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The fundamentals of business always trump any so-called “strategy”. This article is a call to “focus back on fundamentals”. Entering Asia or any new market is challenging and while one can opt for an organic or inorganic GTM strategy, one thing that remains true is that the best value offered at the cheapest price will always win, and the way to measure that
One example that always comes to my mind is Amazon’s journey in India.
Amazon’s success is not a one-off phenomenon; it happened in every country it entered. Despite established players, Amazon captured a big chunk of the market. On the surface, it might seem like a global giant with deep pockets poured money and challenged the competition, but that’s not the whole story of how the company co-exists in India, a Flipkart-dominated turf.
In 2016, when Amazon started rolling out the prime subscription to Indian customers, StandUp comedy shows were getting popular (each show was priced between INR 399–899). Amazon heavily invested in producing standup specials of in-demand comedians and priced the prime subscription at INR 499 (now INR 999) for the entire year — justifying the immediate return on their investment.
Prime is Amazon’s gateway drug. Once you are a Prime member, you are in the Amazon ecosystem. People buy the Prime subscription because it provides — Videos, Music, and fast & preference delivery. The platforms include a massive content repository in Hindi and other Indian languages. Amazon also keeps on adding popular releases (movies and TV shows) tactfully near Sale festivals to get people hooked on Prime.
Decoding the Prime Status
The crux of Amazon Prime membership is not the OTT platforms, it is the behavioral change that it brings in consumer spending. The audience may have bought the subscription to watch their favorite shows, but the inherent tendency becomes to buy from Amazon because it offers you added benefits. With the addition of Alexa and Firestick to the portfolio, Amazon has bound the customer to the prime membership.
Till 2014, Flipkart, a company that played a pivotal role in establishing trust and credibility in the e-commerce segment, did not face any strong competition and had about 40% of the market share. Amazon stood at 12% (3 times less than Flipkart).
In 2016, after the launch of Prime membership, Amazon’s revenue started reaching new heights, and by 2018 it had captured 31.2% of the market share.
Amazon didn’t stop at the Prime Subscription. Over the years, it has launched more campaigns to boost its seller and customer base.
Amazon always took care of 3 core expectations of a conscious Indian consumer: Large Selection, Low Price & more benefits, Super Fast Delivery.
From root level manufacturers (craftsmen) to women entrepreneurs — Amazon reached out to every possible domain of sellers to give its e-commerce platform more of a ‘home-brand’ image.
Amazon has done phenomenally well over the years but even with all its strategies, the e-commerce platform is still second to ‘Flipkart’.
Flipkart is a home-grown brand. It was the first to implement Cash on Delivery for skeptical and conscious Indian consumers to make them trust online shopping. Both the e-commerce giants also flourished because of lowered data rates and the mobile-first consumers.
The Three Prime Reasons why Flipkart still dominates the Indian landscape -
Amazon has grown organically and its biggest competitor in the region, Flipkart, has grown inorganically through acquisitions. The Indian audience might still prefer Flipkart, but Amazon is now the world’s biggest logistics business. Replicating its supply chain network is only a part of the challenge, building a suite of technology and services that Amazon offers is another difficult and expensive venture.
Besides, Amazon is not just an e-commerce player anymore. With its organic growth and multiple verticals, it has a complete network of services surrounding the brand. The company is not just competing with Flipkart, it is also competing with audio and video streaming services, web services, and grocery chains.
So, the ‘one’ right strategy is — ‘Customer-Centricity’. No matter the approach, every company’s primary strategy needs to be — to reach as close to the customer as possible.
However painstaking the process may seem, the results and prospects of growth in the Asian landscape make it worth the struggle! Here are a few pointers to compete in the local arena:
Asia Next is a vlog and blog series about challenges & opportunities faced by global companies, and the Go-To-Market(GTM) strategies Rocket Capital has curated to make your navigation through the landscape easier. With a massive investor network and strong connections in the industry, we help Founders fulfill their Asian Ambitions.
Rocket Capital is a VC fund focusing on New Media Technology start-ups globally. We invest in pre-Series A, Series A & B companies and help founders scale in Asia.