AmazonNow Suggestions
1 like216 views
The document provides an analysis of Amazon's grocery delivery business, Amazon Now, in India. It discusses the opportunities in the Indian online grocery market, advantages of online grocery shopping, and challenges faced by Amazon Now in India. The document analyzes Amazon Now's initial efforts, reviews of its service from customers, key areas for strategic improvement, and proposes an action plan to address issues around partners, service, and people to enhance customer experience and achieve expected results by 2020. It also considers alternative scenarios and contingency plans.
AmazonNow Suggestions
- 1. AMAZON'S KIRANANOW:THE INDIAN ONLINE GROCERY MARKET Peder Viland Aanonsen / Melody Ucros / Leopold W. Hofmann / Lixuan Guan July 13th, 2017
- 2. Objectives • Decide on a business model • Grow and retain customer base • Consistently deliver quality service • Optimize cost-structure Advantages • Speed and convenience • More variety of products • Additional payment methods • Flexible return policy • Better deals • 6th largest grocery market • Mobile internet users will double by 2020 • By 2021, 40% of retail will be online and grocery segment represents 2% • FDI not allowed on inventory-based model India • Low tech adoption (consumers & retailers) • Unorganized market, small kirana stores • Minimal margins, profit based on volume • Consumer habit is to check product quality and negotiate prices at local kirana • No repeat orders or referrals Challenges Understanding The Case
- 3. The Result of Initial Efforts Frequency 1 Supplier post deceptive prices 12 2 Customer service not helpful 8 3 Items out of stock 8 4 Lacking variety of products 7 5 Order cancelled 7 6 Sourcing stores unpopular 6 7 Delivery unprofessional 6 8 Technical issues when using the app 4 9 Wrong products were delivered 4 10 Several ordered items missing 3 11 App deletes basket when changing address 2 12 Poor quality products 2 13 Customer service not available in local language 1 Themes Based on the 42 “most helpful” app reviews from June and July 2017
- 4. Review 4Review 3 Review 1 Review 2 Sample of Existing Reviews “Pathetic people.. once you order, they call you up and say the discounted products are not available.” “Many out of stock items are shown in Stock. In almost every order I placed, one item or other is out of stock.” “It's better to actually buy directly from the stores in market where you have variety in items.” ”The call center behaves as they don’t understand what is being communicated , so this is my last order with Amazon now."
- 5. India Market Size 79Mobile traffic Purchase Groceries34% Average annual income 7260 USD Internet Penetration34.8% Total Population 1326 million 364.98 Million Smartphone users 2468.4 USD Grocery expense per year per men Online Grocery 27% 35% Mobile PC Higher online shopping on PC 2.6x/month $25/ order Analysis of Opportunity
- 6. Bargaining Power of Suppliers Threat of New Entrants Industry Rivalry Average 2.38 • Power of suppliers fairly low • Significance of Sales Volume Average: 3 • Highly regulated FDI • High capital investment to compete • Incumbents not profitable Average: 3.9 • Similar players • Low cost of switching • Undifferentiated products Analysis of Industry
- 7. Threat of Substitutes Bargaining Power of Buyers Conclusion on Industry Average: 4 • Offline the biggest substitute • Cheaper alternative than online Average: 4.3 • Price sensitive buyers • Low switching costs amongst services Analysis of Industry Customers have high bargaining power and many substitutes. Focus strategy on retention.
- 8. Areas of Strategic Improvement Partners Service People
- 9. Action Plan: Partners Partners Guaranteed Stock Standardized Prices Easier Tech Adoption Integrated Inventory System Action 1: Centralize the Sourcing System, through a partnership with 4 Big Supermarket chains, 30 stores in Bengaluru
- 10. Action Plan: Partners Partners Trained Team of Order Pickers Standard Expiration Dates Standard Product Quality Feedback System Action 2: Implement Quality Control Measures to enforce a consistent level of service and products
- 11. Action Plan: Service Service Action 3: Add a web version of Amazon Now in order to expand customer base
- 12. Action 4: Adjust Customer Service Hours for New Target, and add Cash Option Action Plan: Service Service Action 5: Standardize the process and customer journey 2:00pm – 11:00pm Always smile, salute, deliver, collect, and ask for feedback.
- 13. Action 6 : Train and Incentivize the Order Pickers at the Supermarkets Action Plan: People People Action 7 : Onboarding the delivery staff to fulfill standard service expectations Action 8 : Win and retain more customers Reward Based on Performance Reward Based on Customer Feedback Exclusive Promotions and Coupons
- 14. Frequency 1 Supplier post deceptive prices 12 2 Customer service not helpful 8 3 Items out of stock 8 4 Lacking variety of products 7 5 Order cancelled 7 6 Sourcing stores unpopular 6 7 Delivery unprofessional 6 8 Technical issues when using the app 4 9 Wrong products were delivered 4 10 Several ordered items missing 3 11 App deletes basket when changing address 2 12 Poor quality products 2 13 Customer service not available in local language 1 Themes Enhancing the Customer Experience
- 15. Customer ReviewsPerformance Indicators Problems Solved Market Share 2020: Expected Results 4.8Billion 1.4Billion • App Store Rating (4.5+) • Orders Per Day (15k+/region) • Orders Returned (less than 5%) • Customer Retention (70%) • Employee Turnover (1+ years) • Inventory: Exclusive Partnerships • Quality: Team of Order Pickers • Inconsistency: Training Program • Accessibility: Web Version • Control: Feedback System • Tech Adoption: Business Professionals
- 16. What Ifs An Alternative Scenario Contingency Plan Positives • FDI regulations change, and allow for inventory-based model • Competitors never profitable & lack capital Negative • Delivery delays due to limited partners • Coupons fail to compensate for negotiating habit of consumers • Online Grocery Segment fails to reach significant traction from population • Customer loyalty toward local competitors • Finding capable and reliable workforce Consider a merger with a local company • Future CashCow Market • Circumvent the government regulations Established Customer Base • Service expanded to other cities Change Business Model to Inventory-Based • More Profitable • Area of Expertise Retract from Market • Market shows no growth potential • Government strengthen regulations
- 17. BACK-UP SLIDES
- 19. Number of employees 130 Of employees working at a time 70% Number of employees working any time 91 Number of Hours Worked per month 30*9*91=24 570 Targeted orders 15,000 Average order per hour 15,000/24570 = 0,6105 Can we deliver within 2-3 hours? Drive on google maps: 20 minutes
- 20. Suppliers Distribution Centres (DCs) Scheduling and Routing Delivery Amazon Fresh Hub-and-spoke inventory- based model enables tight control over quality along with hyperlocal delivery, to avoid costly investments in delivery. DCs have refrigeration and freezer capabilities for storing items Refrigerated delivery trucks; routes are designed to minimize total distance travelled and maximize fullness of the truck. Grocery crates, reusable totes, insulated coolers, frozen bottles, and dry ice. Amazon Now Zero-inventory model, but centralize few supermarkets to avoid the costs of an inventory-based system, but still remain in control over quality. No DCs are required, products are not stores, quality and freshness of product is maintained by the quality-control employee at each supermarket Based on customer's preferred time slots Riders hired by Amazon on a contractual basis, are taught by Amazon to ensure customer satisfaction Kirana Now Hyperlocal delivery model- deliveries are sourced the local retailers; zero-inventory model. No DCs are required because products are not stored, as in the case of the inventory-based model; quality and freshness of product is maintained by the local kirana stores. Based on customer's preferred time slots. Local delivery persons or kirana stores; local employees deliver the product to the customer’s doorstep. What’s the Difference?