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Foreign Trade University Ho Chi Minh City Campus: Global Marketing: Amazon'S Market Penetration Plan in Vietnam in 2024
Foreign Trade University Ho Chi Minh City Campus: Global Marketing: Amazon'S Market Penetration Plan in Vietnam in 2024
Foreign Trade University Ho Chi Minh City Campus: Global Marketing: Amazon'S Market Penetration Plan in Vietnam in 2024
MIDTERM ASSIGNMENT
MAJOR: INTERNATIONAL BUSINESS ADMINISTRATION
TABLE OF CONTENTS
TABLE OF CONTENTS........................................................................................................i
LIST OF TABLES................................................................................................................iii
LIST OF IMAGES................................................................................................................iii
LIST OF GRAPHS............................................................................................................... iii
CHAPTER 1. ABSTRACT....................................................................................................1
CHAPTER 2. OVERVIEW................................................................................................... 2
2.1 Global trend overview.............................................................................................. 2
2.1.1 Background summary........................................................................................2
2.1.2 Consumer trend..................................................................................................2
2.2 Amazon, Inc..............................................................................................................5
2.2.1 Profile [7].......................................................................................................... 5
2.2.2 Amazon.com......................................................................................................5
CHAPTER 3. MODELS FOR MARKET SELECTION......................................................7
3.1 General market screening process............................................................................7
3.2 Why Emerging markets............................................................................................7
3.3 Why ASIA: Regional macro-screening................................................................... 9
3.4 Why South East Asia..............................................................................................10
3.5 Why Vietnam and Malaysia...................................................................................10
3.5.1 Why Vietnam in Emerging markets................................................................10
3.5.2 Why Vietnam and Malaysia............................................................................ 11
3.5.3 MACS matrix...................................................................................................20
CHAPTER 4. ENTRY MODE............................................................................................ 21
4.1 Why Joint-venture in Intermediate mode?\............................................................21
4.2 Collaborate with e-payment................................................................................... 24
4.2.1 Amazon’s market penetration history............................................................. 24
4.2.2 E-wallet in Vietnam.........................................................................................26
CHAPTER 5. MARKETING STRATEGIES..................................................................... 29
5.1 Segmentation.......................................................................................................... 29
5.1.1 Demographics.................................................................................................. 29
ii
5.1.2 Behavioral segmentation................................................................................. 29
5.1.3 Psychological segmentation............................................................................ 29
5.2 Targeting.................................................................................................................29
5.2.1 Behaviors......................................................................................................... 29
5.2.2 Attitudes...........................................................................................................30
5.2.3 Need................................................................................................................. 30
5.3 Positioning.............................................................................................................. 30
CHAPTER 6. MARKETING TACTICS............................................................................ 31
CHAPTER 7. CONCLUSION.............................................................................................33
REFERENCES....................................................................................................................... a
OWEN CAMPAIGN ANALYSIS.......................................................................................f
iii
LIST OF TABLES
Table 1: Finances are global concern of consumers [2]........................................................ 3
Table 2: Improved global perceptions of sustainable consumption [3]............................... 3
Table 3: Market Attractiveness scoring criteria.................................................................. 11
Table 4: Market Attractiveness of Vietnam and Malaysia in Asia-Pacific region............ 11
Table 5: Competitive Strengths of Amazon in Vietnam with regards to its strongest
regional competitor, Shopee................................................................................................ 14
Table 6: Competitive Strengths, scoring reasoning.............................................................15
Table 7: Amazon SWOT analysis........................................................................................21
Table 8 : Lessons from China’s failure................................................................................25
Table 9: E-wallet choosing-criteria......................................................................................27
Table 10: Amazon x ZaloPay exclusive benefits................................................................ 28
Table 11: 4Ps model of Amalo............................................................................................ 31
Table 12: The extent to how much to standardize/localize................................................. 33
LIST OF IMAGES
Image 1: Consumers are highly aware of the risks and potential consequences when
sharing personal information across digital channels [4]...................................................... 4
Image 2: General market screening process.......................................................................... 7
Image 3: Amazon’s MACs matrix.......................................................................................20
LIST OF GRAPHS
Graph 1: Since October 2021 consumers have shifted priorities in response to emerging
disruptions [1].........................................................................................................................2
Graph 2: Retail e-commerce sales worldwide from 2014 to 2026 [5].................................. 4
Graph 3: Intense e-commerce industry rivalry [6]................................................................ 5
Graph 4: Most popular online marketplaces worldwide in 2021, based on gross
merchandise value [8]............................................................................................................ 6
Graph 5: Emerging market and developing economies: Gross domestic product (GDP) in
current prices from 2017 to 2027(in billion U.S. dollars) [12]............................................. 8
Graph 6: Climate Awareness and Actions [13]..................................................................... 9
Graph 7: Regional e-commerce share of retail in 2020, with a forecast for 2025 [14]........ 9
Graph 8: E-commerce as a percentage of retail sales continues to grow across regions [15]
............................................................................................................................................10
Graph 9: Vietnam warming to e-wallets [50]...................................................................... 26
1
CHAPTER 1. ABSTRACT
The goal of this study is to (1) evaluate the potential impact of Amazon's market
entry on the Vietnamese e-commerce market; (2) suggest suitable market entry strategies.
