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Amazon.Com – Project Paper Essay

Amazon.com is obsessed with fervour to serve consumer and shareholder alike. Since its inception over fifteen years ago, Amazon.com has steadily grown from a burgeoning “dot-com” corporation into a multinational monster, a king in the domain of internet retail. It targets two goals: the satisfaction of a customer and efficient corporate growth. Its marketing strategies are near-legendary, and budding business should take a page – or several chapters – from Amazon.com’s proven marketing manual.

Amazon.com History

Jeff Bezos, Amazon.com founder and CEO, dreamed about books. In 1994, he created Amazon.com, Inc., which he labelled as “Earth’s Biggest Bookstore.” The ecommerce company went online in 1995 and soon expanded into other media, including DVDs, VHS, CDs, MP3s, and eventually a wide range of other products, including toys, electronics, furniture and apparel. As such, the tagline soon changed to “Earth’s Largest Selection.” But books were only the beginning of Bezo’s up-and-coming enterprise.

Amazon.com went public in 1997. In the first shareholder letter, Bezos penned the fundamental foundation for Amazon.com’s success: “Start with customers and work backwards … Listen to customers, but don’t just listen to customers – also invent on their behalf … Obsess over customers.” This policy was backed by a startling business philosophy – Bezos planned on operating at a loss for 4-5 years. It was not until 2001 that Amazon.com posted a net profit at a minuscule one-cent per share. Yet, despite its bizarre business strategy, Amazon.com claimed over 1.4 million customers after only two years of being online.

Now, 45 million satisfied customers shop at Amazon.com for everything from books (most popular) to fashion apparel to fine jewellery to Christmas toys. It has one of the most recognized brand names in the world and garners an estimated 50% of its sales from overseas consumers. Surviving the dot-com bust of the late 1990s and early 2000s, Amazon weathered the e-storms and now thrives in the retail marketplace, challenging vending giants like Wal-Mart and Target. Focused on technological innovation and entered on customer fulfilment, Amazon.com proceeds into the next decade with a profit firmly in one hand, and the capacity to blow it out of the water in the other hand.

Amazon.com’s Business Philosophy

Despite its massive growth, Amazon.com remains unremittingly focused on the consumer. Out of 452 company goals in 2009, 360 directly affected customer experience. Amazon.com’s self-proclaimed mission statement is: “We seek to be Earth’s most customer-centric company for three primary customer sets: consumer customers, seller customers and developer customers.”

Vision

Amazon’s vision is to be Earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.

Mission

The company’s six core values: customer obsession, ownership, bias for action, frugality, high hiring bar, and innovation.

Motto

The company motto: ‘Work Hard, Have Fun, and Make History’.

Question 1

Amazon currently operates in two markets: the business-to-business (offering Internet retailing services) and consumer markets (retailing consumer goods). Identify the characteristics of the two types of buyers and markets.

Amazon is an online bookstore that trades books from numerous originators including Wrox, O’Reilly, Premier Press, and so on. In this case, the publishers have the option of either developing their own site or exhibiting their books on the Amazon site (www.amazon.com), or both. The publishers usually prefer to display their books on www.amazon.com at it gives them a larger audience. Currently, to do this, the publishers want to deal with Amazon, involving seller and buyer, is the B2B model. Amazon derives about 40% of its sales from affiliate marketing called “Amazon Associates” and third-party sellers who sell products on Amazon. Associates receive a commission for referring customers to Amazon by placing links on their websites to Amazon, if the referral results in a sale.

Worldwide, Amazon has “over 900,000 members” in its affiliate programs. Amazon reported over 1.3 million sellers sold products through Amazon’s World Wide Web sites in 2007. Amazon sellers do not have to maintain separate payment accounts; all payments are handled by Amazon. Associates can access the Amazon catalogue directly on their websites by using the Amazon Web Services (AWS) XML service. A new affiliate product, aStore, allows Associates to embed a subset of Amazon products within another website, or linked to another website. In June 2010, Amazon Seller Product Suggestions was launched (rumoured to be internally called “Project Genesis”) to provide more transparency to sellers by recommending specific products to third-party sellers to sell on Amazon. Products recommended are based on customers’ browsing history.

