From Source to Shore an Amazon Success Story
From Source to Shore An Amazon Success Story
By Ankit Shah Amazon is one of the first ventures that set out to tap the potential of web for retail business. It’s hard to believe that a business that started out of founder Jeff Bezos’ garage in 1994 has revenues of over $32 billion today. What is even harder to believe is that the company didn’t make any profit for first 5 years of its conception. Looking back, many leading business analysts see Amazon’s business plan as one of the soundest yet simple business plans, or virtuous cycle as it is more popularly known, of that era.
Figure 1: Amazon’s Business Plan [1]
A sharp customer focus was the key take away of the business plan. While the general market trend during the dot com boom was of aggressively fending off competition, Amazon remained faithful towards the simplest principle of the industry, “It’s a Customer’s Market”. Driven by his will to increase customer satisfaction, Bezos made hefty investments in research and technology which was also new to the market.
Consistent upgrades to the web portal made it increasingly easy to use and opened up the market by introducing its customers to products that were not available at a regular retail store. Features like personal recommendations, search inside a book, wish lists were highly customer centric and quickly caught the attention of the e-shoppers. The high variety offered by Amazon enticed even more customers after the features like rating a product, reviews and discussions were added. Figure 2 shows the current customer satisfaction standing of Amazon and its competitors.
Figure 2: American Customer Satisfaction Index (Internet Retailers). Feb 2011. [2]
Recognizing the importance of the long tail market has also played a part in Amazon’s increasing customer satisfaction scores. Being an online retailer, Amazon has the flexibility to offer obscure products to its customers. The ease of obtaining products and items, which are rarely available
By Ankit Shah Amazon is one of the first ventures that set out to tap the potential of web for retail business. It’s hard to believe that a business that started out of founder Jeff Bezos’ garage in 1994 has revenues of over $32 billion today. What is even harder to believe is that the company didn’t make any profit for first 5 years of its conception. Looking back, many leading business analysts see Amazon’s business plan as one of the soundest yet simple business plans, or virtuous cycle as it is more popularly known, of that era.
Figure 1: Amazon’s Business Plan [1]
A sharp customer focus was the key take away of the business plan. While the general market trend during the dot com boom was of aggressively fending off competition, Amazon remained faithful towards the simplest principle of the industry, “It’s a Customer’s Market”. Driven by his will to increase customer satisfaction, Bezos made hefty investments in research and technology which was also new to the market.
Consistent upgrades to the web portal made it increasingly easy to use and opened up the market by introducing its customers to products that were not available at a regular retail store. Features like personal recommendations, search inside a book, wish lists were highly customer centric and quickly caught the attention of the e-shoppers. The high variety offered by Amazon enticed even more customers after the features like rating a product, reviews and discussions were added. Figure 2 shows the current customer satisfaction standing of Amazon and its competitors.
Figure 2: American Customer Satisfaction Index (Internet Retailers). Feb 2011. [2]
Recognizing the importance of the long tail market has also played a part in Amazon’s increasing customer satisfaction scores. Being an online retailer, Amazon has the flexibility to offer obscure products to its customers. The ease of obtaining products and items, which are rarely available
References: [1] Wikinvest: Amazon.com_AMZN [2] American Customer Satisfaction Index: Feb 2011 [3] Wikipedia: Long Tail Phenomenon [4] Microsoft Partner Conference: Australia and New Zealand Partner Conference 2006 [5] Interbrand: Best Global Brands (2006 – 2010) [6] Wikipedia: Amazon.com [7] Foreign market entry of e-business companies and implications for theories of internationalization - By Kim Dung Le & Franz Rothlauf [8] International Product Policy – By Wolfgang Ulga Marketing Management: Millennium Edition (10th Edition) – by Philip Kotler The Interplay between Cumulative Customer Satisfaction & Brand Value - By Luis Fernando Angulo & Josep Rialp