Amazon launches standalone Kindle Store in India

Twenty-four percent of Indian adults with Internet access have bought an ebook. Now that group could get a lot bigger: Amazon has launched a standalone Kindle Store in India and is selling Kindle exclusively through Indian electronics chain Croma.

Kindle 1photo: Amazon

Amazon does not yet operate a general e-commerce site in India, but it is now selling ebooks there. On Wednesday the company launched the India Kindle Store (www.amazon.com/kindlestoreindia), which sells over a million titles priced in Indian Rupees.

Indian customers can’t buy a Kindle through the store, but they can get one at Indian electronics chain Croma for 6,999 Indian Rupees (USD $126). It looks as though Croma is selling the basic, non-touchscreen Kindle that retails for $79 (with ads) in the United States.

In June, I wrote about the ebook transition in India. In a presentation at Publishers Launch BEA, Bowker’s Kelly Gallagher said that 24 percent of Indian adults with Internet access have bought an ebook. It’s key to look at the size of the overall population combined with the Internet penetration rate: “Suddenly, India becomes the second largest potential market” after the United States. The transition is primarily led by professional, business and academic ebooks, he said — 80 percent of Indian ebook buyers have bought an ebook in one of those genres.

In February, Amazon launched the Junglee.com marketplace in India. The site aims to match sellers and buyers. Many Indian customers already use Amazon.co.uk and Amazon.co.uk offers free super saver shipping to India. Amazon is also building a fulfillment center in Mumbai.

Why Wal-Mart Is Worried About Amazon?

Five years ago, the world’s largest retail chain didn’t have to worry much about the world’s largest online mall. Only about a quarter of Wal-Mart Stores (WMT) customers shopped at Amazon.com (AMZN), according to data from researcher Kantar Retail. Today, however, half of Wal-Mart customers say they’ve shopped at both merchants. That’s leaving the mega-retailer—which long ago bested local brick-and-mortar merchandise stores and supermarkets across America—with a massive online competitor that is too tough to ignore.

Threatening Wal-Mart’s dominance are two trends: The discounter’s traditional customers—bargain hunters making less than $50,000 a year—are getting more tech-savvy, and more-affluent shoppers who began frequenting Wal-Mart during the recession are returning to Amazon as their finances improve. Amazon has moved into merchandise categories that Wal-Mart traditionally has sold, from diapers to vacuum cleaner bags. In its last fiscal year, Amazon posted 41 percent revenue growth, to $48.1 billion, vs. 8 percent at Wal-Mart. The chain’s 2011 online sales amounted to less than 2 percent of its $264 billion in U.S. revenue, says Kantar. “Amazon is always in our sights,” says Jeremy King, chief technology officer at the retailer’s @ WalmartLabs skunkworks in Silicon Valley. “My biggest issue is playing a catch-up game.”

In the last year Wal-Mart has increased its investment in its online business. The company has spent more than $300 million acquiring five tech firms since May and hired more than 300 engineers and code writers in the U.S. and India. Wal-Mart is also launching a program to allow the 20 percent of its customers without credit cards or bank accounts to make online purchases.

Wal-Mart’s acquisitions include Kosmix, a social-media firm, and iPhone app creator Small Society. The company hopes the newcomers can find a way to stop shoppers from engaging in scan and scram. That’s when would-be customers use their smartphones in stores to scan an item’s bar code and then buy it online from a rival merchant. The chain’s tech team also is working on a concept called Endless Aisle, which would let shoppers immediately order from Walmart.com via smartphone if an item is out of stock. “You can’t ask people to leave their phones at the door. So you have to give them value and an experience,” says Venky Harinarayan, @WalmartLabs’ senior vice president of global e- commerce. The former Amazon executive joined from Kosmix.

