Amazon Ace Challenge

Question 1: What specific target consumer group should Amazon focus on while
making its 3 year strategy? Karan was not sure if he should be focusing on a
single specific target group (TG) or build a strategy that is more generic in
nature.
Solution: For a three year strategy plan, we recommend a multi target segment
approach comprising three target groups which have been selected out of six
defined key female consumer segments (refer appendix 1). The parameters on
the basis of which the segmentation is done are as follows:
Income : Lower, Middle and Upper class
Age and stage of life: Single, Married with kids, Married w/o kids, Divorced
Growth rate of the target segment: 1 in every 3 internet users in India
are women, greater than 34-50% internet users in the age group of 15-34
years (Source: Research Review, Trendspotting)
E-commerce buying patterns of tier 2 and tier 3 cities
The target groups are (Refer Appendix 1 for complete segmentation)
1. Fast-Paced: Comprises Upper class women in varied stages of life
viz. Single/Married women with or without kids/Loner. Fast Paced
women are educated, independent and strive for achievement. Based on this
behaviour, they are inclined to spend well on luxurious items and also look
for good shopping experience. Convenience is one of the key factor driving
their ecommerce purchase due to paucity of time. This is a high revenue
generating target group.
2. Family Focused: Comprises Middle Class women who are mostly
single or married but without kids. These women tend to spend more
time online comparing and buying best priced products based on if they are
dependent/independent. They usually spend on their spouse or family. They
are a high to medium revenue generating target group and would prefer
discounts/coupons/cashback schemes. Such women will spend optimally and
expect a good shopping experience
3. The Fighter: Comprises married women with kids who belong to
lower, middle and upper class. This target group is usually ignored and
stereotyped as these women ignore self and buy products for their children
or family. These women are multi-tasking and struggle to complete all their
professional and personal responsibilities. This is an important target group
especially housewives who would serve as social brand advocates and assist
in word of mouth branding. This is a potential medium revenue generator
target group.
Some women may fall into more than one type. Example, someone who is a fast
paced (married women without kids) may have been family focused at some
stage in her life.
Based on our secondary research, following observations were made:

69.2% of online women users were from tier 2 and tier 3 cities (Source:
Vizisense, 2012) (Data Analysis in Appendix 2)
16.54% of females with Monthly income greater than 30000 INR have high
purchasing power. Also, overall 70% graduates or post graduate females
use internet, thus the trend shows that female consumer segment with

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Amazon Ace Challenge

higher education and purchasing power has great potential for online retail
shopping. (Refer Appendix 3)

Question 2. What categories/selection should he focus on for the selected TG

and why? What should the selection acquisition strategy be for Karan?
Solution: The choice of categories should be based upon the preference of the
target categories. Further, among the various selection categories, the extent of
focus may vary according to the margins and volumes. The key categories that
Karan should focus on include the following:
Consume
r
Segment

Characteristics

Fast Paced

Family
Focused

The
Fighter

Independent women, striving for

achievement
Internet savvy, high purchasing
power, decision maker
Upper class, comprises
single/married women with or
w/o kids
Spends well and expects a good
shopping experience
Spend on Lifestyle experiences,
niche/luxury products
Dependent/Independent, relationship
focused
Middle class, comprises Single
and married women without kids
Maintains a budget, medium-high
Purchasing Power; spends on self and
spouse/family
Prefers discounts/coupons; spends
time comparing and buying best
priced products
Spends optimal and expect a good
shopping experience
Lower and middle class
Comprises married women with
kids
Middle class women: successful
multitasker
Lower class women: struggling for
stability
Ignored and stereotyped
Ignores herself and spends on family

Categories
Consumer electronics
Skincare
Branded Apparels
Beauty, Haircare and
Healthcare products
Handbags
Expensive Jewelry items
Home Dcor: Expensive
Items
Personal care, lingerie
wear
Consumer electronics
Groceries
Lifestyle Products
Apparels, Handbags,
Jewelry
Movies, Books, etc.
Festival Items: Xmas
trees, Traditional
Sarees/suits for every
custom, puja thali, etc.
Home Dcor

Baby care products

Healthcare
Books
Home and Kitchen
Groceries

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Selection Acquisition Strategy

The selection acquisition strategy will include roping in increased number of
sellers of various product categories to provide increased product variety. The
strategy will comprise three key elements as listed below:
1.
2.

3.
4.

Assist premium sellers in on boarding various products through on

boarding teams: This will increase the convenience for premium sellers
while at the same time reducing errors
Tie up with logistics players to provide easier, cheaper and more
convenient delivery options for sellers: Amazon, through scale of its
operations, can bargain for better logistics services at lesser prices and
provide the facilities to all its suppliers
Provide small customers difference between Amazon recommended
selling price and sellers price: This will secure margins of smaller sellers
in the face of increased competition
Serve as guarantor for loans taken by small sellers in the target
product categories: This will enable small businesses get loans at
affordable rates, thereby encouraging them set up business online

Question 3. Karan needs to come up with a strategy for customer acquisition in

these regions for the selected TG. With the TG (single or multiple) selected, he
also had to answer the following:

How will Amazon provide a differentiated shopping experience to this TG?

