Jeffrey Bezos, CEO and founder of Amazon.com, is running what some people refer to as the “world’s biggest bookstore.” The story of Bezos’s virtual bookstore teaches many lessons about online business. Out of nowhere, this digital bookstore turned an industry upside down. What happened here was more than just creating a Web site. Bezos conceived and implemented an intelligent, global digital business. Its business is its technology; its technology is its business. Shocking traditional value chains in the bookselling industry, Amazon opened thousands of virtual bookstores in its first few months of operation. Bezos graduated from Princeton and was the youngest vice president at Banker’s Trust in New York. He had to decide if he would stay and receive his 1994 Wall Street bonus or leave and start a business on the Internet. “I tried to imagine being 80 years old, looking back on my life. I knew that I would hardly regret having missed the 1994 Wall Street bonus. But having missed being part of the Internet boom—that would have really hurt,” stated Bezos. One evening he compiled a list of 20 products he believed would sell on the Internet. Books, being small-ticket items that are easy and inexpensive to ship, were on the top of the list. It was also apparent that no book- store could conceivably stock more than a fraction of the 5 million books published annually. Bezos, who had never sold a book in his life, developed a strategic plan for selling books on the Internet. Amazon launched three years later. In the fall of 1994, Amazon filled its first book order—personally packaged by Bezos and his wife. Amazon’s E-Business Strategy
Amazon does not operate any physical stores. All of its sales occur through its Web site. It is consistently pushing the technological envelope in its search to provide a satisfying, personalized experience for its customers. What started as a human-ed- ited list of product suggestions morphed into a sophisticated computer-generated recommendation engine. The company captures the comments and recommenda- tions of buyers for site visitors to read—similar to the friendly salesperson in a store offering advice on which books to buy. The Web site tracks customer traffic, the number of visitors who access the site, how long they stay, what pages they click on, and so forth. The company uses the information to evaluate buying and selling pat- terns and the success of promotions. Amazon has quickly become a model success story for e-businesses around the globe. opening case study
Business Driven Information Systems
Amazon retains customers with Web site features such as personalized recom- mendations, online customer reviews, and “1-click ordering”—the creation of a true one-stop shopping establishment where customers can find anything they want to buy online. Through the Amazon.com Auctions, zShops (independent third- party sellers), and more recently the Amazon.com Marketplace (where customers can sell used items), the company is able to offer its customers almost everything. Shaping Amazon’s Future
Amazon released a free Web service that enables its business partners (whom Ama- zon calls “associates”) to interact with its Web site. More specifically, this Web ser- vice allows its partners to access catalog data, to create and populate an Amazon.com shopping cart, and even to initiate the checkout process. In 16 months, the com- pany has inspired 30,000 associates to invent new ways to extend Amazon’s visibility on the Internet. With over 30 million customers, Amazon has become a household brand.1 64
One of the biggest forces changing business is the Internet. Technology com- panies such as Intel and Cisco were among the first to seize the Internet to overhaul their operations. Intel deployed Web-based automation to liberate its 200 salesclerks from tedious order-entry positions. Instead, salesclerks concentrate on customer...