Page 89 - Introduction to Electronic Commerce and Social Commerce

68 3 Retailing in Electronic Commerce: Products and Services

of order fulfillment and warehousing early on. It has invested $30 a unit regularly might be directed to a vendor that sells
billions of dollars building physical warehouses and distribu- four units for a total of $65. Amazon also provides detailed
tion centers designed for shipping packages to millions of product descriptions and ratings to help consumers make
customers. In 2012, the company started same-day delivery informed purchase decisions. The site has an efficient search
from its new distribution centers. After 2000, the company engine and other shopping aids. Amazon.com has a state-of-
added information technology products and services, nota- the-art warehousing system that gives the company an
bly Kindle e-reader family and Web Services (cloud tech- advantage over the competition.
nologies). In 2015, Amazon continued to heavily invest in Customers can personalize their accounts and manage
Prime Video to actively compete with NetFlix (Trefis 2015). orders online with the patented “1-Click” ordering feature.
Amazon.com’s challenge was, and still is, to profitably sell 1-Click includes an electronic digital wallet, which enables
many consumer products and services online. shoppers to save time paying for their orders, since all the
shopping information, including preferred method of pay-
ment and default address, is stored online.
The Solution: Innovations and Reaching Amazon.com offers many Web 2.0 social shopping fea-
Out to Customers tures (e.g., customer reviews). It acquired Woot! (woot.
com), a social networking company known for its daily
In addition to its initial electronic bookstore, Amazon.com deals. Amazon is continuously adding innovative services. In
has expanded its offerings to include millions of products 2011, the company introduced Price Check (to be described
and services. A unique example of a service they offer is later), which enables customers to compare prices in physi-
Mechanical Turk (mturk.com), a marketplace for crowd- cal stores with a smartphone app. Notable in 2012 were the
sourcing work that requires human intelligence in dozens of same-day delivery initiative, the myhabit.com clothing site
categories. Key features of Amazon.com are easy browsing, (designer brands at reduced prices), and the ability to use
searching, and ordering; useful product information, reviews, mobile devices while you are inside a physical store to com-
recommendations, and other personalization techniques; a pare prices using the Price Check app. The Amazon strategy
very large selection of products, the ability to compare is to provide the best customer satisfaction, make large
prices; low prices; secure payment system; efficient order investments in the short run at the expense of profit, and
fulfillment; and an easy product return arrangement. promote innovations (see businessinsider.com/amazons-
The Amazon.com website has a number of useful ser- profits-what-people-dont-understand-2013-10).
vices, some provided by its companies. For example, its &
“Gift Finder and Wish Lists” section (amazon.com/gp/gift-
finder) suggests gifts for all occasions and seasons, catego- The Results
rized by relationship, price, and more. Author Central
(authorcentral.amazon.com) is a page where customers In 1999, Time magazine named Bezos “Person of the Year.”
can read about authors (such as their biography and speaking In January 2002, Amazon.com declared its first profit—for
events) and even connect with some of them. Authors can the 2001 fourth quarter. Since then, the company has
discuss their work and answer readers’ questions via remained profitable despite its huge investments in distribu-
tweeting. tion centers and other initiatives. Amazon.com reported that
Amazon.com also offers support services. Amazon despite adverse U.S. and global economic conditions, its
Services (services.amazon.com) hosts webstores for a small annual profits for 2015 had increased 721% from 2007.
monthly fee, offering small businesses the opportunity to In 2012, Fortune magazine selected Bezos as the “busi-
have customized storefronts supported by Amazon.com’s nessperson of the year” (see fortune.com/2012/11/16/2012-
payment and order fulfillment system (see services.amazon. businessperson-of-the-year). Annual sales increased
com/content/sell-on-amazon.htm). Customers can use mobile consistently by 30–40% each year due to the addition of
devices to shop. Amazon Prime (amazon.com/prime) offers more products and services, going global, and the increased
unlimited free shipment and streaming video for a $99 volume purchased by existing customers. Amazon offers
annual fee. about 20 million books, music, and DVD/video titles to mil-
Amazon.com is also recognized as an online leader in lions of customers. In 2015, Amazon had over 1.6 million
providing personalized services and CRM. When a customer e-books for sale. Finally, its investors are rewarded with rap-
revisits Amazon.com, a cookie file identifies the user and idly increasing stock prices. Data from 2016 show Amazon.
says, for example, “Welcome back, Sarah Shopper,” and then com as #6 on Alexa (global rank) and #4 (U.S. rank). It has
proceeds to recommend new books on topics similar to past over 23 million “Likes” and over 84,000 “Talking about this”
purchases. You may receive recommendations for cheaper on Facebook (see facebook.com/Amazon). As of February
products. For example, a customer who buys printer toner for 2014, Amazon has 2.3 million followers on Twitter (twitter.