Characteristic of B2B

Amazon uses B2B by providing the opportunity to purchase and sell all types of products via the internet. It allows for relationships to be established in order to complete sales and business transactions. Additionally, providing email address and having personalized memberships are methods for dispensing sale ads and providing discount coupons is a use of the internet by Amazon. Rather than producing time-intensive and costly physical copies for each consumer, a central server or email list can serve as an efficient method for distributing necessary information to the general public The characteristic of B2B is a long-term: Usually involves negotiations and contractual commitments between long-term trading partners (E.g. Suppliers, manufacturers). Thus, also generates high sales revenue and volume.

Significant characteristic is relationship driven not product driven. The BCB model enhances maximization of the value of the relationship and bonding. Buyers and sellers work more closely together and build long-term relationships. Thus rational buying decision is based on business value. The sales cycle in the B2B world is often much longer and more complex. It mainly maximizes on the value of relationships. Amazon focuses on maintaining communication and building relationships. Marketing activities involving lead generation that can be nurtured during the sales cycle can be used to attain this goal. B2B features a multi-step buying process that needs more than one person to decide on the purchase thus B2B companies employ marketing to educate its target audience.

Take for example in an email campaign, objective of Amazon is to drive prospects to the site to learn about their products and services. High expectations for service: Customised services and goods delivery and managing inventory for business partners that extend the supply chain so companies can respond on minute-by-minute basis. Knowledgeable buyers: Suppliers (Amazon associates) and buyers who understand and well-versed in trading in their industry. Involving more buyers, with extensive decision process, the process is more tedious and complex. The buying becoming is more formalised professional purchasing effort. Nevertheless, B2B models always emphasis in educational and awareness building activities to grasp repeat business.

Characteristic of B2C

The above B2C model reflects an individual consumer transact with business organisation, consumer searches for a book on Amazon site and places an order, if required. The B2C category has expanded greatly in the late 1990s with the growth of public access to the Internet. It largely equates to electronic retailing and its main objective is to aggressively convince prospective buyers to shop. B2C companies, including Amazon employ different marketing campaigns for publicizing their goods and services. This would include coupons, vouchers, email blasts, banner ads, limited edition offers and the likes to entice their target market to buy. These campaigns are much shorter in duration thus the urgent need to secure the customer’s interest very quickly. The B2C model of e-commerce is more prone to security threats because individual consumers provide their credit card and personal information in the site of a business organization. In addition, the consumers might doubt that his/her information is secured and used effectively by the business organization.

This is the main reason why the B2C model is not very widely accepted. Therefore, it becomes very essential for the business organization to provide robust security mechanisms that can be guarantee a consumer for securing his information. Consumer markets are the markets for products and services bought by individuals for their own or family use. B2C sales are more engrossed on a very large market segment; market is the total sales market of consumers.

There is very little discrimination or qualification of potential customers. If the product appeals to them, then they are a customer to which Amazon may sell their product. And B2C or businesses that sell consumers more focussed on transactional relationship. However, the traffic volume is very critical due to high volume, low unit value. This characteristic explains that number of customers is many or large target market but limited purchase unit or value. Similar to FMCG (fast moving consumer goods) are products that are sold quickly and at relatively low cost. Nevertheless there is fast repurchase derived or in another words frequent purchases. B2C sales are driven by highlighting the advantages of the product and its usefulness. Depending on how the product is presented to the end user, it may appeal to them based on novelty, ease of use, appearance or price. Usually the aspects of status, desire and price can lead to emotional buying decision.

Besides that in B2C, since it is product driven, the product and its features also able to influence customer during the point of sale. B2C characteristic is inclusive a single step buying process, shorter sales cycle. The path to purchase must be short and simple – just a few clicks from email receipt to order confirmation. Any more than a couple of clicks and the customer are likely to abandon the shopping cart. The call to action must be obvious and the offer enticing. Besides that email campaigns often highlight special deals and discount that can be used both online and in store. They can also be informative especially if the aim is to build the brand and enhance customer loyalty. Loyalty is an important aspect in B2C marketing. This proved very true for company like Amazon. They combine good customer service and education on their product and services thus their customers keep coming back. Amazon’s brand identity created through repetition and imagery.


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