Amazon in Emerging Markets

1. Did Amazon succeed in China? What did it learn?

No!

* What works in America may not work in China – failure to localize business strategies and models enough to account for local conditions.

* Ignore advice from local country heads at your peril - senior executives sitting in foreign headquarters often ignore what local country heads, who are more attuned to local conditions, have to say.

* Do not underestimate domestic competition – many foreign firms think Chinese firms lack marketing and strategic ability. Nowadays, more Chinese firms are winning not by competing just on price but also on product quality, innovation and branding.

* Buying market share, Amazon’s typical international expansion strategy, may not be appropriate for all regions. Amazon’s attempts to follow this strategy was repeatedly blocked due to government protectionism

* Failure to understand cultural differences – Amazon’s Joyo was dogged by piracy issues from the start

* Price sensitivity of local customers – Amazon earned a reputation for being more expensive than local options like Alibaba.

2. Did Amazon make sensible choices in its emerging market strategies? Consider location, entry mode and timing.

* Choice of country was sensible focusing on BRIC countries, who have the largest B2C ecommerce sales growth profiles

* Additionally, the BRIC countries are amongst those that have the highest growth rates of internet usage and mobile subscriptions

* There was a marked contrast between Amazon’s expansion efforts in China compared to their expansion strategy in India 8 years later. The initial Investment in China was relatively small whereas they decided to invest heavily in India from

* While International sales (i.e. ex USA and Canada) amounted to 40.2% of total sales, total international sales excluding German, Japan and the UK amounted to a rather paltry 6% (i.e. sales in emerging markets amounted to less than 6% of total revenues)...