Wal-Mart is trying to improve links between its store inventory, website, and mobile phone apps so that more customers can order online and pick up their purchases at stores, which half of Web customers do already. Wal-Mart is trying Web-based shopping tactics, like its Pay With Cash program for Wal-Mart customers who don’t have credit cards. The new program allows them to reserve products online and pay cash at their nearest store. To cater to its affluent customers, Wal-Mart is selling more expensive items—for example, high-end televisions from Sony (SNE) and Samsung—only online.

Harinarayan’s team is also trying to tackle a new problem for Wal-Mart. Last year the chain was the No. 1 destination for holiday shoppers, with 53 percent of U.S. customers visiting its stores. That was down from 59 percent the year before. To lure gift shoppers, the techies have developed a Shopycat feature that scans the social media preferences of a consumer’s Facebook friends and suggests gift ideas sold on Walmart.com. About 150,000 users have installed the app.

To roll out more such innovations, Wal-Mart must improve its in-house e-commerce technology, so King will hire 87 engineers and coders to bolster the links between the stores and the website. “We’re starting from scratch to build a foundation,” says the EBay (EBAY) veteran. “Ideally, we’d have this platform built a couple of years ago.”

 

The bottom line: Wal-Mart, which gets less than 2 percent of its U.S. sales online, aims to bolster its technical capabilities to compete with Amazon.

 

Black Friday Sales Hits Record, Retail traffic and Foot-falls up.

Preliminary reports for Black Friday indicate that retailers may have seen their strongest sales ever during the all-important kick-off to the holiday shopping season.

black friday sales

Retail sales on Black Friday climbed 6.6% this year to an estimated $11.4 billion, according to ShopperTrak, which tracks foot traffic at malls and stores. Last year, sales climbed just 0.3% to $10.7 billion, which was a record one-day sales amount at the time, according to the company.

“This is the largest year-over-year gain in ShopperTrak’s National Retail Sales Estimate for Black Friday since the 8.3 percent increase we saw between 2007 and 2006,” said ShopperTrak founder Bill Martin. “Still, it’s just one day. It remains to be seen whether consumers will sustain this behavior through the holiday shopping season.”

However, sales have been strong throughout the entire month of November with retailers rolling out holiday deals earlier than ever. In the two weeks leading up to the week of Black Friday, retail sales were up 3.6% and 3.8%, respectively, ShopperTrak reported.

“Retailers continue to stretch out Black Friday weekend by enticing shoppers with doorbuster deals weeks in advance,” said Martin.

Online sales have also proven to be strong, with many big-box retailers and department stores offering deals online earlier this year.

Black Friday online sales surge 24%

Online sales were up 39.3% on Thanksgiving Day and 24.3% on Black Friday compared to the same days last year, according to IBM’s (IBM,Fortune 500) Coremetrics, which tracks real-time data from 500 retailers in the apparel, department store, health and beauty and home goods categories.

“This year marked Thanksgiving’s emergence as the first big spending day of the 2011 holiday season with a record number of consumers shifting their focus from turkey to tablets and the search for the best deals,” said John Squire, chief strategy officer at IBM’s Smarter Commerce division.

Consumers also spent slightly more than they did last year, although they spent most of that money on themselves. According to NPD Group consumers spent about 3% more on purchases during Black Friday. However, about 44% were self purchases up from 33% last year, the research group said.

Retail traffic on Black Friday up 2%

Total US visits to the top 500 Retail websites increased 2% on Black Friday as compared to 2010 and received more than 173 million US visits. Traffic has increased each day leading up to the Thanksgiving holiday and the total visits dipped slightly (-1%) on Black Friday compared Thanksgiving Day 2011. Early Black Friday sales resulted in a shift of online traffic, which climbed prior to the Thanksgiving holiday, however, continued heavy promotional activity helped to drive significant online traffic on both Thanksgiving and Black Friday. While Black Friday has been the top day for online retail traffic over the past two years, warm weather and early store openings encouraged shoppers to go online sooner this season.
DMS Retail 500 11-25-2011.png

Among the categories driving the growth in traffic on Black Friday were Department Stores (e.g. Amazon and Wal-Mart) Apparel & Accessories, Appliances & Electronics (e.g. Best Buy) and Video & Games (e.g. Game Stop).
DMS Retail Categories 11-25-2011.png

Below is a list of the top visited retail sites on Black Friday:
DMS Retail 500 Sites 11-25-2011.png

Many of the major retail websites experienced growth on Black Friday, including Amazon, Best Buy, JC Penney, Sears and Kohl’s. Amazon.com was the most visited website on Black Friday for the 7th year in a row.

