Failure of Amazon in China, an analysis
• E-commerce market in China
• Online consumer product retailers in China
• Performance of Amazon in China
Amazon is a global e-commerce player selling a wide variety of products online. The firm is a market leader in the United States, the United Kingdom, Germany and Japan. It is a dominant player in the West, but has struggled in the Chinese market since the time of its footing in the country. China’s B2C e-commerce market size is almost identical to that of the US.
The market share of the prominent online departmental stores in China can be seen through the below chart.
Amazon occupies a mere 0.8% of this market. It is a stark contrast in relation to a very high market share that the company occupy
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Additionally, Alibaba, which until recently solely operated in China has much higher active customers than Amazon which operates worldwide. The number of active customers for Jingdong, which also operate only in China is almost 50% of the total global active customers for Amazon. This means that the success of Amazon was as a result of more repeat purchases by its active customers rather than deep penetration through the addition of new customers. The number of active customers for Jingdong (2014) doubled in a year (2015). However, global active customers for Amazon increased by mere 11% (2014-15), this was despite the entity entering new international markets. These figures highlight the increase in the reach of Jingdong and Alibaba to newer customers in the Chinese market. These numbers also strengthen the argument that regional companies understand the consumer behaviour better than international …show more content…
It acts as a middleman between the buyers and the sellers and does not operate fulfilment centres. The EBITDA of these Chinese firms correlate negatively with the number of fulfilment centres operated by these entities as seen in the below chart. Jingdong has faster moving inventory than E-commerce China Dangdang. However, the high number of its fulfilment centres result in high fulfilment expenses and therefore, its EBITDA is much lower than that of E-commerce China Dangdang. Alibaba saves considerable storage costs and fulfilment expenses due to the zero-inventory model. These savings are passed to the sellers to help them innovate, grow and sustain. However, Amazon China has made investments year after year to build the necessary infrastructure since its entry into the
The Alibaba group has thrived in the Chinese e-commerce sector from its inception in 1998. They currently account for over 70% of online shopping in China and delivered annual revenues of $636 million in the 12month period ending June 2009 (case p1-2). Alibaba’s successes are due to multiple factors that have allowed them to create corporate advantage, and thus establish market leadership in China (Case p1). The configuration and coordination of Alibaba’s
With the advent of the information technology, specifically the internet, it is said that more and more companies are existing in the online world. The changes in the business market also allows customers to change and become more dependent on online stores and online shopping than go and find something in shopping malls or retail store. One of the existing and considered as the largest and competitive online shopping in the world is Amazon. In this report, the goal is to analyse Amazon based on the case study provided. The analysis includes the discussion of Amazon’s s strategic intent, main resources and capabilities. In addition, this will also include analysis of the resources and capabilities that give
Amazon’s core competencies are in its ability to effectively use and develop technology to drive site traffic and enhance the customer experience. Their distinctive use of website real estate coupled with their ability to leverage their brand and effectively use that leverage to deliver low prices and high quality products, makes them a leader in online retailing. Their partner brands and their ability to adapt and recognize deficiencies enable them to effectively cut out the middle man, or at the very least, partner with them.
Amazon, a United States-based international company, is the world’s largest e-commerce business. The organizational leaders want to expand into China but doing so requires them to evaluate their organization structure to determine if it aligns with the consultants’ recommended strategy for expansion and innovation. This paper begins with an evaluation of Amazon’s existing organizational structure, design, and challenges associated with the existing design. There is a review of the recommended changes to the organization’s strategies, followed by recommendations to changes of the organizational structure and how the recommended changes might help the organization in a changing environment.
Founded just before the turn of the millennium in Hangzhou, China, Alibaba Group has to date become the largest online retail website worldwide in the planet, its total transactions surpassing the sum of both Amazon and eBay’s (Erickson, 2013). The report explains its business and operation model and market strategy, before moving to explore the reasons for Alibaba Group’s success such as its established market share in the large market of Mainland China and its efforts to promote the perception of the reliability and security of e-commerce. Comprising of its future plans in logistics improvement, expansion into developing nations, integration with social networks, venture into mobile
Amazon is a relatively small player in the bookstore industry, and its main competitors are Barnes & Noble and Borders. Despite the difference in scale, the company shows great promise, because its business model overcomes many of the competitors’ drawbacks.
Amazon is the largest internet-based retailer in the world. This American electronic commerce and cloud computing company. Amazon stock logged a massive gain of 118%, last year in the stock market. Amazon was able to post more than $100 billion in sales last year. The fact is that the company has major competitive
The company has many strengths. First, Amazon is the world’s leading online retailer. According to the 2016 Annual Report, Amazon had total net sales of US $135, 987 million in 2016. These total net sales include three segments which are North America, International, and AWS. Second, in comparison to many companies, Amazon has a superior logistics and distribution system, which allows the company to actualize improved customer fulfillment. Third, with its prolonged strategic drive on low-cost, differentiation, and focus, Amazon offers a wide range of product at low prices to customers. Fourth, Amazon enjoys global recognition from its customers. As stated earlier, Amazon built a strong brand in very little time. Finally, the
As of January 2010, Amazon.com has three times the Internet sales revenue of the runner up, Staples. By offering a large amount of varied categories through its website and other international ones (Amazon.co.uk, Amazon.co.fr, and so on), it has managed to grow to a customer based company with over 30 million people. In addition, the online retail format enables the company to reduce costs of managing inventory (Amazon.com; online bookstore, 2008).
Globalization is a growing part of everyday businesses. This is the process of interaction and integration among people, companies, and governments of different nations. With the world of online retail, the buying and selling to one person to another has grown drastically. There has also been a substantial change in technology and what we as people can do in today’s time rather than in the past. Amazon is a huge retail giant and buying and selling items is one of their key functions. The impact made on Amazon is nothing but an advantage. Amazon currently is the 56th largest company in America by market capitalization. Being one the largest retailer around, 15th in the nation at that, Amazon has made a name for themselves. Amazon has made some very substantial growths and with these opportunities they face they can make even more advances in the future. (Globalization 101, 2016)
Amazon.com, Inc. (Amazon.com), incorporated on May 28, 1996, is an American electronic commerce company with headquarters in Seattle, Washington and is the largest Internet-based retailer in the United States (Ungar, 2014). Amazon.com started as an online bookstore, but soon diversified, selling DVDs, Blu-rays, CDs, video downloads/ streaming, MP3 downloads/streaming, software, video games, electronics, apparel, furniture, food, toys and jewelry (Ungar, 2014). The company also produces consumer electronics—notably, Amazon Kindle e-book readers, Fire tablets, Fire TV and Fire Phone — and is a major provider of cloud computing services (Ungar, 2014).
Amazon.com is a Fortune 500 company that has revolutionized the retail industry. In recent years, Amazon has faced increased competition in the highly competitive online retail space as competitors invested heavily in their online storefronts and infrastructure. Positioned in a highly fragmented industry, Amazon must find solutions that can sustain its long term profitability and maintain its market share. To that end, Amazon should grow the Amazon Prime membership base and expand on its media and mobile offerings.
Alibaba’s sites have currently reached over 65 millions of registered users, hosted over millions of merchants and businesses globally. In 2005, its revenue had reached over approximately US$100 millions. Although China’s gross domestic product
Its dominance in the Chinese online retailing market was achieved through Taobao(C2C), China’s version of eBay, and Tmall(B2C), another popular shopping destination where major international brands like Nike and Samsung have online Stores.
Alibaba is the largest leading e-commerce companies of B2B online retailer in China and it is giving a trading platform that associates worldwide purchasers to huge number of small medium enterprises to conduct business in their network. The market operate by Alibaba