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230 ABOUT THE AUTHORS
233 TEAM ARCS

CONTENTS

1st Edition, Issue – 1, June 2019

STRATEGY AND GENERAL MANAGEMENT

1 Peppa Pig Storms China: Fighting Against All Odds?
Dr. Garima Ratna, ARC, Pune

9 Beyond Meat: Taking on the Beef Industry
Vasudha M, ARC, Chennai

22 Bugcrowd: The Crowdsourced Security Platform
Dr. Suchitra Mohanty, ARC, Kolkata

32 Amazon India's Strategy to Solidify in E-Commerce Market
Nilosha Sharma, ARC, Ahmedabad

46 Ahold Delhaize’s AI Driven Supply Chain Initiative
Sharmila Majumdar, ARC, Kolkata

58 Rakuten’s ‘Cashless Stadium’ Initiative: Will It Pay Off?
Subhankar Dutta , ARC, kolkata

69 eBay’s Second Shot in India: Stormy Days Ahead?
Shilpa Bhadrapur, ARC, Pune

79 Campbell's Turnaround Plans Under CEO Mark Clouse
Nilosha Sharma, ARC, Ahmedabad

92 The Makeover of Dharavi: Will it Change the Face of Mumbai?
Keka Lahiri, ARC, Kolkata

105 Patisserie Valerie Crisis: What Went Wrong?
Shilpa Bhadrapur, ARC,Pune

117 Uber Makes a Swift Ride in the Middle East with Careem Acquisition
Disha Parikh, ARC, Ahmedabad

128 Video Gaming: Will the Original Console Gaming Spell Magic on Consumers Again?
Krupa Kalsy, ARC, Pune

ETHICS AND SOCIAL RESPONSIBILITY

139 E-waste Recycling in India: A Sustainable Initiative?
Sushree Das, ARC,Noida

150 Tiny Homes to Set the Trend in Urban Living
Krupa Kalsy, ARC, Pune

ECONOMICS, POLITICS AND BUSINESS ENVIRONMENT

161 Troubles Brewing at Huawei: Can the Tech Giant Survive?
MeenuBhatnagar, ARC, Pune

175 Japan’s Tourism Boom: A Blessing Amidst Challenges
Shilpa Bhadrapur, ARC, Pune

KNOWLEDGE, INFORMATION AND COMMUNICATION

186 Advanced Analytics: Scripting Business beyond the Hype
Dr. Garima Ratna, ARC,Pune

199 Voice Search – The New Driver of Retail Landscape?
Amritha Sahay, ARC, Pune

MARKETING

209 Starbucks’ ‘Dark Social’ Strategy to Drive Growth
Nilosha Sharma, ARC, Ahmedabad

221 Coca-Cola’s ‘Together is Beautiful’ Campaign: Will it Spell Magic?
Amritha Sahay, ARC, Pune

1st Edition, Issue - 1 Peppa Pig Storms China: Fighting Against All Odds?

Peppa Pig Storms China
Fighting Against All Odds?

Case Study

This case was written by Dr. Garima Ratna and reviewed by Doris Rajakumari John, Amity
Research Centers Headquarter, Bangalore. It is intended to be used as the basis for class
discussion rather than to illustrate either effective or ineffective handling of a management
situation. The case was compiled from published sources.
© 2019, Amity Research Centers Headquarter, Bangalore.
Website: www.amity.edu/casestudies/
No part of this publication may be copied, stored, transmitted, reproduced or distributed in
any form or medium whatsoever without the permission of the copyright owner.

Page – 1

1st Edition, Issue - 1 Peppa Pig Storms China: Fighting Against All Odds?

Author: Dr. Garima Ratna

Peppa Pig Storms China: Fighting Against All Odds?

Abstract: Peppa Pig (PP), the preschool brand from the house of Entertainment One (eOne), a
UK based online entertainment media company, had been regaling kids around the world since
1973. All across the globe, the PP brand had encountered success and massive adulation but
the experience in China turned out to be different. The brand made a foray into the China
market in 2015 and initially was an outright success with hundreds of downloads in a short
span of time. In fact, the popularity encouraged creative content developers to use the brand
in memes, video clippings, short videos which hurt the sensibilities of Chinese viewers. But
then, as time progressed, PP came to be associated with ‘society’ people or gangsters in China
and was accused of spreading a subversive culture. The turn of events led to a streaming ban
to the extent that a video streaming app had to withdraw/destroy hundreds of hours of PP
related content. The reputation that PP inadvertently earned inflicted a dent in the brand’s
name. Undeterred, the company in order to rebuild its customer base and brand equity
launched a PP movie in 2019 to commemorate and capitalise on the Chinese year of Pig.
Considering that China was a sensitive and a heavily regulated market for online content,
would the brand PP re-establish itself post the ban controversy?

Case Study

Peppa Pig (PP), a preschool kids’ brand from the house of Entertainment One (eOne), a UK
based online entertainment media company, had regaled kids and adults alike since 1973. A
simple narrative and even simpler characters that constituted a small family of four pigs made
the brand PP a household name in UK, Canada, Spain and several other countries. In 2018, the
brand was in news due to the streaming ban imposed on it in China. The brand entered China
in 2015 and in a short period it garnered a record number of downloads and superlative sales
of related merchandise. By 2018, PP had reached remarkable popularity in China. But it
emerged that China was a different market to operate. The cultural sensitivities of its people
were different from any other nation. The rising popularity of the PP brand led to the China
market being inundated with PP memes, online videos, short clips, etc., many of which
offended the sensibilities of Chinese people. The outcome was that the PP brand came to be
associated with ‘society’ people or gangsters in the country. The UK based brand was accused
of spreading subversive culture in the heavily regulated country. Such was the furore that the
apps which streamed PP videos had to withdraw loads of online content following a ban
imposed on it. However, the ban did not deter the company to expand its base in China. In
2019, which happened to be China’s Year of Pig, the company planned a major expansion drive
and launched a PP movie with a simple storyline rendered through simple village characters. A
promo video was launched which resonated well with the Chinese audience. Against this
background, would PP brand regain its lost ground? Would it be able to survive the oddity of
the China market? Should PP content creators be extra vigilant in creating content considering
it was a preschool brand?

“© 2019, Amity Research Centers HQ, Bangalore. All rights reserved.”

Page – 2

1st Edition, Issue - 1 Peppa Pig Storms China: Fighting Against All Odds?

Peppa Pig: The Brand Journey

eOne was an online platform that dished out entertaining media content to its large customer
base spilled over in many countries including Canada, UK, Austria, Benelux, and Spain.1 It was
founded in 19732 by Darren Throop3 (Throop) and was based in Toronto, Ontario, Canada.4 The
company was involved in the acquisition, development, production, financing, distribution, and
sale of television, film and music content rights from across the world, across genres and
across various formats (digital, DVDs, Blu-rays and TV) too. As of 2019, the company’s content
rights library owned nearly 80,000 hours of film and television content and 40,000 music
tracks.5 eOne’s holdings included The Mark Gordon Company (Grey’s Anatomy, Criminal
Minds), children’s franchise (Peppa Pig), Paperny Entertainment (Cold Water Cowboys, Yukon
Gold, Chopped Canada) and Force Four Entertainment (Seed, Border Security: Canada's Front
Line). It also included partnerships with ICF Films (Rookie Blue, Saving Hope), Allan Hawco's
Take The Shot Productions, Amaze Film + Television (Call Me Fitz) and a first-look deal with
producer David Lancaster (Whiplash, Nightcrawler).6 The company registered revenues of
£1,044.5 million and £77.6 million of Profit Before Tax for the year 2018. Notably, for the year
2019, the online entertainment company took a strategic decision to combine the separate Film
and Television Divisions into a single entity- the Film, Television & Digital Division. Believing in the
principles to ‘Connect’, ‘Create’ and ‘Deliver’, the company’s business model focused on
‘producing, managing and monetising a portfolio of the highest quality content’. The Family &
Brands business line brought maximum contribution to the underlying EBITDA. (Exhibit I). Family
& Brands business line focused on developing a portfolio of children’s specific content; the most
popular and successful amongst them being Peppa Pig (PP) and PJ Masks.7

Exhibit I
eOne’s lucrative Family & Brands Business

Source: “Entertainment One 2018 Annual Reports and Accounts”,
https://www.entertainmentone.com/media/ar2018/#page=1, 2018

1 “Overview Entertainment One”, https://www.crunchbase.com/organization/entertainment-one#section-overview
2 “eOne's Competitors, Revenue, Number of Employees, Funding and Acquisitions”,
https://www.owler.com/company/entertainmentone
3 Houpt Simon, “How the CEO of Canada's eOne built a global entertainment giant”,
https://www.theglobeandmail.com/report-on-business/careers/careers-leadership/how-the-head-of-eone-
claimed-tinseltown-without-going-all-hollywood/article23136719/, May 12th 2018
4 “Overview Entertainment One”, op.cit.
5 “Company Overview of Entertainment One Ltd.”,
https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=7654173, April 23rd 2019
6 “How the CEO of Canada's eOne built a global entertainment giant”, op.cit.
7 “Entertainment One 2018 Annual Reports and Accounts”,
https://www.entertainmentone.com/media/ar2018/#page=1, 2018

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1st Edition, Issue - 1 Peppa Pig Storms China: Fighting Against All Odds?

Peppa Pig

PP was launched in the UK market in May 2004 and since then it had been engaging preschool
kids with entertaining content not just in UK but across the globe including Canada, Australia,
parts of Europe and the US. Broadcast in these territories was made possible through licensing
rollout across multiple product categories.8 John Meagher, Journalist with the Irish
Independent9, attributed the success of PP to its simple animation and clever storylines. He
stated, “Thanks to its combination of superb animation, clever storylines with an
empowerment message and the sort of storylines that appeal to both two-year-olds and their
parents, Peppa Pig soon became a classic of the genre.” Besides, the choice of making an
animal as the central character worked in the kids’ animation brand’s favour. The animators
overcame issues related to race, class and background with an animal character. The fact that
PP was a female added to its appeal as during the time there were very few central female
characters in animation. Phil Davies, one of the creators of PP, analysed, “I think the key is
that she involves the audience. The whole look of it is so clean and fresh. You never see the
strings, as it were. And the language is clean. That takes a lot of effort.” Mark Baker, another
creator of PP, spoke about how each frame of PP was created from a child’s perspective. He
explained, “That is why Peppa's house is on its own, at the top of a hill. When a child draws
their house, even if it's in a terrace, the child will usually draw it by itself.”10

After ruling the hearts of millions in UK, PP ventured into the China market in 2015.11 In fact
the ground preparations began with PP’s parent company acquiring 70% stake in Astley Baker
Davies (ABD) (PP’s production company) for £140 million. The move was in alignment with the
company’s strategy of doubling the size of the business during the period between 2015 and
2020. eOne identified a major growth opportunity for the preschool brand firstly, by continued
expansion in the US and secondly, by penetrating new markets; China being a prominent
choice12. The company even planned to increase utilisation of its licensing and merchandising
activities to boost further growth. According to Throop, “‘Peppa Pig’ has become a worldwide
success and reflects the strength of our 10-year partnership working with ABD. Already the
number one pre-school property in the U.K., Australia, Spain, Mexico and Brazil, and a leader in
other territories around the world, the growth opportunities for ‘Peppa Pig’ are significant.”13

Can Peppa Pig Conquer China Amidst Adversity?

PP was first broadcasted in China in 2015 on the state broadcaster China Central Television

(CCTV) and since then had earned a massive fan following amongst preschoolers and adults
alike.14 PP’s Chinese expansion included PP books in English, Chinese and other local

languages, a website and a host of merchandise on sale. The preschool brand roped in PPW as

8 “Entertainment One 2017 Annual Report and Accounts Bringing the Best Content to the World”,
http://www.annualreports.com/Click/25278, 2017
9 The Irish Independent is Ireland's largest-selling daily newspaper, published by Independent News & Media.
10 Meagher John, “How Peppa Pig took over the world”, https://www.independent.ie/life/family/learning/how-
peppa-pig-took-over-the-world-30309314.html, May 29th 2014
11 “Peppa Pig enters China!”, http://urbanfamily.thatsmags.com/guangzhou/post/233/peppa-pig-enters-
china.html, June 25th 2015
12 ibid.
13 Barraclough Leo, “Entertainment One Buys ‘Peppa Pig’ Producer”,
https://variety.com/2015/tv/global/entertainment-one-buys-peppa-pig-producer-1201606076/, September 30th
2015
14 Bolger Rosemary, “How Peppa Pig became a gangster figure in China”, https://www.sbs.com.au/news/how-
peppa-pig-became-a-gangster-figure-in-china, May 2nd 2018

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1st Edition, Issue - 1 Peppa Pig Storms China: Fighting Against All Odds?

the local licensing agent, Penguin China as publishing partner and King Bee as the toy
licensee.15 In 2017, the company signed a deal with Merlin Entertainments to roll out brick and
mortar entertainment spaces. The first space was inaugurated in Shanghai. The space called
Peppa Pig World of Play covered an area of 11,850 square foot in LC Mall, Pudong.16 Within
weeks of its China launch, PP apps were downloaded more times than any other country
across the world.17

The excerpts from eOne’s annual report in 2018 revealed the growing revenue fetching
potential of PP brand in China and elsewhere. The report revealed, “Peppa Pig has continued
to grow with retail sales of US$1.3 billion (2017: US$1.2 billion) and revenue of £84.7 million
(2017: £70.0 million), an increase of 21%. Year-on-year growth was driven by continued strong
performance across all revenue streams, including continued growth in mature and emerging
markets such as the UK and China, respectively. Over 40 million books have been sold in China
since Peppa Pig’s launch in April 2016 demonstrating the strength of the brand in this territory.
There are now 43 live licensing agreements in China (2017: 22) across all key licensing
categories. Performance has been bolstered by significant broadcast exposure from state
owned CCTV and all its major VOD platforms in the region, including Tencent, iQIYI and Youku,
with over 60 billion VOD views since launch in October 2015 in China, across all platforms. In
addition, Peppa Pig was launched on TV Tokyo in Japan in October 2017 and Disney Junior in
January 2018. Master licensing partner for the country, Sega Toys, recently hosted an exclusive
retail event in spring 2018 which will be followed by a nationwide retail rollout in June 2018.
The US continues to be a key market for Peppa Pig. New episodes premiered in FY18 and the
show transferred to the main Nickelodeon channel where it has been a ratings success, driving
strong licensing and merchandising revenues.”18

As of May 2018, the animation series had 13.4 billion views on streaming platform iQiyi19 and a
high approval rating from fans on Douban20. PP had aired thousands of memes and released a
wide range of merchandise for adults. The brand had even generated a tattoo craze amongst
Chinese population.21 Chinese netizens that included celebrities were seen sporting temporary
‘Peppa Pig’ tattoos in selfies, in addition to PP images appearing on cups, watches and clothes
all over.22 Apart from this, a short rhyme that translated to ‘get your Peppa Pig tatt, shout out
to your frat’ had also gone viral.23 Zheng Donghua, Head of Huawang company (an exclusive
Peppa Pig toys producer) showcased the popularity of PP when he stated, “Last year, we set a

15 “Peppa Pig enters China!”, op.cit.
16 Moon Louise, “Why this could be the year China falls in love with the smiling pink Peppa Pig that has taken the
world by storm”, https://www.scmp.com/business/companies/article/2184719/why-could-be-year-china-falls-
love-smiling-pink-peppa-pig-has, February 3rd 2019
17 Hardman Robert, “As children's favourite Peppa Pig conquers the world, ROBERT HARDMAN on the sexist pig
who's made her creators £140million”, https://www.dailymail.co.uk/news/article-3259889/As-children-s-
favourite-Peppa-Pig-conquers-world-Sexist-pig-s-creators-140million.html, October 5th 2015
18 “Entertainment One 2018 Annual Reports and Accounts”, op.cit.
19 iQiyi, formerly Qiyi, is an online video platform based in Beijing, China launched on April 22, 2010. iQiyi is
currently one of the largest online video sites in the world, with nearly 6 billion hours spent on its service each
month, and over 500 million monthly active users.
20 Douban.com, launched on March 6, 2005, is a Chinese social networking service website that allows registered
users to record information and create content related to film, books, music, recent events, and activities in
Chinese cities.
21 Ma Alexandra, “China bans Peppa Pig to combat 'negative influence' of foreign ideologies”,
https://www.businessinsider.in/China-bans-Peppa-Pig-to-combat-negative-influence-of-foreign-
ideologies/articleshow/63985738.cms, May 1st 2018
22 “China gives ‘subversive’ Peppa Pig the chop”, https://www.thehindu.com/news/international/china-gives-
subversive-peppa-pig-the-chop/article23738756.ece, May 1st 2018
23 “China bans Peppa Pig to combat 'negative influence' of foreign ideologies”, op.cit.