Learning from the Failures of Amazon Cloud

Due to some serious failure in Amazon data centre in Northern Virginia in United States, Amazon Web Services (AWS) suffered a major outage in the last week of April, affecting thousands of websites that rely on AWS. Many start-ups and web companies — including some companies in India — who hosted their services in the US East region were affected due to this outage. Major sites that went down include Foursquare and Quora. This is an embarrassing situation for Amazon, the undisputed leader in cloud computing today. With cloud computing getting increasing attention, startups and enterprise customers are increasingly deploying their services on AWS for their Web-scale computing infrastructure. This AWS outage has raised lots of questions in the minds of users as well as potential cloud users regarding the reliability of the cloud. Naturally, every CIO is concerned. What lessons can we learn from such disasters? Is cloud something that we can bet our business on? The short answer is a resounding yes. Interestingly, other marquee customers like Netflix and SimpleGeo also use AWS to offer their services; but their services were not affected. 

Businesses should be fully aware of the limitations of cloud and should have a design that can sustain such failures. Such failures bring into sharp focus the need for architecture and design that must be addressed clearly. Moving an application to cloud does not merely imply re-locating the server to the data centre of the cloud service provider. Such an approach is all right for applications that are not “mission critical” and whose services can be down for several hours without any major impact. But a large number of services are moving to the cloud to address the core issues of: High availability; ability to scale, that too Web-scale (orders of magnitude increase in usage and/or users); consistency of performance. Though the problem of Availability Zone interdependencies partly lies with AWS infrastructure, many companies failed to recognise that the other part of the problem lies with their developers too. Every cloud expert will acknowledge that the mantra for successful architecture in the cloud is ‘Design for Failure’. Yet, many companies did not adhere to that golden rule in this recent outage. The reasons could be ranging from a lack of technical awareness for configuring high availability to the cost of operating a complex global high availability setup in AWS.

There are a couple of approaches to architecting high availability systems on AWS cloud. One approach is to have businesses running their applications across multiple Availability Zones. In this setup, the application is distributed across multiple zones on AWS (like US East 1A and US East 1B). The failure in a particular zone will redirect the traffic to a different zone that is stable.
This is a cost effective solution (in comparison to the second approach of distributing applications across multiple “Availability Regions”). However this approach may not be sufficient when the entire availability zone goes down, as it happened in the recent outage. The second approach is to run the application across multiple “Availability Regions”. In this setup, the application is hosted on multiple regions on AWS (like US East, US West, Europe and Singapore).

It is possible to have geo-distributed traffic and high availability, across continents in this setup. This setup is recommended for companies that need high level of scalability, load balancing and global user access requirements. In the event of failure at one region, the traffic can be redirected to other stable regions. This approach would have addressed the current AWS outage scenario, and those companies that were unaffected in the April outage used this design principle. The two approaches mentioned here offer a glimpse of the possibilities with regards to designing for failure. Of course, the design can be extended further (to involve multiple clouds or hybrid solutions) taking the business needs into consideration. A cloud architecture should factor some key points: We should avoid single point of failure; The system should not compromise on scalability and the application should be available at all times; The infrastructure setup should align closely to the load requirements.

Any failover setup will result in additional cost. However, it is atrade-off between higher costs of infrastructure vis-à-vis the eventual higher price of unhappy and/or lost customers! In short, April outage of AWS services will bring the focus of cloud computing research and deployment to the importance of architecture and design. We should remember that we can design systems taking into consideration multiple possibilities of failures; and, if well designed, nothing will really fail completely. With this approach, getting to cloud should be a lot more comfortable journey and one that has significant business benefits. It may be worthwhile keeping in mind what one of the key designers said “failure is a first class citizen in our design. We discuss failure all the times, including our lunch hour and build systems with failure in mind”. That is the real lesson we can learn from April outage of AWS. 