To demonstrate Amazon's ability to enter new markets, apart from information on global
consumer trends and market landscape, the preliminary, fine-grained, and MACS model
will be used to identify the most suitable nation for Amazon to penetrate. Joint-venture will
be the most preferable market entry mode resulting from previous analysis. Key marketing
strategies (STP) and tactics (4Ps) utilized specifically in Vietnam will also be demonstrated.
In conclusion, the concern of the extent of product standardization or adaptation is included
in the last section.
Word count: 2089 words
2
CHAPTER 2. OVERVIEW
2.1 Global trend overview
2.1.1 Background summary
Global crisis in economic and social aspects (e.g., increasing interest rates,
unpredictable inflation fluctuations, new variants of COVID-19, etc.)
Graph 1: Since October 2021 consumers have shifted priorities in response to emerging
disruptions [1]
● 62% of global consumers expect their living costs to increase over the next six
months → Costs of living is a global worry.
3
→ 1st Trend: Cutting costs - Consumers are substituting but not sacrificing, repairing but
not replacing.
Firm’s impact on the social and environment critically influences customer intention
of purchase.
Image 1: Consumers are highly aware of the risks and potential consequences when
sharing personal information across digital channels [4]
● Rising demand for e-commerce services: The sales volume keeps increasing
annually, especially in 2021, there is a total of 2.14 billion digital buyers globally,
making up for approximately 30% of the global population.
such a huge effort to penetrate in frontier ones due to the fact that most of the citizens
there cannot get access to the Internet. [9]
- A 2016 report by Google and Temasek predicted a compound annual growth ratein
South-east Asia (SEA) e-commerce sales of 32% in the years to 2025, driven by the
region’s youthful population and its growing middle class. This would bring the
size of the market to $88bn in 2025.
→ Amazon can take advantage of this to increase revenue and market share
globally.
Graph 5: Emerging market and developing economies: Gross domestic product (GDP) in
current prices from 2017 to 2027(in billion U.S. dollars) [12]
9
Graph 7: Regional e-commerce share of retail in 2020, with a forecast for 2025 [14]
10
- SEA is already the world’s fastest-growing ecommerce market, and Vietnam is set
to lead that expansion by 2026.
- Specifically, by 2023, SEA is predicted to become the 4th largest combined GDP,
only behind China, EU, and the US.
- Asia, especially SEA, are reported to lead in worldwide online retail sales.
→ Vietnam may be notified of its upgrade to emerging market status during the
MSCI annual market review in May 2024.