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1st Edition, Issue - 1 Peppa Pig Storms China: Fighting Against All Odds?

new production record with over 13 million toys of Peppa Pig series and a big share of the
orders were booked for 2019, the Year of Pig.”24

But then, as it turned out, the rising popularity of PP brand was marred by a controversy. In
fact, in May 2018, the Chinese video streaming site Douyin (English name Tik Tok)25 had to
completely destroy over 30,000 clips featuring PP, since the character had reportedly
developed a ‘gangster’ reputation (the brand was increasingly being associated with ‘people of
society’- a slang term for gangsters in China) among adults.26 It was not clear whether the ban
on PP content on the video sharing app was self imposed or incited by the government.27 As
reported in The Global Times, “…‘society people’ who have embraced Peppa as their unlikely
symbol, are those who run counter to the mainstream value and are usually poorly educated
with no stable job. They are unruly slackers roaming around and the antithesis of the young
generation the (ruling Communist) Party tries to cultivate.” It was observed that Douyin users
were incorporating the animated character in subversive memes, spoof videos or, at times, as
part of ‘vulgar’ or lewd jokes.28 The Global times reported further, “Peppa Pig had taken on a
subversive hue and subsequently gone viral, illustrating the social psychology of hunting for
novelty and spoofing, which could potentially hamper positive societal morale.”29

China being a ‘culture sensitive’ market, did not take kindly to the huge influence that PP was
having on the local demography. For one, tattoo was absolutely frowned upon in Chinese
culture and second, there was strict censorship regarding anti-establishment content in the
country. Besides, having a ‘gangster’ like reputation was next to committing blasphemy.
Professor Yu, a Senior Research Fellow at RMIT University30 explained the scenario thus, “In
China’s strict environment, it’s hard to directly criticize anything so they use round-about,
joking ways. Peppa Pig is supposed to teach kids about the importance of family which is quite
acceptable to the Chinese culture, but the fact that young people have turned it into
something associated with a thug or a gangster, that’s totally the opposite of what (Chinese
President) Xi Jinping has wanted China to be.” In addition to these controversies, fake PP
merchandise (fake online versions featured paedophiles and sexual organs)31 was allegedly
causing harm to children.32 Incidentally, PP was not the first animation brand to be targeted;
similar fate had been meted to Winnie the Pooh.33 In fact, Chinese political establishment was
severely restricting foreign children’s books (cartoons and fairytales included) since 2017 as it
feared that Chinese people were getting influenced by such content and adopting foreign
ideologies.34 Meanwhile, Olivier Dumont (Dumont), President of Family & Brands at eOne, rued
the dubious reputation the kid’s brand was inadvertently garnering. Dumont commented, “We
were getting quite frustrated with how successful the brand was becoming with an audience
which was not the target audience because it is not healthy. We didn’t mind, [in fact] were
quite happy that Douyin censored Peppa from that platform. It is very much a family brand

24 Xuequan Mu, “Peppa Pig becomes a hit in China's Pig Year”, http://www.xinhuanet.com/english/2019-
02/05/c_137801065.htm, February 5th 2019
25 “China bans Peppa Pig to combat 'negative influence' of foreign ideologies”, op.cit.
26 “How Peppa Pig became a gangster figure in China”, op.cit.
27 “China bans Peppa Pig to combat 'negative influence' of foreign ideologies”, op.cit.
28 “China bans Peppa Pig because she 'promotes gangster attitudes'”,
https://www.independent.co.uk/news/world/asia/peppa-pig-ban-china-childrens-tv-cartoon-gangster-douyin-
a8332846.html, May 2nd 2018
29 “China gives ‘subversive’ Peppa Pig the chop”, op.cit.
30 RMIT University is an Australian public research university located in Melbourne, Victoria.
31 “China gives ‘subversive’ Peppa Pig the chop”, op.cit.
32 “How Peppa Pig became a gangster figure in China”, op.cit.
33 “China bans Peppa Pig because she 'promotes gangster attitudes'”, op.cit.
34 “China bans Peppa Pig to combat 'negative influence' of foreign ideologies”, op.cit.

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1st Edition, Issue - 1 Peppa Pig Storms China: Fighting Against All Odds?

with strong values which resonate tremendously all around the world with families, including
Chinese families and that is what the heart of Peppa Pig is.”35

The ban on the PP content on Douyin did not in any way subdue the popularity and future
plans of the PP brand. The company planned an aggressive expansion road map for the year
2019, with the Pig being the zodiac animal sign of the year. The company had a one-in-twelve-
year chance to celebrate the pig and to further boost PP brand’s popularity.36 To begin with,
Chinese e-commerce icon Alibaba and eOne produced a movie titled ‘Peppa Pig celebrates
Chinese New Year’ scheduled to be released on February 5th 2019 (the first day of the Chinese
Lunar New Year). To promote the movie the production house released a video titled ‘What is
Peppa’ showcasing a grandfather’s relentless and poignant efforts to give his grandson a ‘Peiqi’
(Peppa) for the New Year. The narrative seemed to strike a chord with Chinese viewers as the
video (and the movie too) featured rural and urban China and the hilarious situations being
created by the differences between the dialects of rural and urban China. The movie release
coincided with the Chinese Year of Pig. Connie Chan, a partner at venture firm Andreessen
Horowitz, offered a glimpse into Chinese cultural preferences when she stated, “This Peppa
trailer reflects a deep, deep understanding of Chinese culture: family duty, generational love,
rural cities, community, Chinese New Year. Touching the heartstrings through a deep cultural
connection is the most powerful kind of localization and marketing!”37 The promo video caught
the attention of the Chinese audience in an unprecedented way indicating that the brand was
in huge demand even after the ban on its content. The Financial Times reported, “By Tuesday,
the trailer’s Mandarin hashtag #WhatisPeppa had been viewed more than 1.45bn times on
popular microblogging platform Sina Weibo and the official video had garnered hundreds of
millions of views across various streaming platforms.” According to the official news agency,
Xinhua, “In just a few hours, it was trending on both Weibo and WeChat, the two most popular
Chinese social media platforms with hundreds of thousands of forwards and likes.” Xinhua
reported further, “The story might exaggerate the popularity of the British animation, the
urban-rural divide, and backwardness of rural communication in China, but the emotions are
real and resonate well with the public.”38 Apart from the movie, holiday specific merchandise
was also rolled out.39

Meanwhile, Dumont emphasized the importance of growing the China market thus, “It is a
great opportunity. China as a whole for us as a business is really important. China over the past
few years has really opened up internationally and as a result is becoming one of our main
partners for content making, funding and as a market place.” Dumont was right in emphasizing
China market as the headcount of kids below 5 years of age in the country was approximately
95 million children (as of 2015), according to the records of National Bureau of Statistics.
Dumont also planned ‘location-based entertainment’. In addition, the company phased out
products that were aimed at global markets from China and planned to replace them with
products designed exclusively to cater to local tastes and sensitivities. To do so, a toy line
designed exclusively for the local market, especially tier three and four cities, was launched
through a partnership with toymaker Alpha Group. Dumont explained, “That is the first clear

35 “Why this could be the year China falls in love with the smiling pink Peppa Pig that has taken the world by
storm”, op.cit.
36 ibid.
37 Zhu Chencen, “How Peppa Pig went from banned to viral right before the year of a pig”,
https://daxueconsulting.com/peppa-pig-went-viral-in-china-2019/, February 6th 2019
38 “UK sensation Peppa Pig goes viral in China, a year after it was banned”,
https://www.hindustantimes.com/world-news/uk-sensation-peppa-pig-goes-viral-in-china-a-year-after-it-was-
banned/story-VC4D5ItlT5wJLcTfyJaM1M.html, January 23rd 2019
39 “Why this could be the year China falls in love with the smiling pink Peppa Pig that has taken the world by
storm”, op.cit.

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1st Edition, Issue - 1 Peppa Pig Storms China: Fighting Against All Odds?

sign that we are adapting to local needs and tastes. We are appointing local licensees to create
products which are adapted for the China market. The deeper you go into the country the
more they rely on TV … and probably less awareness [of Peppa] there will be, which leaves
room for growth as the country continues to develop. That just creates even more
opportunities.”40 In addition, there were plans to open PP theme parks which would be
operated by Merlin Entertainments (operating Legoland Resorts, Madame Tussauds and Sea
Life Shanghai). Chen Jie, General Manager of Merlin Entertainment China, divulged, “We plan
to launch the first two theme parks in Shanghai and Beijing next year. We will use Peppa Pig to
design the indoor and outdoor playgrounds, this will contribute to our development in the
Chinese market.” PP stage shows were also slated to be held across China till 2021 apart from
a number of branded pop-up and mall events.41

But then, the challenges of the China market for animation brands were well known. For one,
the industry was not mature enough and second, the content should not hurt deeply
entrenched Chinese values and beliefs. There was a general belief in China that animation was
for kids and as a result, adult like themes were heavily censored.42 Andrew Carley (Carley), EVP
global licensing, family and brands at eOne, emphasized, “The accelerating popularity of Peppa
Pig in China is testament to the brand’s universal appeal and shows us what incredible growth
is possible when the Chinese market gets behind a brand.”43 Considering the stringency and
adversity in China market, was Carley a bit too confident?

40 “Why this could be the year China falls in love with the smiling pink Peppa Pig that has taken the world by
storm”, op.cit.
41 Leung Bo, “China's Peppa Pig theme parks expected to open by 2019”,
http://www.chinadaily.com.cn/a/201804/19/WS5ad8b199a3105cdcf65195d2.html, April 19th 2018
42 Davis Kenrick, “The Unincredibles: Why China Isn’t an Animation Superpower”,
https://www.sixthtone.com/news/1002954/the-unincredibles-why-china-isnt-an-animation-superpower,
September 21st 2018
43 “China's Peppa Pig theme parks expected to open by 2019”, op.cit.

Page – 8

1st Edition, Issue-1 Beyond Meat: Taking on the Beef Industry

Beyond Meat
Taking on the Beef Industry

Case Study

This case was written by Vasudha M and reviewed by Dr. A. Saravanan Naidu, Amity Research
Centers Headquarter, Bangalore. It is intended to be used as the basis for class discussion
rather than to illustrate either effective or ineffective handling of a management situation. The
case was compiled from published sources.
© 2019, Amity Research Centers Headquarter, Bangalore.
Website: www.amity.edu/casestudies/
No part of this publication may be copied, stored, transmitted, reproduced or distributed in
any form or medium whatsoever without the permission of the copyright owner.

Page – 9

1st Edition, Issue-1 Beyond Meat: Taking on the Beef Industry

Author: Vasudha M

Beyond Meat: Taking on the Beef Industry

Abstract: Ethan Brown (Brown), the founder of Beyond Meat, spent his weekends at his
father’s farm while living in Washington D.C., during his school years. The time he spent with
the farm animals led to a nagging interest in the way animals were treated which followed him
to his adult life. This haunting interest led to the founding of Beyond Meat in 2009, which
replicated animal protein from plant products to create a vegan meat alternative. Brown also
strove to reduce dependence on animal protein and mitigate the negative impacts of its
production on the environment. While plant-based alternatives have been around for decades,
a new generation of companies, including Beyond Meat, was using food tech to get plants to
replicate more closely the taste and texture of animal protein. Its products were placed as a
competition to real meat products and were targeted at meat eaters rather than vegetarians.
The company went on to become a resounding success and in late 2018 was planning for an
IPO. It was also focused on expanding its product portfolio and geographical footprint. Will the
alternate meat company succeed in its efforts to take on the beef industry?

Case Study

“We are not telling people not to eat meat -- I think that would be a massive mistake -- we’re
simply suggesting that they have a new type of meat, just plant based. Once we break the code
and get to the point where it’s indistinguishable from animal protein, I think you will see that
shift.” 1

– Ethan Brown, Founder and CEO, Beyond Meat

“When I heard the pitch I was stunned, not just by the science and sustainability aspect or my
own compassionate reasons for being interested but by the audacious goal of competing in the
multibillion-dollar meat industry. These guys weren’t talking about being in the novelty section
of the supermarket, they were talking about producing and marketing a new meat for the
world.”2

– Biz Stone, Co-Founder, Twitter

Beyond Meat, the plant-based meat substitute manufacturer believed that there was a
better way to feed the planet. Its mission was to create The Future of Protein® which was
delicious plant-based burgers, sausage, crumbles, and more, all made directly from simple
plant-based ingredients. By transitioning to plant-based meat they were creating one ‘savory

1 Bronner J. Stephen, “With $72 Million in Funding, the Entrepreneur Behind Beyond Meat Pursues Innovation
Over Profit”, https://www.entrepreneur.com/article/307715, January 22nd 2018
2 Ringen Jonathan, “Tastier, Healthier, And Animal-Free: Can Ethan Brown Reinvent Meat?”,
https://www.fastcompany.com/90181485/ethan-browns-quest-to-make-meat-tastier-healthier-and-animal-free-
2, September 2nd 2014

“© 2019, Amity Research Centers HQ, Bangalore. All rights reserved.”

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solution’ that solved the four growing concerns associated with livestock production namely
‘human health, climate change, constraints on natural resources and animal welfare’.3

In 2018, the UN honoured Ethan Brown (Brown), the founder and CEO of Beyond Meat, as a
Champion of the Earth for the company’s efforts in ‘tackling the world’s most urgent problem
– meat’. The same year the company announced its plans to go global. It brought the Beyond
Burger to the UK’s largest retailer, Tesco, and to Australia. The company announced its first US
drive-thru partner, Del Taco and completed the year on a high note with Beyond Sausage being
included on Time Magazine’s ‘Best Inventions of 2018’ list.4 In addition to this, Beyond Meat
announced that it planned to go public and further expand its product portfolio and
geographical footprint in 2019. Will Beyond Meat, the plant-based meat substitute company,
succeed in its war against the beef industry?

Beyond Meat – The Vegan Beef Company

Ethan Brown (Brown) (Exhibit I), the founder of Beyond Meat, grew up in Washington, D.C.
Here his dad founded the school of public policy at the University of Maryland, while his mom
worked at the Urban Institute. When he was a kid, his family purchased a farm in rural
Maryland and used it as a country house. They gradually ‘ended up running the farm as a dairy
operation with 100 head of Holstein cows’. Brown was to later say, “I had this very urban
upbringing, but there was a strange part of it where I would always be going out to this farm.
At some point I realized that there was a difference between how we treated our dogs and
how we treated the other animals. The cows were production units, valued for a couple of
years and then slaughtered, and at the same time we’re pampering our pets.”5

Exhibit I
Ethan Brown, Founder of Beyond Meat

Source: Chiorando Maria, “The BBC Interviews Vegan Beyond Meat Founder Ethan Brown”,
https://www.plantbasednews.org/post/bbc-interviews-vegan-beyond-meat-founder-dairy-expose,

September 10th 2018

Roy Rogers (RR) restaurant was a favourite after-school spot for Brown. On one such trip to a
RR restaurant he clearly recalled, “I’d get the RR Burger, which was ham and beef and cheese. I
can remember thinking, This is cow’s milk and the cow’s body, and then there’s pig. That’s a
lot!” This awareness resulted in Brown becoming a vegetarian by the time he was 17. By 2014,
he had been a vegan for about 15 years. After ‘stints in graduate school, first in his father’s

3 “Our Mission”, https://www.beyondmeat.com/about/
4 “YEAR IN REVIEW”, https://www.beyondmeat.com/whats-new/cheers-to-a-tasty-2018-year-in-review/,
December 27th 2018
5 “Tastier, Healthier, And Animal-Free: Can Ethan Brown Reinvent Meat?”, op.cit.

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program at the University of Maryland and then at Columbia’s business school’, Brown began
working in the growing field of fuel cells. He spent nine years at Ballard Power Systems which
was the leading manufacturer, acting as a supplier to large industrial clients such as Ford and
Chrysler. The technology’s ‘potential to curb climate change’ was what attracted him. But
during this period, he kept pondering over a way to ‘tackle climate change and animal welfare’.

Without giving up his job, Brown invested in a couple of vegetarian restaurants that specialised
in ‘mock-meat sandwiches and salads made with tofu and seitan imported from Asia’ in the
D.C. area. It was around 2006, that the idea, which was to change everything, struck him.
Brown recalled, “I started thinking, Why can’t you just create animal protein with plants?
What’s the biological reason you can’t do that? And I started looking around at people who
were answering that question.”6

Beyond Meat was founded in 2009 by Brown with the aim of offering consumers a good
alternative to meat while simultaneously solving one of the biggest problems facing the world
which was climate change. This was based on the fact that ‘one of the biggest choices an
individual can make toward helping the planet isn’t buying an electrical vehicle, but cutting
down their consumption of animals’. He considered three options for his new venture: ‘lab-
grown meat, in vitro meat and processes that organised protein from plants to make food that
felt like meat’. He decided on the third variety since he felt ‘it would scale better and be more
palatable to consumers’.7

Brown started his pursuit of people who were creating animal protein with plants. He did this
by studying scientific journals until he came across an obscure paper by a pair of scientists, Fu-
hung Hsieh (Hsieh) and Harold Huff (Huff), at the University of Missouri. Hsieh and Huff were
experts in the use of extruders which were megasize pasta machines that mixed dry and liquid
materials, cooked the resulting slurry, and forced it through a die on the end. They had been
developing ‘an extruder process involving heat and pressure that reorganizes plant proteins
into a more animal-like alignment’ from the early 1990s. Huff explained, “Protein in plants is
like a bird’s nest, and you want to straighten it out. And if you get it right, when it cools, it stays
that way. And that’s where you get your fibers.”

