Midterm assignment major international business administration global marketing amazon’s market penetration plan in vietnam in 2024

FOREIGN TRADE UNIVERSITY HO CHI MINH CITY CAMPUS PEs Ss 2fe ie 2s ae fe of fe oft fe oie aie oe ae oe oe 2k oe ok MIDTERM ASSIGNMENT MAJOR: INTERNATIONAL BUSINESS ADMINISTRATION GL

FOREIGN TRADE UNIVERSITY

HO CHI MINH CITY CAMPUS

PEs Ss 2fe ie 2s ae fe of fe oft fe oie aie oe ae oe oe 2k oe ok

MIDTERM ASSIGNMENT MAJOR: INTERNATIONAL BUSINESS ADMINISTRATION

GLOBAL MARKETING: AMAZON’S MARKET PENETRATION PLAN IN VIETNAM IN 2024

Subject : Global Marketing Lecturer : Ms Nguyen Thi Thu Thao Class Code : ML61

Group : 09 Class K60CLCI

Ho Chi Minh City, December 3

STUDENT’S FULL NAME STUDENT ID

Tran Thi Thao Vy 2112253086

Nguyễn Võ Quỳnh Như 2112253059

Nguyên Ngọc Mai Khanh 2112253035

TABLE OF CONTENTS

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LIST OF TABLES

Table 1: Finances are global concern of consumers [2] .2:::::::cecceeeeceeeceeeeeeceeeeeeeeeeenes 3

Table 2: Improved global perceptions of sustainable consumption [3] 3 Table 3: Market Attractiveness SCOLING CLiteLia 0 eee 5 5- 5 he 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 competIfOr, ShODD€G - - Án HH HH nh HH về nhe 14 Table 6: Competitive Strengths, SCOFIDE T€AaSOTITE - 5 5 5S nh nh net 15 Table /0.0irrvnÀ (9N hố 21 Table § : Lessons from China ”§ Ía1ÏUT€ - - - S25 2211221133 3333131551 1551 131111111 xrz 25 Table 9: 20.21 0iv icon nh 27 Table 10: Amazon x ZaloPay exclusive ber€ẨI{S - «cà vn HH như nhưng 28 Table 11: 4Ps model oi in 31 Table 12: The extent to how mụuch to standardIze/loCaÏ1Z€ .- <5 << «<< se reseere 33

LIST OF IMAGES

Image 1: Consumers are highly aware of the risks and potential consequences when sharing personal information across digital channels [4] -+++<+<<<.<++e=zzezzz 4 Image 2: General markef sCreennInE DFOC€SS - - - sư n 7 04-0) /0210.00 00T 20

LIST OF GRAPHS

Graph 1: Since October 2021 consumers have shifted priorities in response to emerging

6i38110119071051077 ƠỎ 2 Graph 2: Retail e-commerce sales worldwide from 2014 to 2026 [5] 4

Graph 3: Intense e-commerce Industry rIvalry [6] - 5 5< + +2 +2 + ke re re 5 Graph 4: Most popular online marketplaces worldwide in 2021, based on gross

951410191101 100051177727 - £4.31 6

Graph 5: Emerging market and developing economies: Gross domestic product (GDP) in

current prices from 2017 to 20270n billion Ư.S đollars) [12] .- -~+5<=<<< 8 Graph 6: Climate Awareness and Actions [ ÍẴ3] - - -+-+++-<s+++<xszs szsetseeerszsrerreerze 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

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

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.)

2.1.2 Consumer trend

e Global consumers tend to pursue a cost-effective and sustainable lifestyle (2022

“Future Consumer Index” - Ernst & Young) This growing trend is in alignment with Amazon’s core values of sustainability initiatives

% share of consumer segments

| Global) Australia Brazil China France Germany India KSA UK US

Affordability first Planet first Experience first Health first Society first

Graph I: 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

Table 1: Finances are global concern of consumers [2]

36% say | Will buy more second-hand products

— 2nd Trend: Sustainability - Consumers are holding on to their values

e A small but rapidly growing group is interested in exploring emerging technology and digital channels

— 3rd Trend: Extreme concern about personal data sharing, usage, and protection

% of consumers who are concerned when engaging in digital activities % of consumers who are concerned when engaging in digital activities

Trem Concerns about what could happen Concerns about how they share information | _Concerns about what could happen | about what could happen

