Professional Documents
Culture Documents
Managing International Trade (M018Cl) Business Proposal For Amazon Device First Entry To Thailand
Managing International Trade (M018Cl) Business Proposal For Amazon Device First Entry To Thailand
Managing International Trade (M018Cl) Business Proposal For Amazon Device First Entry To Thailand
Date of Submission:08/09/2021
We, the undersigned being all he Directors and Shareholders of Amazon.com, Inc, organized and
existing under the laws of Washington, and having its principal place of business at 440 Terry
Avenue North Seattle, Washington 98109(the “corporation”), hereby certify that the following is
a true copy of a resolution duly adopted at a meeting of the Directors and Shareholders of the
Corporation duly held and convened on September 08/2021,at which a quorum of the Board of
Directors was present and voting throughout, approved the following resolution unanimously.
Therefore, it is resolved:
• Amazon agree to collaborate with KingsMan Advisory to start up the business in Thailand
and the terms of engagement shall be contained in the consulting agreement.
• Amazon establish a new fulfillment center in Bangkok, Thailand on Leave and License
Agreement basis and to to complete all the formalities for setting up the branch office
including the authority to sign and execute all the document(s) or instrument(s) and to do
all such acts, deeds and things as may be necessary in this connection.
DIRECTORS
SHAREHOLDERS
CERTIFICATE OF SECRETARY
IN WITNESS WHEREOF, The Secretary of the Amazon.com,Inc certifies that the above is true
and correct record of the resolution that was duly adopted by the Directors and Shareholders of the
Corporation on September 08,2021.
Eric Clapton
Secretary
Contents
Executive Summary ........................................................................................................................ 1
Chapter 1: Introduction .................................................................................................................. 2
1.1 Company background – KingsMan Advisory....................................................................... 2
1.2 Thailand AS-IT-NOW vs Thailand 4.0 ................................................................................. 2
Chapter 2: Business Environmental Analysis for Amazon in Thailand ........................................ 3
2.1 Amazon SWOT Analysis ...................................................................................................... 3
2.2 General Environment: Amazon in Thailand ......................................................................... 4
Chapter 3: Market Entry Strategy Plan .......................................................................................... 7
3.1 Porter ‘s Five force ................................................................................................................ 7
3.2 Internationalization Strategy ................................................................................................. 9
Chapter 4: Supply Chain Strategy................................................................................................ 10
4.1 Logistic Facilities in Thailand ............................................................................................ 10
4.2 Supply chain Network ......................................................................................................... 12
Chapter 5 : Budget Allocation ..................................................................................................... 12
5.1 Estimate Startup Expenses .................................................................................................. 13
Chapter 6: Recommendation & Conclusion ................................................................................ 16
Appendices A: Type of Amazon devices...................................................................................... 18
Appendices B: growth rate of real gross GDP in Thailand .......................................................... 19
Appendices C: Amazon’s Supply chain ....................................................................................... 20
Appendices D: Raking for Thailand in World Bank Group’s 2020 Ease of Doing Business ...... 21
Appendices E: Acronyms and Abbreviations ............................................................................... 22
Reference ...................................................................................................................................... 23
Executive Summary
The business proposal focuses on first entry of Amazon smart devices in Thailand. The smart home
technology market grows steadily in Asia pacific as it allows user to control all the electric
appliances at touch of finger and provide home owner security and energy efficient all the time. In
2021, revenue in the Smart Home market is expected to reach US$107M (Statista, 2021). This is
a great opportunity for Amazon to start the business in Thailand and earn profit in long term.
Thailand would be a good choice for market entry especially after Covid-19 pandemic as Thailand
try hard to fight back the economy recession with recovery measure that help in business.
Affordability, bureaucracy, low manufacturing cost and strategic location in Asia contribute to
gain a conductive environment for trade and business. According to World Bank Group (2020),
Ease of Doing Business report ranks Thailand 21st out of 190 countries, which shows a significant
improvement compare to previous year. Thailand government adopt “Thailand 4.0” to ensure the
development in next 20 years, which focus on integration in technology and economy. Automation
and Robotics has been identified as new target industries where Amazon smart home device have
high potential for growth in Thailand market. Nevertheless, Thailand is growing road network to
connect to the neighbor countries like Laos, Cambodia, Malaysia, Burma and Vietnam (Ministry
of Transportation Thailand, 2019). Transportation will be further strengthened to fulfill the
growing demand in trade.
Main focus for this proposal is analysis Amazon business environment in Thailand as well as the
internationalization strategy and the supply chain strategy that suitable for Amazon to develop.