Brown immediately flew to Missouri to meet the scientists and had his first taste of their plant-
based chicken straight out of the machine. He said, “It was very hard, but the basic structure
was there.” The trio arrived at an informal agreement to attempt to convert the product into a
business. This idea had not struck the scientists prior to the meeting with Brown.

The trio started to refine the flavour and texture of their product working on a tight budget.
Brown on his part would ‘fly hundreds of pounds of it back with him to D.C. to test it in his
restaurants’. Brown had a good feeling about his product and was confident that ‘there wasn’t
anything else quite like it on the market’. Armed with this feeling and confidence he met with
Whole Foods to ‘pitch them on using it in prepared foods’.8 Chicken-Free Strips, the first
product by Beyond Meat, was arrived at after years of experimenting with the process on
imported plant protein from Taiwan. The Chicken-Free Strips (made from vegan pea and soy
protein ‘chicken’) landed on the shelves of Whole Foods stores in northern California in 2012.
The product proved to be a success, and started selling in other Whole Foods regions.9 Whole

6 “Tastier, Healthier, And Animal-Free: Can Ethan Brown Reinvent Meat?”, op.cit.
7 “With $72 Million in Funding, the Entrepreneur Behind Beyond Meat Pursues Innovation Over Profit”, op.cit.
8 “Tastier, Healthier, And Animal-Free: Can Ethan Brown Reinvent Meat?”, op.cit.
9 “With $72 Million in Funding, the Entrepreneur Behind Beyond Meat Pursues Innovation Over Profit”, op.cit.

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Foods’ Louise Liu (Liu), who oversaw Product Development for the Mid-Atlantic region said,
“We’re always looking for vegetarian protein sources. So I started to give him some feedback
on what we needed.”

Liu was particularly looking for an appealing product that Whole Foods could substitute for the
shredded chicken it used in ‘everything from soups to sandwiches’. She added, “We have the
most success with vegetarian or vegan items when they appeal to more than just that
community.” Meanwhile, in 2010, a Time reporter who came across the Missouri research
paper wrote an article about Hsieh and Huff. This was seen by an executive at Silicon Valley VC
firm Kleiner Perkins Caufield & Byers (Kleiner Parker) who set up a meeting. By 2011, they had
committed to Beyond Meat’s first round of investment. Partner at Kleiner Perkins, Amol
Deshpande said, “We think it can be as big as the meat industry is today. If you can remove the
main bottleneck to meat production, which is the livestock, and get the price down, it could
happen.”

The investment in the form of cash came in two stages. The first was a ‘proof-of-concept stage’
which allowed Brown to build a small production line in a former hospital kitchen. Then, as
Whole Foods bought more and more of Beyond Meat’s chicken the second part of the
investment kicked in.10 It was accompanied by a second round of financing from the Twitter
co-founders Evan Williams (Williams) and Biz Stone (Stone)11 and a few others. This gave
Brown the funds to build a state-of-the-art plant near Hsieh and Huff’s lab in Missouri. By
2013, Beyond Meat’s Chicken-Free Strips were available in stores countrywide.12

Since then, ‘plant-based burger patties and crumbles good for tacos and Bolognese’ with the
same aim of replicating ‘the flavor, texture, and full sensory experience of eating animals but to
deliver high levels of protein (mostly via peas) in a way that is far better for both human health
and the environment’ were added to its offerings. Brown said, “My mother always questions my
strategy on this and says, ‘Why are you always trying to make it taste like meat? Why not just
make it taste good and leave the rest alone?’” But Brown believed that the only way to ‘crack the
mass market’ was to acknowledge the people’s ‘strong attachment to meat and to take that on
directly’. This decision catapulted Beyond Meat’s products into the meat case and not into the
health-food aisle at stores such as, Whole Foods, Safeway, Kroger, and other chains.

Brown elaborated, “Meat is central to who we are as a species and as a culture, and so the
notion that people are going to stop eating meat, I think, is a false one. But the idea that
people will start eating plant-based meat is a very promising one.”13 While plant-based
alternatives have been around for decades, a new generation of companies, including Beyond
Meat, was using ‘food tech to get plants to more closely replicate the taste and texture of
animal protein’.14

In 2014, according to a survey by NPR15 about 39% Americans were reducing their meat intake
mainly citing health reasons. Responding to this growing trend, Chipotle in late 2014, launched

10 “Tastier, Healthier, And Animal-Free: Can Ethan Brown Reinvent Meat?”, op.cit.
11 “With $72 Million in Funding, the Entrepreneur Behind Beyond Meat Pursues Innovation Over Profit”, op.cit.
12 “Tastier, Healthier, And Animal-Free: Can Ethan Brown Reinvent Meat?”, op.cit.
13 Wartzman Rick, “Why The Founder Of Beyond Meat Won’t Demonize The Consumption Of Beef”,
https://www.fastcompany.com/40491406/why-the-founder-of-beyond-meat-wont-demonize-the-consumption-
of-beef, November 3rd 2017
14 Kowitt Beth, “Food Tech Startup Beyond Meat Is Rolling Out a Plant-Based Sausage”,
http://fortune.com/2017/12/18/beyond-meat-beyond-sausage-launch/, December 18th 2017
15 National Public Radio is an American privately and publicly funded non-profit membership media organization
based in Washington, D.C.

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braised tofu sofritas in its restaurants nationwide. Beyond Meat was also ready to meet this
growing trend with its ‘non-chicken, its taco-and-chili-ready Beefy Crumbles, and its
forthcoming Beast Burger’. Its products were available in 4,500 stores nationwide. Its sales
grew by 250% from 2013 to 2014. The Beef Crumbles which debuted at Whole Foods in
February 2013, was growing twice as fast as the chicken strips did at the same point in their
launch. This was despite the fact that both products were priced between $3.99 and $5.99 per
package. This was also in spite of the fact that Americans were not that into meat-substitutes.
Sales in 2013 for the category were up only 0.5% against that in the previous year 2012.

The edge Beyond Meat’s products had over the others in this category was that it also offered
customers a nutritional advantage on the original. Its ‘chicken’ had all the nutritional value of
actual white meat, but did not contain any cholesterol or saturated fats. The Beast Burger
went a step further. It was designed to ‘have more iron and protein than beef, more omega-3s
than fish, more calcium than milk, and a whole host of vitamins, minerals, and antioxidants’.

Better health was not the only appeal that Beyond Meat offered customers. According to a UN
report, by 2050, the world was going to need 70% more food. While 26% of all land was
already devoted to raising livestock this was a difficult proposition. 1,800 gallons of water was
required to produce just one pound of steak (Exhibit II). As per the UN study, Livestock was
responsible for 18% of greenhouse emissions which was more than all transportation
combined.16 Lab-grown or ‘cultured meat’ was considered to be a bridge between real meat
and plant-based products. San Francisco-based Memphis Meats produced meat from self-
reproducing cells. It thus produced meat that was an ‘animal-based’ product which avoided
the need to ‘breed, raise, and slaughter huge numbers of animals’. The company launched its
first synthetic meatball in 2016 which was later followed by the world’s first cell-cultured
chicken and duck in 2017.17

Exhibit II
Comparison of Animal Based vs. Lab-grown Meat

Source: “Our Meatless Future: How The $90B Global Meat Market Gets Disrupted”,
https://www.cbinsights.com/research/future-of-meat-industrial-farming/, January 16th 2019

In order to rectify the impact of the meat industry on climate change, Beyond Meat planned to
go beyond precooked meat substitutes sold in the refrigerator section. According to Brown,
“Right now, a lot of products on the market, including our own, it’s like Astroturf to grass. We
want to create the real thing.” Brown’s plan to engineer a plant-based product that was not
just a lot like meat but identical in almost every way ‘it would even come raw and be sold right

16 “Tastier, Healthier, And Animal-Free: Can Ethan Brown Reinvent Meat?”, op.cit.
17 “Our Meatless Future: How The $90B Global Meat Market Gets Disrupted”,
https://www.cbinsights.com/research/future-of-meat-industrial-farming/, January 16th 2019

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next to prime rib in the butcher aisle’ might sound outlandish but it succeeded in luring ‘plenty
of high-profile backers’. Bill Gates was an early investor. Twitter cofounders Stone and
Williams, invested in the company in late 2011 through their tech incubator ‘Obvious Ventures’
and ultimately joined the board.

Experts opined that the Beast Burger ‘may have gotten its name for a reason’ since it had been
‘harder to get right than anyone expected’. Because of this the planned launch in the summer
of 2014 was postponed to October of the same year. Brown explained, “Obviously it would
have been a lot better to have it out for barbecue season. But it was a performance issue.
There’s a trade-off between moisture and taste and ingredient functionality, and we weren’t
getting the right balance.” The problem was due to the extra nutrients sourced from plants
which counted as whole foods but were not necessarily tasty.

As a result, Dave Anderson (Anderson)18, who was in charge of the test kitchen in Los Angeles,
was adjusting parameters, offering bites, and gathering opinions. In the kitchen, he was testing
‘varying levels of firmness and flavor, including several agents made from yeast and designed to
create the megasavory sensation of umami’. Anderson was working on the burger for months,
subjecting it to blind taste tests, regular taste tests, and sending it out to a team of expensive
‘professional masticators’. It was also shipped to a lab in San Francisco for some heavy-duty
analytics that compared the Beast to a real burger across a wide variety of parameters.19

In Beyond Meat’s 26,000-square-foot plant in Columbia, Missouri, raw materials consisted
mostly of 50-pound sacks of ‘Soy Protein, Maltodextrin, Chicken Flavor, Carrot Fiber, and
Morton Top Coarse Salt’. According to the company insiders, these raw materials were loaded
into ‘huge, silolike hoppers in the next room and fed into one of three trolley-size extruders,
which funnel it through massive, stainless-steel cylinders, where the dry materials are
combined with water. At the end, partially hidden by a tarp, is a barrel-shaped gizmo with a
bunch of hoses snaking out of it, which looks like something that would shoot gamma rays in a
’60s comic strip. This attachment, which completes the otherwise standard extruder, is where
the plant protein undergoes its transformation into a much meatier structure’.

Brent Taylor (Taylor) and Brown met when the former was working for Kleiner Perkins, ‘putting
together the due diligence report on Beyond Meat’. Taylor later joined Beyond Meat and became
its co-founder. Taylor who said a majority of people in the L.A. office were in marketing went on
to say, “When I was at Wharton, buddies of mine founded Warby Parker, and concepts like that
are interesting because they show how you need to create a great experience in addition to the
product. So a lot of the work we do isn’t about just perfectly replicating the structure of chicken
and beef, it’s about, how do we create a good experience around it?”

The company faced many obstacles in marketing its products. Some consumers found the idea
to be ‘just weird–the culinary equivalent of the uncanny valley phenomenon that makes overly
human animated characters in movies disturbing’. Then there were the ‘left-leaning vegans’
who were inclined to view the product as ‘inferior’. Then came the resolute bunch of the meat-
eating men. As per Brown’s knowledge meat and especially the burger, was a product with a
masculine tilt to it. He said, “It’s not that we’re suggesting we should market only to men. It’s
that we need to make sure that it passes the masculinity test.” The company in early 2014
announced that the Mets’ star slugger and third baseman, David Wright, had signed an
endorsement deal with it.

18 He used to be Ellen DeGeneres’s private chef, helped create Hampton Creek’s Beyond Eggs and once ran L.A.’s
best vegan restaurant, Madeleine Bistro.
19 “Tastier, Healthier, And Animal-Free: Can Ethan Brown Reinvent Meat?”, op.cit.

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Beyond Meat was investing heavily in a ‘budding high-tech lab’ in the El Segundo office in the
hopes that it would result in a product so good ‘it can sit next to animal meat in the
supermarket within the next decade’. In 2013, Beyond Meat was hiring and contracting with a
range of scientists ‘including protein chemists, structural biologists, and even a specialist in
metabolic engineering from Harvard Medical School’. Jody Pu­glisi, a Stanford Structural
Biologist who served on the company’s scientific advisory board said, “What you’re seeing now
is an attempt to understand the principles of what makes meat meat, both in terms of biology
and of cuisine. We’re in IBM PC days. These are the first products of their kind.”

Even as Brown was strengthening technical research at Beyond Meat, he was also focused on
‘man-on-the-street testing’. Brown elaborated, “We want to make sure that we’re not getting
hung up on some scientific point. This is food, and we want people to enjoy it.”20 Brown’s
determination led to another crucial piece of his strategy which was not to shy away from
collaborating with traditional players in the meat industry. Brown explained, “There’s a lot to
learn from them both on the production side and on the development side.” While, Humane
Society of the US was an investor, Tyson Foods owned 5% of the company. Former McDonald’s
CEO Don Thompson, also an investor in Beyond Meat, was the one who came up with the
name of the company’s signature product ‘the Beyond Burger’ (Exhibit III).21

Exhibit III
The Beyond Burger

Source: “Products”, https://www.beyondmeat.com/products/

Towards the end of 2017, Beyond Meat launched its plant-based sausage product named
Beyond Sausage (Exhibit IV) at a restaurant in a Boulder, Colo. Whole Foods. One of the
biggest challenges in creating a plant-based sausage was its ‘varied bite’. A sausage was not
homogenous since it was made up of the different parts of muscle and fat within the animal. In
order to recreate this varied texture, the R&D team used a mixture of peas, fava beans and
rice. They also made use of beet, paprika and coconut oil. In order to create the casing of the
sausage which was made of animal intestine and naturally folded back on itself, the Beyond
Meat team decided to use alginate, a substance contained within algae. To recreate the
sausage’s curve, the company planned to sell the product in moulded trays. The Beyond
Sausage was to be available in three flavours: bratwurst, sweet Italian, and hot Italian. The
product contained no cholesterol and had ‘43% less total fat, 38% less saturated fat, and 26%
less sodium than the animal-based equivalent’.22

20 “Tastier, Healthier, And Animal-Free: Can Ethan Brown Reinvent Meat?”, op.cit.
21 “Why The Founder Of Beyond Meat Won’t Demonize The Consumption Of Beef”, op.cit.
22 “Food Tech Startup Beyond Meat Is Rolling Out a Plant-Based Sausage”, op.cit.

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Exhibit IV
Beyond Sausage

Source: “Products”, https://www.beyondmeat.com/products/

Will Beyond Meat’s Vegan Tryst Pay-off?

The plant-based meat business saw huge growth since 2010. Beyond Meat went on to become a
leading brand with ‘a growing product line’ and planned to go public. Beyond Meat’s products
were sold in about 35,000 restaurants and grocery stores in more than 20 countries. Meanwhile,
55% of the biggest US restaurant chains offered at least one plant-based entrée, according to a
2019 report from the Good Food Institute. For a majority of consumers this entrée was in the
form of a vegan burger from brands such as Beyond Meat and Impossible Foods.
Beyond Meat’s newest product Beyond Beef (Exhibit V), which was a ground-meat style
version of its plant-based beef, was introduced in the Natural Products Expo West Show in
2019. The product has been its goal since the company launched its first offerings which were
vegan chicken strips and the beefy plant-based Beyond Burger.23

Exhibit V
Beyond Beef

Source: Forgrieve Janet, “Beyond Meat Is On A Mission To Make Plant-Based Meat The Affordable
Choice”, https://www.forbes.com/sites/janetforgrieve/2019/03/14/beyond-meat-is-on-a-mission-to-

make-plant-based-meat-the-affordable-choice/#6f5386ad2352, March 14th 2019

23 Forgrieve Janet, “Beyond Meat Is On A Mission To Make Plant-Based Meat The Affordable Choice”,
https://www.forbes.com/sites/janetforgrieve/2019/03/14/beyond-meat-is-on-a-mission-to-make-plant-based-
meat-the-affordable-choice/#6f5386ad2352, March 14th 2019

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Brown commented on the newest product, “We focus maniacally on understanding meat and
rebuilding it from plants, so consumers will be able to have more rather than less of their red
meat dishes. The launch last week of Beyond Beef is the result of years of research and
development into sourcing new types of plant-based protein and turning it into a product
designed to provide even the most avid meat lovers with the flavor and texture they expect
from ground beef.”

The product was made from a mixture of proteins from plants including peas, mung beans and
brown rice, which gave it a more beef-like texture. Brown said, “It’s easy to get a bunch of
plant protein and mash it together and give it to the consumer, but if you want to really tap
into that familiar experience, you have to focus on the texture of the protein itself. There are
different structures of protein as they bite into it.” Beyond Beef was developed with a more
‘neutral taste profile than the Beyond Burger, to make it work in meatballs, tacos and all the
other dishes that are traditionally made with ground beef’. (Watch the video on Beyond Meat
– A Brand Morphing into a Movement at https://www.youtube.com/watch?v=hwpkXs_xsl4).