Image 1: Consumers are highly aware of the risks and potential consequences when

sharing personal information across digital channels [4]

e 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

(in billion U.S dollars)

Graph 3: Intense e-commerce industry rivalry [6]

— E-commerce is an emerging but promising industry: Amazon needs to fully understand the global trends in its quest to "conquer" new markets

2.2 Amazon, Inc

2.2.1 Profile 7]

- Industry: Retail & Wholesale- Discretionary

- Sub-industry: E-Commerce Discretionary

- Sector: Consumer Discretionary

Most popular online marketplaces worldwide in 2021, based on gross

merchandise value [8]

Segmentation by customer group

Pleminary screening:

General criteria:

* Market size/ growth

* Buying power of customers

* Culturally similar markets

= Highest market potential

Specitic product/ market

criteria

customers rate as important

to them?

Harmony Amazon's competences

compared with strength and weaknesses of Shopee

Mim) Highest sales potential

Primary data (field research)

Image 2: General market screening process 3.2 Why Emerging markets

- Thereport made by Oxford Business Group has indicated that e-commerce has been well-established in developed countries for years; meanwhile it may take Amazon

lary data

(desk research)

Lee9ss

ae

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 rate in 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

- In the emerging markets, e-commerce revolution, governments, homegrown entrepreneurs, and international e-commerce giants all need to play their part If done right, online markets stand to create new jobs and benefit customers By unleashing innovation and strengthening market competition, e-commerce may be just what is needed to unlock the emerging world’s next growth phase | 10]

- According to McKinsey Global Institute, emerging economies - 18 of 71 countries outperformed their peers and global benchmarks - which have become an established engine of global growth [11]

Graph 5: Emerging market and developing economies: Gross domestic product (GDP) in

current prices from 2017 to 2027(in billion U.S dollars) [12]

Furthermore, GDP is an important indicator of a country's economic power, and Graph 5 shows that emerging markets economic power will continue to grow substantially until 2027 — Potential and sustainable markets to expand Amazon’s market penetration

3.3 Why ASIA: Regional macro-screening

Asia will experience “Green” consumer trends according to Euromonitor, which

is favorable for the sustainability mission, vision and commitments of Amazon

—| om worried about climate change

—— try to have a postive impact on the envronment through my everyday actions

——' feel ican make a difference 10 the worle through my choices and actions

EUROMONITOR INTERNATIONAL

Graph 6: Climate Awareness and Actions [13]

- Since Asia-e-commerce Pacific's proportion of retail in 2020 and with an estimate for 2025 is the largest (51% and 61%, respectively), the region has significant potential for the industry

3.4 Why South East Asia

According to the Financial Times,

- 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

E-commerce as a percentage of retail sales continues to grow

across regions

Graph 8: E-commerce as a percentage of retail sales continues to grow across regions

[15]

3.5 Why Vietnam and Malaysia

3.5.1 Why Vietnam in Emerging markets

3.5.1.1 Supported data from the Vietnamese government

According to Vietnamese National Institute for Finance [16], Vietnam could be included in the MSCI’s watchlist for a market status upgrade from “frontier market” to emerging status during the annual market review in May 2023

— Vietnam may be notified of its upgrade to emerging market status during the MSCTI annual market review in May 2024

3.5.1.2 Supported data from market credit rating agencies

- Financial Times Stock Exchange (FTSE): Vietnam will remain on the Watch List

as a Frontier market and reviewed for possible reclassification as a Secondary

Emerging market within the FTSE Equity Country Classification scheme at the

— Highest market potential

Table 3: Market Attractiveness scoring criteria

Prices < 7$ billion 7 - 14$ billion > 14$ billion

Population < 60 million 60 - 120 million > 120 million

GDP < 400 400 - 800 > 800

Table 4: Market Attractiveness of Vietnam and Malaysia in Asia-Pacific region

Weigh

(ad — 5]

- In the eCommerce market, - In the eCommerce market, the

the number of users is number of users is expected to Market

- 25 expected to amount to 73.7m | 0,75 | amount to 20.4m users by 2027 | 0,25 size

users by 2027 [19] [20]

- Revenue in the eCommerce

- Revenue in the eCommerce market is projected to reach

market is projected to reach

Prices 20 The value of Business-to-| 1 |The Malaysian e-commerce | 0,6

Consumer (B2C) e- market is estimated to register a commerce in Viet Nam is growth of 19.9% to reach $9.2 expected to grow by over 20 billion in 2022 [24]

percent to reach US$16.4 —3

billion in 2022 [23]