1
Chapter 1: Introduction
KingsMan Advisory is a management consultancy that was founded in 1926 Our company was
founded by Eric Lee in 1975. Our consultancy serves more than 500 firms in various sector such
as government, public and also private industry to expand their business. Nowadays, Kingsman
Advisory own more than 15000 employee over the world and has revenue more than $5 Billion.
Our mission is to help our client obtain a practical and lasting solution to real business issue.
Apart from that, we do have consultant from different sector including medical doctor, engineer,
data scientist, entrepreneur, software engineer which can help our client to resolve challenging
business issue.
2
Chapter 2: Business Environmental Analysis
for Amazon in Thailand
Three of Amazon biggest strength is first-mover advantage and well product design. Amazon
speaker launched in 2014, which is the first smart speaker available to public (Joshua and
Neil,2016). Till now, it has been upgraded and improve and now in its fourth reincarnation,
Amazon Echo (4th Gen). It has been best-selling smart speaker since 2016. A key to a good sales
volume for Amazon Echo is because of its great product design. Alexa, which is an intelligent
virtual assistant attached to Amazon echo, able to understand what users saying and also have
additional features like setting reminder and security.
Amazon has weakness as well. One of the Amazon device’s weakness is technical difficult in
product. According to Amazon (2021), the wake word for Alexa is only “Alexa,” “Amazon,”
“Echo,” and “Computer”, which is very limited. If the command isn’t said, the smart speaker won’t
3
respond at all. Hacking of smart device is the biggest concern for the user. Research shows that
certain Amazon/Alexa subdomains are vulnerable, that allows hacker to install malware and listen
to everything happening in user’s home (Matt,2020).
As now smart technology arises, Amazon can invent more different smart devices such as
smartphones with Alexa built-in. This may help Amazon to leverage its wide distribution network.
Furthermore, Amazon should consider to expand the presence of their core brand by partnering
with leading retails. It will help Amazon go beyond e-commerce, into retails giant and establishing
a wider presence and visibility of Amazon smart home products.
Threats that affect Amazon are domestic competitors and low-entry barrier. Xiaomi and Huawei
enter the Thailand market in 2017 and 2008 respectively and they are strong in smartphone and
smart home technology market. These huge Chinese tech companies are slowly taking smart home
market share. Amazon is also affected by Chinese tech companies which enter the Thailand market
earlier and are offering cheaper prices on their product (Morgan et al., 2017).
Political dimension. Thailand’s foreign policy always emphasizes on maintain a close and
longstanding security relationship with United States. In 2002, The US-Thailand Trade and
Investment Framework Agreement (TIFA) was signed and to provides a strategic framework and
principle on trade between US and Thailand (US gov,2021). A good relationship between US and
Thailand provides a big opportunity for Amazon to diversify its work. Nevertheless, Thailand
well-defined FDI policies focus on liberalization and promotes free trade throughout the nation
with other countries. The Board of Industries (BOI) offers different tax incentives as well as import
duty exemptions or reduction for foreign investor startup business in Thailand (Andy,2020).
Economic dimension. According to IMF (2021), Thailand relies more on employment in the
service sector but less on agriculture, which is a good sign of more advanced economy. Thailand’s
GDP per capita is one of the highest in Southeast Asia and grew at the rate of 4.19 percent in 2018.
However, GDP Thailand in 2020 fell by 6.1 percent due to Covid-19 pandemic. The pandemic
stops the tourism flows and significant contraction in economy activity. Furthermore, Thailand has
posted an incredibly low unemployment rate for several year, which means workforce matched
well with demand for labor (World Bank,2021). Equally important, inflation rate in Thailand tend
4
to be low and stable, as demonstrated in Figure 1 as below (IMF, 2021). Economic stability in
Thailand predetermined Amazon’s success as online and offline business expansion availability
of disposable income boost the company financial performance.
Social Dimension. Social and cultural trends in a country are affecting business growth, even
though is not always immediately obvious. The number of smartphone users, which is potentially
can be the customer of buying smart home devices is increasing rapidly over the years (Statista,
2021). The number of smartphone users in Thailand reached around 53.37 million in 2020, this
factor directly promotes further growth of Amazon smart devices in Thailand market as it provides
more convenient living experience and also more energy efficient to users.
