Industry: E-commerce

Company: Amazon GROUP 03

Competitor: Flipkart Group Member

Akash Deep
Roll No.

M220-21

Aman Raj M327-21

SHOP Mahima Nidhi M363-21
Soreng

Payal M271-21

Rahul Roshan M065-21

Behera

Shradha Bijarnia M295-21

Shuvam Kumar M407-21

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 Ratio Analysis
Profitability Ratio 2017 2018 2019 2020 2021

Return on total Assets 0.02 0.06 0.05 0.07 0.08

Return on equity 0.11 0.23 0.19 0.23 0.24

Gross profit margin 0.37 0.40 0.41 0.40 0.42

Earnings per share 0.32 1.03 1.17 2.13 3.30

Liquidity Ratios 2017 2018 2019 2020 2021

Current ratio 1.04 1.10 1.10 1.05 1.14

Quick ratio 0.76 0.85 0.86 0.86 0.91

The return on assets have improved 4 times since 2017, from 0.02 to 0.08; The gross margin and
earning per share has been improving continuously over the span of 5 years, EPS multiplied by 10 times
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 Ratio Analysis
Leverage Ratios 2017 2018 2019 2020 2021

Debt to assets 0.29 0.24 0.28 0.26 0.28

Debt to equity 1.37 0.91 1.02 0.90 0.84

Times interest earned 5.09 8.97 9.21 13.86 13.79

Activity Ratios 2017 2018 2019 2020 2021

Inventory turnover 6.98 8.10 8.08 9.80 8.34

Accounts receivable turnover 22.20 18.38 13.22 15.21 13.93

Average collection period 16.44 19.86 27.60 24.00 26.21

Amazon has a current ratio of 1.14 in FY 21 which is lowest amongst its indian peers,It signifies amazon
needs to maintain lesser assets to fulfil its order than its peers.
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 3-Circle Model
Company Amazon
E A F
Competitor Flipkart
B
D C
A- Amazon’s USP B- Industry Standard
1. Global presence in more than 58
G countries as amazon.com, option of 1. One-stop online access to all
ordering some products through global kinds of products from different
sellers. brands and price ranges
2. "Amazon Basics" offering more than 2. Easy exchange, return and
100k+ variety of products. refund policy with pickups
A- Company’s USP 3. "Amazon Prime" provides same-day 3. Live-tracking of orders made
B- Industry Standard fast delivery or 1-2 days delivery, it available to customers
C- Cost of doing business also gives media platforms access to
D- Competitor's USP entertainment.
E- White space- unmet/unfulfilled needs of the C- Cost of doing business
customers 1. Flipkart had spent Rs 1073.4 crore on advertising and promotional
F- Company’s Internal capability and resources expenses in FY21, Amazon had spent Rs 2728.4 crore on advertising
not yet realised (Ex.- R&D) promotional expenses.
G- Competitor’s Internal capability and 2. Amazon spent Rs 8,546 crore in legal and professional expenses during
resources not yet realised (Ex.- R&D) 2018-20.
3. Employee Benefits- Parental Support Benefits, Insurance Benefits, Higher
Education Assistance Program etc. 4
 3-Circle Model
D- Flipkart’s USP
1. Flipkart Assured-gives a Seal of Quality and Speed
● Where the products undergo 6 quality check.
● Fast and free shipping, being delivered within 2-4
days.
2. Shop Now Pay Later with zero additional charges.
Instant credit up to 1 lakh at one click with just 30 secs.
3. Flipkart Plus Membership with advantage of Free
Shipping, Early Access to Sales, Rewards and get
superior customer support.
E- White space- unmet/unfulfilled needs of the
customers
3 key needs of consumers from e-commerce websites
are-
1. An easy-to-use experience: 47% of consumers
say that usability and responsiveness are the most
important elements of an e-commerce website.
2. Detailed information about Products
3. Reviews and Ratings: Before completing a
purchase on an e-commerce website, consumers
want to know what other people think as well as
experts in the area think about the products.
F- Amazon’s Future plans, Internal capability and resources not
yet realised
1. Entering into untapped markets: The company is also
considering expansion into Spain, Italy, and Germany in 2022.
2. Amazon is making its play for the future of computing with the next
major phase in computing: ML and AI.
3. Amazon is now looking to make its delivery service more
environmentally friendly which is a commitment to be net-zero
carbon across the board by 2040.
G- Flipkart’s Future Plans, Internal capability and resources
not yet realised
1. Dark stores
● These generally ship products and groceries account for just about
20-30% of the total SKUs in select cities.
2. Flipkart Grocery
● Flipkart goes in with a selection of about 4,000 products while the
nearby shops offer anywhere between 400 and 500..
3. Shopsy- Flipkart’s social commerce platform
● Flipkart is likely to invest in its social commerce venture – Shopsy –
that has entered into the grocery business to take on Tata’s BigBasket,
Zomato-backed Blinkit, Zepto, Swiggy Instamart, Jio Mart Express,
among others. 5
 Strategy Group Maps

