The essay focuses on use of digital channels by Amazon.com to achieve success. It starts with company overview of Amazon. Amazon is an online selling retailer of products like books, toys, electronics, games, music etc. The essay mentions the early start of the website from a small book selling website to a big online retailer spread across the world. Then essay then give some facts and figures for Amazon describing it no 1 online selling website and other web analytics data. Later on the essay progresses with the reasons or the usage of various digital channels to achieve success covering Customer loyalty, Innovation, Leadership, Mergers and Acquisitions, Partnership, Shipping offers, Marketplace and Media Sales. Throughout the essay examples have been mentioned relating to the point being discussed. It also descries about the work culture and leadership at Amazon.com under the strict guidance of its founder and CEO, Jeff Bezos. The conclusion is made revising the strategy used for its success.
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About Amazon
Amazon.com is an American company operating around the world headquartered in Seattle, Washington in United States. It was founded in 1994 by Jeff Bezos who is now CEO of the company. Amazon offers wide range of products online like books, movies, DVDs, games, electronics, Sports, beauty products and much more to its customers at lowest possible price. It is also one of the Fortune 500 companies because of its success.
[Source: Amazon’s Website- About Amazon, Available from http://www.amazon.com/Careers-Homepage/b?ie=UTF8&node=239364011, Accessed on 23th April, 2013]
Amazon.com reaches to its customers/ consumers by selling products and services through its retail website- www.amazon.com. And amazon gives comfort to end users or its customers that they can choose from wide range of products available on its website it terms of brand, price and their uses. It gives convenience to the buyers to buy from anywhere in the world sitting at their home.
[Source: The New York Times, Wednesday, April 24, 2013, Available from http://topics.nytimes.com/top/news/business/companies/amazon_inc/index.html, Accessed on 24th April, 2013]
It is known that amazon has attained huge success and has market share of 120 billion (in 2013) across the world [Source: The The New York Times, Wednesday, April 24, 2013, Available from http://markets.on.nytimes.com/research/stocks/fundamentals/fundamentals.asp, Accessed on 24th April, 2013]. Well this huge success was received over the period of time by widening its product base form books to other consumer products, collaborating with various applications developer like apps for android users etc. The success and growth in earlier times was because they positioned themselves in market as “EARTH’S BIGGEST BOOKSTORE” which is changed now to be most customer-centric company.
[Source: Differentiate and Grow Rich: The Critical Importance of a Strong USP by Eric Graham, Available from http://www.web-site-evaluations.com/usp-article.htm, Accessed on 24th April, 2013]
Web Analytics and Amazon
As you can see the above web analytics data for various web portals tells us that highest revenue per unique user is made by Amazon in the year 2011 as compared to other sites. [Source: Here’s How Much A Unique Visitor Is Worth by Jay Yarrow, January 05, 2011, Available from http://articles.businessinsider.com/2011-01-05/tech/30039682_1_facebook-visitor-social-networking Accessed on 24th April, 2013]
Following points helps us in understanding the reach of Amazon and how successful it is:
The annual revenue of Amazon is $34 Bn which is more than the GDP of half of the countries around the world
In 2010, Amazon was the 1st online selling website in the world
Amazon reaches 19.5 Mn customers daily
Average amount of revenue bought by unique users in Amazon is 5 times more than Ebay’s
The cloud platform- Amazon’s S3 can store 82 books per person which can save enough forest
In 2011, Amazon had 50 warehouses covering an area of 25 Meter Square feet (approximately)
All the above points shows widespread area of Amazon which provides products fast and at cheap rates than other online selling websites. So now lets discuss how it attained success in the later part of essay.
[Source: The Astounding Growth of Amazon, Available from http://7pillarsofsellingonline.com/amazon-growth-infographic/, Accessed on 25th April, 2013]
Why Success??
