6.3 PORTER Analysis
The Porter’s Five Forces tool is a very powerful tool. It is simple but excellent for judging exactly where power lies. As it helps to understand not only the strength of current competitive position but also the strength of an expected position, it is very useful.
It is a critical part of your planning process. If you gain a proper understanding of where the power lies, you can take advantage of the company’s strengths. You can also improve your firm’s weaknesses. Overall, you will not take any wrong steps.
Figure – 26 PORTER
Supplier power:
E-commerce companies sell many products through its platforms ranging from books to electronics items to cosmetics etc. For each items, there are multiple suppliers who sell these …show more content…
The buyer has a lot of options to choose. Buyer can easily switch products because of very low switching costs. Variety of products is on display in several e-commerce companies and buyer can choose based on its requirement. It can also compare cost instantly, which is not possible in case of offline retail shopping. E-commerce companies roll out various schemes and discount frequently. It reduces product price and gives customer power to choose the best deal from any online retail-shopping portal. All these factors make buyer power more when compared to the E-commerce companies.
Threat of New Entrants:
Threat of new entrants is very high in this E-commerce industry due to the following reasons:
1. Indian government has recently allowed 100% FDI in marketplace model and sooner or later it will allow 100% FDI in multi-brand online retail inventory base model. So, this means new foreign companies can come and start their own online retail companies based on any model.
2. The investment required to start an E-commerce company is very less when compared to offline retail stores. To start, all is needed is to tie up with product suppliers and develop a website for displaying products with payment option where customers can buy.
3. E-commerce market in India is growing very fast. It is estimated that it will be $80 billion market by 2020. It will attract more …show more content…
The growth of Indian economy is growing at a fast pace and which has improved people living standard overall. India provides Amazon with limitless opportunities in the coming years. Amazon has to roll out its future strategies considering big threats that will affect them in coming years. Firstly, strategy of heavy discounting on products to grab more market share and customer need to be relooked by the company. Volume and market leadership are not the only factors, which add value to its stock. Secondly, it need to sort out delivery shortcomings and website crashing during festive season. It will not only increase customer satisfaction but will also help in adding more new customers. Thirdly, it needs to keep innovating to be ahead in the market. The concept of same delivery with additional cost is successful in Indian market and needs to keep innovating to grab more market share. Indian market is very competitive and competitor like Flipkart regularly comes with newer ideas. Finally, it should broad its reach in Indian market. It is currently present only in 50 big cities and a lot of rural market is still untapped. It should start adding new areas under its delivery
The Porter’s Five Forces tool is a very powerful tool. It is simple but excellent for judging exactly where power lies. As it helps to understand not only the strength of current competitive position but also the strength of an expected position, it is very useful.
It is a critical part of your planning process. If you gain a proper understanding of where the power lies, you can take advantage of the company’s strengths. You can also improve your firm’s weaknesses. Overall, you will not take any wrong steps.
Figure – 26 PORTER
Supplier power:
E-commerce companies sell many products through its platforms ranging from books to electronics items to cosmetics etc. For each items, there are multiple suppliers who sell these …show more content…
The buyer has a lot of options to choose. Buyer can easily switch products because of very low switching costs. Variety of products is on display in several e-commerce companies and buyer can choose based on its requirement. It can also compare cost instantly, which is not possible in case of offline retail shopping. E-commerce companies roll out various schemes and discount frequently. It reduces product price and gives customer power to choose the best deal from any online retail-shopping portal. All these factors make buyer power more when compared to the E-commerce companies.
Threat of New Entrants:
Threat of new entrants is very high in this E-commerce industry due to the following reasons:
1. Indian government has recently allowed 100% FDI in marketplace model and sooner or later it will allow 100% FDI in multi-brand online retail inventory base model. So, this means new foreign companies can come and start their own online retail companies based on any model.
2. The investment required to start an E-commerce company is very less when compared to offline retail stores. To start, all is needed is to tie up with product suppliers and develop a website for displaying products with payment option where customers can buy.
3. E-commerce market in India is growing very fast. It is estimated that it will be $80 billion market by 2020. It will attract more …show more content…
The growth of Indian economy is growing at a fast pace and which has improved people living standard overall. India provides Amazon with limitless opportunities in the coming years. Amazon has to roll out its future strategies considering big threats that will affect them in coming years. Firstly, strategy of heavy discounting on products to grab more market share and customer need to be relooked by the company. Volume and market leadership are not the only factors, which add value to its stock. Secondly, it need to sort out delivery shortcomings and website crashing during festive season. It will not only increase customer satisfaction but will also help in adding more new customers. Thirdly, it needs to keep innovating to be ahead in the market. The concept of same delivery with additional cost is successful in Indian market and needs to keep innovating to grab more market share. Indian market is very competitive and competitor like Flipkart regularly comes with newer ideas. Finally, it should broad its reach in Indian market. It is currently present only in 50 big cities and a lot of rural market is still untapped. It should start adding new areas under its delivery