur Jack Ma, Alibaba.com was launched in Hangzhou as an online forum for Chinese manufacturers to sell their products to domestic and overseas buyers. In 2002, Alibaba made its first profit, only $1. It “badly trailed” EachNet, according to the Wall Street Journal.67 By 2014, Alibaba Group with Jack Ma as chairman operated several web services including two of China’s largest e-commerce sites, Taobao.com and Tmall.com. However, faced by competition from eBay EachNet, little- known Alibaba’s quest for market share in the early 2000s was not easy.

In response to the eBay-Eachnet acquisition, Alibaba launched Taobao.com in 2003 as a way of preventing eBay from taking away its customer base.68 Taobao.com began as a marketplace and auction site that would later serve as a pure marketplace which connected merchants of all sizes to a network of millions of consumers. According to Helen Wang, author of The Chinese Dream, given that Chinese users at the time

7

were unfamiliar with Internet auctions, only 10% of Taobao’s product listings were available for auction, as opposed to 40% for eBay EachNet. Alibaba also offered longer and more flexible listing periods for its auction products. Furthermore, to cater to China’s three hundred million cell phone users (compared with only 90 million Internet users at the time), Taobao offered its buyers and sellers the option of communicating via instant messaging and voice mail.69

The marketing strategies of the two companies also reflected their different knowledge and experience. EBay purchased exclusive rights to Internet ads on major Chinese portals Sina, Sohu, and Netease whereas Ma blitzed the major TV channels with Taobao ads. At the time, many more Chinese were in front of their TVs than on the Internet. Most importantly, Taobao charged no commission fees to its sellers. Signing-up was very easy – even five minutes was enough to register on the site.70 Many of these differences appealed to the Chinese and helped Taobao to quickly overtake eBay Eachnet. In 2013, Taobao recorded 7 million sellers and over 800 million product offerings.71

Tmall, was Alibaba’s next offering. It was a business-to-consumer marketplace designed for bigger merchants and major labels, such as Nike and Gap. Each business selling products on Tmall was required to pay a deposit to set up its business, and was then charged a fee on each transaction. Created in 2008 as part of Taobao.com, Tmall.com officially became its own website in June 2011.72 By the end of 2012, Tmall had attained a 51.5% share of the Chinese business-to-consumer marketplace (see Appendices I1 and I2 for Alibaba’s Tmall and Taobao web pages and for Alibaba Group’s executive leadership).73

In 2013, combined transaction volume for the two sites equaled $240 billion, more than the transactions for Amazon and eBay combined (approximately $100 billion and $75 billion, respectively); (see Appendices J1 and J2 to compare Alibaba with major western Internet companies). According to The Wall Street Journal, Alibaba controlled nearly 80% of all Chinese e-commerce in 2013.74

Alibaba Group filed for an initial public offering in the U.S. on May 6, 2014, with analysts valuing the company at over $150 billion. Alibaba sought to be listed on the New York Stock Exchange (NYSE) with the ticker, BABA. As of the time of the case, Alibaba had since filed various amendments throughout the summer in response to requests for additional information from SEC approval. The expected IPO date had been pushed back to September 2014.

Joyo.com

Founded in 2000, Joyo.com was the largest online retailers of books, music and videos in China as of 2004, according to Amazon.75 Joyo also sold software, toys and gifts, among other products.

Jingdong Mall / JD.com

Other major competition came from Jingdong Mall (JD.com), formerly known as 360buy.com. Reportedly founded in 1998, its marketplace went online in 2004. In 2012, Jingdong Mall had a market share of 22.7%, making it China’s third largest Internet retailer.76 Total merchandise sales reached $16.39 billion in 2013.77,i In March 2014, TenCent Holdings, a leader in online games and mobile messaging (through WeChat) agreed to acquire at 15% stake in JD.com for $215 million, in a move to enter the rapidly growing mobile commerce market.78

Amazon’s China Experience
Amazon first entered China in 2004 by acquiring Joyo.com for $75 million. Amazon’s entry came at

i Gross merchandise volume for retailers is different from net sales. Based on Jingdong’s 2014 20-f filing with the SEC, the firm reported approximately 6.6 billion USD in net sales based on the 6.31 official average annual exchange rate of RMB per USD.

