From Source to Shore an Amazon Success Story Essay

From Source to Shore An virago Success Story By Ankit Shah amazon is one of the first ventures that set out to dab the potential of web for retail business. Its hard to believe that a business that started out of founder Jeff Bezos garage in 1994 has revenues of over $32 meg today. What is even harder to believe is that the company didnt make any profit for first 5 years of its conception. Looking back, many leading business analysts turn around Amazons business plan as one of the soundest yet simple business plans, or virtuous cycle as it is more popularly known, of that era. Figure 1 Amazons Business Plan.A sharp client focus was the key take away of the business plan. While the normal market trend during the dot com boom was of aggressively fending off competition, Amazon remained faithful towards the simplest principle of the industry, Its a guests Market. driven by his will to increase customer satisfaction, Bezos do hefty investments in research and technology which was as well as new to the market. Consistent upgrades to the web portal made it increasingly easy to use and opened up the market by introducing its customers to products that were not available at a regular retail store.Features like private recommendations, search inside a book, wish lists were highly customer centric and quickly caught the attention of the e-shoppers. The high variety offered by Amazon enticed even more customers after the features like rating a product, reviews and discussions were added. Figure 2 shows the current customer satisfaction standing of Amazon and its competitors. Figure 2 American Customer Satisfaction Index (Internet Retailers). Feb 2011. Recognizing the importance of the long tail market has as well as played a part in Amazons increasing customer satisfaction scores.Being an online retailer, Amazon has the flexibility to offer obscure products to its customers. The ease of obtaining products and items, which are rarely available at regular stor es, is a key USP of Amazon. It is also a major profit maker for Amazon. Figure 3 The Long Tail Phenomenon Consistent high scores on the customer satisfaction king and the sound business strategy reaped its first profit in 2001, by which while Amazon had become a household name. Customer satisfaction is identify as a leading contributor to a companys profits by many leading industry experts.Figure 4 component of various Business Performance Factors to Shareholder Value Cost of attracting a new customer is almost 4 times the cost of retaining an old one is a statistic that is broad(a)ly accepted in the industry. This translates to huge savings in Figure 5 Reason for customers to stop dealing with vendors operational costs as Amazon stands at over 81 million registered users today. As Amazon concentrated on building deeper customer relationships, it also came up with innovative slipway to leverage these relationships to increase sales.Bill me later was introduced to increase the b uying power of the animate customers. It allowed customers to buy a product instantly but be account at a later date. Amazon Marketplace is a service that allows users to buy and sell used items. It is also a great example of how Amazon has leveraged its customer relationship to create new opportunities as the success of such a venture depends greatly on the customer relationships. The Brand Value of Amazon has also seen an upward movement similar to the customer satisfaction index.This has also helped Amazon attract more customers and increase its market presence. 2006 2007 2008 2009 2010 36 Amazon 65 62 58 43 Brand Index Figure 6 Amazons Increasing Brand Value 5 The increasing brand look upon and the saturating market in United States have urged Amazon to spread into international markets. Amazon began its European expansion by acquiring Bookpages. co. uk in 1997. The international market growth of Amazon has been steadily increasing in the new markets and off late has come at power with the US market in wrong of contribution to the revenue stream.Figure 7 International Sales vs US Sales The categorical waterfall approach to international expansion coupled with spectral adherence to the customer centric business model is the major contributor to Amazons success in international markets. The international expansion time line below shows that Amazon favors American market to introduce its new product lines and features. Also, the American market still remains Amazons favourite in terms of wide product line. Figure 8 International Expansion Timeline for Amazon.Amazon is now moving towards establishing itself as a global attraction in e-tailing. In keeping with its sound business model, Amazon is still focused towards innovating customer centric features and targeting customer satisfaction as a immemorial goal. With an increasing presence in international markets, Amazon also faces increasing competition from local e-tailers. Entering a market by acquiri ng an existing player is a strategy that has worked for Amazon. Country Acquired Year UK Bookpages. co. uk 1998 Germany Telebuch. e in 1998 China Joyo. com 2004 Figure 9 Amazons International Acquisitions.Amazon also offers many country specific features and variations to its product line. This differentiation approach towards international markets plays a key role in building a market hold dear and capturing market share. Country Canada Features Choice of language between French and English on the web portal. Canadian website Amazon. ca which is fully managed from the USA and on which Canadian customers can place their orders.To avoid expensive exporting from the USA, Amazon has entered partnerships with publishers and wholesalers from which customers are directly supplied. Offers a separate UK product selection. Provision to pay through postal orders. The German subsidiary is also responsible for serving the Austrian market. Provision to pay using cheques. Pays a small fin e for ignoring the 5% limit for usher out on books. Reduced its French staff and outsourced some of its administrative functions to the UK. Used the existing delivery system established by joyo. com instead of nation wide couriers.