Technological Dimension. Thailand 4.0 policy was unveiled by the junta in May 2016, which
Artificial Intelligence (AI), robotics and digital industries are the primacy sectors in this strategy
(Gigi, 2021). By adoption of 4.0 revolution, Thailand is on its way to become next Asian digital
behemoth. Amazon advanced smart home technology will definitely help Thailand to realize
Thailand 4.0 because of the reason below:
5
4) Increased energy and cost efficiency
Environmental dimension. Thailand has announced it will be shifting the economy policy model
towards bio, circular and green economy approach (Chris, 2021). Industries such as Agricultural,
medical, energy and biochemical sector will be support by the government to implement a newer
and sustainable technology. In this case, Amazon Echo and Alexa can reduce home’s energy
consumption by temperature control, lighting, window treatments and recycle track.
Legal dimension. According to Amazon annual report 2020, government law and regulation is a
risk for Amazon to expand internationally. Tariff and quota issues, labor-related ones and any legal
compliance is the biggest concern for any type of distribution. In 2019, Thailand’s average MFN
applied tariff rate was 10 percent and 30 percent of tariff lines are MFN duty free including
electronics and industrial machinery (US ITA 2021). Starting on Sep 1 2021, Thailand will impose
new value added tax (VAT) on foreign e-Service and e-Platform provider which will affect
Amazon as well. (Chart Chotiphol, 2021). Below is the Tax and duty for import to Thailand:
Generally, submission of import entry form and export entry form to custom is required for
import and export in Thailand. The form must accompany by shipping document including
BL/AWB, commercial invoice, packing list and letter of credit. Some specific product might
require import or export license.
6
Chapter 3: Market Entry Strategy Plan
Before Amazon enter the Thailand market, it is essential to know the competitiveness of the
particular market. Amazon delivers various product and services from accessories, book, e-
commerce etc., hence Amazon has an upper hand over the suppliers in supply chain as they are
great number of suppliers, distributors and manufacturers that able to supply Amazon. In this case,
Amazon has more power to influence the cost and product due to the high demand and volume it
purchases.
Amazon always emphasize on customer satisfaction and product quality (Duhigg,2019). Generally,
customer has high bargain power because the intense competitive in smart devices industry.
Consumer tend to be price-sensitive. If Amazon fail to deliver a great service with low or
reasonable price to customer, they might switch to other products. To subtain the good relationship
and customer loyalty, Amazon investing more effort to negotiate for a lower price or to enhance
the feature of the products.
As the rising of smart home technology, there are a lot of firm try to enter to this industry. However,
Amazon echo was the first released smart speaker in 2014 and kick start the whole new smart
home industry (Amazon,2021). Nowadays, Amazon had released various smart home product like
smart display (Amazon Echo Show), security devices & lighting (Amazon Ring) and tablet
computer (Amazon Fire). Besides, Amazon Alexa which is the virtual assistant AI also works well
on other smart devices. As of July 2020, 100 thousand devices are compatible with Alexa (Lionel,
2021). Amazon invests heavily on the best technology in order to keep on climbing on the ladder
of success within smart home industry, it becomes difficult for competitors to compete in the
market.
There are few substitute products available in the market. However, the quality and performance
offer by Amazon product is much higher than others. For example, Amazon Echo speaker not only
helps user to control the home appliance, user also able to place the order through Amazon with
7
voice command. Thus, the advanced technology and quality of the product helps Amazon to
minimize threat of substitute forces.
The rivalry in the smart home industry is high because there is great number of players creates an
intense competition. Goggle, Apple, Sonos, Xiaomi are some of the competitors of Amazon. Thus,
competition in technology marketplace is high. All these big firms have advanced technology and
giant in smart devices industry by offering hardware and software. Therefore, Low switching cost
and readily make customer easier to switch the brand as other firm also offer a similar product
feature. For Amazon, it is essential have continuous development or innovation in the product for
its loyal customer.
8
3.2 Internationalization Strategy
Best strategy for Amazon to enter Thailand market is transnational strategy. This strategy helps
Amazon to achieve product-market fit.
Product: Currently, Alexa (Virtual Assistant AI developed by Amazon) only support only 8
languages which is English, French, German, Hindi, Italian, Japanese, Portuguese and Spanish
(Summa Linguae, 2021). However, according to UN statistic 2010, number of speakers who speak
Thai in Thailand is approximately 90.73% of total population. In this case, that is necessary for
Amazon to continue add Thai language to fulfill the market’s need.
Operation and management: Amazon should embody the idea of “thinking globally, acting
globally”. In operation wise, Amazon may hire local manager to run their in-country operations
and manufacturing facilities. Besides, partnering with local agent or distributor is a wise choice as
they may using their extensive market knowledge, established distribution network and close
relationship with industry and government to help Amazon expedite the market entry efficiently.