Brown went on to say about the process, “It’s about trial and error. There are thousands of
molecules that make meat taste like meat, and we’re getting better at knowing which
molecules are driving which flavors.” The company was also researching the ‘overall
functionality of protein in the human body and the benefits of plant-based over animal-based
proteins’. A variety of plant proteins was important to the company’s mission to create plant-
based meats that were less expensive than traditional meats, and the company aimed to
develop up to 30 different plant-based protein options to further that goal. It was engaged in
exploring a plethora of sources such as: lupin, mustard seed and sunflower seed.

“Each come with their own characteristics, it’s really fascinating to me. The plant kingdom is
replete with protein, once we think of it as a human food source and not a feed source for
animals,” Brown said. Having a wide range of protein sources would also aid the company in its
global growth goals, since the ability to produce and sell food closer to available plant-based
protein sources would make it ‘more cost-effective and make the products more affordable’.
Even as other vegan brands such as Lightlife and Tofurky developed ground-beef style
products, Beyond Meat became the first plant-based meat-maker to announce IPO plans in
late 2018.

Brown said, “We have an ambition to be part of the generation that separates meat from
animals. You don’t do that by thinking small, you don’t do that by having a couple chefs and
food scientists.” Hence raising cash in an IPO would fund the next phase in that journey. He
went on to say, “There’s no reason this shouldn’t be cheaper than meat, and to get there we
need to make investments in the supply chain.”24 Beyond Meat has applied to list on NASDAQ
under the ticker symbol ‘BYND’. According to market analysts, ‘Goldman Sachs, JPMorgan and
Credit Suisse were the lead underwriters on the deal with BofA Merrill Lynch, Jefferies and
William Blair acting as co-managers’. The company had not set a price range or specified how
much it was aiming to raise, ‘using the placeholder sum of $100 million in its prospectus’. The
company announced that proceeds of the deal would be used to ‘expand current
manufacturing facilities and open new ones, to finance research and development and to
boost sales and marketing, along with the catchall general corporate purposes’ according to
the prospectus submitted to file for the IPO.

24 “Beyond Meat Is On A Mission To Make Plant-Based Meat The Affordable Choice”, op.cit.
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Beyond Meat’s strategy was to ‘place its products in the meat case at its grocery partners with
the aim of persuading meat lovers to try it out’. It did not try to market to vegans and
vegetarians who accounted for just about 5% of the US population. By early 2019, the Beyond
Burger was available at about 11,000 of its 17,000 grocery-store customers in the US. It was
also available at Canadian fast-food restaurant chain A&W.

While Beyond Meat successfully grew its revenue over the years, it was yet to yield a profit. In
the initial nine months of 2018, the company made revenue of $56.4 million, more than
double the $21.1 million posted in the previous year 2017 during the same period, and more
than the $32.6 million posted for all of 2017. In spite of this its net loss in the nine-month
period in 2018 came to $22.4 million, only slightly less than the $23.4 million loss posted in the
year-earlier period. The company’s loss for 2017 was $30.4 million, higher than the $24.1
million loss reported in 2016.

The prospectus cautioned, “We anticipate that our operating expenses and capital
expenditures will increase substantially in the foreseeable future as we continue to invest to
increase our customer base, supplier network and co-manufacturing partners, expand our
marketing channels, invest in our distribution and manufacturing facilities, hire additional
employees and enhance our technology and production capabilities. Our expansion efforts
may prove more expensive than we anticipate, and we may not succeed in increasing our
revenues and margins sufficiently to offset the anticipated higher expenses.” Experts also
cautioned Investors that like many companies when they first go public, ‘Beyond Meat was not
planning to pay a dividend in the foreseeable future’. This meant that Investors had to rely on
stock gains to generate returns.

Beyond Meat expected the alternative meat category to become a multibillion-dollar market
over time and to poach a significant share from the $1.4 trillion global market for meat. The
company planned to copy the strategy used by the plant-based dairy industry, whose current
size was 13% of the dairy milk industry at about $2 billion in 2017. According to the
prospectus, “The success of the plant-based dairy industry was based on a strategy of creating
plant-based dairy products that tasted better than previous non-dairy substitutes, packaged
and merchandised adjacent to their dairy equivalents.” Adopting the same strategy would
boost the plant-based meat category to the same proportion of the roughly $270 billion meat
category in the US to about $35 billion in the US alone.

The company also had plans to expand beyond the US. It had launched in Europe through
contracts with three distributors and reported strong interest from European grocery and
restaurant chains. Beyond Meat was planning to open manufacturing facilities in Europe in
2020. It also had a local distributor in Hong Kong and planned to expand in Asia over time.25

In a letter accompanying the newest filing for the IPO submitted in the last week of March
2019, Brown wrote, “If we insist meat be defined by origin—namely poultry, pigs and cows—
we face limited choices. But if we define meat by composition and structure—amino acids,
lipids, trace minerals, vitamins, and water woven together in the familiar assembly of muscle,
or meat—we can innovate toward a solution. Here’s how. None of these core elements of
meat is exclusive to the animal. They are abundant in the plant kingdom. The animal serves as
a bioreactor, consuming vegetation and water and using their digestive and muscular system

25 Linnane Ciara, “Beyond Meat is going public: 5 things to know about the plant-based meat maker”,
https://www.marketwatch.com/story/beyond-meat-is-going-public-5-things-to-know-about-the-plant-based-
meat-maker-2018-11-23, January 15th 2019

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1st Edition, Issue-1 Beyond Meat: Taking on the Beef Industry

to organize these inputs into what has traditionally been called meat. At Beyond Meat, we take
these constituent parts directly from plants, and together with water, organize them following
the basic architecture of animal-based meat. We bypass the animal, agriculture’s greatest
bottleneck.”26

Even though the plant-based meat market seemed like a niche market, it was highly
competitive. The other players in this market were Boca Foods, Field Roast Grain Meat Co.,
Gardein, Impossible Foods, Lightlife, Morningstar Farms and Tofurky. But Beyond Meat also
viewed traditional meat companies as its rivals, including giants such as Cargill, Hormel Foods
Corp., JBS, Tyson Foods Inc. and WH Group, the owner of Smithfield (Exhibit VI). These
companies had deep pockets and more resources and their products were already widely liked
by consumers. 27

Exhibit VI
Top Meat Manufacturers

Source: “Our Meatless Future: How The $90B Global Meat Market Gets Disrupted”,
https://www.cbinsights.com/research/future-of-meat-industrial-farming/, January 16th 2019

The prospectus also forewarned about these established players, “They may also have lower
operational costs, and as a result may be able to offer conventional animal meat to customers
at lower costs than plant-based meat. This could cause us to lower our prices, resulting in
lower profitability or, in the alternative, cause us to lose market share if we fail to lower
prices.” Experts spoke about an alternative scenario where traditional food companies
acquired plant-based foods manufacturers and launched their own alternative protein
products. The size and scale of these established players would help them gain market share.
The main ingredient in Beyond Meat’s products was pea protein, an extract of yellow peas. As
of 2019, the company sourced it from suppliers in Canada and France. But one single supplier
of the protein represented 79% of its net revenue in the first nine months of 2018. The
company suffered supply interruptions from this supplier which resulted in delays in delivery.

26 Starostinetskaya Anna, “BEYOND MEAT IS ABOUT TO GO PUBLIC; FOUNDER ETHAN BROWN SPEAKS ABOUT
THE EVOLUTION OF MEAT”, https://vegnews.com/2019/4/beyond-meat-is-about-to-go-public-founder-ethan-
brown-speaks-about-the-evolution-of-meat, April 4th 2019
27 “Beyond Meat is going public: 5 things to know about the plant-based meat maker”, op.cit.

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The price of pea protein sourced by Beyond Meat was vulnerable to factors such as poor
harvests caused by bad weather, natural disasters, pestilence, as well as changes in economic
conditions and the number of farms that grew them. The company was working to ‘diversify its
supply chain and lock in prices through long-term contracts’. A significant amount of Beyond
Meat’s revenue came from products made at facilities owned by co-manufacturers such as
CLW Foods LLC28 and FLP Food LLC29. Beyond Meat did not have written contracts with either
company, thus the relationship was a vulnerable one which could be ended or changed at any
time. The prospectus added, “We believe there are a limited number of competent, high-
quality co-manufacturers in the industry that meet our strict quality and control standards, and
as we seek to obtain additional or alternative co-manufacturing arrangements in the future,
there can be no assurance that we would be able to do so on satisfactory terms, in a timely
manner, or at all.”30

Thus, even as the company formulated its ambitious plans for expansion, there were a number
of obstacles in its journey of growth. According to Kerri Adams, Editor-at-Large at
foodabletv.com31, “While Beyond Meat just filed an IPO, this plant-based burger company,
along with others in the market appear to be facing legal challenges from the state of Missouri
and the country France. In France, you can now be fined 300,000 euros (about $343,000) if you
use ‘steak,’ ‘sausage,’ or any other meat term to describe products that are not partly or
wholly made up of meat. Missouri passed similar legislation this year over the legal term of
meat.”32 Will Beyond Meat be able to overcome these obstacles and succeed in its journey ‘to
become the first generation of humans to separate meat from animals, unlocking the next era
in the American story of innovation, disruption, and growth’?33

28 CLW Foods is a California-based producer of ground beef.
29 FPL is a Georgia-based beef company.
30 “Beyond Meat is going public: 5 things to know about the plant-based meat maker”, op.cit.
31 It is a network for the restaurant and hospitality industry.
32 Adams Kerri, “Plant-based Meat Gets Pushback From Missouri and France”,
https://www.foodabletv.com/blog/plant-based-meat-gets-pushback-from-missouri-and-france, December 3rd
2018
33 “BEYOND MEAT IS ABOUT TO GO PUBLIC; FOUNDER ETHAN BROWN SPEAKS ABOUT THE EVOLUTION OF
MEAT”, op.cit.

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1st Edition, Issue-1 Bugcrowd: The Crowdsourced Security Platform

Bugcrowd
The Crowdsourced Security Platform

Case Study

This case was written by Dr. Suchitra Mohanty and reviewed by K. Bhagyalakshmi, Amity
Research Centers Headquarter, Bangalore. It is intended to be used as the basis for class
discussion rather than to illustrate either effective or ineffective handling of a management
situation. The case was compiled from published sources.
© 2019, Amity Research Centers Headquarter, Bangalore.
Website: www.amity.edu/casestudies/
No part of this publication may be copied, stored, transmitted, reproduced or distributed in
any form or medium whatsoever without the permission of the copyright owner.

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1st Edition, Issue-1 Bugcrowd: The Crowdsourced Security Platform

Author: Dr. Suchitra Mohanty

Bugcrowd: The Crowdsourced Security Platform

Abstract: Founded in 2012, Bugcrowd, pioneered the crowdsourced security platform and
offered bug bounty, vulnerability disclosure as well as next generation penetration testing to
its customers with the help of its curated and vetted community of security researchers. The
company offered its crowdsourced security services to more than 50 industry sectors around
30 countries in the world. Bugcrowd was the largest crowdsourced security platform in the
world and due to its innovative offering, it was ranked among the most innovative companies
in the world during 2019. With the help of its flagship product, Crowdcontrol, the company was
able to resolve as well as uncover security bugs in the various products of its customers.
Subsequently, Bugcrowd became a trusted aid for many big companies such as Motorola,
Tesla, HP, Square, Mastercard, Fitbit, Western Union and TripAdvisor, etc. However, the
company was facing tough competition from its key rivals namely HackerOne and Synack. In
addition to this, maintaining the trust between the enterprises and the security researchers
was a key issue. Amidst this scenario, would Bugcrowd be able to sustain its success with the
help of its ambitious executives as well as innovative products?

Case Study

“The scope of cybersecurity continues to expand as attackers and defenders develop new
strategies and tactics in response to the ongoing broad adoption of the cloud and mobile...As
attack surfaces expand and adversaries gain additional opportunities for penetration, security
leaders are looking to crowdsourced security platforms, like Bugcrowd, that can effectively
scale in the same continuous nature as the development process.”1

– Doug Cahill, Senior Analyst, ESG2

Launched in 2012, Bugcrowd grew to become the leading crowdsourced security platform in
the world as of 2019. The company offered bug bounty programs for many companies
such as Fitbit, Tesla, Mastercard, square, HP, etc., with the help of its network of crowdsourced
security researchers mainly to find out vulnerabilities in the clients’ software. Due to its
innovative idea, the company was able to serve more than 50 industry sectors in almost 30
countries across the world. Regarding the success, David Baker, the chief security officer,
Bugcrowd, explained, “The increasing number of unfilled cybersecurity jobs and the pressure
to bring products to market faster have contributed to the growing and under-defended attack
surface… Our latest survey with ESG underscores how crowdsourced cybersecurity is quickly
becoming a foundational element of any organization's cybersecurity program.”3 Bugcrowd had
reported around 100,000 valid bugs to its clients and had paid out more than $16 million to its

1 Bugcrowd, “Crowdsourced security poised for breakthrough in 2019”, https://www.prnewswire.com/news-
releases/crowdsourced-security-poised-for-breakthrough-in-2019-300820106.html, March 28th 2019
2 Enterprise Strategy Group.
3 “Crowdsourced Security Poised for Breakthrough in 2019”, op.cit.
“© 2019, Amity Research Centers HQ, Bangalore. All rights reserved.”

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‘white hat hackers’. It was also the first company to offer programs to find bug in the customers’
products as well as online offerings. As a result of which the customers could fix the security risks
before any malicious hackers could spot it. Due to the innovative business model, Bugcrowd was
named as the World's Most Innovative Companies (MIC) by Fast Company for 2019. 4

However, the company was facing a tough competition from its key rivals namely HackerOne5
and Synack.6 In addition to this, establishing trust was a key issue between the enterprises and
the security researchers.7 Amidst this scenario, would Bugcrowd be able to reap success from
its innovative crowdsourced security services across the globe with the help of its freelancing
security researchers?

Bugcrowd: The Inception and Growth

Crowdsourced Cyber Security: An Insight

Crowdsourcing was commonly known as the act of engaging a group of people for the purpose
of attaining a common goal or objective.8 And, in case of cyber security, it would imply the
process of roping in a huge bunch of talented human resources to fight against the cyber risks
associated with various online platforms as well as internet based activities and products.9
According to experts, the gig economy was playing a key role in disrupting everything starting
from the hospitality sector to the transportation sector.10 The ease and simplicity of booking a
cab via the Uber platform, epitomised as disruption in the ride-hailing service,11 made the
company popular among the people.12 The innovative room sharing idea of Airbnb further
enabled the people to book an accommodation quickly and easily across the world through the
company’s online platform.13 Following the boom in gig economy14, a number of start-ups
were launched mainly to provide secure computing services to its customers. The start-ups
were crowdsourcing talented IT security researchers and offering various vulnerability testing
or pentesting services to its customers.15,16

4 “Bugcrowd”, https://www.fastcompany.com/company/bugcrowd
5 Hopping Clare, “Microsoft joins forces with HackerOne to boost bug bounties”,
https://www.itpro.co.uk/security/33412/microsoft-joins-forces-with-hackerone-to-boost-bug-bounties, April 9th 2019
6 Stone Jeff, “HackerOne thinks its freelance hackers can conduct penetration tests better than actual pentesting
companies”, https://www.cyberscoop.com/hackerone-penetration-testing/, March 1st 2019
7 Wright Bob, “Bugcrowd CTO explains crowdsourced security benefits and challenges’,
https://searchsecurity.techtarget.com/feature/Bugcrowd-CTO-explains-crowdsourced-security-benefits-and-
challenges, August 2018
8 “What is Crowdsourcing?”, https://crowdsourcingweek.com/what-is-crowdsourcing/
9 Rayome Allson DeNisco, “Is crowdsourcing cybersecurity the answer to CISO’s problem”,
https://www.techrepublic.com/article/is-crowdsourcing-cybersecurity-the-answer-to-cisos-problems/, March
28th 2019
10 Shah Anu, “Why the Gig Economy is worth investing in”, http://bwdisrupt.businessworld.in/article/Why-the-
Gig-Economy-is-Worth-Investing-in/15-03-2018-143426/, March 14th 2018
11 Hartmans Avery and Mcalone Nathan, “How Uber grew up to become the world's most valuable startup”,
https://www.businessinsider.in/How-Uber-grew-up-to-become-the-worlds-most-valuable-
startup/articleshow/53439314.cms, July 28th 2016
12 Blystone Dan, “The story of Uber”, https://www.investopedia.com/articles/personal-finance/111015/story-
uber.asp, May 14th 2019
13 Airbnb, “About Us”, https://press.airbnb.com/about-us/
14 A free market system that offered flexible, temporary and short-term contract to various human resources.
15 Grimes Roger A., “Why should consider crowdsourcing IT security services”,
https://www.csoonline.com/article/3297436/why-you-should-consider-crowdsourcing-it-security-services.html,
August 15th 2018
16 Ombelets John, “Crowdsourcing cybersecurity”, https://medium.com/cxo-magazine/crowdsourcing-
cybersecurity-7fa834beafe6, February 26th 2018

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The crowdsourced security websites acted as middlemen and tried to connect the companies
with ethical hackers or IT security researchers. The individual researchers as well as the
company used to register with the website of the crowdsourced security platform. Once
registered, the researchers could easily browse the clients enlisted on the websites. After
selecting the company, the researchers tried to find the vulnerability and made a submission.
And, after the submission, the individual researcher could communicate directly with the
company. Once the report was accepted, the researcher received the payment from the client
company.17 (Exhibit I).

