Amazon Kirananow Case Analysis Solution

Questions

1. Analyze the macro-environmental factors affecting Amazon’s KiranaNow using the

PESTEL framework.

2. How have consumer preferences changed with respect to online grocery shopping,

and how can KiranaNow accommodate these new preferences?

3. The common business models which exist in India’s online grocery market are the

following:

a) Marketplace Model- Zero inventory model;

b) Inventory-led Model – The company directly purchases products from the

manufacturer and stores them in fulfilment centres; and

c) Hybrid Model – The company maintains its own inventory of products and acts as

a facilitator between buyers and sellers.

Discuss the pros and cons of each of the above models.

4. What are the pros and cons of KiranaNow’s business model?

5. What are the challenges faced by KiranaNow and what strategies should it use to

overcome these challenges?

6. What are the factors contributing towards KiranaNow’s sustainability and what are

the factors working against it?

7. What options would you recommend to KiranaNow for achieving growth?

Answers:

Q1.

Macroeconomic factors affecting KiranaNow in India

Political – The FDI guidelines for different retail formats were regulated by the Department of

Industrial Policy and Production. 100% FDI in the market-place model is an advantage as KiranaNow

follows this model.

Economical – Indian grocery market is expected to grow to 15% by 2020.

Increase in direct and indirect investments in the economy would result in the increasing consumer

purchasing power.

Online grocery would contribute to about 30-40% of the overall retail business by 2021. Therefore

growth potential for KiranaNow is very high.

Social - Buyer demographics in India show that there is a high increase in no. Of smartphone users

by 2020, and the consumers are slowly adapting to ecommerce platforms.

Indian grocery shoppers were used to negotiating prices to get the best deals, which is not possible

in the online grocery shopping, a behavioural hindrance to Indian grocery shoppers adopting online

grocery shopping also, low rate of technology adoption by Indian homemakers, the largest segment

of grocery shoppers in Indian society, and by small retailers are a challenge to a market place model

like KiranaNow.

Technological – We see that the digital buyer penetration in India is on the rise and would reach

around 70% by 2020, with increase in usage of smartphones and lower data prices.

Poor management of information technology (IT) like the quality of data available being poor,

delivery staff are technophobic, make it difficult for partners to connect with merchants.

Environmental – The strategic deal between Walmart and Flipkart would affect the competitiveness

of KiranaNow.

Legal - According to the FDI guidelines for Indian ecommerce firms, the seller is responsible for the

quality as well as guarantee/warranty of the products and not the ecommerce platforms, this would

in turn reduce liability of KiranaNow

Q2. Consumer preferences have changed over the years, grocery shoppers generally preferred

offline grocery shopping where they could judge the quality of the produce. It was very important

for shoppers to make sure the produce they were buying was fresh and healthy looking.

Furthermore, Indian grocery shoppers were used to negotiating prices to get the best deals. Online

grocery shopping did not allow for such negotiations—a behavioural hindrance to Indian grocery

shoppers adopting online grocery shopping. Another challenge was the low rate of technology

adoption by Indian homemakers, the largest segment of grocery shoppers in Indian society.

The scenario was changing slowly with increasing mobile penetration growing acceptance of online

shopping, growth in the online retail market leading to a reduction in prices, and the launch of

lucrative schemes for customers were all fuelling the growth of online grocery shopping. The

convenience offered by the prospect of grocery delivery to one’s doorstep was another factor that

prompted an increase in online shoppers.

To ensure more consumers came onto its platform, lower the cost of customer acquisition, improve

the purchase volume of repeat purchasers, and generate more referrals by repeat purchasers,

KiranaNow must focus on service elements such as the ease of transaction, fair prices, on-time

delivery, and product quality.

Q3.

A)

Marketplace Model- Zero inventory model

Pros

 Low Cost structure

 Since the sourcing of material is done

from local Kirana stores,