Emerging market within the FTSE Equity Country Classification scheme at the
Interim Review in March 2023. [17]
- The World Bank: Vietnam now is one of the most dynamic emerging countries in
the East Asia region. [18]
3.5.2 Why Vietnam and Malaysia
3.5.2.1 Why Vietnam
3.5.2.1.1 Market attractiveness
→ Highest market potential
Table 3: Market Attractiveness scoring criteria
Score 1 3 5
Populati 20 The current population of 0,6 The current population of Malaysia 0,2
on Vietnam (or Viet Nam) is is 33,360,350 as of Sunday,
99,438,256 as of Sunday, November 27, 2022, based on
November 27, 2022, based Worldometer elaboration of the
on Worldometer elaboration latest United Nations data. [26]
of the latest United Nations →1
data. [25]
13
→3
Economi 20 Moving forward to 2024, the 0,6 The Malaysia GDP is projected to 0,6
c IMF forecasts that Vietnam’s trend around 440.00 USD Billion in
position GDP will rank fourth in the 2024. [28]
(GDP) ASEAN-6, hitting US$615.6 →3
billion, respectively. [27]
→3
- Market size: refers to the total number of potential buyers for your product. In order
to be considered an attractive market, one country must have a large value of market
size. [29]
- Gross domestic product (GDP): is the value of the goods and services produced in
an economy. It’s generally a good sign for businesses when GDP is growing because
the standard of living of people in that country is raised and people are willing to
buy more. [30]
- However, If a country’s GDP isn’t growing as fast as its population, GDP per capita
isn’t rising. That means the standard of living for the people, and their purchasing
power, isn’t increasing. [31]
3.5.2.1.2 Competitive strength
The main reason why customers opt to use online shopping websites is because they
can nearly always locate the things theyrequire to meet their demands on these websites.
97% of consumers have abandoned a purchase because the service wasn’t convenient
14
Having a high-quality local business network is another vital factor for companies
in the e-commerce sector to ensure that they have a broad source of products to satisfy the
majority of their consumers' needs.
Customers are likely to return for repeat purchases online because of the
conveniences they get. These conveniences include free shipping, delivery, deals and
discounts, and flexible payment methods.
It’s been found that close to 68% of visitors tend to leave websites because they
aren’t happy with the customer service being offered. Therefore, ecommerce companies
should provide good customer service with a view to maintaining the customer’s retention
rate. [33]
Products fit to
25 4 1.0 3 0.75
market demands
Criteria Vietnam
a) Shoppertainment
a) Personalization
- Consumers want to be entertained and
- The demand for more personalized
Products fit connected with one another.
products or services increased much on Gen
to - Shopee app contains entertainment
Z consumers.
market components like live streaming of events,
- Amazon has made some impressive strides
demands in-app gaming,....
in personalisation with the use of artificial
- Shopee’s mobile app recorded the
intelligence, machine learning, and
highest Monthly Active Users number in
16
Criteria Vietnam
Criteria Vietnam
Criteria Vietnam
Criteria Vietnam
Marketing - Amazon's success is largely attributed to its - Kick-off offline channels with celebrity
customer-centric philosophy and intense ambassadors
focus on efficiency. - Out-of-house initiatives: Shopee utilizes
the celebrity endorsement on the banner,
poster, billboard on buses, taxis, trains.
- Shopee 9.9 Super Shopping Day,
Shopee University Program,
International connection
Market - Amazon now operates across 5 continents - The Shopee platform is currently
presence with around 20 countries having dedicated available in 13 countries, i.e., Indonesia,
websites for shoppers and sellers. Although Taiwan, Vietnam, Thailand, Philippines,
they don’t have operations in every country, Malaysia, Singapore, Brazil, Mexico,
they still deliver to over 100 countries in the Colombia, Chile, Poland, and Spain.
rest of the world.
20
→ Joint venture, which belongs to Intermediate entry mode, is the most appropriate
business arrangement for Amazon to expand into the Vietnamese market.
21
STRENGTHS WEAKNESSES
INTERNAL
Firm size Amazon has not really understood the Asian
(1) One of the most recognizable brands in market nor built brand awareness.
the world, responsible for $502.191B
billion revenue for the twelve months
ending September 30, 2022 [40].
(2) Fourth tech company to reach a $1
trillion market cap, and is quickly on its
way to $2 trillion. This increasing resource
availability provides the basis for increased
international involvement of Amazon over
time.
→ Good brand prestige, brand resources &
capabilities to attract Vietnamese
companies in collaborating.