—5

Populati | 20 The current population of] 0,6 | The current population of Malaysia| 0,2

November 27, 2022, based

on Worldometer elaboration

of the latest United Nations

data [25] November 27, 2022, based on

Worldometer elaboration of the

latest United Nations data [26]

1

Economi | 20 Moving forward to 2024, the | 0,6 | The Malaysia GDP is projected to} 0,6

€ 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

Reasoning for criteria

- 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, Ifa 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 they require to meet their demands on these websites 97% of consumers have abandoned a purchase because the service wasn’t convenient

enough Therefore, convenience, meaning having a wide range of products, is an important aspect that e-commerce companies need to concentrate more to increase sales

321

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]

User-friendly website interface is also a crucial competitive strength Due to numerous e-commerce businesses operating in the market nowadays, customers spend a lot

of time deciding which e-commerce platform to use As a result, the market presence of a business is a factor that customers take into consideration when making their decision

Table 5: Competitive Strengths of Amazon in Vietnam with regards to its strongest

regional competitor, Shopee

(I > 5 pts) (in %) Amazon Shopee

Products fit to

25 4 1.0 3 0.75 market demands

Quality of the local business

network

(1 — 5 pts) (in %) Amazon Shopee

Prices & Promotions 15 3 0.45 4 0.6

Logistic & Shipping network 10 3 0.3 1 0.1

- 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 | _ -

in personalisation with the use of artificial -

- Shopee’s mobile app recorded the intelligence, machine learning, and

highest Monthly Active Users number in

Criteria

b) Wide range of products

- Amazon has a catalog of 12 million

products across all categories and services

(RepricerExpress, 2021)

- Factoring in the Amazon Marketplace,

there are 353 million products available on

Amazon (RepricerExpress, 2021) [32]

Vietnam for the first quarter, according to

an all-new ranking by iPrice Group and App Annie Intelligence [33]

a) Wide range of _ products Shopee offers a wide range of products, including electronics, home goods, and

- In Singapore, Malaysia, and the

Philippines, Amazon offers lots of tools and

services to help small businesses build their

brands domestically and internationally

online [34]

- With these tools to be applied in Vietnam,

Amazon can create a high-quality local

business network

- Amazon with 6.3 million total sellers in

2021, according to Marketplace Pulse

- The platform currently has over 160 million active listings with approximately 6 million _ sellers, including more than 7,000 brands and leading distributors

- The number of sellers on Shopee’s website raises around 60% annually

Prices &

Promotions - Amazon’s generic corporate strategy is to

offer the maximum value for its customers

at the lowest price

- Amazon has a built-in algorithm that

recognises any change in price and adjusts

product rankings quickly and effectively, so

their own competitors can’t keep up - Shopee was able to draw customers in

through a number of campaigns for year- round incentives including free shipping,

discounts, and flash sales

- Shopee’s financial reports in the first few years, 90% of marketing spendings is used for these campaigns [35]

- Amazon is known for cutting its prices on

a regular basis, especially around the festive

- Amazon’s supply chain is one of the most

efficient among major companies

worldwide

- Amazon mostly uses its own delivery

vehicles for same-day or one-hour delivery

options as using third-party logistics to

deliver these orders would just lengthen the

- Amazon Prime Air can deliver products

under five pounds in locations within 10

miles of Amazon’s fulfillment centers

within just 30 minutes or less [36]

- Shopee works with leading logistics companies to have an integrated application in the logistic system application

- Shopee Supported Logistics partners include: Shopee Xpress, Speedpost

Standard, Ninja Van, J&T Express, UrbanFox, uParcel

- The product delivery will be within 9-

18 working days

Payment

methods - Amazon accepts a variety of payment

options, including credit and debit cards

Some available payment methods at

Amazon: Visa, Amazon Store Card,

MasterCard/EuroCard, Discover Network,

American Express, JCB, NYCE, STAR, or

- Amazon’s own payment system: Amazon

Pay - Easy checkout for customers with - Shopee has collaborated with various

payment service providers to process the payment in a fast, convenient and secure manner

- Credit / Debit Card, Online Banking,

Maybank2u, Cash on Delivery (COD), Cash Payment at Convenience Stores, Installment Plan, SPayLater

- Shopee’s own payment system: