Amazon.com was launched by Jeff Bezos in 1994. It was initially a small online bookseller that provided customers with access to an extensive selection of books without physical stores and warehouses (Hamilton, 2004). Amazon.com has rapidly grown within years and become a giant superstore company. The success of Amazon.com has opened up the potentials and business opportunities of e-commerce.
What are the key factors contribute to the success of Amazon.com?
Jeff Bezos and Amazon.com did not witness the success immediately. In fact it has incurred significant losses and exposed to greater competition and challenges. However Jeff Bezos distinguished Amazon.com from its competitors by unique business strategies and providing customers with outstanding value and a superior shopping experience.
1. Business Strategies
Amazon.com stands head and shoulders above others because it pursues 3 business strategies, including cost-leadership, customer differentiation and focus strategies (Saunders, 2001). Cutting costs and achieving greater profitability is the greatest challenges of Amazon.com. Amazon.com always makes sure that it provides quality products to customers at a lower cost for a more reasonable and affordable price than its competitors.
Amazon.com pursues customer differentiation strategy by providing customers with different design, quality or convenience so that customers could easily recognize and differentiate its products from competitors. Lastly, Amazon.com focuses on outstanding customer service and experience to ensure customer satisfaction by fulfilling customers’ demands and requirements.
2. Amazon.com's Value Proposition
Values play an important role in Amazon.com's succeeding. A value is similar to a goal and often determines the difference between success and failure of the enterprise (Saunders, 2001). Amazon.com is practicing 2 key values in its business – customer satisfaction and operational frugality. Customer satisfaction is what Amazon.com most concerns about; whereas operational frugality helps the company to have more capital to spend on branding and business expansion.
3. Customer Service
Amazon.com always focuses on its customers and it provides admirable customer service. A study by Saunders (2001), shows that more than half of Amazon.com's customers are repeat customers. Impressive customer service of Amazon.com has aided in its success because it strengthens its customer satisfaction, and in turn, results in customer retention and loyalty. Amazon.com serves its customers by performing as promised, such as punctual delivery. Amazon.com also focuses on additional elements that customers want, such as concentration of quality, reliability, security and availability of product. Amazon.com never stops seeking customer service improvements as it believes customers are the support of the business.
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