U.S. Embassy & Consulate in Thailand Bangkok also provide a customized business solution and
trade specialist to help foreign business to understand more about business environment, law and
regulation in Thailand. They also provide business matchmaking services including trade
counselling, market intelligence, commercial diplomacy etc.
Marketing and Branding: Amazon may implement RACE framework for digital marketing:
Reach: Detailed approach to SEO. For example, when users search “Smart home device”,
Amazon website holds the top spot in Google rankings.
Act: When potential customer directs to Amazon Website, create interaction with them. Further
exploration of site visitors can include “Subscribe us”, “Register as a member” or “Click to view
the Promote code”.
Convert: Conversion to sales, customer can pay via E-commerce transaction or offline channels.
Engage: Build the customer loyalty by email communication, feedback and direct interaction.
9
Chapter 4: Supply Chain Strategy
Inbound Cross Dock is the place where Amazon handle deliveries from vendors and supplier, often
is oversea. Amazon will unstuffing import container from oversea. Ideal location for IXD to setup
is Khlong Toei, Bangkok as it contains major port facilities which can reduce the inbound
transportation expense from port to IXD facility. IXD are the first entry point for the fulfillment
process by comtemporize inbound process with the distributional capabilities of fulfillment center.
FC is the facilities where to pick and pack the customer order. The FC can be large (up to 1,000,000
sqf) and 3 thousand staff. FC prefer located closer to population-dense area such as Bang Khae to
increase the deliver speed and lower the outbound process. Besides, FC should further expand to
other city such as Chiang Mai, Hat yai and Udon Thani to ensure large coverage. To improve cost,
speed and reduce work injury, warehouse automation must be implemented. Amazon Robotics is
responsible to pick up the item to prepare for shipping or stowing while employee will identify the
pick items and pack it nicely without causing damage. Palletizer can be used to sort, transfer and
stack the cases onto a pallet. Amazon robo-stow can lifts pallets of inventory to different level and
expedite the inbound process (Amazon,2018) .
3)Sortation Center
The cargo from FC will send to sort center. The sort centers sort customer package by their
regional/local destinations and decide which distribution system (Thailand Post, DHL, FedEx) to
use. With this expansion, Amazon Thailand will strengthen its delivery speed and connectivity for
customers. Normally, sort center located somewhere near fulfillment center.
10
4)Parcel delivery station
Deliver station is the last step before final delivery to customer and positioned in metropolitan area.
It serves a tightly defined urban area. Amazon package arrive from fulfillment center or sort center
and sorted by zip code and route optimized. After that, parcels are dispatched and hand over to the
3PL.
Amazon may set up parcel locker in public area such as shopping mall so consumer are
convenience and wider options to choose their preferred parcel pick-up location at low price, while
the urban logistic may increase their productivity and efficiency in managing the surge in e-
commerce volumes.
This service is designed to fulfill the fast delivery requirement, normally the lead time is less than
48 hours. It allows the Prime member to enjoy free same day delivery. It can be collocated with
Amazon fulfillment centers to get replenished the stock quickly but operated independently.
11
4.2 Supply chain Network
Inbound
Cross Dock
Procurement
&fulfillment
Procurement
Fulfillment &fulfillment
Center
Order
Standard Shipping
(1-3 days)
3PL
(THPD)
Sort
Thailand Post Center Distribution
(THPD)
Freight Delivery
(THPD)
(THPD)
Same day
THPD delivery
Distribution Delivery
Center (THPD) Station
(THPD)
Last Mile
Delivery Point
( Amazon Hub
Locker/Store-like
facility)
Customer Home
12
Chapter 5 : Budget Allocation
13
Table 6: Estimate expenses for location and admin
14
Summary Statement
15
Chapter 6: Recommendation & Conclusion
Amazon should expand their business offline instead only focus on e-commerce especially for
digital product. In the retail store, Amazon able to collect and leverage more data through shoppers’
buying behavior for example frequency and the correlations between decision). Customer will feel
more confident and reliable when they able to view the actual product before making any purchase.
Furthermore, offline retail able to fulfill consumer on-the-go needs. Customer also able to order
online in advanced an collect the product in the store later which is very convenient and providing
a good experience to customer.
According to Statista (2021), smart home market in Thailand worth THB17.02 billion in 2019.
Thai property firm are currently developing the new smart home project to boost the convenience
and enhance the security. Amazon may collaborate with the local property developer such as
Sansiri Thailand to transform a residence by integrate the artificial intelligence innovation into a
living space. By connection to Amazon Alexa apps, residents able to control all the electrical
appliances and utilities. This will be a great selling point to attract consumer and increases sales.
