Research Paper: Bringing Amazon.com to Chile

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Bringing Amazon.com to Chile

Sizing up Amazon:

The present expansion possibilities of Amazon.com can be studied with relation to the current competition the company faces from various other book marketing companies and the need to expand into new markets. The question is if expanding services to Chile will give the company a competitive advantage. The future demand for eBooks and eReaders are growing and as of now Amazon is the market leader and there are competitors who also fight for the share and reader loyalty may dwindle towards Amazon. Companies like Sony and Walmart may for example make inroads. Even in the U.S. only 1.5% own the Kindle or an eReader and over three million eReaders may have been sold in 2009. In future the people who switch from regular books to ebooks will be massive and eBook and eReader manufacturers all have to provide high class services. (Lardinois, as the EBook Market Matures, Amazon Will Face Stiff Competition)

Of course Amazon can surf the new tide easily because of the niche it has carved for itself and also the rapid integration between its reader and a number of vendors who would sell books for the Kindle. Strong competition may come from companies like Barnes & Noble's new eBook store and the advent of Sony, but still globally Amazon and the Kindle are here to stay. It also appeals to the professional market the B2B market, for example the electronic flight bag for pilots based on iRex eReader and with the fall in prices people will adapt to these readers very fast. But that is the case of opulent markets. For the developing economies the company may have to use its internet presence and ship digital books and physical books. (Weinman, Amazon's E-Book Market Share May Plummet: Great News for Amazon)

Amazon's present ninety percent shares in the e-book market will start going down to may be thirty percent in the coming five years. This is predicted to occur because of the newer business models of Apple (AAPL) and Google (GOOG). The iPad as opposed to the new eBook pricing model, that may compel Amazon to increase retail prices to keep up with Apple's pricing, will provide the initial impetus to Kindle but in future the market is expected to be split between Apple, Amazon, and Google. As of now E-book sales have given revenue to the tune of $135 million to Amazon and could grow in future to $215 and the situation is that Amazon has the market of twenty percent of the global book market and it also is into new and used print books and e-books. (Weinman, Amazon's E-Book Market Share May Plummet: Great News for Amazon)

Thus with the competition growing Amazon clearly has to expand and this means books and it's Kindle. There may be losses to Amazon in future with Apple and major book companies fighting for the market share in the e-book front, and Amazon, to grow must seek new markets. It is this difference that makes it necessary to physically create presence in nations like Chile. The next step is to see if the company can come up with a viable business in e-commerce for Chile. Chile is a complex country and therefore the factors of Chile ought to be considered. The factors that could affect the emarket and physical market for Amazon at Chile would be the government restrictions, internet penetration and the education aspects of the country.

There is also a predomination of the Spanish language which also must be taken into account. If Amazon is going to sell kindle in Chile, and deliver books to customers at Chile -- then there must be a stock and office created at Chile for stocking and selling its wares. All these means extra cost and if Amazon sticks to selling ebooks online then it must compete with Google and Bing which provide the search engine for searches. Such considerations also have to come into focus when the viability is analyzed.

The Chile Market:

Chile borders Peru, Bolivia, and Argentina and among them is the most developed country of South America. It has the best education system and literacy rate and for the purpose of ecommerce it has the best telecom infrastructure with a growing broadband market and the estimates back in 2008 showed that there were over 1,461,799 broadband Internet connections in Chile, and now the nationwide broadband penetration rate is 8.8%. The Tarapaca Region, Antofagasta Region and Santiago Metropolitan Region have the highest concentration of broad band usage. VTR, Chile's cable company is the major provider followed by Telefonica Chile, Chile's biggest phone company. The surfing pattern for the Chileans show that they access sites more form the work place than from home. Thirty percent use the Cafes, and only 2.6% of the populations don't use the internet. (E-commerce and Internet industry in Chile)

Thus there is a great possibility that Chile will also be using the e-books and the online download facility. The use of the internet by the student community which is ever growing and the government insistence on education has spawned a new class of customer, the student hunting for text books at bargain rates and with the introduction of online purchase facilities and local deliveries this group of purchasers could be a valuable asset to Amazon. That is because the higher education in Chile is based on public funding both for public and private universities. Chilean higher education system had from the last century, higher education channel for the middle class. (Morales-Gomez; Torres, 131)

Combined with the education rate and with the liberal way the country is seeking to provide with communication facilities, where Chile holds the highest user rates for PC, internet and mobile in Latin America, and the market can be used by online marketers. There are reports that the Chilean has more revenue from it than the United States and Spain. Chilean surfers largely use the internet for socially necessary information and the sites Fotolog and YouTube are most accessed. Chile also got top rank in the Latin Technology Index there is a great potential for the use of the medium for ecommerce and further development of the market. (Lloyd, Chile Offers Marketers a Multiplatform Advantage Imedia Connection)

Over the last few years B2B e-commerce in Chile revealed a significant growth, while B2C e-commerce is still very small in size and the growth is slower compared with B2B e-commerce. E-commerce growth in the country has been advanced by business-to-business and business-to-government transactions. E-commerce in Chile was to the tune of U.S.$687 million by 2008, and the present moment shows that the E-commerce and it development has got to an advanced stage. The citizens have become used to online transactions and Chile has the highest penetration of credit cards, and online banking in Latin America. (E-commerce and Internet industry in Chile)

In future Chile could be the best bet for online advertising and mobile marketing with the government taking initiatives to expand this online market. (Lloyd, Chile Offers Marketers a Multiplatform Advantage Imedia Connection) it has to also be noted that the countries of Latin America recognize the importance of the internet. Chile has for instance, moved to legislating the access to internet as a right as much as access to clean water and light are rights. Governmental control of access to internet and limitations in its use has made countries like Cuba, and Venezuela unviable even though these countries have high internet penetration. In the case of Chile the climate for trade is the best in Latin America. (Deibert, 198) Presence in Chile could mean also the future prospects of expanding into the other markets like Argentina which is also progressing fast.

Expected Problems:

There could be the necessity of using Spanish for transactions… [END OF PREVIEW]

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Bringing Amazon.com to Chile.  (2011, March 14).  Retrieved July 19, 2019, from https://www.essaytown.com/subjects/paper/bringing-amazoncom-chile/119

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"Bringing Amazon.com to Chile."  Essaytown.com.  March 14, 2011.  Accessed July 19, 2019.
https://www.essaytown.com/subjects/paper/bringing-amazoncom-chile/119.