Amazon initially considered international expansion due to massive growth potential from new markets and saturation in the domestic US market. The UK was chosen as the first foreign market due to low cultural, administrative, and economic differences from the US along with opportunities to acquire established online booksellers. In Japan, Amazon partnered with local retailers to navigate regulations while investing in popular product categories. Amazon failed in China due to intense local competition that was better equipped to address market challenges along with cultural and regulatory barriers. Across markets, Amazon typically started with online books and acquired local sellers, later expanding product lines while leveraging services like Kindle and AWS.
Amazon initially considered international expansion due to massive growth potential from new markets and saturation in the domestic US market. The UK was chosen as the first foreign market due to low cultural, administrative, and economic differences from the US along with opportunities to acquire established online booksellers. In Japan, Amazon partnered with local retailers to navigate regulations while investing in popular product categories. Amazon failed in China due to intense local competition that was better equipped to address market challenges along with cultural and regulatory barriers. Across markets, Amazon typically started with online books and acquired local sellers, later expanding product lines while leveraging services like Kindle and AWS.
Amazon initially considered international expansion due to massive growth potential from new markets and saturation in the domestic US market. The UK was chosen as the first foreign market due to low cultural, administrative, and economic differences from the US along with opportunities to acquire established online booksellers. In Japan, Amazon partnered with local retailers to navigate regulations while investing in popular product categories. Amazon failed in China due to intense local competition that was better equipped to address market challenges along with cultural and regulatory barriers. Across markets, Amazon typically started with online books and acquired local sellers, later expanding product lines while leveraging services like Kindle and AWS.
Amazon initially considered international expansion due to massive growth potential from new markets and saturation in the domestic US market. The UK was chosen as the first foreign market due to low cultural, administrative, and economic differences from the US along with opportunities to acquire established online booksellers. In Japan, Amazon partnered with local retailers to navigate regulations while investing in popular product categories. Amazon failed in China due to intense local competition that was better equipped to address market challenges along with cultural and regulatory barriers. Across markets, Amazon typically started with online books and acquired local sellers, later expanding product lines while leveraging services like Kindle and AWS.
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1) Why did Amazon initially consider international expansion?
Is international expansion a key success factor in Amazon's industry?
a) Massive growth potential (Pull)
b) Saturation in the domestic market (Push) c) Amazon was initially into the online book business which was easily replicable in multiple markets. Further, being a discount store, Amazon had to expand its business and revenue to gain more profits. d) Even other businesses of amazon like online retail, marketplace and AWS were easily replicable as they were all based on the internet which was rapidly expanding around the world. e) New competition is coming up and e-retailing is growing. f) Growth in the no. of internet users. g) Currently, around 26% of Amazon’s revenue comes from international markets. It is rapidly growing or has firmly established itself as the industry leader in many of these markets that it has expanded into and only failed in 2 countries namely, China and Brazil.
2) Why did Amazon choose the United Kingdom as its first foreign entry location and not other countries such as Canada and Australia? What strategies did Amazon use in the United Kingdom? Did these strategies make sense?
a) C - Low (language, books and reading habits)
A - Low (Same institutes, colonial history) G - Moderate E - Low (same consumer incomes, buying patterns and GDP per capita) Low-risk proposition b) UK was similar to the US, Amazon’s home country in multiple ways. English was spoken in both countries, both had a big enough market in place that was ripe for disruption and even the competitive landscape with eBay and other local retailers was similar to that of the US. c) Canada and Australia aren’t big enough markets compared to the UK due to their sparse population. d) Also, the UK already had an established online book retailer in the form of Bookpages.co.uk which provided an excellent opportunity for inorganic growth in a new market, which wasn’t the case with other markets. (Bridge-in institutional gaps). These can turn into competitive advantages/barriers to entry e) Amazon leveraged this acquisition and expanded its product portfolio to stay on top of the UK market. f) Lastly, the success of this strategy of entering a new market through online book stores was used multiple times by Amazon as they expanded into new markets. 3) Why did the company choose to enter Japan after the United Kingdom and Germany? What strategies did Amazon use in Japan? Did these strategies make sense?
a) Japan was already a large export market for Amazon and this gave them enough presence even before starting operations there. b) Japan was a high-income country, had a population that was adept at using the internet, a very big book industry which was the core business of Amazon then and the people had a liking for Western products. c) Contrary to all their other expansions, in Japan Amazon took the route of alliances where they teamed up with other retailers to establish a presence and improve their product catalogue. These alliances helped Amazon navigate the tricky legislative space in Japan as they had experienced players helping them in their expansion. d) Another was their investment in fashion, sports and apparel.
4) Why did Amazon fail in China?
a) Intense local competition and better equipped to deal with institutional voids b) No acquisition possibility since it was an underdeveloped market c) And no partner found maybe since competitors were unwilling to work together d) Culture and language are different in china. The vast majority of customers are unwilling to pay for e-books. e) Many Chinese customers did not use credit cards and paid in cash when their orders were delivered. f) Books were a luxury that a growing country like China couldn’t afford around 2004. g) Due to regulatory barriers and complications in launching its cloud service, Amazon did not launch the Kindle Fire until June 2013, which was necessary for customers to save and access the books they bought. h) JD built its own logistics network and employed a business-to-consumer strategy to complete purchases. JD's logistics operation allowed them to ship more than 90% of orders in one day or less and connect with 99% of China's population. Amazon won't be able to transport items as quickly as Tmall or JD, so there is no reason for customers to choose them. i) Additionally, Amazon had not been as aggressive in its marketing efforts as some of its competitors, such as Alibaba and JD, which had attracted customers through shopping festivals, discount campaigns, and nationwide red envelope promotions.
5) Was there any pattern across Amazon's international entries?
a) During their first round of global expansion, Amazon started out as an online book retailer in almost all the markets and then expanded its product portfolio. b) They acquired established online booksellers in these markets and used their data and other competencies to gain leverage during market entry. c) In the second round of global expansion, Amazon leveraged their e-book store, kindle and subscription service to enter new markets. In most countries, it started out as an e- book retailer offering significant savings over paper books or providing cheap video streaming to gain a foothold and then expand its product portfolio. d) Their electronic portfolio of Kindle, Alexa, and streaming services through Twitch and Prime gave them enough business initially and provided support during market entry. e) In some markets, along with the marketplaces and online retail business, they also used their AWS services to provide something that wasn’t previously available to the consumers in those markets.
