Amazon: Betting Big on a Trillion Dollar Indian Market
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Case Code: BSTR490 Case Length: 12 Pages Period: 2013-2016 Pub Date: 2016 Teaching Note: Available |
Price: Rs.400 Organization: Amazon Industry: Indian Online Retail Market Countries: India Themes: Overseas Mergers & Acquisitions |
Abstract Case Intro 1 Case Intro 2 Excerpts
Background
Jeff Bezos (Bezos) established Amazon in Seattle, Washington, in 1995 with the mission of making a company "that could sell everything possible online". Amazon started off by selling books as books had a global market, long shelf life and were easy to deliver. In 1995, Amazon was known as the "earth's biggest bookstore".
By 1998, Amazon’s sales were $610 million and the company had more than 13 million worldwide customers. By the end of 1998, it diversified its merchandise to computer related products, furniture, clothes, toys, jewellery, and food.
Amazon focused on investments in new and existing markets; it was clear that it did not expect to make profits for the first four to five years of entering the market. The cash flows were reinvested in new lines of business, as Bezos said: “That has always been the plan for Amazon. Invest profits in new lines of business. Amazon's investors know that was the deal and they're okay with it. Every business now must be built to transform, to last in today’s marketplace".
Partnerships were core to the Amazon growth strategy. In 2013, it partnered with the US Postal Service to deliver its orders on Sundays. By 2015, Amazon was manufacturing the Kindle and other consumer electronics goods under the name 'Fire'. These included the Fire Tablet, Fire TV, and the Fire Phone. Also, products like USB cables were manufactured under its in-house brand AmazonBasics. By 2015, Amazon was known to be the largest provider of cloud infrastructure services in the world, providing online retail services to a host of companies including Borders bookstores and Target. Amazon became the world’s largest online retailer with operations in 60 countries 4 and customers from more than 220 countries...
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