Exhibit I
Business Model: Crowdsourced Security Platform

Source: “Capitalize on the Rising Demand of Crowd-sourced Security Platforms with This Detailed
Website Features Analysis”, https://www.fatbit.com/fab/capitalize-rising-demand-crowd-sourced-

security-platforms-detailed-website-features-analysis/

According to experts, the global crowdsourced cyber security market was anticipated to reach
almost $165 billion by 2023.18 Rising threat from the hackers, growing cyber-attacks, increasing
issues in privacy as well as data protection were some of the key driving factors for the growth
of the crowdsourced security platform in the world. In addition to this, the increase in digital
transformation was also playing a significant role in the overall growth of the crowdsourced

17 “Capitalize on the Rising Demand of Crowd-sourced Security Platforms with This Detailed Website Features
Analysis”, https://www.fatbit.com/fab/capitalize-rising-demand-crowd-sourced-security-platforms-detailed-
website-features-analysis/
18 Sawers Paul, “Bug bounty platform Bugcrowd raises $26 billion”, https://venturebeat.com/2018/03/01/bug-
bounty-platform-bugcrowd-raises-26-million/, March 1st 2018

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security platform.19 Regarding the growth of the cyber security platform, Dain DeGroff, partner
and president, Triangle Peak Partners, said, “Every digital business today should take
advantage of bug bounty programs, especially given the increased sophistication of
cyberattacks and the proven effectiveness and power of the crowd in identifying these threats
before they cause damage.”20

HackerOne Inc., App Testing, Crowdsprint, Bugcrowd Inc., Synack, Inc., Dentrix Inc, Crowdtest
and Bugfinders, etc., were some of the key players in the Global Crowdsourced Security
Market as of 2019. Among these players, Bugcrowd Inc., was known as the leading
crowdsourced security platform in the world as of 2019. 21

Inception of Bugcrowd

In 2012, Bugcrowd was founded by Casey Ellis (Ellis) and Chris Raethke in Australia.22 According
to Ellis, on September 1st 2012, the idea of Bugcrowd came to his mind while he was travelling
on a flight from Melbourne to Sydney. On arriving home from the airport, Ellis had registered
the domain name and the Twitter handle of the leading crowdsourced security platform
‘Bugcrowd’. Ellis further said, “I sit here having realized the most significant parts of my dream
for the security industry: To connect two groups who desperately need each other but have
historically been terrible at getting along, and to do so at massive scale.”23

Growth of Bugcrowd

After inception, the company focused on launching the bug bounty programs24. In 2013, the
first bug bounty program was launched on www.bugcrowd.com. It was a time-boxed, public
program with cash reward. The program was meant for bounty testing on a web app designed
especially for bounty testing. Reporting for the first bounty was done with the help of a simple
web form. Bugcrowd received a positive response from its customers.25 The company received
$1.6 million as its seed round funding from various investors such as Icon Venture Partners,
Square Peg Capital, Paladin Capital Group, etc.26 After its first crowdsourced project, Bugcrowd
also started gathering knowledge about the reporting processes as well as the communication
logistics between the clients and cyber security researchers. 27 (Exhibit II).

19 “Crowdsourced Security Market 2019 Industry Growth, Technology, Top Key Players (Bugcrowd Inc.,
HackerOne, Inc., Synack, Inc., Bugwolf, Crowdtest, Bugfinders , Dentrix Inc) and Forecast Research Report 2025”,
https://www.openpr.com/news/1497288/Crowdsourced-Security-Market-2019-Industry-Growth-Technology-
Top-Key-Players-Bugcrowd-Inc-HackerOne-Inc-Synack-Inc-Bugwolf-Crowdtest-Bugfinders-Dentrix-Inc-and-
Forecast-Research-Report-2025.html, January 15th 2019
20 “Bug bounty platform Bugcrowd raises $26 billion”, op.cit.
21 “Crowdsourced Security-Global Market Outlook (2017-2026)”,
https://www.researchandmarkets.com/reports/4704043/crowdsourced-security-global-market-outlook,
November, 2018
22 “Bugcrowd program case study”, https://cdn2.hubspot.net/hubfs/1549768/PDFs/Bugcrowd-Case-
Study.pdf?t=1475626008401
23 Ellis Casey, “How to hire a new CEO-A note from Bugcrowd’s founder”, https://www.bugcrowd.com/how-to-
hire-a-new-ceo-a-note-from-bugcrowds-founder/, August 28th 2017
24 A deal offered by many software developers as well as websites through which many individuals were
rewarded for identifying bugs pertaining to software vulnerabilities.
25 “Bugcrowd program case study”, op.cit.
26 Spencer Leon, “Bugcrowd seals $6 million series A funding round”, https://www.zdnet.com/article/bugcrowd-
seals-6-million-series-a-funding-round/, March 13th 2015
27 “Bugcrowd program case study”, op.cit.

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Exhibit II
Goals of Bugcrowd Public Program

 Engage with our security researcher community
 Get our engineering team using our own product in real life situations
 Learn from our past security blunders
 Help other organizations to implement best practices in running their own vulnerability

disclosure programs.

Source: Bugcrowd program case study”,
https://cdn2.hubspot.net/hubfs/1549768/PDFs/Bugcrowd-Case-Study.pdf?t=1475626008401

The company also launched Bugcrowd Flex Program (Flex). It was a time-boxed bug bounty
security assessment and was also considered as an improvement over the traditional
penetration testing results. (Exhibit III). A specific time period (usually of two weeks) was
considered for the security assessments. There was no long term commitment under the Flex
program. The company’s in-house team of security researchers managed all the issues
consisting of all the heavy lifting, validating the submissions and reporting the appropriate
findings to the company. According to experts, the early programs enabled Bugcrowd to learn
more about the vulnerability disclosure processes.28

Exhibit III
Penetration Test vs Flex Program

Particulars Penetration Test Flex Program

Coverage Low. One or a handful of consultants High. More eyes + pay for results =

constrained by Time. better coverage.

Effort Medium. Heavy set-up cost. Low. Simple set-up. Bugcrowd

Required by Prioritized report at the end of prioritizes the issues for you and

You assessment. provides a report.

Vulnerability High. As long as you have a great pen High. Researchers have variety of skill
Quality tester who doesn’t sand bag results. sets and logic tests.

Cost per High. Consultants are expensive, and Low. You set the cost and reward
vuln
their time is limited. based on severity and creativity.

Source: “Bugcrowd program case study”,
https://cdn2.hubspot.net/hubfs/1549768/PDFs/Bugcrowd-Case-Study.pdf?t=1475626008401

In 2014, Bugcrowd had attained 400% revenue growth than the previous year (2013). Experts
further pointed out that the Bugcrowd’s customer base had doubled while its employee head
count had tripled during 2014. Regarding the spurious growth of the company, Ellis,
mentioned, “Every company is vulnerable, and staying ahead of the attackers relies on winning
the race to discover and fix these vulnerabilities before they do.” The security testing for
software through crowdsourcing idea further enabled the company to work with many big
companies such as Tesla, Western Union, Pinterest, Silent Circle, etc. The innovative idea of
the company also attracted customers from a broad range of industries, starting from,
telecommunications, financial services, retail, media, business to business technology,
software, application service providers, healthcare and automotive.

According to Kim Green, CISO, Zephyr Health, “Bugcrowd exponentially scales our line of
defense, providing us access to more than 20,000 of the best security minds in the industry…In
2015 alone, we've read about a handful of successful data breaches from within our own

28 “Bugcrowd program case study”, op.cit.

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healthcare space, and it's clear that the cyber-attacks are only going to grow to be more

aggressive. With Bugcrowd's help, Zephyr Health was able to transform our own company
development to prioritize security, leaving no stone unturned.”29 “The dearth of cybersecurity

defenders within organizations and the shortcomings of status quo security approaches is

increasingly being addressed by crowdsourced security testing, as it cost-effectively brings the
creativity of the crowd to outsmart adversaries,” said, Ashish Gupta (Gupta), CEO, Bugcrowd.30

In 2015, Bugcrowd sealed its series A round of funding of $6 million under the leadership
Costanoa Venture Capital. Post the funding round, the total investment tally of the company
was$9 million. The new funding further helped Bugcrowd to expand its services portfolio. Neill
Occhiogrosso, Partner, Costanoa Venture Capital, further said, “As security continues to be a
top spending priority for enterprises across the globe, the financial and operational leverage
that Bugcrowd's platform enables is a highly strategic asset.”31

In 2018, the Bug bounty platform had raised $26 million in its series C round of funding under
Triangle Peak Partners (Exhibit IV). Other venture capitalists namely Salesforce Ventures,

Costanoa Venture Capital, Blackbird Ventures, Paladin Capital Group, Rally Ventures, Industry

Ventures, Stanford, Hostplus, and First State Super had also participated in the fund raising

activities of Bugcrowd. According to experts, the company was planning to use the cash
specifically for driving its market growth and product innovation. 32

Exhibit IV

Funding Rounds of Bugcrowd

Year of Series of Money Lead Investors
Funding Funding Raised ($)

2018 Series C 26 M Triangle Peak Partners

2016 Series B 15M Blackbird Ventures

2015 Series A 6M Costanoa Ventures

2013 Seed Round 1.6M Icon Venture Partners, Paladin Capital
Group, Square Peg Capital and Others

2013 Seed Round 50K -

Source: Compiled by the Author from – (a) “Bugcrowd”,

https://www.crunchbase.com/organization/bugcrowd#section-funding-rounds and Spencer Leon, (b)

“Bugcrowd seals $6 million series A funding round”, https://www.zdnet.com/article/bugcrowd-seals-
6-million-series-a-funding-round/, March 13th 2015

Business Model of Bugcrowd

The business model of Bugcrowd involved enlisting a group of white hat hackers who helped to
find the vulnerabilities on clients’ software. The company mainly developed premises that let
the clients’ software to be openly exploited by the hackers to find an unknown opening.
According to experts, many companies across the world were building software with various
rapid development techniques. And, it was becoming difficult task for the developers to find
an opening in the software. Sometimes, the company spent huge amount of money for hiring
skilled professional for fixing the vulnerabilities in the software. In the wake of this, Bugcrowd
offered an open platform which mainly acted as an intermediary between the cyber security

29 Seals Tara, “Bugcrowd grows revs by 400%”, https://www.infosecurity-magazine.com/news/bugcrowd-grows-
revs-by-400/, October 8th 2015
30 “Bug bounty platform Bugcrowd raises $26 billion”, op.cit.
31 “Bugcrowd seals $6 million series A funding round”, op.cit.
32 “Bug bounty platform Bugcrowd raises $26 billion”, op.cit.

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researchers and the clients. The company offered cash rewards which ultimately motivated the

researchers to find the bugs. Since its inception, the company had run more than 700
programs and had paid over $12 million as bounties (as of 2018). 33 Bugcrowd followed the

most rigorous standards of security both for its researchers and customers i.e. the Soc 2 Type 1
compliance and ISO 270001 certification.34 (Annexure I).

Will Bugcrowd Sustain in the Hyper-Incentivized World of ‘Bug
Bounties’?

With the help of its innovative offerings, Bugcrowd was able to serve customers in over 50
industry sectors, in more than 30 countries across the world as of 2019. Due to its innovation
and leadership specifically in the cyber security sector, the company was also recognised
among the ‘World’s Most Innovative Companies’ in 2019 by the Fast Company. Many leading
companies around the world including Fitbit, Master Card, HP, NETGEAR, etc., were trusting
the Bugcrowd platform for crowdsourced security and were the customers of the company’s
flagship product, Crowdcontrol.35

Further, industry experts anticipated more than 3.5 million unfilled cyber security professional
roles by 2021. In addition to this, more than half of all the organisations working in the IT and
IT related sectors would be looking to fill open positions particularly in the cyber security
segment. In this demand and supply mismatch situation, Bugcrowd was planning to fill this
critical gap by connecting various organisations across the world with the world’s most elite
hackers mainly to find as well as fix vulnerabilities before it was exposed to any adversaries.
Regarding the key objective of the company, Gupta, further said, “At Bugcrowd, our mission is
to make the internet a safer place, filling the cybersecurity skills shortage while providing
opportunities for security researchers around the globe… As cybersecurity continues to be a
growing concern for both organizations and consumers, we have been steadfast in our growth
and development to advance this mission. It’s an honor to see our progress recognized by Fast
Company and to be named as one of the companies leading the industry forward.”36

The Department of Defense (DoD) also selected Bugcrowd for the ‘Hack the Pentagon’
initiative. Under the contract, Bugcrowd would work to strengthen the security for sensitive as
well as internal assets of Pentagon by running bug bounties and various other crowdsourced
security programs. Regarding the contract, Chris Lynch, Director, the Defense Digital Service,
said, “Finding innovative ways to identify vulnerabilities and strengthen security has never
been more important…When our adversaries carry out malicious attacks, they don’t hold back
and aren’t afraid to be creative. Expanding our crowdsourced security work allows us to build a
deeper bench of tech talent and bring more diverse perspectives to protect and defend our
assets. We’re excited to see the program continue to grow and deliver value across the
Department.” Responding to DoD’s assignment Gupta, said, “We are thrilled that Bugcrowd
has been selected to ‘Hack the Pentagon’ to bring the scale and expertise of our worldwide

33 Miller Ron, “Bugcrowd bug bounty platform gets big boost with $26 million series C investment”,
https://techcrunch.com/2018/03/01/bugcrowd-bug-bounty-platform-gets-big-boost-with-26-million-series-c-
investment/, March 1st 2018
34 “Bugcrowd named to Fast Company’s annual list of the World’s Most Innovative Companies for 2019”,
https://www.bugcrowd.com/press-release/bugcrowd-named-to-fast-companys-annual-list-of-the-worlds-most-
innovative-companies-for-2019/, February 20th 2019
35 Kepes Ben, “Bugcrowd raises cash because of the power of the people”,
https://www.networkworld.com/article/3057271/bugcrowd-raises-cash-because-of-the-power-of-the-
people.html, April 20th 2016
36 “Bugcrowd named to Fast Company’s annual list of the World’s Most Innovative Companies for 2019”, op.cit.

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elite Crowd of whitehat hackers to outsmart adversaries and strengthen our nation’s
security…Bugcrowd’s proven platform and Crowd of researchers brings a wide variety of
experience and technical specialization to handle the complexity of constantly changing attack
surfaces that the DoD – or any organization – will face in the coming years.”37

The leading crowdsourced security platform also introduced Traffic Control 2.0, the latest version
of its VPN38 technology. The new VPN technology would offer more flexibility, visibility and
control over the company’s security testing programs. Under the new technology, Bugcrowd
would also provide program-specific VPN to each individual researcher. With the help of the new
VPN technology, Bugcrowd would help organisations to manage as well supervise various
activities of the researchers. Regarding the new technology, Mark Milani, Global Head, Product
and Engineering, Bugcrowd, mentioned, “We believe it’s our responsibility to continuously build
innovative solutions to support the changing needs of our customers…The extensible
architecture of our platform is paramount to this. Today’s releases further our mission to make
the digitally-connected world more secure, helping customers fix faster and bring more secure
products to market.” In addition to this, the company was also launching new platform
integrations which would play a key role towards vulnerability patching.39

To recognise the researcher community, Bugcrowd also announced a new incentive program
during 2019. The new researcher incentive program might attract more researchers to work on
the Bugcrowd platform.40 It also opened Bugcrowd University to provide ‘hands-on training’ to
the community for security research. According to experts, the company was planning to
address the skill shortage particularly in the cyber security market through crowdsourcing.
Regarding the objective of university, Jason Haddix, VP of Trust & Security, Bugcrowd,
explained, “Making Bugcrowd home for researchers is one of our highest priorities. The goal of
Bugcrowd University is to empower researchers with training and content to strengthen the
security community…With this Bugcrowd University program we will not only train and
empower our Crowd to find high-priority vulnerabilities, we will also introduce this model to
would-be security researchers around the world to increase the number of skilled researchers
looking for vulnerabilities.”41

However, the company was facing a tough competition from its key rivals namely HackerOne42
and Synack43. Based in San Francisco, HackerOne was taking cautious strategies and was
offering crowdsourced pen-testing services to its customers. According to experts, the pen-
testing market was estimated to be around $1 billion as of 2019. “Most [penetration testing]
companies suck...Our plan is to take the market share from pen test companies,” highlighted,
Mårten Mickos, CEO, HackerOne. Synack had also conducted crowdsourced pen tests.44 In

37 “Department of Defense Selects Bugcrowd to ‘Hack the Pentagon’”, https://www.globenewswire.com/news-
release/2018/10/24/1626491/0/en/Department-of-Defense-Selects-Bugcrowd-to-Hack-the-Pentagon.html,
October 24th 2018
38 Virtual Private Network Technology.
39 “Bugcrowd brings coverage assurance to crowdsourced security”, https://www.bugcrowd.com/press-
release/bugcrowd-brings-coverage-assurance-to-crowdsourced-security/, February 28th 2019
40 Nguy Abigail, “2019 Researcher Incentive Programs”, https://www.bugcrowd.com/2019-researcher-incentive-
programs/, February 5th 2019
41 “Bugcrowd University Opens Its Doors to the Crowd”, https://www.globenewswire.com/news-
release/2018/08/07/1548159/0/en/Bugcrowd-University-Opens-Its-Doors-to-the-Crowd.html, August 7th 2018
42 Founded in 2012, HackerOne was one of the leading vulnerability co-ordination and bug bounty platforms in
the world, and it helped more than 1200 organisations for finding and fixing vulnerabilities.
43 Based in Redwood City, California, Synack was one of the leading trusted leaders in Crowdsourced Security
across the globe.
44 “HackerOne thinks its freelance hackers can conduct penetration tests better than actual pentesting
companies”, op.cit.

