No company illustrates the business era of the Internet more than Amazon.com. What started out as a book company emerged as a serious competitor to dozen of industries. If founder and CEO Jeff Bezos achieve his vision, “Amazon.com will be a place where you can find out anything.” Given the activities, expansions, and successes to date, Amazon is making important headway on its ambitious plans to take over the whole e-commerce e-tailing world.
Amazon.com started in the year1996 selling books over the Internet. Since that time the company pioneered most of the innovations which define electronic shopping, like one-click shopping, customer reviews, affiliation programs and online gift-wrapping. It was the first site for customers to really buy anything over the Internet.
It is the largest seller of online books, music and videos. It went public in the year 1997, and the stock price eventually raised from $1.50 a share into the heady triple digits.
To raise the number of customers to its site, Amazon.com established an affiliation program which awards other sites a percentage of the sale when customers are linked from their site to Amazon.com to make a recommended purchase. A customer visiting the Amazon.com site is greeted with a busy Web page showing key specials that day and giving opportunity to navigate to the kind of product the customer wants to buy. If books are the purchase to be made that day, the customer can click on the books link, and search for a book by title, author or subject. So far, the scenario is not much to get excited about, however the power behind the Amazon.com business model is not yet shown. If a customer searches for a particular book, not only does Amazon.com’s site give the details of the book, however potential buyers can read the table of contents, look at comments written by other readers of the book and link to other books of a related topic or by the same author. Comments give a sense of community to the Amazon.com site where customers can contribute or read comments easily. Moreover, the Amazon.com systems track purchases of the book at hand, and can tell the new customer of other books purchased by those who purchased the current book. Their “suggestions” are based on real data called from an extensive database of transactions, making the suggestions that much more relevant to the present customer.
The purchasing transaction is innovative, too. The standard process lets customers add a selection to their shopping cart and either continue shopping or finish out the transaction. Shipping options are presented and purchases are paid for with credit cards. If the customer is a repeat customer, the system already consists of payment and shipping information, and the purchase can be quickly made with a single “click” of the mouse. E-mail is sent to the purchaser at some points along the process, comprising a confirmation that the order was received and a notice of the shipping of the order. E-mail is as well automatically produced to alert customers of specials associated to purchases they made, like a new book by a favorite author.
By combining a transaction system with real time information, customer connections and dissemination systems make retailing on the Web, or e-tailing, a different experience from traditional buying at the local bookstore or mall.
Bezo’s vision is for Amazon.com to be the centre of the commerce world. That goal means spelling or at least locating books, videos, CDs, electronics, pet food, house wares, garden supplies, or whatever a shopper on the Internet wants to buy. The company as well offers an online auction. In mid-1999, Amazon.com announced two more e-tailing options. All Product search is a product browser which help customers locate items at Amazon.com, its partners, or anywhere on the net.
Amazon.com hosts Z-shops, an online mall, where anyone or any company can set up a store, by paying a small monthly fee and commission. In return such stores gain potential access to the 25 million customers of Amazon.com. It now as well hosts online operations and fulfillment for more established retail rivals like Toys “R” Us, Target, and Circuit City in return for a percentage of sales, per-unit payments, or periodic fixed payments. For illustration, in their partnership with Toys “R” Us, the toy company gives the product while Amazon.com sells and delivers it. This partnership recommends that Amazon realizes it can’t compete outside its core markets devoid of significant help and Toys “R” Us acknowledges that it requires to build on its core competency.
What is next for Amazon.com? Bezos is quoted as saying, “The idea is to let people find out anything they might want to buy online. Amazon is a ‘Kathryn Store’ or a ‘Jeff Store’. The notion is that you take the customers and put them at the center of their own universe.”
problem 1: How has Amazon.com and their use of the Internet changed the retailing industry? Give some particular illustrations.
problem 2: Comparisons have been made between giant bookstore retailer Barnes and Noble and Amazon.com. Barnes and Noble operate dozens of bookstores in most of the local communities. Yet Amazon.com’s reach goes anywhere and everywhere on the Web. What, in your opinion, should Barnes and Noble do to compete with Amazon.com?
problem 3: In order to more rapidly realize and sustain its profitability must Amazon.com have remained a solely clicks-based e-business (without warehouse) selling only books? Why or why not?
problem 4: How can Amazon.com complete Bezos’s vision? What do they require to do to individualize their services to 25 million customers?