Amazon: Not Just a Book Store Any More

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1. Customer Relation Management (CRM)

As previously discussed, the CRM system is designed to track the customers interactions and use these interactions to build a profile of the customer. With over two-thirds of Amazon customers being repeat customers and over 40% being frequent users, it is no wonder Amazon relies so heavily on their CRM systems (Nicholls 2011). At the basics, this system stores all of the customer’s personal information. On the not-so-basic side, the CRM uses a combination of customer feedback, customer interest, wish list and product reviews to process transaction records (Al Imran 2014). While the CRM does the heavy lifting regarding customer data management, the ERP system does the warehouse automation.

2. Enterprise Resource Planning (ERP)

As the backbone of the system, Amazon relies on a huge Oracle database to automate their order system. The system is designed not only to figure in the nearest distribution center to the customer, but to also consider other factors, such as other items ordered with item and delivery schedule (Bacheldor, 2004). Amazon does this to determine which distribution center can most efficiently ship an item. This determination changes for every item ordered as the inventory is constantly changing. While the wide variety of products available (200 million) is likely a draw to the marketplace, the free 2-day for over 20 million of these items is listed as the #1 reason (78%) customers shop at Amazon (Smith 2016). Without such a unique and complex ERP system, Amazon may have burst with the dot-com bubble.

IV. INNOVATION STRATEGY

While Amazon places the CRM and ERP systems as one of the major reasons for their success, innovation is the key for any successful business to remain near the top. As we already know, Amazon started its existence as a book store. They soon began offering DVD’s and CD's alongside the books. From there, they tried their hand at auction style selling but after little success at competing with eBay, and continued issues with fraud, they focused their attention on the B2C model. This modeled allowed for small businesses to sell their goods through the Amazon.com site while Amazon took a small commission on each sale. So what other innovations have Amazon shared with the world? A few include the Kindle, Echo, and Digital Media.

1. The Kindle

The Kindle was originally released in 2007. Since then, there have been 8 different generations of the reader, with each successive generation offering new innovations. In keeping with Amazon’s lineage, the Kindle Paperwhite was designed to have the look at actual paper without the dimming effects the sun has on traditional tablets. With over 20 million Kindle devices sold in 2013 alone, Amazon profits between $265 and 530 million from e-book sales, which has very little overhead costs (Trefis 2014).

2. Echo

The Amazon Echo was released on November 6th, 2014 to much excitement and speculation. The Amazon Echo is a small wireless speaker that is also like a personal assistant. With your Echo, you can order items directly from Amazon, create shopping list, set timers, play music or even get the news, weather, or set your thermostat. While the Echo is a relatively new device, other companies are struggling to catch up to a device that in only 18 months has sold 3 million units (Risley, 2016).

3. Digital Media

With more and more American’s “cutting the cord” on cable, 15% according to a Pew Research study and an additional 9% never having had cable (Horrigan, 2015), Digital media has become the content of the future. Amazon originally starting offering Digital Media content in 2006 and Netflix, one of their biggest competitors uses the Amazon S3 infrastructure to host their content, Amazon appears to be making money in ways never through possible.

V. RECOMMENDATIONS

Just as Amazon has been able to keep current with the customers’ needs in the past, Amazon needs to focus on the future to continue to innovate. The global marketplace is changing day by day and if Amazon doesn’t keep ahead of these changing, they could quickly lose their advantage. There is no time for relaxation. Because no matter how loyal you think a customer is, the customer is loyal “Right up to the second somebody else offer them a better service” – Jeff Bezos.

Driven by a culture to expand and grow, Amazon’s innovation seems ahead of its time. With nearly 40% of all e-commerce shopping in the US happening on Amazon, it seems as though the train has left the station and there is no stopping it.

Works cited

Al Imran, Abdullah. MD. (2014, October 13). A Study on Amazon: Information Systems, Business Strategies and e-CRM. Print

Amazon.com, Inc. History. (n.d.). Retrieved April 19, 2016, from http://www.fundinguniverse.com/company-histories/amazon-com-inc-history/

Bacheldor, Beth. "From Scratch: Amazon Keeps Supply Chain Close To Home - InformationWeek." InformationWeek. 5 Mar. 2004. Web. 19 Apr. 2016.

Berryman, Reid M. (2014, April 4). Amazon.com, Inc.: a case study analysis. Print

Horrigan, J., & Duggan, M. (2015, December 21). One-in-seven Americans are television “cord cutters”. Retrieved April 20, 2016, from http://www.pewinternet.org/2015/12/21/4-one-in-seven-americans-are-television-cord-cutters/

Nicholls, C. (2011, August 2). Selling on Amazon: Pros and Cons. Retrieved April 19, 2016, from http://www.practicalecommerce.com/articles/2928-Selling-on-Amazon-Pros-and-Cons

Risley, J. (2016, April 06). Amazon Echo sales reach 3M units as consumer awareness grows, research firm says - GeekWire. Retrieved April 20, 2016, from http://www.geekwire.com/2016/report-amazon-sold-3-million-echo-smart-speakers-awareness-grows/

Smith, C. (2016, January 27). 110 Amazing Amazon Statistics. Retrieved April 19, 2016, from http://expandedramblings.com/index.php/amazon-statistics/

Soper, S. (2015, December 16). Amazon Is Capturing Bigger Slice of U.S. Online Holiday Spending. Retrieved April 20, 2016, from http://www.bloomberg.com/news/articles/2015-12-16/amazon-is-capturing-bigger-slice-of-u-s-online-holiday-spending

Trefis. (2014, April 2). Estimating Kindle e-book Sales For Amazon. Retrieved