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addition to this, the trust factor between the enterprises and the security researchers was
gradually eroding. Responsible vulnerability disclosure was also an issue in case of the
crowdsourced security platform. Besides, many times, the company received submissions
which tried to mess with the platform. 45

Bugcrowd platform’s holistic approach to crowdsourced cyber security enabled its customers an
actionable intelligence which would help them (the customers) to measure success, multiply the
positive impact, and offer more secure products in the market.46 However, “There are places
where having more eyes is helpful, and places where [having] the right expertise matters more
than the number of people looking at it...The more specialized, nuanced or complex an area [is],
the more important it becomes to have an expert there … I don’t trust crowdsourced areas as
much as specialized”, said, Chris Betz, chief security officer of CenturyLink.47

Annexure I
Bugcrowd’s Business Model

Source: “Bugcrowd: Why crowdsourced security?”, https://ww2.bugcrowd.com/rs/453-IJC-
858/images/why-crowdsourced-security-bugcrowd-032118.pdf

45 “Bugcrowd CTO explains crowdsourced security benefits and challenges”, op.cit.
46 “Bugcrowd named to Fast Company’s annual list of the World’s Most Innovative Companies for 2019”, op.cit.
47 Stone Jeff, “Why bug bounty firms wants to be penetration testing companies”,
https://www.cyberscoop.com/bug-bounty-pen-testing-hackerone-synack-bugcrowd/, April 12th 2019

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Amazon India's Strategy to Solidify in
E-Commerce Market

Case Study

This case was written by Nilosha Sharma and reviewed by Dr. A. Saravanan Naidu, Amity
Research Centers Headquarter, Bangalore. It is intended to be used as the basis for class
discussion rather than to illustrate either effective or ineffective handling of a management
situation. The case was compiled from published sources.
© 2019, Amity Research Centers Headquarter, Bangalore.
Website: www.amity.edu/casestudies/
No part of this publication may be copied, stored, transmitted, reproduced or distributed in
any form or medium whatsoever without the permission of the copyright owner.

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1st Edition, Issue-1 Amazon India's Strategy to Solidify in E-Commerce Market

Author: Nilosha Sharma

Amazon India's Strategy to Solidify in E-Commerce Market

Abstract: Amazon was an online retailer selling a wide range of products which included music,
books, movies, toys, electronics, housewares, etc. Over the years, Amazon had tried to draw
the attention of Indian customers with various promotional initiatives in the form of marketing
ads like ‘Aur Dikhao’ (show me more) which showcased the mentality of Indian customers,
who looked for many options before making the final purchase. In the intervening time,
Amazon also witnessed that the Indian e-commerce market had become very competitive and
customers sought value for their money through online transactions. In 2019, the company
came up with ‘Kitne Mein Mila’ (how much you got it for?) campaign to sell quality products at
affordable pricing to customers. Analyst estimated the Indian e-commerce market would
become $1.2 trillion market by 2021 due to increasing use of internet, mobile wallets growth,
changing shopping patterns due to smartphone penetration and growth of Millennial/Gen-Z
customers. On the other hand, Amazon India and various other e-commerce players like
Flipkart faced the heat of new FDI rules implied due to complaints from small shops and
domestic sellers. Amidst this scenario, it remained to be seen whether Amazon India would be
able to strengthen its position in the wake of stiff competition and challenges in the e-
commerce market.

Case Study

“Seven years after expanding into India, Amazon has realized the immense potential of the
Indian offline retail market. Even though the number of Internet users surpassed the half a
billion mark in India in 2018, it is still pegged at one-third of the total population. On the other
hand, digital transactions still lag behind cash transactions by a huge margin in the country.
Against this backdrop, the company sensed a big opportunity where it can use offline channel
to reach out and directly establish interaction with consumers across India.”1

– Sumit Chopra, Consumer Research Director, GlobalData

Founded in the US in 1994, Amazon had expanded its presence in various countries such as,
Japan, China, India, Brazil, France, Singapore, Italy, Germany, UK, Spain, Netherlands,
Canada, Mexico, and Australia. The company entered the Indian market in 2013 and launched
its website ‘Amazon.in’. The website offered a wide assortment of products which included
groceries, apparel, movies, television shows, books and household items.2 Amazon came up
with ‘marketplace’ model wherein third party retailers would sell their goods through

1 “Amazon proposes offline route to strengthen presence in India, says GlobalData”,
https://www.globaldata.com/amazon-proposes-offline-route-to-strengthen-presence-in-india-says-globaldata/,
April 1st 2019
2 “Company Profile of Amazon – The world’s largest online retailer”, https://www.startupopinions.com/amazon-
company-profile/
“© 2019, Amity Research Centers HQ, Bangalore. All rights reserved.”

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Amazon’s site.3 Thereafter in 2015, Amazon came up with new marketing campaign named as
‘Aur Dikhao’ (show me more) which showcased the mentality of Indian customers who looked
for many options before making the final purchase.4

Then in 2016, Amazon witnessed 100% year-on-year growth and undertook various initiatives
to strengthen its position in the e-commerce market. The company came up with ‘Global
Store’ which helped them to sell global products to the Indian customers through their
website. With AmazonNow and Amazon Pantry, the customers were able to get their groceries
and other essentials at their doorstep within 90 minutes or next day respectively. The
customers were also benefitted with ‘Subscribe and Save’ feature, wherein they could save the
list of personal care products and refill them as per their usage schedules.5 Amazon came up
with think globally and act locally strategy in India to win over customers. Amazon also used
machine learning and artificial intelligence (AI) in order to bring better precision to delivery.6
Furthermore, the company learnt that the Indian e-commerce market had become more
competitive and the Indian customers sought value for their money during the online
purchases. Thus, Amazon launched ‘Kitne Mein Mila’ (how much you got it for?) campaign to
tap this segment of consumers.7 However, in a major development in 2019, the government
had tightened the rules for e-commerce companies like Amazon and Flipkart to follow new FDI
regulations which protected the rights of small sellers in the market.8 In this backdrop, it
remained to be seen whether Amazon India would be able to strengthen its position in the
wake of stiff competition in the e-commerce market.

Amazon India – The Brand Journey

Headquartered in Seattle, Washington, Amazon.com was an online retailer, Web service
provider and manufacturer of electronic book readers. It was an Internet-based enterprise
which sold music, books, movies, toys, electronics, housewares and many other goods, which
were sold directly to the customers or as a middleman to the retailers. The Web services
business included renting data storage and computing resources via internet (cloud
computing). The company had a significant presence online so much so that in 2012, around
1% of the all internet traffic in North America came in and out of the data centres of
Amazon.com. The company was founded by Jeff Bezos (Bezos), a former Wall Street hedge
fund executive, in 1994. The name ‘Amazon’ was chosen by the founder as it started with the
first letter of the alphabet and secondly due to its association with the South American river.9
(Exhibit I).

3 “Amazon launches first online shopping site in India”, https://www.bbc.com/news/business-22780571, June 5th
2013
4 Tewari Saumya, “Amazon solves 'Kya Pehnu' dilemma”, https://www.afaqs.com/news/story/46635_Amazon-
solves-Kya-Pehnu-dilemma, December 21st 2015
5 Mallya Harshith and Nair Athira, “How e-commerce changed in 2016 for Flipkart, Amazon and Snapdeal”,
https://yourstory.com/2016/12/ecommerce-2016, December 30th 2016
6 Sawhney Mohanbir, “7 Ways Amazon Is Winning By Acting 'Glocally' In India”,
https://www.forbes.com/sites/mohanbirsawhney/2018/04/30/7-ways-that-amazon-is-winning-by-acting-
glocally-in-india/#273e334f61c1, April 30th 2018
7 Roy Sunit, “Amazon is back with a new catchphrase - ‘Kitne Mein Mila’”,
https://www.afaqs.com/news/story/54704_Amazon-is-back-with-a-new-catchphrase---Kitne-Mein-Mila, March
22nd 2019
8 Khatri Bhumika, “Amazon India Drives Its Offline Strategy, Gains Control Of Retail Chain More”,
https://inc42.com/buzz/amazon-india-drives-its-offline-strategy-retail-chain-more/, April 3rd 2019
9 Hall Mark, “Amazon.com – AMERICAN COMPANY”, https://www.britannica.com/topic/Amazoncom

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Exhibit I
Amazon’s Founder – Jeff Bezos

Source: Singh Shelley, “Amazon's strategy for India: Stick to the concept of sister site”,
https://economictimes.indiatimes.com/industry/services/retail/amazons-strategy-for-india-stick-to-

the-concept-of-sister-site/articleshow/44978075.cms, October 30th 2014

Amazon, in February 2012, soft launched the Junglee.com website in the Indian market, which
allowed customers to only compare prices but they were not able to purchase items directly.10
The aim of the website was to enable the retailers to advertise their products free of cost to
the Indian customers and also to increase traffic at their stores. Subsequently, in June 2013,
the company announced its full-fledged entry into India with the launch of its marketplace
‘Amazon.in’.11 The website initially sold only books, films and TV shows and slowly planned to
sell cameras and mobile phones.12 The company launched Junglee with the intention to learn
about the online habits of Indian customers. In India, Amazon shared its infrastructure with
Junglee to flank its main marketplace. Moreover, the company had not adopted this double-
play strategy in any of the 12 markets. Niren Shah, Managing Director, Norwest Venture
Partners13, stated, “Comparison shopping sites have not worked globally. But Amazon faces
tough competition from local players and is now using Junglee as a flanking strategy - a test
platform to try out categories and products before offering them on amazon.in.” Besides, the
flanking strategy was not used by any other rivals in the Indian market.

Industry analysts claimed that Amazon India could leverage a lot from Junglee. Ankur Bisen,
Senior Vice-President, Retail & Consumer Products, Technopak, stated, “Junglee is an ideal
place for a first-time online shopper and a first-time online seller to experience e-commerce.”
In due course, apart from being just a price comparison website, Junglee also allowed
transactions from different websites which competed with amazon.in. Other than this, Junglee
offered websites with Amazon’s payment gateway to make things easier.14 Amazon came up
with ‘marketplace’ model wherein third party retailers would sell their products through
Amazon’s site.15

Soon after entering the Indian market, Amazon India opened its first fulfillment center in
Mumbai. Ben Schachter, an Analyst, Macquarie16, stated, “While it has been speculated that

10 Singh Shelley, “Amazon's strategy for India: Stick to the concept of sister site”,
https://economictimes.indiatimes.com/industry/services/retail/amazons-strategy-for-india-stick-to-the-concept-
of-sister-site/articleshow/44978075.cms, October 30th 2014
11 “Amazon Launches In India”, https://www.amazon.in/gp/feature.html?ie=UTF8&docId=1000728823, June 5th 2013
12 “Amazon launches first online shopping site in India”, op.cit.
13 A venture-capital fund.
14 “Amazon's strategy for India: Stick to the concept of sister site”, op.cit.
15 “Amazon launches first online shopping site in India”, op.cit.
16 Macquarie Group Limited is an Australian multinational independent investment bank and financial services
company.

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Amazon would be expanding internationally, it seems that the international expansion plans
have been accelerating. Last year, they launched a country-specific site in Spain and now it
looks like India could be next.”17

In 2013, Amazon introduced two new programs which included ‘Fulfillment by Amazon’ and
‘Selling on Amazon’. The company offered its retailers to sell their products online without any
listing fees and pay-as-you-go fulfillment services. Greg Greeley, Vice President of International
Expansion, Amazon.com, stated, “Our vision, at Amazon, is to be Earth's most customer centric
company; to build a place where people can come to find and discover virtually anything they
want to buy online. With Amazon.in, we endeavor to build that same destination in India by
giving customers more of what they want – vast selection, low prices, fast and reliable delivery,
and a trusted and convenient experience. We're excited to get started in India and we will
relentlessly focus on raising the bar for customer experience in India.”

While the purpose of Juglee.com was to provide free advertisement to retailers, the launch of
‘Selling on Amazon’ and ‘Fulfillment by Amazon’ was to offer unlimited and free ‘virtual shelf
space’. With the help of both the programs more than 2 million sellers were able to sell their
products to 200 million customers across the globe and also increase sales. Amit Agarwal
(Amit), Country Manager, Amazon India, stated, “Our vision is to become a trusted and
meaningful sales channel for retailers of all sizes across India, enabling them to succeed and
efficiently grow their business online. With Fulfillment by Amazon, we will do the heavy lifting
for the sellers so that they can focus on core business functions like sourcing and pricing their
products.”18

Thereafter in 2014, Amazon announced to invest around $2 billion in India, while its rival
Flipkart declared to raise a fresh capital of $1 billion.19 Bezos stated, “After our first year in
business, the response from customers and small and medium-sized businesses in India has far
surpassed our expectations. We see huge potential in the Indian economy and for the growth
of e-commerce in India. With this additional investment of US $2 billion, our team can
continue to think big, innovate, and raise the bar for customers in India. At current scale and
growth rates, India is on track to be our fastest country ever to a billion dollars in gross sales. A
big ‘thank you’ to our customers in India – we’ve never seen anything like this.”20

The company also opened its second fulfillment center in Bangalore in 2014. Amit stated, “We
are very excited by the tremendous response from sellers of all sizes for our Fulfillment by
Amazon offering in the short span of seven months since launch of Amazon.in. We are also
thrilled by the customer response to our recently launched Next-Day Guaranteed Delivery
service in several cities. Today over 120,000 plus products are available for next day delivery
across eligible pin codes in several cities. The launch of the new fulfillment center in Bangalore
is part of our continued investment in providing fast and reliable delivery across vast selection
of products, and enabling sellers of all sizes to achieve nationwide scale.”21

17 Barr Alistair, “Amazon setting up first ‘fulfillment center’ in India”, https://www.reuters.com/article/us-
amazon-india/amazon-setting-up-first-fulfillment-center-in-india-idUSTRE80J24Z20120120, January 21st 2012
18 “Amazon Launches In India”, op.cit.
19 Miglani Jitender, “Amazon India And Flipkart Are Betting Big On India eCommerce Growth”,
https://www.forbes.com/sites/forrester/2014/08/07/amazon-india-and-flipkart-are-betting-big-on-india-
ecommerce-growth/#5eb62b21641b, August 7th 2014
20 “Amazon Announces Additional US $2 Billion Investment in India”,
https://www.amazon.in/gp/feature.html?ie=UTF8&docId=1000818573, July 30th 2014
21 “Amazon opens its second Fulfillment Center in Bangalore”,
https://www.amazon.in/gp/feature.html?ie=UTF8&docId=1000779663, January 20th 2014

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According to the Forrester Asia Pacific online retail forecast, “India’s online retail spending was
expected to reach $2 billion by the end of 2013.” Along with this, the industry observers
viewed that the Indian e-commerce market was growing at a much speedier rate and
companies like Flipkart and Amazon would also witness strong growth. According to Amazon,
“At current scale and growth rates, India is on track to become the fastest country ever to
reach $1 billion in gross sales. It is important to note that Amazon launched India operations in
June 2013 only.”22 Brian Olsavsky (Olsavsky), CFO, Amazon, stated that the investment in the
country was on track and the company was ‘super excited’ about the growth in the country.
Olsavsky stated, “When we see a positive surprise we double-down on it - that's kind of our
policy - and India is that kind of surprise. We're very happy, very encouraged early on about
what we've seen so far with the ramping up of the business, the level of innovation going on
for both customers and sellers.”23 Thereafter in 2015, Amazon came up with new marketing
campaign named as ‘Aur Dikhao’ (show me more), which showcased the mentality of Indian
customers who looked for many options before making the final purchase.24 (Watch the
Amazon video at https://youtu.be/PVsvqsVDYJI).

