Amazon’s Customer Obsession

Amazon’s Customer Obsession

1. Amazon Background

Founded by Jeff Bezos, the Amazon.com website started in 1995 as a place to buy books. During the first 30 days of business, Amazon fulfilled orders for customers in 50 states and 45 countries all shipped from his Seattle area garage. The company participated in the development of the ecommerce, it led its expansion and Amazon.com is now the leader of the market, it sells more than forty categories of goods. Today Amazon is considered as one of the biggest web based company along with Google, Apple and Facebook. The Seattle based company has around 230.000 employees and had $107 billion sales in 2015. The company is currently operating in 14 countries: Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Mexico, Netherlands, Spain, United Kingdom, and USA. Amazon is also the biggest marketplace of the world. Indeed, along with their B2C strategy, they developed a B2B strategy in order to have a wide range of suppliers. This strategy allows them to be independent and to offer to their customer’s competitive prices. Amazon also launched its own products as the very famous Kindle; the 1st version was launched in 2007. Besides, the company diversified its activities, its offers among others: videos, arts, games services. They even developed a service to publish new books, Amazon publishing. Amazon’s vision is today to be "Earth’s biggest selection and to be Earth’s most customer centric company”

2. Amazon General Strategy: Customer oriented

a. A customer oriented general strategy

The General strategy of Amazon is from their own words “Consumer Obsession” and this strategy is efficient. They always outperform other Internet retailers and they are always first ranked in the American Customer Satisfaction Index (ACSI). Furthermore, its strategy is based on low price but in order to be profitable, they need to have high sales which is linked with customer satisfaction. As Amazon’s CEO said “If you make customers unhappy on the internet, they can each tell 6000 friends” and that’s why Amazon is so customer focused. Therefore whole business was developed with customer obsession idea. The company tries to give them the best and most enjoyable purchasing experience possible. Since its creation, it keeps on improving it; it even developed its own improvement platform called “Weblab”. It uses it in order to evaluate the improvements done on the website and on its products. Amazon manages to offer this unique purchasing experience through five main points: An interface which is really easy to use and looks attractive, quick and reliable delivery which is possible thanks to its vast and fully automated warehouses located in strategic spots, an easy and convenient returns policy, products reviewed by customers, purchase suggestions based on previous purchases and comparison with what other customers bought.

b. Value proposition: focus on engagement part

Amazon’s vision of its value proposition is to offer the widest range of products at the lowest price with a very convenient and quick delivery. Therefore its value proposition is based on three main pillars:

Lower price: In order to attract and retain customers, Amazon offers cheaper goods than its competitors. This is a long-term strategy which aims to acquire more and more customers in order to make high margins. They manage to lead this strategy mainly because it keeps low storage costs. Indeed it was shown that a product on average gets sold in 33 days through amazon whereas its competitors take 70 days to sell the product.

Larger selection: Since the beginning Amazon decided to offer the widest range of product possible. They keep on increasing the number of references they have as long as the number of good categories they offer.

Greater convenience: Buying on Amazon website is really easy, the company offers the 1Click® technology which is an easy and secure card payment service for the regular customers. Besides, the delivery service is convenient, cheap and even free sometimes. Amazon website is also designed to be easily used on all devices, or sometimes called “Omni channel” (computer, mobile, tablets)

c. Customer segmentation

Amazon customer segment is really wide; every person who is buying online is a potential customer in the countries where Amazon is based. We decided to focus mainly on the B2C strategy but Amazon also developed a B2B strategy. Indeed in order to deliver their value proposition and to have the larger selection possible, its B2B strategy is a core element. It allows them to reduce their storage costs. Amazon keeps the bestselling product in its own stock and longer tail items in third party sellers stock. In addition, Amazon also takes fees on the third party sellers which increase its benefits.

In its B2C CRM Strategy, Amazon focused mainly on high value customers and regular buyers. It prefers targeting each individual person and their specific online behavior, wants, and needs rather than crowds. This strategy provides Amazon to convert visitors into long term, high value customers.

3. Amazon’s Customer Retention

Amazon invests a lot to engage its customers and to develop loyalty among them; it developed a wide range of tools and techniques. 80% of the customers who are buying from

Amazon will repeat it; this high rate is possible thanks to a wide range of innovation. There are three core elements of the retention strategy: One-to-one marketing strategy, Amazon prime, and advanced technical abilities.

a. Engage by a One-to-one marketing strategy

Amazon developed a marketing strategy which focuses on individuals; they offer each customer a unique experience in order to build long lasting customer relationship.

Personal recommendations: Amazon tracks each customer’s historical record, analyses what other consumers with the same taste bought and then gives personal advice and suggestions to consumers.

Development of a strong relationship: Amazon cares about each customer and rewards their loyalty. For instance, Amazon offers discount for regular buyers.