Digitisation or use of digital channels is much more than use on internet. It requires planning and implementing strategy which suits your organisation. It involves imbibing technological innovation into your website or services offered and giving greater power to consumers in terms of choice and price. So the one who wants to win or have greater revenue and market share will have take lead and act in such a way that it gives a advantage over your competitors. [Source: The digitisation of everything, How organisations must adapt to changing consumer behaviour by Ernst & Young, Available from http://www.ey.com/Publication/vwLUAssets/The_digitisation_of_everything_-_How_organisations_must_adapt_to_changing_consumer_behaviour/$FILE/EY_Digitisation_of_everything.pdf, Accessed on 24th April, 2013]
And this can be seen in the advancement and progress of Amazon over the years that how it has exploited the use of digital technology for its growth and success. This is discussed below:
Customer Loyalty and Repeat Purchases
As mentioned earlier, Amazon receives good number of revenue from unique customers but it has also developed loyalty of its customers i.e., they again and again visit the site and buy the product and services offered by/at Amazon. This is one the main reason of Amazon’s success that once a customer purchases from the site he/she visits again and makes an order placement. As they say, they work for repeat purchases through simple and easy to navigate website, speedy, trusted and timely completion of order and transactions to provide good customer service.
One of the loyalty program at Amazon is Amazon Prime in which a customer pays minimum fee and in turn they will get delivery/ shipping at free or discounted rates but at a quick speed in the countries like US, UK, Germany and Japan.
Free Shipping Offers
This works as very attractive tool for the customers. It is like the customer has to continue shopping to a certain limit to avail free shipping or delivery charges. This amount is fixed by Amazon at a level where profitability is achieved and it has kept this figure at a competitive range.
Continuous Innovation
The founder and CEO of Amazon, Jeff Bezos, himself gives lot of importance to technology while rendering good and quality to services to its customers. This is done at the company by not only having one separate department called Research and Development but instead technology and innovation is introduced and tod to keep up the movement in each department not only one. They always bring in high performing solutions for transactions.
To give you one example, in the year 2011 it gave infrastructure to it the ebook readers to update Kindle “Whispersync”. The result of this was that amazon now has more kindle book readers than paper book readers.
[Source: Amazon.com case study by Dave Chaffey on January 16, 2012- A summary of Amazon’s business strategy and revenue model, Available from http://www.smartinsights.com/digital-marketing-strategy/online-business-revenue-models/amazon-case-study/, Accessed on 25th April, 2013]
Also with time it moved on and updated their product range and technology like the company from selling of regular hardcover and paperback books also introduced sale of e-books on kindle version which was widely accepted and liked by office goers who travelled continuously and found it difficult to carry on the weight of physical books. It made it available to customers on Apple iOS and Android platforms or devices. It diversified into other services like Amazon MP3 to shop or download and play songs on your kindle, Android, Mac or iPad devices through its cloud player.
[Source: http://www.gogetessays.com/index.php?mode=free&category=Business&item=amazon-s-digital-channel-s-success Accessed on 25th April, 2013]
Media Sales
Media Sales is nothing but selling of advertising space on your website or in a magazine or newspaper. And this technique is very intelligently used by Amazon. It displays advertisements of many good brands as well as Goodle text ads. And the figure says that in 2011 media sales contribution to Amazon’s revenue was 17% of its total revenue.
[Source: Amazon.com case study by Dave Chaffey on January 16, 2012- A summary of Amazon’s business strategy and revenue model, Available from http://www.smartinsights.com/digital-marketing-strategy/online-business-revenue-models/amazon-case-study/, Accessed on 25th April, 2013]
Mergers and Acquisition done by Amazon
Amazon merged or acquired a number of companies in different sectors to increase its market share and have growth. It mostly entered into equity partnership with the partnered firms. It generated revenue by charging fees from these companies to put their advertisement on Amazon’s website and move traffic to their site. Following are few of the websites with whom Amazon partnered or acquired:
HomeGrocer.com (website for your daily supplies of grocery)
Drugstore.com (in pharmacy sector)
Kozmo.com (an online store and same day delivery)
Living.com (a website for furniture)
Pets.com (a website which supplied materials for your pets)
Wineshopper.com (where wines were available)
Sothebys.com (an auction website)
Partnership due to competition
Also as Amazon grew and increased its products and area of operation, many other websites were not able to withstand this competition. So Amazon gave them a chance to enter into partnership with it and gave chance to them to sell their product or services using Amazon’s website. This give those allied partners a ready platform to sell their services online and to Amazon revenue through commission or partnership and also to increase its spread from books to other sectors. This was the case with UK’s Waterstones which was a traditional book store but was very famous and big. As the online era begin and started to flourish it could not stand the online competition so it entered into partnership agreement with Amazon such that Amazon was responsible for marketing and distribution of its book online for which Waterstone would receive commission. Same was the case with other companies like US Borders, Toys R’ Us.