- Allow the partners to share the responsibility of management to lower operation and
administrative costs → Vietnamese partners can increase the speed of Amazon’s
market entry
- Global operations in R&D and production are prohibitively expensive but are
necessary for Amazon to achieve a competitive advantage.
4.2 Collaborate with e-payment
The next-step strategy that we suggest is to collaborate with a Vietnamese e-wallet - and
that is ZaloPay
4.2.1 Amazon’s market penetration history
4.2.1.1 Entry mode method
Amazon used a simple strategy to enter new markets: Enter countries that are
growing quickly in terms of e-commerce adoption as a percentage of total retail. Typically,
Amazon starts by negotiating with local book publishers. Then, once the parties reach an
agreement, Amazon starts selling Kindles and ebooks as a way to get its foot in the door.
Take Amazon’s case in China as an example. Amazon entered the Chinese market
in 2004 by acquiring Joyo.com, a popular online seller of books for $75m – during the next
decade it became Amazon China.
→ Missing the importance of localization of its operations, ranging from its products
to delivery speed and customer interaction left Amazon no other choice than to abandon its
Chinese e-commerce ambitions.
25
The billions of dollars Amazon spent to Amazon can take advantage of VNG, the
open 15 fulfillment centers, controlling owner of ZaloPay with great infrastructure
much of its own inventory, and building its (VNG Campus has a total construction and
own infrastructure without creating use area of 52,440m2, applying the world's
revenue modern campus model.)
Number of partners x
Gamification x
Diverse ecosystem x
Brand salience x x
User database x
28
⇒ ZaloPay
Amazon x ZaloPay
Amazon ZaloPay
5.2 Targeting
Young adults (18 - 40 years old) in Ha Noi and Ho Chi Minh city who are university
students or have a part/full-time job.
5.2.1 Behaviors
- Work hard, only spend money on necessities.
- Usually buy necessities from e-tailer due to reasonable pricing.
- Spend much effort and time to seek promotional deals.
- Easily influenced by previous reviews of other people, KOLs.
- Use e-wallet for expenditure records and money-saving.
30
5.2.2 Attitudes
- The more money saved, the better.
- Reduce the more waste on the environment the better.
5.2.3 Need
- Safety needs are important, especially to those living far from their hometown.
5.3 Positioning
Amalo is a personalized e-commerce platform that can recommend cost-effective
shopping plans.
31
PRODUCT PROMOTION
PLACE PRICE
CHAPTER 7. CONCLUSION
Table 12: The extent to how much to standardize/localize
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e
- Viral Clip: To clarify the story in TVC, OWEN made a viral clip with the same
concept and told the successful story of each ambassador (Trọng Hiếu, Shark Dzung,
Hoàng Lê Giang), attracting discussion from users.
- PR: In order to reach more young people, the campaign continues to spread the story
as well as the contest information on newspapers that many young people follow
such as VnExpress, Dân Trí, Cafebiz,...
2. Place
- Owen has massively distributed its products across many channels such as offline
flagship stores in northern regions such as Ha Noi, Quang Ninh, Vinh Phuc,..
- Furthermore, it also sells products on online channels such as Owen website,
Lazada Owen Flagship, Lazada Owen Outlet and Shopee.
3. Product
- Past: Since 2008, when entering the fashion market for men, OWEN has built a
luxurious and elegant image like successful gentlemen. However, it is the same
image of serious shirts and pants that makes the brand feel "old", customers who
prefer OWEN are mainly successful gentlemen aged 30 and over; Present: To
change the brand's perspective to better suit new trends as well as to bring about a
high-class experience, sublimate emotions for younger, more modern, more brave
men who like to build a masculine image
g
⇒ The collection “My Way” depicts the dynamic, optimistic, colorful world of
young men with dreams and aspirations to rise up in life.
- Mainly focus on middle-aged customers although there are many designs for the
younger generation
- Design: elegant, youthful but dynamic
- Features: tight style, flattering figure, bright color, wrinkle-free material, durable
- Diversified product portfolio: office fashion, streetwear to accessories
- Brand image is not synchronized: product, design,...
4. Price.
- Owen belongs to the mid-range segment:
+ Austria: 360,000 VND - 598,000 VND
+ Pants: 450,000 VND - 595,000 VND