Amazon Business Plan

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Q1.  What specific target consumer group should Amazon focus on while making its 3-year strategy?

Indian Middle class on the Rise-

A detailed research on the Indian consumer market shows a rising trend of India’s middle classs population. According to the research, the middle class segment will grow to more than 40% of the total Indian population and create the world’s fifth-largest consumer business. The private spending is expected to increase to 70 trillion rupees by 2025. [Exhibit 1]. Therefore, we suggest Amazon to focus on the middle class segment for future growth.[pic 4]

Keeping current market share (Exhibit 2), and Amazon’s objective in mind, our suggestion is to build a strategy that will help them grow inorganically and create a significant competitive advantage. So, our recommendation is as follows-

1. Introduce key service offerings integrated with productofferings, enablingga seamless experiencee for Indian consumers - The key idea behind this strategy is to create a significant POD from thecompetitionr and makea significant impacttono the Indian lives. B2C services is currently not touched by any competitor, so Amazon can have a first mover advantage in this space. Services and products complement each other. The product sales will feed the service sales and vice versa.[pic 5]

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1. Launch Amazon Family Central – Win customer loyalty and create competitive advantage by tapping into Indian family oriented value system -According to the latest Lok survey, when Middle class respondents were asked “ What do they value most in their life”, the answer that came up maximum is “Family”, Thus, transitioning Amazon from Individualistic outlook to family outlook will not only add brand loyalty, but also it will help Amazon gather huge knowledge about Indian consumers, their buying patterns. This knowledge when used analytically will surely boost Amazon’s sales.

Q2.  What categories/selection should he focus on for the selected TG and why? What should the selection acquisition strategy be for Karan?

The recommended target group is the Indian middle class comprising of adult male, female and children. Amazon’s offering should be satisfying the needs of this target group. The reason for the selection of the categories is that these categories involve substantial services, which are not offered by the e-commerce players today.  The categories to be focused upon are:

1. Clothing and accessories

India’s apparel and accessories market is expected to grow by a CAGR of 13% and reach $124Bn by 2020 (Exhibit 3). Online apparel and accessories market in 2014 was worth INR 3354 crore ($559 million) and the figure is expected to reach INR 16,800 crore ($2.8 billion) by 2016 (Exhibit 4).

Consumer Need:

Clothing (especially ethnic wears, trousers, overcoats) generally requires alterations for proper fitting. The consumer either doesn’t buy the product online because of the hassle of getting it altered or has to go to a neighborhood tailor. This is in contrast to purchasing these products in a mall where alterations are provided in house.