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International expansion of e‐retailers: Where the Amazon flows
Author(s) -
Chakrabarti Rajesh,
Scholnick Barry
Publication year - 2001
Publication title -
thunderbird international business review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.553
H-Index - 37
eISSN - 1520-6874
pISSN - 1096-4762
DOI - 10.1002/tie.1040
Subject(s) - competition (biology) , amazon rainforest , protectionism , business , foreign direct investment , product (mathematics) , disadvantage , rules of origin , international trade , market access , commerce , marketing , international economics , advertising , industrial organization , economics , commercial policy , political science , ecology , geometry , mathematics , biology , law , macroeconomics , agriculture
Competition among e‐retailers is becoming increasingly intense and continuously narrowing margins. Weexamine the price competition between Amazon and Barnes & Noble to illustrate this. The key to survival,therefore, lies in rapidly expanding market size in one or both of two ways: expansion across product lines andinternational expansion. Although foreign consumers can easily access an online retailer's website, highcross‐border shipping costs often put foreign e‐retailers at a disadvantage. We show how, in spite ofbeing a superior store in most respects, Amazon fails to compete with the leading Canadian online book retailer,Chapters Online, primarily because of cross‐border shipping disadvantages. Consequently e‐retailersare using traditional foreign direct investment (FDI)‐based strategies to expand internationally.In addition, a new mode of foreign market entry—e‐mediation—involving match‐making betweencustomers and suppliers in a country through a website located in another country, is also emerging. This isparticularly suitable in situations where protectionist barriers forbid FDI‐based strategies. Amazon plans touse this strategy in Canada. © 2002 John Wiley & Sons, Inc.