Then in December 2015, Amazon India came up with a campaign named as ‘Kya Pehnu’ which
showcased how people were confused about what to wear for a particular occasion.25 Besides
this, the company came up with the ‘Amazon Fashion Squad’ which had a section of experts who
helped the customers solve the query on what to wear. Mayank Shivam (Shivam), Category
Leader, Amazon Fashion, India, stated, “That fashion has grown to become the top three fastest
growing categories for Amazon.in.” He further added, “This campaign underlines the concept
that is primarily driven by real-life consumer insight kya pehnu or what to wear. In addition to
this, we have also invested in creating and scaling up the Amazon India Fashion Week and will
continue to invest in this category. We are a fashion destination, not just a fashion brand, and
therefore, it is imperative for us to cut across TG segments. The campaign addresses both youth
and young professionals through the spectrum of situations.”26 (Exhibit II).

Exhibit II
‘Kya Pehnu’ Campaign of Amazon India

Source: Tewari Saumya, “Amazon solves 'Kya Pehnu' dilemma”,
https://www.afaqs.com/news/story/46635_Amazon-solves-Kya-Pehnu-dilemma, December 21st 2015
22 “Amazon India And Flipkart Are Betting Big On India eCommerce Growth”, op.cit.
23 D'Onfro Jillian, “Amazon's next big challenge: Winning India”, https://www.businessinsider.in/Amazons-next-
big-challenge-Winning-India/articleshow/48210306.cms, July 25th 2015
24 “Amazon solves 'Kya Pehnu' dilemma”, op.cit.
25 “Amazon is back with a new catchphrase - ‘Kitne Mein Mila’”, op.cit.
26 “Amazon solves 'Kya Pehnu' dilemma”, op.cit.

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Amazon India in 2015 launched ‘Project Udaan’ to increase its reach in semi-urban and rural
areas. For this, the company partnered with offline partners like medical stores, kirana and
mobile shopping outlets to encourage local entrepreneurs to help the local customer with
online shopping. The company tied up with Vakrangee and two partners which helped to
connect with villages in deeper Maharashtra and Rajasthan.27 (Exhibit III).

Exhibit III
Project Udaan of Amazon India

Source: Singh Rajiv, “How Amazon is going deeper into the hinterland with a gambit of unique offline-
online blend”, https://economictimes.indiatimes.com/small-biz/startups/how-amazon-is-going-

deeper-into-the-hinterland-with-a-gambit-of-unique-offline-online-blend/articleshow/60714288.cms,
September 17th 2017

According to Assocham, “In the last few years, the adoption of e-commerce in India has grown
exponentially. From being worth about $3.9 billion in 2009, online retail is worth $38 billion in
2016.”28 Then in February 2016, Amazon through the ‘Apni Dukaan’ brand campaign tried to
showcase those set of consumers who were reluctant to make an online purchase.29 The
company partnered with Gaurav Gera, a stand-up comedian to promote Amazon products on
social media platforms like Twitter and Facebook.30 (Exhibit IV).

27 Singh Rajiv, “How Amazon is going deeper into the hinterland with a gambit of unique offline-online blend”,
https://economictimes.indiatimes.com/small-biz/startups/how-amazon-is-going-deeper-into-the-hinterland-
with-a-gambit-of-unique-offline-online-blend/articleshow/60714288.cms, September 17th 2017
28 “How e-commerce changed in 2016 for Flipkart, Amazon and Snapdeal”, op.cit.
29 “Amazon is back with a new catchphrase - ‘Kitne Mein Mila’”, op.cit.
30 “Gaurav Gera promotes Amazon India's #ApniDukaan campaign”,
https://www.afaqs.com/news/story/47233_Gaurav-Gera-promotes-Amazon-Indias-ApniDukaan-campaign,
February 25th 2016

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Exhibit IV
Amazon India’s ‘ApniDukaan’ Campaign

Source: “Gaurav Gera promotes Amazon India's #ApniDukaan campaign”,
https://www.afaqs.com/news/story/47233_Gaurav-Gera-promotes-Amazon-Indias-ApniDukaan-

campaign, February 25th 2016

In July 2016, Amazon India came up with new campaign named as ‘#AdjustNoMore’ wherein
the ad showcased customers not to compromise on anything and get optimal solutions on
products.31 Dheeraj Sinha, Chief Strategy Officer (South Asia), Leo Burnett, stated, “Many times
we are unable to make the best of these because we don't get access to products and services
required. We settle for the suboptimal, make do with what we have. This campaign amplifies
how Amazon can help break these everyday compromises. Because Amazon makes accessible,
a wide range of products. With Amazon on our phones, now we don't have to adjust
anymore.”32 (Exhibit V).

Exhibit V
‘#AdjustNoMore’ Campaign of Amazon India

Source: Roy Sunit, “Amazon is back with a new catchphrase - ‘Kitne Mein Mila’”,
https://www.afaqs.com/news/story/54704_Amazon-is-back-with-a-new-catchphrase---Kitne-Mein-

Mila, March 22nd 2019

Apart from promotional activity, Amazon witnessed that the retail market in India was
estimated to grow by $1.2 trillion by 2021 as compared to $795 billion in 2017. According to a
report titled, ‘Unravelling the Indian Consumer’ published by Deloitte India and Retail

31 “Amazon is back with a new catchphrase - ‘Kitne Mein Mila’”, op.cit.
32 “Amazon asks Indians to #AdjustNoMore in its latest ad campaign”,
https://brandequity.economictimes.indiatimes.com/news/advertising/amazon-asks-indians-to-adjustnomore-in-
latest-ad-campaign/53303842, July 21st 2016

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Association of India, “The fast growing e-commerce market in the country will touch USD 84
billion in 2021 from USD 24 billion in 2017 on account of a healthy growth in organised retail
sector. Further, as the internet penetration in the country increases and more international
retailers start operating in India, the share of organised retail market is expected to increase
from 12 per cent in 2017 to 22-25 per cent by 2021. This will also be driven by the growth of e-
commerce market from USD 24 billion in 2017 to USD 84 billion in 2021. Increasing online
shopping, smartphone usage and internet penetration across semi-urban and rural segments
would help boost the sales.”

Anil Talreja, Partner, Deloitte India, stated, “India continues to hold a strong position as far as
its market potential is concerned and is on its way to becoming the third largest consumer
market in the world, poised to grow close to USD 1.2 trillion by 2021.” The report further
stated, “Given the strong retail and consumer outlook, India is expected to witness redefining
trends in the consumer market which will shape the future of the retail industry. Consumer
experience will be the key focus of the companies. Against the backdrop of the Indian and
global economies that set the stage for achieving globalisation, innovation, M&A activity, and
increased digitalisation, consumer companies are likely to continue to reinterpret traditional
levers to stimulate growth in a competitive business environment.”33

Would Amazon’s Renewed E-Commerce Strategy Win Customers in
India?

Going further, in 2016, the customers not only just purchased electronics and fashion online
but also bought furniture, gift cards and daily essentials in India. The online shopping websites
like Amazon, Flipkart and Snapdeal noticed that the customers matured along with the new
online ecosystem. Vishal Chadha, Senior VP (Business), Snapdeal, stated, “The delivery of
functional benefits like speed, convenience and value also resulted in massive growth from
non-metros cities in India.”

In the same year, Amazon witnessed 100% year-on-year growth and undertook various
initiatives. The company came up with ‘Global Store’ which helped them to sell global products
through their website. With AmazonNow and Amazon Pantry, the customers were able to get
their groceries and other essentials at their doorstep within 90 minutes and next day
respectively. The customers were also benefitted with ‘Subscribe and Save’ feature, wherein
they could save the list of personal care products and refill them as per their usage
schedules.34 Saurabh Srivastava, Head FMCG, Amazon India, stated, “The Subscribe and Save
program is yet another example of Amazon innovation and working backwards approach to
meet customers’ needs. We realize that buying monthly household items require a lot of time
and effort; first in terms of remembering to buy and then actually going and making a
purchase. With Subscribe and Save, our core promise is focused on taking away the hassle
associated with remembering to buy regular household items. Subscribe and Save is a very
successful program in other countries and is used by millions of Amazon’s customers. We are
confident that our customers in India will see tremendous benefits from the program as
well.”35

33 “Indian e-commerce market to touch USD 84 billion in 2021: Report”,
https://economictimes.indiatimes.com/industry/services/retail/indian-e-commerce-market-to-touch-usd-84-
billion-in-2021-report/articleshow/68169239.cms, February 26th 2019
34 “How e-commerce changed in 2016 for Flipkart, Amazon and Snapdeal”, op.cit.
35 “Amazon introduces ‘Subscribe and Save’ program in India”,
https://www.amazon.in/b?ie=UTF8&node=8593326031, April 14th 2016

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In 2017, the revenues of Amazon India doubled with 105% growth.36 According to the Internet
Trends report presented by Kleiner Perkins Caufield Byers37 (KPCB), “Amazon India is likely to
emerge as the dominant e-commerce company in the country in the long run, while the overall
number of Internet users in the country continues to grow rapidly. The number of internet
users has grown 40% over the past year to about 355 million. Amazon India is most likely to
dominate the country’s online retail market in the long run.” Amazon in India offered a wide
selection of products along with strong advertising and marketing. In addition to this, Amazon
Prime worked as the key differentiator for Amazon India and also helped to retain customers.
Sandeep Murthy (Murthy), Partner, Venture Capital Firm, Lightbox Ventures Management Ltd.,
stated, “Amazon has done a great job in India so far—they’ve adapted to the local market very
well. Some of their solutions from there (in the US), they are customizing those for what makes
sense here. And they’re leveraging their great knowledge and capital.”38

In the same year, Amazon India came up with one more campaign named as
‘#SabAmazonWaale’, which showed how different types of customers choose Amazon as the
most preferred online shopping platform for purchasing anything of their choice.39 Ravi Desai
(Desai), Director Mass and Brand Marketing, Amazon India, stated, “‘Apni Dukaan’ as a thought
came into being last year as Amazon became a more familiar and trusted store for crores of
customers across India, and ‘Sab Amazon Waale’ is a celebration of these customers that have
placed their trust in the brand over the years.”40 (Exhibit VI).

Exhibit VI
‘#SabAmazonWaale’ Campaign of Amazon India

Source: Roy Sunit, “Amazon is back with a new catchphrase - "Kitne Mein Mila"”,
https://www.afaqs.com/news/story/54704_Amazon-is-back-with-a-new-catchphrase---Kitne-Mein-

Mila, March 22nd 2019

36 Malviya Sagar and Mukherjee Writankar, “Amazon registers over 100 per cent growth in India revenues in
FY17”, https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/amazon-registers-over-100-per-
cent-growth-in-india-revenues-in-fy17/articleshow/61856241.cms, November 30th 2017
37 A Silicon Valley venture capital firm.
38 Sen Anirban, “Amazon to dominate Indian e-commerce market in the long run: KPCB report”,
https://www.livemint.com/Companies/vDsedgFhBhDrFcXJK0irnN/Amazon-to-dominate-Indian-ecommerce-
market-in-the-long-run.html, June 2nd 2017
39 “Amazon is back with a new catchphrase - ‘Kitne Mein Mila’”, op.cit.
40 Furtado Collin, “Why Amazon India Shifted its Narrative to #SabAmazonWaale from #ApniDukaan”,
http://www.adageindia.in/marketing/cmo-strategy/why-amazon-india-shifted-its-narrative-to-
sabamazonwaale-from-apnidukaan/articleshow/62010452.cms, December 11th 2017

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1st Edition, Issue-1 Amazon India's Strategy to Solidify in E-Commerce Market

Going ahead, Flipkart and Amazon gave stiff competition to each other in 2017. The industry
observers noted that both the players had strong position in the market as Amazon had huge
capital investments at its disposal, while the rivals like Paytm and Flipkart had strong investors
like Alibaba Group Holdings Ltd., Tencent Holdings Ltd, Tiger Global Management and SoftBank
Group Corp. Murthy stated, “The challenging thing about e-commerce though is that if you
look globally, there are only 12 companies that have over a billion (dollars) in revenue, over a
billion in market value and are public. In India, you have at least four (companies) fighting for
that position.” He further added, “We are also in a market and business today where we don’t
have the consumption capacity yet to merit the level of spend that has gone in. We need to
have consumption growth first—until then it’s a bit of a waiting game. And during that waiting
game, it’s a question of who has the staying power. The fortunate thing for Flipkart is that they
have Tencent in their backyard, Paytm has Alibaba and Amazon being Amazon is a good thing.
So, we now have some staying power. Now it’s about waiting and watching.”41

Besides this, Amazon focused more on every geographic segment of India’s online retail
market just after rival Flipkart assigned rural and smaller cities as its next potential markets for
future growth. Amit stated, “Our ambition in India is to become everything for everyone. We
don’t think that way (whether the time has come in India’s e-commerce market to target
particular segments of customers). We believe customers, wherever they are in India, should
be able to buy and get products delivered to them.” According to Goldman Sachs, “Flipkart and
Amazon, the two largest e-commerce players in the country, are running neck and neck in the
South Asian nation’s promising online retailing market that is expected to swell to $103 billion
by 2019-20 from $26 billion at present. In the crucial Diwali sales during October, Flipkart
announced that it had sold 15.5 million units, compared with Amazon’s 15 million units.”42

Amazon came up with ‘think globally and act locally strategy’ in India to win over customers.
Amazon in India leveraged its ‘logistics capabilities, massive scale and balance sheet’ while
creating local offerings for the Indian customers. Amazon studied the buying habits of
customers and concluded that customers may not be comfortable in reading online product
reviews due to lack of education and hence it established kiosks in small local retail locations
which assisted the consumers in buying the products. Amazon also found out that there were
major bandwidth issues with the customers as many of them used ‘feature phones with slow
network connections’, so they were not able to view the Amazon app. The company slimmed
down the version of the app so as to adjust with the slower network speeds. Amazon also used
machine learning (ML) and artificial intelligence (AI) in order to bring better precision to
delivery.43

The company’s vision was to become an AI-as-a-service company. Rajeev Rastogi, the well-
known AI expert in India was the Director of Machine Learning at Amazon India. Amazon had
gathered customer data and had technology to improve purchase experience. The company
also used analytics and ML algorithms to maintain customer data and stock at the Fulfillment
centres. Also the smooth functioning of logistics operations was due to ML algorithms. The
company used ML in the logistics business which included segmenting zip codes to get minute

41 “Amazon to dominate Indian e-commerce market in the long run: KPCB report”, op.cit.
42 Bailay Rasul, “Amazon's India strategy: Focus on every geography to become 'everything for everyone’”,
https://economictimes.indiatimes.com/small-biz/startups/amazons-india-strategy-focus-on-every-geography-to-
become-everything-for-everyone/articleshow/57761644.cms, March 22nd 2017
43 “7 Ways Amazon Is Winning By Acting 'Glocally' In India”, op.cit.

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1st Edition, Issue-1 Amazon India's Strategy to Solidify in E-Commerce Market

detail about the address. Then for delivery purposes ML capabilities and AI were used to get
the best route and time to deliver the parcels to the customers.44

Amazon strongly focused on using AI and ML to deal with competition in the market. The
company also designed algorithms to detect fraudulent transactions, fake reviews and fake
products.45 Besides this, Amazon also tried to spread awareness among customers about the
wide selection of products available on amazon.in. The company launched ‘Kitne Mein Mila?’
(how much you got it for?) campaign which emphasised on leveraging value for money to
engage with customers (Exhibit VII). The campaign showcased different situations wherein
customers had purchased products like consumer electronics, mobile phones, appliances,
fashion products at an affordable price with quality assurance. The campaign was designed by
Ogilvy, included digital content and TVCs for customers in India.46

Exhibit VII
‘Kitne Mein Mila?’ Campaign

Source: Roy Sunit, “Amazon is back with a new catchphrase - ‘Kitne Mein Mila’”,
https://www.afaqs.com/news/story/54704_Amazon-is-back-with-a-new-catchphrase---Kitne-Mein-

Mila, March 22nd 2019

Desai stated, “As customers, we all seek value for our hard earned money. We all
operate within a fixed budget and seek quality products within it. Keeping in mind this insight,
the ‘Kitne Mein Mila’ campaign showcases how Amazon.in understands this customer need
and offers a wide selection of quality products making shopping more affordable, accessible
and within the reach of everyone’s budget.” Kiran Ramamurthy, Manager Partner, Ogilvy
South stated, “‘Kitne mein mila’ is the ubiquitous phrase that captures two quintessential
things about a product that has just been bought – its quality and its price. It is the first
inevitable question that is asked when you see a friend or acquaintance with a new product
that appeals to you. So, when Amazon wanted to convey that a wide selection of products was
available at great prices, there was no better phrase than ‘kitne mein mila’ to anchor the
thought of fantastic value that customers get on Amazon. The essence of this campaign is the
genuine surprise that is evoked in people when they discover that the product that they
thought was expensive is available at jaw dropping prices on Amazon.”47

44 Bhatia Richa, “Amazon’s India Strategy – Consolidating Its Empire On The Back Of Artificial Intelligence”,
https://www.analyticsindiamag.com/amazons-india-strategy-consolidating-empire-back-artificial-intelligence/,
February 27th 2018
45 “7 Ways Amazon Is Winning By Acting 'Glocally' In India”, op.cit.
46 “Amazon India launches its new campaign – ‘Kitne Mein Mila?’”,
https://brandequity.economictimes.indiatimes.com/news/advertising/amazon-india-launches-its-new-
campaign-kitne-mein-mila/68490335, March 20th 2019
47 “Amazon India launches its new campaign – ‘Kitne Mein Mila?’”, op.cit.

