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AMAZON.COM: E-TAILING GROWS DESPITE THE SLUMPING ECONOMY
Anldzon.com (amazon. com) reported that its annual profit for 2008 had doubled, witll a 41 percen t revenue increas e, de spi te adverse U.S. ilnd global economic condition s. Entrepreneur Jeff Sezos fa ced an opportunity rather than abusiness problem. In the early 1990s, Sezos saw the huge potential for retilil sales over the Internet and identified books as the most logical prod uct for e-tailing. In July 1995, Sezos started Amazon.com , an e-tail ing pioneer, offeri ng books via an electronic catalog from its Web site. Over the years, the compallY has recognized that it must continually enhance its business models and onlinestorefront by expanding its product selection, improving the customer experience, and adding services and alliances. In addition , the company recognized early on the importance of order fulfillm ent and wa rehousing. It has invested hundreds of millions of dollars in building physical warehouses designed for shipping sm all packages to hundreds of tho usands of customers. Amazon.com's challengewas, and remains, how to succeed where many have faile d- namely, how to sell consumer products online, at a profit, and show a reasonable rate of return on investment.
The Solution: Reaching Out to Customers
In addition to its initial electronic bookstore, Amazon ha s expanded its offerings to a vast array of products and services segmented into three broad categories: media (books, music,DVDs, etc.); electronics and other merchandise (including its new wireless reading device, "Kindle"; office supplies; cameras; toys; etc.); and other (nonretai l activities, such as Web services, Amazon Enterprise Solutions, etc.). Key fea tures of the Amazon .com superstore are easy browsing, searching, and ordering; useful product information , revi ews , recommendations, and perso nali zation;broad selection; low prices ; secure payment systems; and efficient order fulfillment. The Am azon.com We b site has a number of features that make the online shopping experience more enjoyable. Its "Gift Ideas" section features seasonally appropriate gift ideas and servi ces. AmazonConnect allows customers to select their favorite authors, read about them , and then receive e-mails from thoseauthors. Amazon also offers various marketplace services. Amazon A uctions hosts and operates auctions on behalf of individuals and small bu sinesses throughout the world. The Shops service hosts electronic storefronts for a monthly fee, offering small businesses the opportunity to have customized storefronts supported by the richness of Am azon's order-fulfillment processing. Customers can useWeb-enabled cell phones, PDAs, or Pocket PCs to access Amazon .com and shop anywhere, anytime. Amazon.com also can be accessed via AT&T's #1 21 voice service. Amazon is recognized as an online leader in creating sa les through customer intimacy and customer relationship man agement (CRM), which are cultivated by informative marketing front ends and one-to-one advertisements. In addition, sales aresupported by highly automated, efficient back-end systems. When a customer ma kes a return visit to Amazon , a cookie file (see Chapter 4) identifies the user and says, for
example, "Welcome back , Sarah Shopper," and then proceeds to recommend new books from the same genre of the cus tomer's previ ou s purchases and a range of other items . It also provides detailed product descriptions and rating sto help consumers make informed purchase decisions . The site has an efficient search engine and other shopping aids. Amazon.com has a superb wa rehousing system that gi ves the company an advantage over the competition. Customers can personalize their accounts and manage orders online with the patented "l-Click" order feature. l-Click includes an electronic wallet (see Chapter 11) , which...