Amazon is actually originated from the concept by Jeffrey Bezos. Amazon started to sell online in July 2005 and serving customers from 160 different countries. At that time, many people regard Amazon as the “Golden Child of the Internet” because it is a very successful online retailer. Amazon started off with selling books because Jeffrey thinks that purchasing a book does not require too many physical interactions of the customer with the product. Therefore, the tendency for customer’s rejection towards online purchasing in Amazon will be lower.
All these while, Amazon only focusing in one important principle in order to be a successful online retailer and maintain their position in this competitive market place which is “The Customer”. Jeffrey believes that customer is the factor why Amazon can still survive nowadays even there are booming of online retailers. He knows that building long term relationship with customer will provide greater profit and revenue in the future. So, Amazon greatly emphasizing on providing superior customer service to the customers as satisfied customers will make repeat purchase and help the company to generate positive word of mouth.
The success of Amazon is determined by the superior service quality and the features provided in the website such as powerful search engine with DWIM function and integrate technology called 1-click in the website. Amazon is trying to integrate customers to actively participate in the virtual community when they visit Amazon.com. Due to this, Amazon provides personalised web page and personalised recommendations to individual customer. Furthermore, customers have their own “Wish List” to put in the items that they are interested in. Customers are also encouraged to have social interactions with other customers, contact personnel and writers by joining online chat rooms and post review through Discussion Board.
Finally, in order to ensure customer never forget about Amazon.com, Amazon also takes initiative to send a reminder to customer if the customer does not visit Amazon for certain length of time and provide book recommendations.
1. What is Collaborative Filtering and how it works in Amazon.com?
According to Wikipedia, collaborative filtering is the process of making automatic predictions about the user’s interest based on the previous group of customers with similar taste characteristic. The concept is that, the customers who have similar purchase patterns will seem to purchase similar items in the future. All the predictions will be specifically recommended to specific user but the information is gathered from many users.
Applied to the Amazon.com case study, the website is using this method to provide recommendation to customer based on majority of the customers characteristic that have the similar interest in similar item. According to the case study, the software determines what other books those are popular with the people who read the same books. For example, in Amazon’s website, it is using the item-based collaborative system to make suggestion to the customers through ‘the customer who bought this also bought’. In short, Amazon actually uses collaborative filtering by matching the purchasing and browsing pattern between users. Then, Amazon will provide customer with future purchase recommendation.
2. What is a ‘Wish List’ and what is the purpose of it?
A wish list is a service provided by Amazon to their customers. It is a place reserved for individual customer to list down the books that they personally wish to have in the list provided. Amazon provides this service so that other customers who planned to give a gift to other customer (their friend or family) in Amazon can actually review their personal list and buy the book that their friend or family wish to have instead of buying other items that might not be preferred by the recipient.
3. What is service customisation and how Amazon utilizes it to enhance customer’s shopping experience?
Service customisation can be defined as service that is personalized or modified in order to meet certain needs of individual customers. Amazon.com utilizes service customization as a differentiation strategy for the company. According to the case study, Amazon’s guiding philosophy is to provide superior service to the customers. Their focus is on the customers. So, Amazon builds relationship with its customers by letting the customers to know that they are personally unique and special to the company. And one of the ways to let them know is by customizing Amazon’s service according to individual customer.
Amazon realises that customers like to be treated with respect and like the feeling appreciated. Due to this, Amazon provides service that makes personalized recommendation to individual customer based on the customer’s past purchasing pattern and past customers that have purchase the similar books. This can enhanced the customer’s shopping experience since the recommendations can help him to spend less time to search for books that he is interested in.
Furthermore, according to the case study, Amazon has created a personalized web page that greets the customer by name once the customer visits the website and he can have the privilege to view the new recommendations made by collaborative filtering tool. With this service, the customer feels that he is being appreciated as a customer and have a sense of belonging to Amazon.com.
4. What are the services that Amazon.com is offering to enhance customer shopping experience?
In order to enhance customer shopping experience, most of the services that Amazon offers require customer active participation. Amazon has provides a Discussion Board service in the website so that customer can view other reader’s comments about specific books. Furthermore, customer can chat with other participants in the Discussion Board. It provides an opportunity for the customers to build relationship and exchange information. Thus, this will creates some social activities that all these while the online organization is lacked of. Customer no longer is the only one involved in the transaction. Instead there will be other customer who will be chatting with the customer through online. The best thing is that there is an Author’s corner in the Discussion Board service. Customer can chat and ask questions to the book’s author. This creates a good opportunity for the customer to get to know the author and chances are not always available especially to those who visit the traditional bookstore.
