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Sustainability at Amazon 15.913/915 Sustainability Lab Shelby White| Preston Kutney Pra:k Modi | Georg Caspary Part I: What are e-Commerce/consumer purchasing behaviors of young Indian consumers? What is the size and poten:al of this market? Project Objec1ve: The goal of the project was to help Amazon uncover insights about millennial and gen-z Indian consumers’ aPtudes towards sustainability and the effect on purchase preferences in order to provide Amazon with informa:on that will help establish innova:ve products or programs geared toward its sustainability-minded consumers in the rapidly growing Indian market. To assist Amazon, we sought to answer the following research ques:ons: Part II: How do Indians understand and define sustainability? What are young Indian consumer aPtudes about environmental sustainability issues? Part III: What are young Indians’ aspira:ons for the future and how will cultural values and aPtudes on sustainability affect e-Commerce behavior, especially as wealth grows? Methodology and Findings: Focusing primarily on secondary research, our team explored exis:ng studies on the topic of sustainability, millennials and genera:on z preferences in the U.S. versus India, as well as evidence on aPtudes of experts on climate change. AYer narrowing the scope to include environmental concerns among Millennial consumers in India only, we found the following insights: o Market is large and poised for growth, led by young consumers o Popula:on is 65% rural, but 70% of income is generated in ci:es o Vegetarianism and wedding spending highlight unique culture-driven spending behavior, with significant differences from U.S., especially regarding food o Significant challenges to e-Commerce penetra:on exist including: poor infrastructure and cash on demand being primary form of payment o Climate change is perceived as the biggest global issue by Indians while North America and Western Europe consider ISIS as the biggest global threat o “Green” is associated with “natural” or “herbal” and the market for organic and natural products has been growing at 25-30% o Young Indians are more socially responsible and environmentally aware than prior genera:ons o Indian consumers more likely to purchase eco-friendly or “green” products, all other things being equal o Inconclusive whether or not young consumers are willing to pay a premium o Limited evidence for rela:onship between na:onal income and environmentalism. o Consump:on behavior in most categories will change with income, with a few notable excep:ons - preferences around meat consump:on and local goods will remain sustainable. o India has a long history of CSR and Indians believe companies (especially foreign ones) have a duty towards society that is legally enforceable and increasingly focused on the environment. Next Steps for Amazon In light of the quality of available research on Indian consumers’ aPtudes about sustainability, the reliability and validity of the conclusions may not be an adequate founda:on for immediate ac:on. We believe further analysis is required and Amazon is in a unique posi:on to take advantage of its expansive consumer purchasing data: Matched pairs back test on past sales Find a pair of similar products, with iden:cal prices and customer reviews. One product in the pair must be clearly superior in some dimension of sustainability. Analyze propor:ons of sales of that product to the overall category in neighborhoods with different income or age levels. Repeat analysis among both Indian and U.S. consumers to compare and contrast findings. Experiment op1on 2 For a single item, A/B test versions of the sales page with sustainability messaging or informa:on placed more prominently (such as natural, organic, or local adver:sementsIndian-made) and evaluate two effects: the informa:on effect on sales of equally priced items, and then separately, the price effect, or elas:city of demand as price is increased for the “sustainable” version. Experiment op1on 1 Study effect of Amazon-branded packaging waste vs non-branded packaging waste on willingness to purchase on Amazon. Study design could have respondents enter past a trash-filled street, with branded trash inten:onally placed in their path. Respondents would be told the study is about eCommerce and remunera:on would money towards an eCommerce website of their choice. Objec:ve: Determine whether or not there are nega:ve effects to branded waste considering Indian consumers’ concerns about inadequate waste management.

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Page 1: Sustainability at Amazon - MIT Sloan · (such as natural, organic, or local adver:sementsIndian-made) and evaluate two effects: the informa:on effect on sales of equally priced

Sustainabilityat

Amazon

15.913/915SustainabilityLabShelbyWhite|PrestonKutneyPra:kModi|GeorgCaspary

PartI:Whataree-Commerce/consumer

purchasingbehaviorsofyoungIndian

consumers?Whatisthesizeandpoten:al

ofthismarket?