Successful Brand Marketing

With an increase in trust deficit world over, here is what brand managers need to weed out of their environments to retain their brands’ trust

MARKETING’s greatest invention is the brand. In effect unheard of 100 years ago, brands and branding now march triumphant. Everything and everybody — places and destinations, political parties and social movements, people (first celebrities and politicians, now, it appears, all of us) — are brands.

Yet, aside from a few usual suspects such as Apple, in the branding heartlands, all is not well. Y&R executives John Gerzema and Ed Lebar highlighted the problem in 2008, when they reviewed longitudinal evidence from Y&R’s Brand Asset Valuator research programme. In their book The Brand Bubble, they charted a ‘precipitous’ decline in brand trust since 1993, along with sharp falls in consumer perceptions of quality, brand awareness and ‘brand esteem’.

In 1993, for example, consumers trusted 52% of the brands researchers asked them about. Fifteen years later, the figure had fallen to 25%. Gerzema and Lebar pointed out that stock markets may have been pushing up the value of brand-owning companies, but brands themselves were being ‘hollowed out’.
Then came recession. Halfway through, Promise chief executive Charles Trevail observed that “according to every survey and index on trust in institutions and organisations from around the world, trust is in terminal decline”. Even when the recession was supposed to be lifting, Alterian chief executive David Eldridge commented on his company’s latest research: “Consumer trust is at an all-time low.”

So what’s the problem? How can brands and branding be so successful, yet so sickly at the same time? The answer may lie with the occupational diseases of brand management — diseases that are generated by the daily working lives of brand managers.

MASKING THE PROBLEM
Brand management as ‘mask management’ is the most common of such diseases. Because brands are all about external communication, many brand managers find it hard to resist the temptation to paint ‘lipstick on the gorilla’ — telling customers what the brand manager knows they would like to hear, rather than keeping to the truth of what the organisation can, or actually intends to, deliver.

In reality, the most important part of the brand manager’s job is one of internalisation: bringing customer views and perceptions from outside the organisation inside, so that the organisation understands, responds and resonates to customers’ changing demands. Yet, activity-wise, the minute-by-minute focus of the day job is external communication. When changing the external message is easy (and fun) and changing the organisation inside is hard (and painful), the lures of lipstick-on-the-gorilla mask management can become irresistible. In fact, they can even be dressed up as a new theory. Remember when we were told that punters didn’t buy the beer, but its advertising? Remember George, the Hofmeister bear?

Next on the list is brand hubris. Not long ago, it was fashionable among brand consultants to show their clients a chart depicting the relative prices of different T-shirts. Some sold for a fiver or less, while branded ones were at least £50. “Which T-shirt do you want to be?” the consultants would ask. The difference between being able to charge £5 and £50 lies in “branding”, they would say. “We can help you become experts at ‘branding’.”

Well, they may have been experts at branding, but they were dunces at economics. If you sell 1000 T-shirts for £5 with a £1 margin, you make £1000 profit. If you sell 10 for £50 with a £48 margin, you make £480 profit. By implying that the supply/demand curve could be ‘branded’ away, these consultants were usually doing their clients a real disservice. While they were doing the rounds with their presentations on ‘branding’, full of impressive words such as ‘intangibles’, the brand that romped it on the high street was Primark.

