Daquilanea

Denise Daquilanea
Padgett
ENGL 102-027
November 22, 2016
The Amazon Effect:
An International Impact
Amazon, formally known as Amazon.com, Inc., is one of the worlds most innovated
companies, providing services to consumers, sellers, enterprises, and content creators. A
company that began in 1994 selling books has grown into a company selling over 200 million
different products ranging from clothing, to electronics and food items. Jeffrey P. Bezos started
the company in his garage just outside of Seattle, Washington and has since transformed into one
of the most successful international companies. Amazon has seen great success in North
American countries but have consistently struggled in eastern countries, especially in China.
A major factor that contributes to their success is their focus on the consumers. The
companys current business statement is We seek to be Earths most consumer-centric
company; to build a place where people can come to find and discover anything they might want
to buy online. The company puts their focus on their consumers and what they do and do not
like, what they want to see happen, and what they want to change. This method works for the
company; it is what helped them become one of the most successful companies in the world. In
Amazon: Love Them? Hate Them? Lets Follow the Money, Treanor discusses Amazons three
primary consumer sets: consumer customers, seller customers, and developer customers
(Treanor, 2010). Rather than viewing their customers as a whole, the company views them in
three different subgroups, which helps them cater to the needs and desires for each group. All

Comment [PA1]: Not needed.

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three of the the consumer sets use the website for different reasons, therefore they use the
company from different perspectives.
Amazon Prime is also factors in their success and is what keeps customers coming back
for more. Time Magazine describes the service as bigger, more powerful, more profitable than
anyone imagined (Tuttle, 2013). Though the company had high hopes on its success, they never
imagined that it would evolve into a service with various types of advantages. Amazon Prime
offers services such as free two-day shipping, unlimited streaming of movies and TV shows
available on Prime Video, exclusive discounts, and Prime pantry, which allows Prime members
to shop groceries, household items, and pet care items for $5.99. The service costs $99 per year
and provides college students with a discounted rate of $39. Time magazine estimates that the
number of Amazon Prime subscribers have doubled in the past two years and is expected to
double within the next year, though they do mention that the company does not disclose their
number of prime members to the public (Tuttle, 2013). Members of the service are more likely to
spend more money on Amazon than non-members, mainly due to the fact that members seek to
take advantage of their membership. If they were to use Amazon as much as non-members
would, they would essentially be wasting their money on the membership. Additionally, the
service is more than just the free two-day shipping, its endless list of services and benefits truly
makes the cost worth it. As of October 2016, Amazon Prime was launched in China. The service
offers unlimited domestic shipping and free cross-border shipping, which they are hoping will
give them a leverage against their competition in China, who only offer free shipping with only
domestic transactions. Though, unlike how free two-day shipping is the alluring factor in
Amazon Prime in the United States, free shipping is normal on the competitors sites, which may
prevent the company the leverage they are seeking for. Additionally, the service does not

Comment [PA2]: Proof read a little closer.

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provide the same benefits as the Prime subscription in the United States. Prime video is not
offered due to piracy and copy write laws and are not yet advanced enough in the country to
launch Prime Pantry or Prime now, which allows same day delivery. The service in China will
cost about 388 yuan, which is $57, but it is currently at a promotional price of 188 yuan, which is
$28, due to its recent launch (Abkowitz, 2016). The addition of Amazon Prime in China marks
one of the first subscription- based e-commerce membership service in the country.
The Kindle is known as Amazons biggest marketing strategy. Released in 2010, the
Amazon Kindle is a series of e-readers specialized for Amazon. In 2013, the Kindle devices
brought in about $3.9 billion in revenues. The device initially came from an attempt to compete
with Apples success with the iPads and iPhones. Kindles mission to offer every book, ever
written, in any language, all available within 60 seconds, has made it successful all over the
world. Bezos states that the Kindle is a platform that has paved the way for creators. It allows
authors who have never had their work published, to share their work with the world (The Man
Who Sells Everything, 2015). This concept, in turn, helps with the smaller businesses rather
than harming them. In June 2013, two types of Kindle products were released in China after
several years of negotiation. The products ranged from around $130-$300, which was
comparable to its prices in North America and sold over 500 products per day, mainly in bigger
cities such as Beijing and Shanghai. Though the product was seen as being successful, the Kindle
still struggled. A Chinese company called Dangdang released an e-reader, Docon2, around the
same time that the Kindles were released in China (Lei, 2013). Their products were lower in
prices and had better mounting. This gave the Kindles a minor setback in China.
The company operates through two different segments. The first segment is the North
American segment, which focuses on retail sales and consumer products through North