Vertical Integration
Amazon should pursue vertical integration in delivery services and reduce the reliance on logistic
company like Fedex and UPS. If Amazon offer the deliver services to customer by itself instead
of 3PL, it will help to reduce operation costs and increase efficiency. Amazon able to control the
logistic business volume and offer a better service to end customer.
In conclusion, the first objective of this proposal is to evaluate the Amazon market in Thailand.
The business environment analysis from Chapter 2 has shown Thailand is a good choice for market
entry especially Thailand market is high demand for smart home product. The second objective is
to analyze the market strategy for Amazon. Transnational strategic have major advantage for
Amazon to achieve both global efficiency and local responsiveness by offer a specific product to
target market. Furthermore, supply chain strategy is one of the most important strategic to make
16
sure the smooth transition of product to customer by the most cost-effective way. All of these
strategic can help Amazon to accomplish their expansion goals successfully.
17
Appendices A: Type of Amazon devices
AMAZON DEVICES
AMAZON
ECHO&AL
RING AMAZON
EXA AMAZON AMAZON
FIRE KINDLE E- (SECURITY BLINK
DEVICES(S FIRE TV SMART EERO(WIFI
TABLETS READERS CAMERA (SECURITY
MART HOME )
,DOORBEL CAMERA)
SPEAKER)
L,ALARM)
18
Appendices B: growth rate of real gross GDP in Thailand
19
Appendices C: Amazon’s Supply chain
20
Appendices D: Raking for Thailand in World Bank Group’s 2020
Ease of Doing Business
21
Appendices E: Acronyms and Abbreviations
22
Reference
J. B., & N. S. (2016, April 19). The Real Story of How Amazon Built the Echo. Retrieved from
https://www.bloomberg.com/features/2016-amazon-echo/
Amazon.com INC. (n.d.). Amazon Alexa – Learn what Alexa can do | Amazon.com. Amazon.
https://www.amazon.com/b?ie=UTF8&node=21576558011
Morgan, M., Mgmt, Diehl, K., & Bishop, B. (2017). Strategic Analysis of Amazon.
https://candlesbymadison.com/wp-content/uploads/2018/04/Strategic-Analysis-of-Amazon-
copy.pdf
M. B. (2020, August 13). Alexa, have you been hacked? New research finds major security
flaws in Amazon’s virtual assistant. Mashable SEA. https://sea.mashable.com/tech/11950/alexa-
have-you-been-hacked-new-research-finds-major-security-flaws-in-amazons-virtual-assistant
U.S. Relations With Thailand. (2021, May 4). United States Department of State.
https://www.state.gov/u-s-relations-with-thailand/
Chart Chotiphol. (2021, February 23). Thailand Applies VAT on Foreign e-Service and e
Platform (Short Version) - ILCT Ltd. ILCT Ltd. https://www.ilct.co.th/thailand-applies-vat-on
foreign-e-service-and-e-platform-2/
Gigi Onag . (2021, August 2). Thailand confident on achieving industry 4.0 ambition. FutureIoT.
https://futureiot.tech/thailand-confident-on-achieving-industry-4-0-ambition/
https://greencitizen.com/thailands-shift-to-eco-friendly-growth/
23
Duhigg, C. (2019). Is Amazon Unstoppable? The New Yorker.
https://www.newyorker.com/magazine/2019/10/21/is-amazon-unstoppable
Language Support in Voice Assistants Compared (2021 Update). (2021, April 21). Summa
Linguae. https://summalinguae.com/language-technology/language-support-voice-assistants
compared/
UNdata | record view | Population by language, sex and urban/rural residence. (2016). Un.org.
http://data.un.org/Data.aspx?d=POP&f=tableCode:27
Bots by the numbers: Facts and figures about robotics at Amazon. (2018). About Amazon.
https://www.aboutamazon.com/news/innovation-at-amazon/bots-by-the-numbers-facts-and
figures-about-robotics-at-amazon
Smart Home - Thailand | Statista Market Forecast. (2021). Statista. Retrieved September 5,
2021, from https://www.statista.com/outlook/dmo/smart-home/thailand
24
Alexa Cheater .(2016, April 1). Amazon’s Supply Chain Innovation Delivers Results. Kinaxis.
https://www.kinaxis.com/en/blog/17617
Aaron .(2021). Thailand - Gross domestic product (GDP) growth rate 2024 | Statista. Statista;
Statista. https://www.statista.com/statistics/332051/gross-domestic-product-gdp-growth-rate-in
thailand/
25