That is not to say that discounting is always the best strategy. Rather, it is to challenge the widespread belief that it’s the ‘extra stuff on top’ — the stuff added by ‘branding’ — that is the source of brands’ margins and profits. The fact is that, apart from some special cases such as luxury goods, if you look at most successful brands — such as Amazon, Apple, Dell, easyJet, Facebook, Google, IKEA, Nike, Starbucks, Tesco, Toyota, Virgin and Wal-Mart — what marks them out is not superb ‘branding’ (sometimes it’s superb, but very often it’s not) but that they deliver outstanding customer value, often via breakthrough innovations, technology and/or underlying business models.
‘Branding’ alone hardly ever makes a business successful. It is businesses, including their culture and ethos, that make brands successful. And as soon as the business drops the ball on innovation, service, quality or price, or forgets its cultural roots, the brand quickly loses its lustre.

CLARITY OF PURPOSE
Brand narcissism is our third, closely related, occupational disease. Brand narcissism works on two levels. At the first, every brand manager desperately wants their target audience to recognise their brand, love it and be loyal to it by, for example, acting as an unpaid yet enthusiastic brand advocate.
There is nothing wrong with these dreams per se. They are natural. What is wrong is when we morph the wish into a ‘strategy’ of ‘success by being popular’ — where getting people to talk about and ‘love’ the brand becomes an end in itself, pretty much divorced from the value it’s supposed to be delivering.

The second level of this brand narcissism, which is even more dangerous, is where the brand manager forgets the underlying purpose of the brand and starts acting as if it’s the job of the customer to add value to the brand (by paying a price premium or being its advocate, for example), rather than the job of the brand to add value to the customer.

An obvious point, perhaps, but it can be difficult to remember in a world where your every passing thought, and key performance indicator, is about how well-remembered you are, how preferred you are, or how many people are talking about you.

Our final occupational disease is toolkit myopia. Brand managers are surrounded by a dizzying array of sophisticated tools and techniques for research, testing, data-gathering and evaluation. They are on an endless quest for the breakthrough insight and the sparkling creativity. It’s difficult to master all these things and the quest easily becomes obsessive. So much so, that it soon seems as if excellence at these diverse technicalities lies at the heart of successful branding — when it is not.

You can, for example, use exactly the same technical toolkit, excellence, to build a brand that perfectly communicates a brand’s unique value.
And to hide the fact that the brand is nothing more than a me-too mediocrity. You can use technical excellence to articulate specialness and hide sameness, but content-wise, they are opposites, having an opposite meaning to the customer.

The one thing that branding as mask management, brand hubris, brand narcissism and toolkit myopia have in common is that they destroy trust. They are potentially catastrophic mistakes, yet they are in the air brand managers breathe, growing naturally in their working environment. So they have to be combated on a daily basis.

How? What’s the antidote? To remember that a brand’s real job is to build trust, and that everything the brand does must be tested against this yardstick. It’s this simple human understanding that successful brand managers never let anyone forget.

Borders to offer five free books with e-book software

Borders Group Inc. said Friday it will offer five free books, including a Dean Koontz novel, to customers who download the bookseller’s free electronic-book reading software.

Through July 14, customers who download the software will receive Frankenstein: Prodigal Son by Dean Koontz; One Shot by Lee Child; The Alchemyst by Michael Scott; Julia Child’s Julia’s Kitchen Wisdom and Master your Metabolism by Jillian Michaels. The books are worth more than $40 collectively, Borders said.

Customers will also get a chapter of Danielle Steel’s forthcoming novel Legacy, which isn’t available anywhere else.

Borders launched its e-bookstore earlier this week, entering the fray along with competitors Amazon.com and Barnes & Noble.

Borders e-book reading software is available across an array of platforms including e-book readers and mobile devices such as the iPhone, Blackberry and Android phones with its partner Kobo.

Brazil Consumers Draw Retail to Smaller Cities

Brazilians’ biggest shopping spree since 2001, fueled by rising wages and credit, is drawing investments to smaller cities as retailers chase consumers outside of Sao Paulo and Rio de Janeiro.

Macae, a former fishing village that’s now the base for Brazil’s offshore oil production, will open its first mall in September, meaning its 169,000 residents won’t need to drive three hours to Rio de Janeiro to shop. The statistics agency today said sales rose 10.5 percent in May from a year ago.

