Amazon launched its Web site in India in 2013, but faced some significant problems. Notably, roughly 67% of the country’s billion-person population lives in remote rural areas with little infrastructure services. In India, only 35% of the population has Internet access and the country is still a cash-based economy, making it hard for e-commerce companies to gain traction. India also has a strong foreign direct investment policy that restricts foreign retailers from selling directly to consumers online.
To get its business rolling, Amazon needed to get local sellers to sell their products online. Again, a difficult task when so few people and companies in India are online. To gain suppliers and merchants, the company took a unique marketing approach and developed “Amazon Chai Cart” – a fleet of three-wheeled vehicles that served as mobile tea carts. Using this approach, the carts traveled more than 9,400 miles of streets in 31 cities. They served 37,200 cups of tea and signed up 10,000 new sellers of merchandise.
But it still needed to do more in order to make shipping easy and efficient. To do that, Amazon opened more than 20 warehouses and partnered with local companies for delivery. These, plus other initiatives, have helped Amazon India to become the country’s largest online store, carrying 80 million products from 120,000 merchants.
It might not be fast, easy, or cheap to open operations in another country. First, you have to listen and learn. Then, you can act.
Group Activities and Discussion Questions:
- Discuss the methods for companies to open operations in another country.
- Discuss with students how companies such as Amazon could open operations in foreign countries. What are some of the difficulties these companies face?
- Show Amazon’s site that is focused on gaining sellers in India: https://services.amazon.in/services/sell-on-amazon/benefits.html/ref=az_footer_soa?ld=AWRGINSOAfooter
- Show Amazon’s chai tea cart: https://services.amazon.in/services/sell-on-amazon/benefits.html/ref=az_footer_soa?ld=AWRGINSOAfooter
- Also show videos: Buying (ad) –
https://youtu.be/cJdTop6VZao and Make in India –
- Finally, discuss how these lessons could be applied to opening other foreign markets.