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1st Edition, Issue-1 Amazon India's Strategy to Solidify in E-Commerce Market

Despite of making several efforts, Amazon had to change its plans in lieu of changes made by
government in the FDI policy for e-commerce market in 2019 (Annexure I). In the same year,
Amazon completed the acquisition of Aditya Birla retail chain ‘More’. According to Ministry of
Corporate Affairs filing of Witzig Advisory Services, “Amazon has picked up 49% stake in the
company, but has only bought 17% voting rights via Class A equity shares and the rest 32%
stake through Class B equity shares which don’t have voting rights.”48 The company stated, “It
won’t broadcast it plans but assures its customers to provide best in class customer experience
in all aspects of the point of contact.”

Furthermore, Amazon India planned to open 100 gazeboes or kiosks exclusively at the prime
malls in the market. These kiosks would help the company to sell the products through it and
also showcase and order products from the kiosks.49 Sumit Chopra, Consumer Research
Director, GlobalData, stated, “Amazon has been looking to expand and strengthen its offline
presence in India with a shop-centric and customer-centric model to give customers a first-
hand experience of its devices such as the Kindle ebook reader, Echo and Fire TV dongle. Two
years ago, Amazon had first ventured into offline play with ‘Amazon Kiosks’ in the South Indian
city of Bengaluru. Later, it opened four more kiosks – one in Ahmedabad, two in Bengaluru and
one in Mumbai.”

He further added, “The expansion comes at a time where other giants like Google and Myntra
– the online fashion arm of Flipkart – are scaling up their presence in the offline sector. With its
calculative move, Amazon will be able to leverage the advantage of the FDI regulations along
with maximum visibility towards the consumers, especially in the tier 2 and tier 3 cities. By
providing the prospective buyers an idea of the hardware products, Amazon can boost sales by
gaining traction towards the section of the population which still believes in physically seeing a
product before actually purchasing it.”50

On the other hand, on account of the changing FDI landscape, market analysts claimed that
Amazon had a rough road ahead. Satish Meena, an Analyst for Forrester Research, opined that
“This will certainly impact the investment plans of Amazon in India. Some parts of Amazon will
face challenges, and if the Indian operations take a step back in scaling, we can expect some
change in their jobs scenario also.” Echoing similar views, Kartik Hosanagar, a Professor at the
Wharton Business School, claimed that “Amazon will also need more clarity from the
government on how exactly the new changes will affect their business. There’s been a lot of
debate on how to best interpret the new rules, particularly around discounts and exclusive
offers, which have been important levers for Amazon to gain market share… It’s simply too
soon to tell.”51 Amidst this scenario, it remained to be seen whether Amazon India would be
able to strengthen its position in the wake of stiff competition and changes in the government
policies in the e-commerce market.

48 “Amazon India Drives Its Offline Strategy, Gains Control Of Retail Chain More”, op.cit.
49 Shelley Merlyn, “Amazon Is Out With A New Strategy To Strengthen Its Presence In India”,
https://dazeinfo.com/2019/03/27/amazons-kiosks-malls-india/, March 27th 2019
50 “Amazon proposes offline route to strengthen presence in India, says GlobalData”, op.cit.
51 Kim Eugene, “Amazon is on a hiring spree in India, even as new restrictions on foreign sellers loom”,
https://www.cnbc.com/2019/01/16/amazon-india-hiring-spree-new-restrictions-foreign-sellers-coming.html,
January 16th 2019

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1st Edition, Issue-1 Amazon India's Strategy to Solidify in E-Commerce Market

Annexure I
New FDI Policy and How the Customers Would Get Affected by the new FDI Policy

The new policy for e-commerce bars companies from selling products
exclusively on their online portals. Online entities with foreign investments
cannot offer products sold by retailers in which they hold equity stake.

New FDI Rules in e- It also mandates online e-commerce giants including Amazon and Walmart-
Commerce
owned Flipkart from stocking a quarter or 25 per cent of their inventory

from a single vendor. The government’s new FDI rule has also debarred such

online marketplaces from manipulating the price of products or offer deep

discounts.

How the Customers Would Get Affected by the New FDI Policy

The new FDI rule is aimed at uplifting Indian sellers, especially those with

physical presence only. The heavy discount provided by Flipkart and Amazon

would fall sharply on a select range of products after the new FDI policy.

1 No more deep New purchases from either Amazon or Flipkart would now cost more as the
discounts products would be sold directly via a third-party seller, who is likely to
charge more than the existing inventory-based system. A bulk of customers

on e-commerce websites seek to purchase electronic products including

mobile phone, digital camera, laptops, video game consoles but the new FDI

rules may lead to higher prices.

E-commerce platforms such as Flipkart, Myntra and Amazon earlier used to

buy products at bulk from manufacturers at a heavy discount and sold them

at a lower cost to entities where they had stakes and these sellers would

2 Why fewer again sell it on the respective e-commerce platforms. However, all major
discounts? online entities now have to restructure their business patterns to

accommodate more third-party sellers where they have no stake. Such a

move is expected to cause a significant dip in terms of discounts as prices of

the actual product and extra delivery charges may also apply.

Government said the move would benefit customers as well. By preventing

exclusive marketing or selling rights in its new FDI policy for e-commerce,

the government has disallowed online marketplaces from exclusively selling

3 More options a product. This means manufacturers will have to sell their products to all
for customers markets places. Therefore, a new OnePlus phone is likely to be available on

a number of portals, leaving the customer with more choices.

This could happen with a wide range of products which was either available

on only Flipkart or Amazon.

A draft analysis by analyst firm PwC suggested that the new e-commerce

4 Online shopping policy could lead to a ‘$46 billion or over Rs 3.2 lakh’ loss terms of sales by
platforms likely 2022. While both e-commerce outlets were busy adhering to fit in to the
new structure, customers should be aware of that the major players had
to take deep removed a large volume of products from their website. By the end of
sales knock February 2019, sweeping changes in prices would be there apart from

changes in pricing strategy.

The new rule could create a situation favourable for offline retail stores in

5 Rise of physical the country. While deeper internet penetration and mobile use led to a
stores likely rising number of online platforms, a number of customers shop online only
to get products at a cheaper rate. With product prices set to become almost

uniform across all selling channels, customers may favour physical stores.

Source: Compiled by the Author from – “New FDI e-commerce rules in India: What it means for online

shoppers”, https://www.indiatoday.in/business/story/new-fdi-e-commerce-rules-in-india-what-it-
means-for-online-shoppers-1449783-2019-02-06, February 6th 2019

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1st Edition, Issue-1 Ahold Delhaize’s AI Driven Supply Chain Initiative

Ahold Delhaize’s AI Driven Supply Chain
Initiative

Case Study

This case was written by Sharmila Majumdar and reviewed by Rajan Shah, Amity Research
Centers Headquarter, Bangalore. It is intended to be used as the basis for class discussion
rather than to illustrate either effective or ineffective handling of a management situation. The
case was compiled from published sources.
© 2019, Amity Research Centers Headquarter, Bangalore.
Website: www.amity.edu/casestudies/
No part of this publication may be copied, stored, transmitted, reproduced or distributed in
any form or medium whatsoever without the permission of the copyright owner.

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1st Edition, Issue-1 Ahold Delhaize’s AI Driven Supply Chain Initiative

Author: Sharmila Majumdar

Ahold Delhaize’s AI Driven Supply Chain Initiative

Abstract: In 2015, Dutch grocer, Ahold paid $28 billion to acquire Belgian food retailer,
Delhaize. The merged entity, known as ‘Ahold Delhaize’ (AD) became the owner of top brands
such as Food Lion, Giant Food (of Landover), GIANT Food Stores (of Carlisle), Hannaford, Stop
& Shop, and Peapod, ‘the country’s leading online grocer’. It took two years for the successful
integration of its business and in the year 2018, AD decided to push for growth in the US
market, one of the biggest market segments for the company. It aimed for comparable sales growth,
gain market share and also boost its online sales to approximately €7 billion by 2021. Though by
August 2018, US grocery market size was recorded to be $800 billion, the market was very
crowded as traditional and local grocers were operating alongside the supermarket chains and
retailers like Walmart, Kroger and Aldi (no-frills German grocer) and Lidl (German discount
chain) for the market share. In addition to that, the entry of Amazon in grocery business had
made the market extremely competitive. The customers were looking for quality shopping
experience, variety, convenience as well as transparency and assurance. In such a scenario,
would Ahold Delhaize’s plan to run a data driven business and adoption of technology such as
Artificial Intelligence, Robotics and Integrated Transportation Management system be able to
guarantee its business growth in coming period?

Case Study

“In an industry that’s undergoing rapid change, fuelled by shifting customer behavior and
preferences, we will focus on growth by investing in our stores, omnichannel offering and
technological capabilities which will enrich the customer experience and increase efficiencies.
Ultimately, this will drive growth by making everyday shopping easier, fresher and healthier for
our customers.”1

– Frans Muller, President & CEO, Ahold Delhaize

Food shopping had always been a communal as well very personal activity. While for some,
it might be a compulsion, others felt much more enthusiastic exploring the fresher and
healthier varieties of food available to them. No matter how they would feel about grocery
shopping, all types of customers undoubtedly looked for quality shopping experience. They
were increasingly becoming much more adventurous with their diets and food choices. This
has forced the grocery shops to curate wider variety of foods and beverages from various
sources. Not only that, to keep up with the hectic pace of their lives, they were also looking for
convenience. To satisfy such diverse needs and offer best shopping experiences, grocery stores
in the US started leveraging technology to engage with their customers.2

1 “Ahold Delhaize’s Leading Together Strategy Focuses on 3-Year Growth”, https://progressivegrocer.com/ahold-
delhaizes-leading-together-strategy-focuses-3-year-growth, November 13th 2018
2 “Phononic’s 2019 Store of the Future Report: How Consumers View the Grocery Store Experience”,
https://phononic.com/wp-content/uploads/2019/03/Phononic-Store-of-the-Future-2019-eBook.pdf
“© 2019, Amity Research Centers HQ, Bangalore. All rights reserved.”

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1st Edition, Issue-1 Ahold Delhaize’s AI Driven Supply Chain Initiative

In such scenario, by August 2018, the size of the US grocery market touched $800 billion. In
spite of its lucrative size, it was a very crowded market having presence of traditional and local
grocers competing with big supermarket chains and retailers like Walmart, Kroger3 and also
discount shops like Aldi (no-frills grocer from Germany) and Lidl (German discount chain).4,5 In
addition to that, entry of Amazon in grocery business via acquisition of Whole Foods had
transformed the dynamics of the US grocery market. To survive in the competition, even the
traditional grocers were compelled to invest to improve in-store efficiency and customer
experience. They had to satisfy the customers’ growing demand for transparency and multiple
dietary requirements.6,7

In such a challenging and competitive landscape, Ahold Delhaize (AD), ‘the world-leading food
retailer based in the Netherlands’, operated ‘wide variety of store formats – from
hypermarkets to local supermarkets and convenience stores’ in the US market via Ahold
Delhaize USA. The major supermarket operated by AD in the US included ‘Food Lion, Giant
Food (of Landover), GIANT Food Stores (of Carlisle), Hannaford, and Stop & Shop, in addition of
Peapod, ‘the country’s leading online grocer’. In order to deal with the changing customer
preferences, AD had planned to drive its business growth and grab market share through its
comprehensive strategic programs. The company had identified five key areas to reposition its
business, expand customer base and build emotional connection with them. And in that plan,
the company had pinned its hope on successful adoption of technology such as Artificial
Intelligence (AI), Robotics and Integrated Transportation Management system.8,9 Given the
emerging trend of online grocery business in the US, how AD was bracing itself for the future?
Would AI-driven supply chain initiatives be able to guide the business on a higher growth
trajectory in coming period?

Grocery Market in the US: An Overview

According to market observers, the US grocery business was defied as the ‘Retail
Apocalypse’10. While the onslaught of online business trend was compelling other businesses,
like apparel, consumer electronics, and home furnishings stores to close down, the trend in the
grocery business was just the opposite. As compared to 2017, in 2018 there was a 30% rise in
store openings for grocery business. This reflected addition of ‘17 million sq. ft. of new space’.
Both local and also other leading players in the business were seen to be opening their stores
across the US states such as California, Florida, and Texas.11

3 Kroger is an American retailing company, largest supermarket chain (by revenue) in the US.
4 Meyersohn Nathaniel, “Amazon-Whole Foods one year later: The grocery business will never be the same”,
https://money.cnn.com/2018/08/28/technology/business/amazon-whole-foods-365-walmart-kroger-costco-
grocery/index.html, August 28th 2018
5 Wolf Liz, “Despite ‘Retail Apocalypse,’ U.S. Grocery Store Openings Jumped 30 Percent in 2018”,
https://www.nreionline.com/retail/despite-retail-apocalypse-us-grocery-store-openings-jumped-30-percent-
2018, April 17th 2019
6 Redman Russell, “Survey: Grocery stores need to ‘enter the modern age’”,
https://www.supermarketnews.com/consumer-trends/survey-grocery-stores-need-enter-modern-age, April 1st
2019
7 Olayanju Julia B., “Top Trends Driving Change In The Food Industry”,
https://www.forbes.com/sites/juliabolayanju/2019/02/16/top-trends-driving-change-in-the-food-
industry/#399388fe6063, February 16th 2019
8 “Ahold Delhaize’s Leading Together Strategy Focuses on 3-Year Growth”, op.cit.
9 “All the facts about our stores in the U.S.”, https://www.aholddelhaize.com/en/brands/united-states/our-
brands-in-the-united-states/
10 The ‘retail apocalypse’ was defined as the phenomena of closing down of a large number of brick-and-mortar
retail stores, especially those of large chains, starting in 2010 and continuing onward.
11 “Despite ‘Retail Apocalypse,’ U.S. Grocery Store Openings Jumped 30 Percent in 2018”, op.cit.

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In 2018, according to Food Marketing Institute (FMI) and Nielsen’s joint report, the online
grocery business comprised only 2 to 4.3% of the total grocery business in US which stood at
$641 billion. Interestingly, by 2025, the share of the online grocery retail was expected to
increase by 20% in the overall grocery retail.12 (Exhibit I). Therefore, while gearing up for
competition, the food retailers, wholesalers as well as traditional supermarkets considered
online grocery both as an opportunity as well as challenge.13 With such trend, experts believed
that as the new-age customers were evolving, in response, the stores needed to beef up both
digital as well as physical presence; which would serve the purposes of convenience as well as
flexibility.14

Exhibit I
Future of Online Grocery Sales in the US

Source: “Ecommerce in the Grocery Sector: Retailers and Brands Innovate to Propel Growth in 2017”,
https://mymarketwise.com/2017/04/05/ecommerce-in-the-grocery-sector-retailers-and-brands-
innovate-to-propel-growth-in-2017/, April 5th 2017

Especially Amazon’s acquisition of Whole Foods in 2017 had triggered many changes in the US
grocery landscape. After Amazon’s entry, other businesses started taking online platform more
seriously, offering their customers same day delivery facilities and also finding other ways to
come closer to the shoppers. Retailers like Walmart, Target15, and Kroger chose to be
innovative to respond to the changing the customer expectations. The locals as well as other
big players also had to get ready for that change. The customers were seen to be making
frequent visits to the shops, but they were seen to be spending less time there. For such
customers, German grocer, Aldi, was opening smaller stores and sold private-label products
with deep discounts. The chain had further plan to open 800 such ‘new stores and remodel the
existing ones’ by investing $5.3 billion in the US market. Not only Aldi, other players like Lidl
(German discount chain), Sprouts16 were also planning to expand, revamp and realign their

12 Danziger Pamela N., “Online Grocery Sales To Reach $100 Billion In 2025; Amazon Is Current And Future
Leader”, https://www.forbes.com/sites/pamdanziger/2018/01/18/online-grocery-sales-to-reach-100-billion-in-
2025-amazon-set-to-be-market-share-leader/#6d08a0a862f3, January 18th 2018
13 Redman Russell, “Food retailers size up the competition”, https://www.supermarketnews.com/retail-
financial/food-retailers-size-competition, October 10th 2018
14 “Despite ‘Retail Apocalypse,’ U.S. Grocery Store Openings Jumped 30 Percent in 2018”, op.cit.
15 Target Corporation is the eighth-largest retailer in the US.
16 Sprouts offers its customers an old-fashioned farmers market experience for fresh, natural and organic foods
and products at incredible prices.

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