8

a time when China’s GDP was growing at a rate near 10% each year, accompanied by a small but growing Internet user base of 94.6 million people (7.3% of the 1.3 billion person population) and an e-commerce market estimated to be worth $8.6 billion. In 2004, Joyo.com had 5.2 million registered users as well as projected revenues of $15 million.79 Within six months of the acquisition, a little earlier than expected from the time of due diligence, the management team had departed.80

For its first year in China, Amazon operated under Joyo.com’s domain name, mainly offering books, DVDs, and CDs to its customers in China’s largest cities of Beijing, Shanghai, and Guangzhou. Despite the departure of Joyo’s management team, the transition was seamless to the Chinese consumer.81 By 2007, Amazon had increased its product offerings thirty-two fold, offering electronics, baby products, beauty care products, and watches. With $26.1 million in sales in the last quarter of 2006, Joyo.com’s market share had reached 12%.82 In 2007 Amazon changed the domain name from joyo.com to amazon.cn, with Joyo Amazon as its name in Chinese. Amazon was renamed Amazon China in 2011, pronounced in Mandarin as “Yamashi.”83 Amazon finally launched its Kindle e-reader in China in June 2013.

Amazon strived to replicate the acclaimed customer experience it delivered to consumers in developed markets. For instance, Piacentini liked to tell an anecdote about the delivery of a new Harry Potter book in Chinese on its publication date in 2005. Amazon China delivered 5,000 books on schedule. However, when a competitor undercut Amazon’s price by 5 RNB (less than $1), Amazon issued a refund for the difference to the customers, who were not expecting a refund. This gained Amazon much positive publicity, and Piancentini hailed it to be the firm’s best public relations and marketing move in China for the year84.

Amazon had to drastically adjust its logistics operation in China. To start, Amazon used Joyo.com’s three existing fulfillment centers located in Beijing, Shanghai, and Guangzhou. From there, Amazon distributed orders to its other thirty delivery centers across the country.85 Piacentini and his team eventually expanded Amazon’s distribution network by creating fifteen fulfillment centers across China, its largest logistics operation outside the U.S. Differently from its U.S. model at the time, Amazon played a large role in the last leg of the delivery process. Amazon started to handle deliveries in-house by hiring employees to transport the merchandise the “last mile” to the customer. Instead of vans or trucks, however, intra-city deliveries in China were commonly carried out on bicycles or scooters due to China’s tendency for traffic-filled roads.86 When Amazon entered China in 2004, overnight deliveries had only recently been made possible due to new developments in truck, rail, and aerial transport.87

Amazon initially faced payment challenges similar to those it encountered later on in India. In the early 2000s, many Chinese customers were reluctant to pay in advance for their purchases with credit card. As a result, Amazon’s China team adopted Joyo.com’s cash on delivery option. Furthermore, Amazon began to offer free shipping on all purchases through its site. Joyo.com also offered product recommendations to customers based on their past purchase history, something that had proved successful in other Amazon markets.88

Homework is Completed By:

Writer Writer Name Amount Client Comments & Rating
Instant Homework Helper

ONLINE

Instant Homework Helper

$36

She helped me in last minute in a very reasonable price. She is a lifesaver, I got A+ grade in my homework, I will surely hire her again for my next assignments, Thumbs Up!

Order & Get This Solution Within 3 Hours in $25/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 3 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 6 Hours in $20/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 6 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 12 Hours in $15/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 12 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

6 writers have sent their proposals to do this homework:

Homework Guru
Math Guru
George M.
Financial Solutions Provider
Smart Accountants
Academic Mentor
Writer Writer Name Offer Chat
Homework Guru

ONLINE

Homework Guru

I have worked on wide variety of research papers including; Analytical research paper, Argumentative research paper, Interpretative research, experimental research etc.

$49 Chat With Writer
Math Guru

ONLINE

Math Guru

I have written research reports, assignments, thesis, research proposals, and dissertations for different level students and on different subjects.

$37 Chat With Writer
George M.

ONLINE

George M.