Amazon also creates a ‘Wish List’ for the customers. Whenever the customer has certain books that he wants, he can add it in his personal wish list. This wish list will serves as a guidance of what to buy to the customer’s friends or family. For example, if a customer wanted to buy a gift to his friend, he can search through his friend’s wish list, select the book and purchase it through Amazon and Amazon will send the book to his friend’s house. With this service, the customer feels that it will be easier to buy gift to their friends or family since this is the books that their friends or family wanted and he will not ended up buying the wrong gift.
Besides, Amazon also makes personalized recommendations to the customer. With the use of collaborative filtering, the customer will be provided with future purchase recommendations based on customer past purchases or other customer’s purchase with similar characteristic. This service makes customers life easier since they need not to search through the whole website in order to find books that they are interested in. Furthermore, if the customer purchase the 2 books together (the book that customer wants plus recommended book), special price will be given and customer can save money while having the books that he likes.
In order to make customer feel unique and appreciated by the company, Amazon make personalized web page. When the customer visits Amazon.com, the web page will greet the customer by name and allow the customer to view the new recommendations by collaborative filtering. Furthermore, with 1-click technology (the customer need not to click 2 times like they used to do in other online websites to reconfirm the information given), the customer need not to re-enter their personal information every time he needs to make purchases which will increase customer’s convenience especially those customers with hectic lifestyles. With this service, customer can reduce the time they spent on buying in website.
Not to forget about Amazon’s powerful search engine. Amazon uses the ‘Do what I mean’ (DWIM) search function. The basic purpose of this search function is to correctly display the book’s title even though the customer might type in the wrong spelling or do not type the name of book or author correctly. The search function will recorrect the For example, if the customer typed Kotler as Cotler, the book list will still appear on the screen. With this service, the customer still can search the books that he wants even though he does not type in the correct name in the search engine. Amazon did a very good job in this because there are many times customer tend to misspell the book’s title or author’s name because couldn’t really remember the spelling exactly. This will reduce customer effort to search through the website and enhance the website’s ease of use.
Furthermore, the customer can actually track their recent orders through a “Where’s My Stuff’ link at the bottom left of the Amazon’s main page. The customer can actually track their orders after they paid for their items to ensure that the item is on its way to the customer. This service actually enhances customer satisfaction since the customer can actually check their product’s location after they had made the payment. At least, it gives assurance to the customer that his product will be shipped after the payment has been charged to their credit card. Due to this, the customer needs not to wait blindly and will not have to suspect whether Amazon has ships the item or not. In short, it reduces the customer’s perceived risk.
Finally, the shopping cart provided by Amazon is one of the services that will enhance customer’s shopping experience. The shopping card will “remember’ all the books or items that have been placed in the shopping cart by customers. This means that even after four months, the items in the shopping cart has not been deleted and still in the shopping cart. Customers need not to search back the books or items and worry that their items are no longer in the shopping cart after a few months does not log in to Amazon.com. This service enable customer to group their items into large orders in one shipping so that can reduce their shipping cost. This enhances customer experiences since the customer knows that Amazon designed the website with the customers in mind and emphasize on providing the best to each and every customers in Amazon.
5. What is a click and mortar?
According to Fitzsimmons and Fitzsimmons, “click and mortar” firms represent traditional retailers that have extended their market reach by adding a website. It acts as a supplement channel. Delivery of items can be made from a regional warehouse by mail or within urban areas by truck from the local store.
6. What is a brick and mortar?
According to Fitzsimmons and Fitzsimmons, “brick and mortar” is a traditional store whereby the customer chooses to order a product either by phone or online, and the local store will deliver it that day. The customer can also visit the store to make the purchases personally.
How would you contrast Amazon’s business model with that of Barnes & Noble before Barnes & Nobel went online?
Business Model Dimension 1: Value Proposition
- Customers have a problem of buying books when they stay in remote places. It is very likely that there will be limited bookstores or limited choices in bookstores located in remote areas. The customer will have to travel to bigger city bookstores to buy books that they want which will cost them time and money.
- Customers also have problem buying books which are rare to find. These books can be only found through searching different bookstores to see if they have the title. This kind of searches can be very time consuming and may result in the book not being found.
- Customers will also have to take time out of their lives to search for books at a bookstore. Busy consumers may not have the time to browse through the entire bookstore and may miss out on some books that they may like. Customers will also have to purposely travel to bookstores which may not be convenient for them.
- Customers have difficulties in finding books in an unorganized bookstore or a bookstore which carries a very large collection of books.
Business Model Dimension 2: Market Segment
Business Model Dimension 3: Position in the Value Network
Business Model Dimension 4: Competitive Strategy