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Amazon Marketplace
This is a different type of association or partnership wherein customers of Amazon and other retailers may list and sell their used or new products (including books) online on its website. This acts as a win- win situation for both the parties where Amazon will get a certain fix fee or commission on the sales amount. It also has other such program like – Merchants @ which is catering to third party merchants, those who have items more than those who list their products in Amazon Marketplace, they also can similarly sell their products online on the website of Amazon.
[Source: E-Business and E-Commerce Management by Dave Chaffey, 2009 3rd edition- Case Study 12.1 Learning from Amazon’s culture of metrics Chapter 12 Pg 622-625, Available from http://books.google.co.in/books?id=lsQZKstCuDUC&pg=PA625&dq=marcus+2004+how+amazon+partnered&hl=en&sa=X&ei=MLl3UbWEFoSNrgemxoCQCg&ved=0CDMQ6AEwAA#v=onepage&q=marcus%202004%20how%20amazon%20partnered&f=false , Accessed on 24th April, 2013]
Leadership
At the of dot com bubble burst in American economy, there were very few companies who could withstand the recession and Amazon was one of them. The founder Jeff Bezos told that he was not aiming to make prsofits in the start of the years, he aimed at long term goal and to be a name worldwide. So it was under his leadership that Amazon developed its focus on customer service as most important identity of Amazon.
[Source: How Amazon’s Unconventional Business Model Changed Me From Hater To Customer For Life by George Parker, AdScam, December 18, 2012, 6:18 AM, Available from http://www.businessinsider.com/why-amazon-is-so-hugely-successful-2012-12, Accessed on 25th April, 2013]
Management and Work Culture @ Amazon.com
As according to Kevin Saito, one of the former employee each department in Amazon has its own identity and own set of culture as according to the department head. There is hard working culture at Amazon. The values are defined keeping goal as Customer Satisfaction. Employees are considered equal during work time and in work place. And work of each employee is considered important.
Jim Skinner, senior TPM at Amazon Instant Video tries to maintain supportive nature at work and ensures that it is followed.
[Source: What is The Internal Culture Like at Amazon by Dianna Dilworth on March 9, 2012 3:10 PM, Available from http://www.mediabistro.com/appnewser/what-is-the-internal-culture-like-at-amazon_b21016 Accessed on 25th April, 2013]
The founder and Ceo, Jeff Bezos maintains happy and healthy environment at work. Also to ensure good work , weekly management meetings are also held. Also the final decision authority lies with Bezos. And he ensures creativity in the organisation.
[Source: Amazon Culture, Available at http://sites.duke.edu/jeffbezos/2011/06/23/amazon-culture/, Accessed on 25th April, 2013]
Conclusion
It is time now to adopt fresh and innovative ways to do your business as the customer are fast changing to new and advanced kind. Digitisation is much more than the use of internet, it involves each step which leads to greater innovation with the use of internet mediums.
[Source: The digitisation of everything, How organisations must adapt to changing consumer behaviour by Ernst & Young, Pg 14, Available from http://www.ey.com/Publication/vwLUAssets/The_digitisation_of_everything_-_How_organisations_must_adapt_to_changing_consumer_behaviour/$FILE/EY_Digitisation_of_everything.pdf, Accessed on 24th April, 2013]
Amazon is one such company who has tapped the power of digital mediums and it has proved right for its success. So Amazon is a good example of a company who has taken the lead, implemented the digital strategy properly and therefore has earned the competitive edge over others online giant sellers.
As discussed in the essay, Amazon started as a small online book selling website from a warehouse and grown to over a huge web seller giant almost competing with Walmart. Continuous innovation and imbibing technology with its selling techniques has helped Amazon to keep up the pace of digitalisation and target new customers as well as retain old ones. Like providing regular updation or loyalty programs for existing customers and targeting new customers by advertising through right medium like Google Adwords etc. Mergers and Acquisitions and entering into partnership has helped it to increase its reach and revenue over a period of time. Last but not the least al the leadership of Jeff Bezos, his vision and values has helped in the growth of Amazon to such a level.
The essay explains in details how Amazon used different digital channels to reach to its success using customer satisfaction and providing products at cheaper rates as their main goal. It also try to make the user experience easy and friendly. In whole the essay gives examples, cases and facts of Amazon journey to success.
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