How can Amazon build loyalty with this TG in the long run?

Solution: We recommend a customer acquisition strategy which would provide a

differentiated shopping experience and help build customer loyalty. The strategy
would comprise four key elements as listed below:
1. Strategy for getting customer to Amazon.in:
a. Leverage search engine optimization to direct customers to its
website: According to a survey conducted by compete.com, about 61%
of women use search engine to find products while shopping online.
b. Use targeted social media marketing (and analytics) for
engaging customers: Women increasingly prefer social media
encounter with brands. According to research conducted by Fluid, a
brand solutions organization, 55% of women buy from brands that they
interact with on social media and 35% of women recommend brands
through social media.
c. Collaborate with schools to provide books as a complete package
to students
2. Strategy for converting the visit to sale: This comprises increased customer
engagement during purchase process
a. Provide live chat options: A Cooliyo survey suggested that 80%
women preferred to interact with stylists while buying fashion and
lifestyle products online
b. Provide cashbacks: According to a survey by Cashkaro.com, 72% of
women respondents suggested that cashback, coupons and discounts
were significant motivation for them to shop online. Providing discounts

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in terms of cashback will promote customers returning to Amazon.in to
utilize the cash refunded, thereby driving customer retention
c. Providing virtual try-on and virtual fitting: A 2014 PWC survey
suggested that 25% customers are worried about fit/suitability of the
product while shopping online
d. Customize website and product offerings according to local
tastes: Develop websites in vernacular languages and customizing
offerings as per local needs.
3. Strategy for promoting customer revisiting Amazon.in: This includes
delighting the customer through the shopping experience to build customer
loyalty
a. Gratify at point of decision: Provide small freebies (such as key
chains, ear rings, etc.) to consumers when they add products to cart and
order within a given time (say 1 hour)
b. Encourage customers to return by providing discounts/reward
points: Provide discount codes/reward points when customers place
order which stay valid for a certain time, thereby encouraging customer
to return and buy from Amazon within a given timeframe.
c. Exemplify the service experience: Provide convenient services such
as price drop alert, Prime Now (in tier 2 and tier 3 cities), free delivery
(likely to make 60% of customers buy product), reverse logistics (83%
customers prefer retailers with easy return process), payment options
(CoD preferred by 60% customers)
4. Strategy for leveraging existing customers as brand ambassadors:
a. Encourage customers to write product reviews: Incentivize
customers to write reviews by rewarding those who write reviews
regularly and reviews that get maximum likes/up votes
b. Incentivize customers to refer products by giving reward points
on purchase of referred product: According to a Nielsen survey, 71%
customers are more likely to purchase a product if its referred to them on
social media

Annexure
Appendix 1: Segmentation of female consumer group
Female
Consume
r
Segment
Fast
Paced
Family
Focused
Frugal /
Conserva
tive
The
Fighter
The
Loner
Managin

Age/Stage
of life

Singl
e

Marrie
d w/o
kids

Marrie
d with
kids

Loner

Income Class
Upper Class

Middle class

Lower/Middle
Class

Lower Class
Middle Class
Middle Class
Upper Class
Middle Class

Divorc
ed

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g on her
own

Upper Class

Characteristics and category/selection for the above segmentation

Consumer
Segment

Characteristics

Fast Paced

Family Focused

Frugal/Conserva
tive

The Fighter

Independent women, striving for

achievement
Internet savvy, high purchasing
power, decision maker
Upper class, comprises
single/married women with
or w/o kids, loner
Spends well and expects a good
shopping experience
Spend on Lifestyle experiences,
niche/luxury products
Dependent/Independent,
relationship focused
Middle class, comprises
Single and married women
without kids
Maintains a budget, mediumhigh Purchasing Power; spends
on self and spouse/family
Prefers discounts/coupons;
spends time comparing and
buying best priced products
Spends optimal and expect a
good shopping experience
Comprises single, loner and
divorced women
Lower/middle class;
conservative shopper
Spends only on essential items
or small luxuries
Seeks value for money; prefers
discounts and cashbacks
Lower and middle class
Comprises married women
with kids
Middle class women: successful
multitasker
Lower class women: struggling
for stability
Ignored and stereotyped
Ignores herself and spends on
family

Categories
Consumer electronics
Skincare
Branded Apparels
Beauty and Healthcare
products
Handbags
Expensive Jewelry items
Home Dcor: Expensive
Items
Personal care, lingerie
wear
Consumer electronics
Groceries
Lifestyle Products
Apparels, Handbags,
Jewelry
Movies, Books, etc.
Festival Items: Like Xmas
trees, Traditional
Sarees/suits for every
custom, puja thali, etc.
Home Decor

Apparels on
discounts/festivals
Footwear on
discounts/festivals
Books

Baby care products

Healthcare
Books
Home and Kitchen
Groceries

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The Loner

The Single Again

Middle and Upper Class

Comprises women whose
children have grown up and
left her
Ignored segment
Concerned about health and
aging gracefully
Medium to high Purchasing
Power
Spends on herself, especially on
travel, leisure and healthcare
Middle and Upper Class
Comprises divorced/widow
women
Looks for affiliations and forming
connections

Healthcare
Books
Exercise and Fitness

Books
Consumer electronics
Clothing, accessories,
handbags, etc.

