Amazon and Future Group: Rethinking the Alliance Strategy 

Group 3Sarah Bennani Vladimir Pushmin Anton Telepnev Maria Zatkova

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Have Amazon and Future Group made the right decision with respect to selecting each other as alliance partners? 

Market outlook

Vertical complementary strategic alliance

Diversifying strategic alliance

Synergetic strategic alliance

Cross-border strategic alliance

Growth opportunity in the Indian retail market. Future Group helped to provide with the Indian sources that are required according to India’s foreign direct-investment policy

Synergies in distribution as both companies have a well-developed and well-equipped logistics system

Synergies in customer acquisition and cross-promotions

Opportunity for Amazon to enter fashion market that popular among most of the e-commerce retailers due to high margins and growing demand

Future Group expected to enter the FMCG market, where Amazon is present

Opportunity for Future Group to leverage Amazon’s investments, innovations in technologies through secure payments, fast delivery and easy returns

Amazon have an opportunity to use Future Group’s product portfolio and its understanding of the local consumer

Growth of the Indian economy,

changing demographics,

increased disposable income,

focus on technology

Significant retail industry growth, from

$204 b to $600 b between 2000 – 2014 and expected growth

of up to $1,3 trillion by 2020

Fast growth of the online retail

industry, from $500 m to $2 b between 2009 –

2014 that expects to double by 2020

Brick and mortar retailers are looking for opportunities to

enter online channel

Direct investment policy restrict foreign

companies operations

Business related cooperative strategy

Corporate related cooperative strategy

International cooperative strategy

What are the probable risks faced by Amazon and Future Group? What can they do to safeguard against those risks?

1. Small profit due price alignment between physical stores and high discounting e-sales.

2. Strong and powerful competitors3. Lack of trust, Biyani is still criticizing the

e-commerce companies4. Ineffective alliance negotiations, terms and

conditions of future cooperation were poorly negotiated

5. Amazon is locked with Future group brands, so other companies can’t sell their products, resulting in limited offerings by Amazon.

6. Slow integration with other Future Group brands

7. Government legislations, only 25% of sales can be done via online platforms

Risks faced by Amazon and Future Group

Ways to safeguard from the risks

Increase the prices to increase the margin while keeping the sales near 25% limit.

Price

Attract new

brands

Contracts review

Deversify

Amazon can allow some other brands to use its services due to a limited amount of sales per brand group.

Continue to add new non-fashion brands to the Amazon delivery network.

All of the old contracts should be reviewed/renegotiated to avoid future conflicts with ongoing operations.

What actions would you recommend for the Amazon-Future Group partnership? What are the implications of your recommendations?  

• In order to achieve their targets within three years (60 billion)

• Demonstrate a better expertise of customers portfolio

• And penetrate the market

The developed expertise of Amazon is highly needed• Penetrating the market online is an indirect

way to advertise for the offline stores with a trade off situation

• Since the new India’s foreign direct-investment policy in 2016, India’s government allowed Amazon 100% foreign direct investment in the business-to-consumer online marketplace-> Future Group is dependent on Amazon

1The negotiation of profit or margin sales 2 Exclusive collection/line

Available only online, no competition between online and offline selling-> agreement on both sides by setting the “discounting” strategy

3Unsold items from offline stores

transferred to Amazon online platform

Promotions and discounting could be present to the retail industry• Particular items would not be found in offline

stores anymore

4Amazon & Future Group have been

collaborating only for 2 years• Lacking on time to bring major changes to

the cooperative deal• Lacking on the experience/background and

knowledge in order to make an improvement• TIME + EXPERIENCE= KEY FACTORS