History and Background
Amazon was founded in 1994 by Jeff Bezos, who is still the head of the company at the time. Based in Seattle, Amazon started out as an online bookseller and went on to become the world's largest non-travel e-commerce business. Once the website was established as a bookseller, it was a logical step into the sale of other entertainment products, such as music and films, and also into the hardware used to deliver home entertainment. Amazon was a pioneer in the use of software that monitors each online customer's preferences, enabling the company to suggest other products that may be of interest to the individual, either on their personalized web page or via e-mail. A book customer who walks out of a bookshop, with or without a purchased book, is effectively `lost' to the store, but Amazon can target registered customers — with their permission — with messages such as `Recommended for you' or `Customers who bought this item also bought'. Like other successful websites (e.g. eBay and TripAdvisor), Amazon has worked on creating a community feeling by allowing registered customers to upload reviews, create lists of their favorite books, etc. In this way, it has personalized the online shopping experience for mass-market products. Other important innovations in Amazon's history have included: • gift vouchers
• the personal Wish List page, which friends or family can use to select gifts for someone
• Amazon Marketplace, for third-party sellers of new and used goods • Amazon Associates, allowing customers to act as third-party traders of Amazon products from their own websites
• online DVD rental
• a succession of new departments, including sports equipment, house and garden, jewelry and, most recently, baby and shoes departments • Amazon Prime, a subscription service offering any number of next-day deliveries of goods in return for an annual fee (£49 in the UK).
Service offerings and value proposition
• Amazon’s value proposition is based on low cost prices for a high selection of books ordered through an anytime, anywhere extremely convenient mechanism.
• To achieve this, they designed a unique organizational system relying on an entirely automated order management system, tightly linked to their suppliers and payment networks, allowing them to minimize human intervention, therefore reducing costs.
• Special deals with their partners (suppliers) allow them to maintain very little physical inventory.
• They also use unique roles to create a sense of community among book readers, who collaborate to serve as reviewers or salespersons (through the Associates program).
• Technology is used both in the back-office as well as in the interaction with the customer (World- Wide-Web for product information and ordering, electronic mail for customer service).
The key success factors for Amazon.com
i) Low cost provider
One of the biggest advantage amazon.com has is its ability to sell books and other products at extremely low price with compromising the quality of its product or service. This advantage of Amazon.com quickly became one of its most important success factor. ii) Broad selection
Leveraging on the power of the internet, Amazon.com are able to provide its customers a wide selection of books and product. Unlike the traditional retailers that needs to stock up inventory in order to display out to the public, Amazon.com displays its goods through an electronic catalog without having to stock all that is displayed. iii) Ease of Navigation
Trying to revolutionize the shopping experience, Amazon.com was design with the intention of making the shopping experience as smooth as possible. Sub menus and links are placed neatly on the page. Promotional items were displayed at “catchy” or strategic places. All this allows the customer to navigate freely and easily in the website and also...
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