Key Insights from the three Strategic Maps:

● From Strategic Map 1 we see that Apart from Amazon & Flipkart, Market Share per Number of employees is very low for
Snapdeal, Paytm Mall, Nykaa, Shopclues & India Mart
● From Strategic Map 2 we see that Number of products per Revenue generated is High for Flipkart as compared to Amazon
● From Strategic Map 3, we see that though Nykaa caters to large number of Pincodes it has very low Market share
● From all three Strategic Maps, we clearly see that both Amazon & Flipkart are leaders in the ecommerce sector in India 6
What are Amazon’s key resources and capabilities?
Amazon’s Organization Resources & Capabilities Valuable Rarity Inimitability Organized

Growing brick and mortar presence Yes

Growing diversity of online services Yes

Growing portfolio of private label products Yes

Extensive delivery network involving domestic, regional and international Yes Yes
partnerships

Expertise based on a considerable history of e-commerce Yes Yes

Strategic Warehouses and distribution hubs Yes Yes Yes

Sustained Competitive Advantages

High Global Brand Equity Yes Yes Yes Yes

High Market Capitalization Yes Yes Yes Yes

International network of affiliates that expand international market reach Yes Yes Yes Yes

Artificial Intelligence Capabilities Yes Yes Yes Yes

Human Resource Management Yes Yes Yes Yes

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 Non-Competence Reason Competence Reason

HIgh Brand Equity Very difficult to imitate

Company’s growing brick
and mortar presence
Growing portfolio of private
label products diversifies the
company’s offerings.
Growing diversity of online
services
Delivery network
Immitable
High Market Capitalization Facilitates to fund and invest in business
expansion and diversification
SMEs can implement private
labelling.
Affiliate Network Valuable in supporting the e-commerce
business, and because its global size is rare
and difficult to find.
Not rare and inimitable
Integration of AI Provide product enhancement and improved
Any company can gain the customer experience
expertise with proper
planning. Valuable and rare
among new firms.
Recommendations with respect to VRIO Analysis

● Artificial intelligence capabilities reinforce and intensify the

Flipkart Resources and Capabilities: benefits of the company’s brand equity through increased product
● Supply Chain Network - VRO effectiveness and desirability
● Distribution and Logistics Costs: VO ● Continuing such AI integration strengthens the strategic benefits
● Customer Network: Provide medium term competitive of the company’s non-core competencies. Improves product
advantage. attractiveness and customer satisfaction.
● Global Market Penetration: Strong Competitive Advantage● The company is in the position to penetrate emerging markets,
● Brand Awareness - Sustainable Competitive Advantage which present high growth opportunities for the business. 8
 Industry’s Key Success Factors

Product diversity Doorstep

Personalization Advanced
delivery
The diverse categories of
Speedy delivery with easy Relevant product Customer service
products available recommendations, Reliable, easily
considering different returns, refunds and free
pick-ups requires minimal special offers, loyalty accessible and smooth
target audience in mind programs etc. customer journey
at one place efforts from the customer

Innovation Culture
Amazon’s Key Success Factors
Platform-Specific
One-click ordering, prime delivery,
prime air, dash buttons etc. - First
D Amazon expanding lucrative
categories like groceries, outdoor
B
movers advantage items etc. into micro-sites.
Creating mini businesses
Operational Excellence
AWS, Frequent, small and A Customer Obsession
reversible changes, refine Easy returns, hustle free returns,
operation procedures frequently,
anticipate failure etc.
C active query resolution, live
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tracking etc.
 How has it evolved and future predictions?
Before pandemic e-commerce was seeing a steady increase of 4.5% globally.

In India the growth was gradual due to speculations about defective products, trust issues regarding
refunds and lesser accessibility to population of India.