ProjectObjec1ve:ThegoaloftheprojectwastohelpAmazonuncoverinsightsaboutmillennialandgen-zIndianconsumers’

aPtudestowardssustainabilityandtheeffectonpurchasepreferencesinordertoprovideAmazonwith

informa:onthatwillhelpestablishinnova:veproductsorprogramsgearedtowarditssustainability-minded

consumersintherapidlygrowingIndianmarket.ToassistAmazon,wesoughttoanswerthefollowing

researchques:ons:

PartII:HowdoIndiansunderstandanddefine

sustainability?WhatareyoungIndian

consumeraPtudesaboutenvironmental

sustainabilityissues?

PartIII:WhatareyoungIndians’aspira:onsfor

thefutureandhowwillculturalvaluesand

aPtudesonsustainabilityaffecte-Commerce

behavior,especiallyaswealthgrows?

MethodologyandFindings:Focusingprimarilyonsecondaryresearch,ourteamexploredexis:ngstudiesonthetopicofsustainability,

millennialsandgenera:onzpreferencesintheU.S.versusIndia,aswellasevidenceonaPtudesofexperts

onclimatechange.AYernarrowingthescopetoincludeenvironmentalconcernsamongMillennial

consumersinIndiaonly,wefoundthefollowinginsights:

o Marketislargeandpoisedforgrowth,

ledbyyoungconsumers

o  Popula:onis65%rural,but70%ofincomeisgeneratedinci:es

o  Vegetarianismandweddingspending

highlightuniqueculture-driven

spendingbehavior,withsignificant

differencesfromU.S.,especially

regardingfood

o  Significantchallengestoe-Commerce

penetra:onexistincluding:poor

infrastructureandcashondemand

beingprimaryformofpayment

o  Climatechangeisperceivedasthebiggest

globalissuebyIndianswhileNorthAmerica

andWesternEuropeconsiderISISasthe

biggestglobalthreat

o  “Green”isassociatedwith“natural”or“herbal”andthemarketfororganicand

naturalproductshasbeengrowingat

25-30%

o  YoungIndiansaremoresociallyresponsible

andenvironmentallyawarethanprior

genera:ons

o  Indianconsumersmorelikelytopurchase

eco-friendlyor“green”products,allother

thingsbeingequal

o  Inconclusivewhetherornotyoungconsumersarewillingtopayapremium

o  Limitedevidenceforrela:onshipbetween

na:onalincomeandenvironmentalism.

o  Consump:onbehaviorinmostcategorieswill

changewithincome,withafewnotable

excep:ons-preferencesaroundmeat

consump:onandlocalgoodswillremain

sustainable.

o  IndiahasalonghistoryofCSRandIndiansbelievecompanies(especiallyforeignones)

haveadutytowardssocietythatislegally

enforceableandincreasinglyfocusedonthe

environment.

NextStepsforAmazon

InlightofthequalityofavailableresearchonIndianconsumers’aPtudesaboutsustainability,the

reliabilityandvalidityoftheconclusionsmaynotbeanadequatefounda:onforimmediateac:on.

WebelievefurtheranalysisisrequiredandAmazonisinauniqueposi:ontotakeadvantageofits

expansiveconsumerpurchasingdata:

MatchedpairsbacktestonpastsalesFindapairofsimilarproducts,withiden:cal

pricesandcustomerreviews.Oneproductin

thepairmustbeclearlysuperiorinsome

dimensionofsustainability.Analyze

propor:onsofsalesofthatproducttothe

overallcategoryinneighborhoodswith

differentincomeoragelevels.Repeat

analysisamongbothIndianandU.S.

consumerstocompareandcontrastfindings.

Experimentop1on2Forasingleitem,A/Btestversionsofthe

salespagewithsustainabilitymessagingor

informa:onplacedmoreprominently

(suchasnatural,organic,orlocal

adver:sementsIndian-made)andevaluate

twoeffects:theinforma:oneffectonsales

ofequallypriceditems,andthen

separately,thepriceeffect,orelas:cityof

demandaspriceisincreasedforthe

“sustainable”version.

Experimentop1on1StudyeffectofAmazon-brandedpackagingwaste

vsnon-brandedpackagingwasteonwillingnessto

purchaseonAmazon.Studydesigncouldhave

respondentsenterpastatrash-filledstreet,with

brandedtrashinten:onallyplacedintheirpath.

Respondentswouldbetoldthestudyisabout

eCommerceandremunera:onwouldmoney

towardsaneCommercewebsiteoftheirchoice.

Objec:ve:Determinewhetherornotthereare

nega:veeffectstobrandedwasteconsidering

Indianconsumers’concernsaboutinadequate

wastemanagement.

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