Consumer spending is driving economic growth in some of the poorest corners of Brazil, helping shield the economy from its first decline in exports in two years. CBL & Associates Properties, Inc. the third largest mall operator in the U.S., chose Brazil’s 151st-largest city to build its first overseas shopping center as retail sales slump in the U.S.

“This is probably the first time in history we’ve seen this boom in consumption penetrate so deep into the countryside,” said Alfredo Coutino, senior economist for Latin America at Moody’s Economy.com in West Chester, Pennsylvania.

Brazil, Latin America’s largest economy, expanded 5.8 percent in the first quarter and 6.2 percent in the last three months of 2007, the fastest rate in three years. It’s benefiting from surging domestic demand, public spending and rising prices for soy and other commodities.

Retail, supermarket and grocery store sales have increased more than 10 percent in four of the first six months of 2008.

Brazil’s real gained 0.2 percent 1.5924 per dollar at 1:44 p.m. New York time from 1.5948 late yesterday.

Consumers, Amazon

Average real incomes adjusted for inflation in Brazil’s six largest metropolitan regions jumped 12.7 percent, to 1,208 reais ($758 ) in May, as economic growth has accelerated the past three years, according to the national statistics agency. Bank lending in May rose 32.4 percent from a year earlier.

The strengthening muscle of the Brazilian consumer is being most intensely felt in the impoverished north and northeast.

In Maranhao, Brazil’s second-poorest state, retail sales surged by 14.3 percent last year, above the national average of 9.6 percent. Sadia SA, the country’s second-biggest food maker, is investing 10 million reais to expand a distribution center in the Amazon city of Manaus to satisfy demand from more Brazilians exiting poverty.

“As Brazil makes more money selling oil and commodities, the shopping dollars will follow and we’ll see more malls being built,” said Rich Moore, a real estate investment trust analyst for RBC Capital Markets in Cleveland.

At least 30 malls are under development after sales at the country’s 387 shopping centers surged 16 percent to $58 billion reais last year, says Marcelo Carvalho, president of Brazil’s Association of Shopping Centers. He estimates growth will slow to 11 percent this year.

Macae

Stephen Lebovitz, president of Chattanooga, Tennessee-based CBL, said the company is investing in Macae because of the town’s quick growth and lack of shops.

Macae is the base for ships heading out to the offshore oil platforms in Campos Basin, where Brazil got about 85 percent of its oil production last year. Gross domestic product per capita in Macae jumped 64 percent from 2002 to 2006, to 36,000 reais, triple the national average.

CBL is expanding beyond the U.S. as an economic slump in its home market reduces demand for consumer goods. The company’s net income may drop 38 percent in 2008, the third consecutive annual decline, according to the median estimate of analysts surveyed by Bloomberg. CBL shares fell 46 percent in the past 12 months.

The mall in Macae will cost 60 million reais to build. It’s 65 percent leased before its September opening date.

`100 Percent Leased’

Economic growth is also stoking inflation, which accelerated to a 31-month high of 6.06 percent in June. The central bank has raised interest rates twice this year in a bid to tame prices.

CBL’s minority partner in the Brazilian joint venture is TencoCBL. Chief Executive Officer Eduardo Gribel said he has commitments from CBL to spend $120 million through 2009 building malls in Macae and four other markets where no shopping centers currently exist. Among their prospects: the sweltering Amazonian port city of Macapa.

Lebovitz declined to say how much CBL plans to spend.

The mall in Macae will yield annual returns almost double the 6 percent to 8 percent average of U.S. malls, depending on the outlook for inflation and how much the central bank raises borrowing costs from the current 12.25 percent, Gribel, 54, said in an interview after meeting with the mall’s future tenants at the construction site.

Brazil’s central bank is expected to raise rates to 14.25 percent this year, according to a July 14 central bank survey.

“There’s always a risk of a blip in the economy, but I’ve never been in a mall in Brazil that’s not 100 percent leased,” CBL’s Lebovitz said.

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