Indian market is majorly divided between Amazon (32%) and Flipkart group(Flipkart and Myntra, 60%).

But with the pandemic came digitalization which increased accessibility to people and established
companies gained customer loyalty over time increasing sales by 16%-19% globally in 2020.

In India e-commerce is predicted to reach USD 188 billion by 2025 and USD 350 billion by 2030.

In such a growing market there will be aggressive competition. It is essential for brands to gain first
movers advantage through innovation now.

Sources: https://www.ibef.org/industry/ecommerce#:~:text=The%20Indian%20E%2Dcommerce%20market,%2C%20reaching%20US%24%2074.8%20billion.
https://unctad.org/news/global-e-commerce-jumps-267-trillion-covid-19-boosts-online-sales#:~:text=The%20dramatic%20rise%20in%20e,report%20published%20on%203%20May.
https://economictimes.indiatimes.com/tech/technology/flipkart-group-bagged-60-market-share-in-diwali-festival-sales-report/articleshow/88192988.cms?from=mdr
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 Porter Diamond Model
Firm Strategy ,Structure and Rivalry
● Moving in sectors like digital payments, music and video
streaming, grocery delivery etc
● Reduction of barrier and influence of west has grown up
● Change in the customer profile and the needs of the
target audience
Factors Conditions
● Technology is one of the leading factors that contributes
significantly
● Knowledge resource like software developers for
technical support
● Available infrastructure like delivery services
Chances
● Intangible nature of online or digital services is
unique
● With a large, young and internet-enabled population
● Land of diverse religion and faiths
● Online shopping in India thrives on deals, discounts
and cash backs
Demand Conditions
● Customer still wants consistent and seamless experience across all
touch points: online, in-store, website, mobile app, social media, or
service
● Shoppers want real-time, relevant, and personalized information
and offers
● Lot of improvement in logistic services
Related and supported industry
● Mobile platforms, social media analytics, omni-channel service
● Exciting place with the interplay of social, mobility, analytics, cloud
(SMAC), digital, 3D and, virtualization
● Factors like accelerating internet access, staggering penetration of
mobile phones and robust investment resulted in growth
● Rise of digital wallet and online payments
Government
● Launch of multiple iniativities like Digital India ,Make in India and
Startup India
● Government’s list of notified essential services during pandemic
Conclusion :Yes,all the factors are showing positive indications for
India to be their home base
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 AMAZON VRIO
Capability Valuable Rare Imitable Organization Competitive Advantage

Financial Resources Yes Yes No Yes Temporary

Brand awareness Yes Yes No Yes Sustained

Customer Loyalty Yes Yes No No Temporary

Artificial intelligence capabilities Yes Yes Yes Yes Sustained

Distribution Network Yes Yes Yes Yes Sustained

Product Range Yes Yes Yes Yes Competitive Advantage

Marketing Yes Yes No Yes Temporary

Sales Force and Channel Management Yes No Yes No Competitive Advantage

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 FLIPKART VRIO
Capability Valuable Rare Imitable Organization Competitive Advantage

Financial Resources Yes Yes No Yes Sustained

Brand awareness Yes Yes No Yes Sustained

Employees Yes Yes Yes No Temporary

Customer Network Yes Yes No Yes Strong Competitive Advantage

Patents Yes Yes No No Unused

Distribution Network Yes Yes No Yes Sustained

Artificial intelligence Yes No Yes No Strong Competitive

capabilities Advantage(In long run)

Pricing Strategies Yes No Yes No Temporary

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 Recommendations
1. Increase customer Loyalty - 23% of the
customers contribute to more than 84% of
the sales revenue.
2. Continue to invest in the marketing
activities - As the rival firms also have
string marketing Capabilities, amazon
needs to continue investing in marketing to
have temporary competitive advantage.
3. Sales Force and Channel Management -
Can provide sustainable competitive
advantage. Potential is certainly there
1. Patents - The Patents of Flipkart are not well
organised which means, that the organisation is
not using these patents, to their full potential.
2. Artificial intelligence capabilities - The
company still has a lot of scope with the use of AI
in organization.In the long run it can provide
sustainable competitive advantage.
3. Pricing Strategy - Pricing strategies are regularly
imitated in the industry. Using different pricing
analytics, flipkart should have dynamic pricing to
keep it ahead of the Competition.
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