As per my knowledge I can assist you in writing a perfect Planning, Marketing Research, Business Pitches, Business Proposals, Business Feasibility Reports and Content within your given deadline and budget.

$29 Chat With Writer
Financial Solutions Provider

ONLINE

Financial Solutions Provider

I will provide you with the well organized and well research papers from different primary and secondary sources will write the content that will support your points.

$23 Chat With Writer
Smart Accountants

ONLINE

Smart Accountants

I will be delighted to work on your project. As an experienced writer, I can provide you top quality, well researched, concise and error-free work within your provided deadline at very reasonable prices.

$43 Chat With Writer
Academic Mentor

ONLINE

Academic Mentor

I am a professional and experienced writer and I have written research reports, proposals, essays, thesis and dissertations on a variety of topics.

$29 Chat With Writer

Let our expert academic writers to help you in achieving a+ grades in your homework, assignment, quiz or exam.

Similar Homework Questions

Jack hartmann hands up for letter sounds - Have to watch all the videos and need two questions for each video (only questions) - Curver infinity kit sam's club - Bob marley & the wailers get up stand up - 55mm ring size uk - Moral lesson of around the world in 80 days - Rexona stunt city full movie - Qnt 351 week 1 statistics in business - Manic miner class tools - Statistics 2 class - Pillow method is designed to - Access module 1 sam textbook project - Asa flight timer manual - 500 wrd essay - Incremental analysis is most useful - Chcccs025 support relationships with carers and families answers - What type of angles are x and y? - Legal, Ethical, and Risk Issues in Organizations - Good us history research paper topics - Excel add ins data analysis plus - Student exploration gravitational force gizmo answer key - Telstra apply for phone - 72 as a product of primes - Farah chatelier - Wk 7 fin - Chapter 22 descent with modification a darwinian view of life - Castle view house east lane runcorn - Leader member exchange theory essay - What is the value of x identify the missing justifications - Human genetics concepts and applications 11th edition test bank - Intercultural effectiveness scale - Care certificate and code of conduct standards include diagram - Loughborough urgent care centre opening times - Ford motor company and the pinto - Prewriting: Finding Key Passages - 11.2.4 configure a ppp wan link - Kevin cheng tv shows - What deception is vincent trying to maintain - Hush puppies creative brief - What is the diameter of the sun - Discussion post - What are stars made of - Mauchly's test of sphericity spss - Importance of classroom management ppt - Paulina tylka cause of death - Acara's list of challenging words - Globalization at the crossroads transcript - Comparing the articles of confederation and the constitution worksheet answers - 6sl3210 1ke21 3af1 datasheet - Hall coefficient for germanium - Olley vs marlborough court ltd - Bi-7 - Ic 7402 truth table - Counselling foundation st albans - Physician associate osce blueprint - Perfume network of san ysidro california cosmetics & original cologne - Vital signs critical thinking questions - Requirement review in software engineering - Twenty one pilots self titled dropbox - Standard deviation range rule of thumb - Reasons for creating artifacts - World Literature - Who gave harry potter the invisibility cloak - Threat Modeling - Seidel's guide to physical examination 9th edition - Industry open systems approach to social responsibility - The danger of a single story worksheet answers - Scholastic ellis island worksheet - New coke case study - The boyfriend's death urban legend - Dbt skills training manual - Computech corporation is expanding rapidly - Proposed partnership with old spice - Implementation plan resource allocation - Law test - Umea university sweden world ranking - 007d8 - "Assignment 2.2: Liberty Challenged in Nineteenth Century America Final Paper" - Drapers ward textile mill password - Gift shop profit margin - Psychological egoism in a corporation - Friday - What is it about 20 somethings essay - Optimal olefins m sdn bhd - East taphouse village hall - Polit and beck 2008 reference - Dragon's dogma ambrosial meat - Business - Weight loss challenge poster - What does the latin root terr mean - Alwaysrain irrigation inc would like to determine - Dd form 1351 1 - History of education in the philippines - Lip abscess icd 10 - Deliverable 2 - Change Management Models - My thought whose murder - Watermark market neutral trust - Case Brief - Jarden zinc greeneville tn - Stock Investment Analysis