To run an e-commerce successfully is not an easy task and to maintaining a successful e-commerce site is a vital part of a thriving retail business model these days. However, Amazon was passing through those difficult problems and become a success e-commerce throughout the network world. Amazon is a multinational electronic commerce launched by Jeff Bezos at year 1995. It started as an online bookstore, but soon diversified, selling MP3 downloads, software, CDs, DVDs, video games, electronics, furniture, toys, foods, and jewelry. Did you know? Amazon is also AmazonBasics that branded electronic products, AmazonFresh that sells and delivers groceries in Seattle, AmazonStudios that is online social movie studio, and Amazon WarehouseDeals that offers discount on refurbished products.
There are few strategies that Amazon applied to be success in their e-commerce business. First and foremost, internet imposes no limits on how much Amazon can sell. The digital enables limitless inventory, boots customer care and allows high margin, lowest prices. For limitless inventory, Amazon went from 1 category to 16 main categories. Amazon focuses on competition, product, search, buying power, brand and trust, and cost management. Besides that, Amazon also creates a digital driven supply chain by hiring the expert- Walmart. For boost customer care, Amazon first focuses on customer focus by following a bottom-up approach; every decision at Amazon is driven by customer’s needs. Secondly, Amazon focuses on frugality by continually looking for ways to do things cost-effectively. Lastly, Amazon focuses on innovation by always looking for simple solutions in order to provide lower prices to its customers. Amazon had creates a trusted, loyal and informative relationship with its customers. For high margin and lowest prices, Amazon is significantly cheaper than its competitors assuming there is no sales tax and free shipping. As a pure-player, Amazon leverages its digital advantage to optimize its supply chain. Amazon leveraging its high positive cash flow, it is able to maximize margins and beat all other retailers when it comes to pricing.
Furthermore, Amazon’s control of customer accounts and loyalty. Amazon acquires its customers’ confidence and it benefits form a loyal customer base: 2/3 of the sales comes from returning customers. The 3 main approaches of Amazon’s control of customer accounts and loyalty are as below. First of all, recurring usage which is recurring usage captivates users’ attention. Then, seamless integration which is vertical integration that creates a consistent experience that is very appealing. At last, lock-in which occurs when circumstances prevent uses from leaving a platform.
Moreover, Amazon is building an ecosystem to achieve digital supremacy. Now, Amazon has reached a critical mass, it is trying to create an ecosystem to increase its footprint towards users and authors to customer loyalty. The examples for towards users are great device, massive selection and low prices. The examples for toward authors are higher royalty share (35% or 75%). Then, for customer loyalty, kindle owners will buy 70% more books than prior to owing the device.
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