Appendix 2: Usage of Internet by women in Different States

States
Andhra Pradesh
Chandigarh

Interne
t users
172400
0
74000

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Chattisgarh
Delhi
Goa
Gujarat
Haryana
Himachal Pradesh
Jharkhand
Karnataka
Kerala
Madhya Pradesh
Maharashtra
Orissa
Punjab
Rajasthan
Tamil Nadu
Uttar Pradesh
West Bengal
Total
Women Internet
users in T2 and T3
cities
% women internet
users in T2 and T3
cities

104000
287800
0
112000
800000
110000
64000
24000
242600
0
640000
554000
417000
0
160000
780000
380000
272000
0
141000
0
870000
200000
00
138240
00
0.6912

Note: Highlighted items pertains to metro cities (Source: Vizisense, 2012)

Assumptions:
1. Mumbai contributes 50% women internet users; 2085000 non
metro women users
2. Bangalore contributes 50% women internet users; 1213000 non
metro women users
3. Kolkata users are excluded in West Bengal data
Conclusion: 69.2% of online women users were from tier 2 and tier 3 cities

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Appendix 3: Parameters driving womens internet usage
Parameter
Education

Monthly
Household
Income; MHI

Definition
Undergradua
te
Graduate
Post
Graduate
>10000
10000-30000
>30000

% of internet using
females
28.14%
47.53%
24.14%
45.35%
38.11%
16.54%

Conclusions:
1. 16.54% of females with Monthly income greater than 30000 INR have high
purchasing power.
2. Overall 70% graduates or post graduate females use internet.
3. Thus, the trend shows that female consumer segment with higher
education and purchasing power has great potential for online retail
shopping.

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Amazon Ace Challenge

Appendix 4: Observations based on Secondary research
1.

2.
3.
4.

Following facts were observed from the secondary research:

69.2% of online women users were from tier 2 and tier 3 cities
(Source: Vizisense, 2011)
According to Women and web which engages in Bridging the
Internet gap and creating new global opportunities in low and
middle-income countries, following data points were observed:
o 75% of the women who are online are under 35 years of
age, with over 24 million women accessing the Internet
daily
o An estimated number of 5 million women shop or transact
online
o Categories such as skin care (72%), baby care (69%), and
hair care (65%) products saw maximum internet based
research before making a buying decision
According to IAMAI-IMRB report, non-working women category
grew 18% year-on-year to 5.83 million to 4.93 million, while the
working women category grew 8% to 4.77 million from 4.41
million last year.
In urban areas, 60% of the working women and 47% of nonworking women access internet daily
Indias Internet users are estimated to be about 354 million in 2015. Out
of which, 216 million users will be from urban area. It is expected that
the internet users will reach 500 million by 2017.
It is estimated that 35-40% of internet users are women which amounts
to over 75 million urban women currently which will increase to 175
million in next 3 years.
As per 2012 data, 20 million women were using internet and based on
our analysis as shown in appendix 2, 69.2% of online women users were
from tier 2 and tier 3 cities.

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Appendix 5: References

India @ Digital, Bharat Creating a $200 billion Internet Economy,

BCG (link)
Cost of Acquiring Customers for Online Stores (India), Net Distribution
(link)
E-tailing in India: pushing the retail frontier, Technopak Advisors (link)
Study: Online Shopping Behaviour in the Digital Era, iAcquire (link)
Marketing to Women: What Do They Really Want?, Fluid (link)
Online shopping is catching on among women in India, TechinAsia
(link)
This is what men and women are buying online in India, Business
Insider (link)
Efficient product returns: Hitting the nail on the head of e-commerce,
Smartcube (link)
Indian Online Women and Moms: Research Review, TrendSpotting
(link)
To win in Indian e commerce business, researching tier 2 and 3 cities
will be imperative, ValueNotes (link)
Which Part of India is Contributing The Most to E-Commerce Growth,
Browntape (link)
Hottest Product Categories in Indian Online Retail, Browntape (link)
9 E-commerce trends in 2015 that influence buyer experience,
Shipwire (link)
5 Actionable Ways to Improve Customer Loyalty on Your Online Store,
Browntape (link)
Top 5 Online Marketplaces in India compared, Browntape (link)
5 E-Commerce Trends to Look Out for in 2015, Browntape (link)

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