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American sites. The second segment is the international segment and focuses on international
locations and looks at export sales outside the United States and Canada. The company sells the
most products in the United States. In Mexico, China, and Brazil, they only sell about 1.5 million
products, which is over 200 million less than the United States. Though Amazons international
segment is not nearly as successful as their North American segment, it cannot be said that it a
failure, because it is still producing revenue. Instead of putting their focus in countries such as
the United Kingdom or Germany, which have potential to be as successful as the company in
North America, they put all their investments and emphasis on countries such as China, which
may be nearly impossible to dominate in.
Although Chinas economy is expanding at one of its slowest pace yet, revenues in
online shopping is soaring, and is expected to almost double in the next few years. In fact, China
is considered the leading country in e-commerce by a landslide. The main reason why the
countrys numbers in e-commerce is so high is because a vast majority of their retailers operate
through Alibaba, which is a business-to-consumer website similar to Amazon. 75% of Chinas ecommerce is through Alibaba. In comparison, in the United States, only 26% of e-commerce

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transactions are conducted through Amazon, one of their leading e-commerce retailer. The line
graph above shows the e-commerce sales in retail from 2014 and projects the percent of sales all
the way through 2017 (Mobile Accounts, 2015). It is clearly seen on the graph that the United
States is falling behind China through a large margin in terms of retail e-commerce. China is the
dominant leader in e-commerce sales, with the United States falling behind quite far off. The
companys chief excutive, Jeff Bezos, is aware of the issue and states that We cannot run our
normal playbook in China (The Man Who Sells Everything, 2015). This means that the
strategy they use in North America will not work in China. There is a need for the company to
adapt to Chinese consumers in order for them to succeed. Rather than focusing on brining the
North American Amazon to China and making the consumers adapt, they need to create a whole
new type of Amazon which caters the specific needs of the Chinese consumers such as lower
prices for higher quality merchandise. Centralizing their e-commerce platform allows them to
make sales without the effort of competing with other sites. Another factor explaining Chinas
rise in e-commerce is their mobile usage. According to South China Morning Post, a Hong
Kong- English language newspaper, 87% of people are internet users, as opposed to the United
States 74% of total internet users. This information is significant because 55.5% of mobile ecommerce sales comes from online retail shopping (Perez, 2015). Additionally, the internet is
essentially the only place where the Chinese are able to buy name-brand, international products.
For example, Nike products, or Calvin Klein items may be easy to purchase in the United States,
but in China, the only place to access these type of items are through the internet. Naturally, this
would increase their sales in e-commerce.
The leading factor in Amazon inability to become successful in China is Alibaba. This
company is virtually unknown to most people in the United States, but in China, it is their

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biggest online commerce company. The bar graph below displays the market share in China and
which companies are the leading players (Chang, 2013). The bar graph clearly shows that
Alibaba plays a significant roll in Chinas market shares, accounting for almost half of the
shares. Amazons share is an astounding less than five percent. It is clear that in China, Alibaba
is a key player, while Amazon only plays a small role.

In comparison, Amazon accounts for 70% of market shares in the United States, meanwhile
Alibaba accounts for a little over three percent. In Humbled Amazon Turns to Rival Alibaba for
Help in China, Cendrowski argues how even though the majority of the websites products are
counterfeit, they still sell. The reasoning behind this is because essentially, the Chinese are
cheap. In America, consumers typically look for the quality over the product over the low price
of the product. While they still may not purchase the most expensive, top rated product, they still
purchase a product that is authentic and reliable. Consumers in China look for what is cheapest.
Name brands and authenticity is not important to them. Unlike Amazon, 80% of Alibabas
merchandise are fake products, such as a Gucci purse being sold for 300 Yuan, which is about 50
US dollars. Comparably, an authentic Gucci bag goes for around $800-$2000. Cendrowski states

