Distribution Strategy of

By Group 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

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

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

Industry Eco-System

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

Channel Analysis 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

Market Structure of Amazon

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

Strategic Partners

• 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

• 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

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

• Future Group: Sells retail group's offerings online40 brands are exclusively retailed online through

Amazon

• SBI: Recently signed an MoUTo develop better commerce solutions and smooth &

trusted ` payments for small businesses and end customers

Other Strategic Partners

• 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

• 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

Incentive Plan andChannel Distribution

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.

Distribution Channel-Digital

Distribution Channel-Digital

• 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

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

Physical Channel

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.

WHOLESALER

CUSTOMER

INFORMATION

INFORMATION PRODUCT

PRODUCT

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

Direct Purchases

WHOLESALER

CUSTOMER

INFORMATION

INFORMATIONPRODUCT

PRODUCT

PUBLISHER/

SUPPLIER

INFORMATION

Gets paid before paying the distributor

WHOLESALER

CUSTOMER

INFORMATION

INFORMATIONPRODUCT

PRODUCT

PUBLISHER/

SUPPLIER

INFORMATION

Distributer/manufacturer

CUSTOMER

INFORMATION

INFORMATION

PRODUCT

Drop-shipping channel

SELLERS CENTAL

WHOLESALER

CUSTOMER

INFORMATION

INFORMATIONPRODUCT

PRODUCT

PUBLISHER/

SUPPLIER

INFORMATION

Other Sellers

INFORMATION

• 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

Promotions and Visual Merchandising

• 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 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

ATL Promotions - The Great Indian Summer Sale

Cat fight between Flipkart vs Snapdeal vs Amazon

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

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!

• 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

Evaluation and Conclusion

• 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

• 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