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that he relies on Alibaba more than Amazon for the prices, only using Amazon as a back-up for
when he cannot find a product on Alibaba (Cendrowski, 2015). Additionally, Alibaba has
recently begun drone shipping, which has allowed the company to ship products to rural areas
(Abkowitz, 2016). This innovated way of shipping has provided a significant change because
prior to the decision to deliver packages by drones, it was very difficult to reach buyers. This, in
turn, prevented a decrease in e-commerce. Amazon has contemplated drone delivery but are
unable to do it in the United States due to federal regulations. In an interview in Foreign Affairs
Magazine, Jeff Bezos, founder and CEO of Amazon says that we have a long-standing practice
of staying focused on our customers rather than our competitors, when asked about whether
Alibaba is helping or competing with the company (The Man Who Sells Everything, 2015).
Bezos is stating that instead of focusing on passing their competition or stealing customers who
use other services, they focus on their current customers and remaining focused on keeping those
current customers satisfied and pleased with the services they receive.
Despite Amazons struggles in the eastern countries, the company still reigns as one of
the most successful companies in the world through its marketing techniques and focus on
customers. Amazons success stems from the relationship between consumers and businessmen.
Listening to the consumers interests have allowed the company to expand with various products
and services such as Prime, Kindle, and Alexa. Despite all their success, they battle to make land
in China, the struggle comes from the difference in consumers and retail market. Keeping China
and North Americas markets separate may be the key that puts Amazon over Alibaba while still
keeping their current success and game plan in other countries.

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Work Cited Page

Abkowitz, Alyssa. "Amazon Delivers Prime Program to China." Wall Street Journal. Wall Street
Journal, 28 Oct. 2016. Web. 21 Nov. 2016.
Cendrowski, Scott. "Humbled Amazon Turns to Rival Alibaba for Help in China." Fortune.
Fortune, 05 Mar. 2015. Web. 12 Oct. 2016.
Chang, Elsie, Yougang Chen, and Richard Dobbs. Chinas E-tail Revolution: Online Shopping
as a Catalyst for Growth. Rep. McKinsey&Company, Mar. 2013. Web. 18 Nov. 2016.
Lei, Jessica Ya. "Amazons Day One In China: The Role Of Amazons Kindle In China."
Publishing Research Quarterly 29.4 (2013): 365-370. Academic Search Complete. Web.
19 Oct. 2016.
"Mobile Accounts for Almost Half of China's Retail Ecommerce Sales - EMarketer." EMarketer.
N.p., 30 July 2015. Web. 21 Nov. 2016.
"The Man Who Sells Everything." Foreign Affairs 94.1 (2015): 2-6. Academic Search Complete.
Web. 19 Oct. 2016.
Perez, Bien. "China's Mobile E-commerce Market Miles Ahead of US, to Grow to US$505
Billion by 2016." South China Morning Post. South China Morning Post, 4 Aug. 2015.
Web. 16 Nov. 2016.
Smith, Cooper. "Amazon's Business Is Becoming Even More Dependent On North
America." Business Insider. Business Insider, Inc, 25 Apr. 2014. Web. 21 Nov. 2016.
Treanor, Ted. "Amazon: Love Them? Hate Them? Lets Follow The Money." Publishing
Research Quarterly 26.2 (2010): 119-128. Academic Search Complete. Web. 19 Oct.
2016.

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Tuttle, Brad. "Amazon Prime: Bigger, More Powerful, More Profitable than Anyone
Imagined." Time. Time, 18 Mar. 2013. Web. 21 Nov. 2016.

Denise,
The breadth and scope of your topic is impressive, and I think you've done a good job walking
your audience through the complicated network of research you've compiled here. Im
still missing that sense of strong exigency. Why do we need to know about this? What
reason does your audience have to get involved? This feels more like a report rather than
a research paper. By which I mean, there is a lot of really interesting information and
context here, but no real argument guiding it. Why is it important that Amazon is leading
in China? What are the implications for us here? what are the implications globally?
Also, there are quite a bit of typos here. proof read a bit closer. Like I said, I found this to
be a really interesting and compelling read. Good work.