Amazon’s Customer Obsession

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Email Marketing: Email marketing is one of the most important strengths of Amazon. Amazon had realized the power of email to drive the revenue for years ago and invested on it. The company developed its own cost-effective email service built on the reliable and scalable infrastructure. The system is able to track customer behaviors and send them personalized and the most relevant content. It also avoids sending email campaigns with high unsubscribe rate and it automatically optimizes content for a better customer experience.

Development of a community: Amazon’s consumers are a community. Everyone who bought a product is able to add feature contents which include product reviews and rating, online recommendation lists, wish lists, buying guides, and etc. Amazon also aims to develop bounds between customers with the same taste and it had developed a system of electronic "soul mates" which identifies and recommends products that one soul mate has purchased but the other has not. Moreover, Amazon encourages its consumers to share their purchasing experience on their social networks.

Effective and efficient customer service: Amazon tries to answer quickly and easily each customer questions or request, especially through its aftersales service. For example the company recently developed the disruptive innovation Mayday. It’s a simple button which was first installed on the Amazon Kindle HDX series. If the consumer clicks on that button, within 15 seconds, a live customer service responds in a small video window and handles customer’s questions. This service is available 24 hours a day.

b. Amazon Prime

Members and regular buyers are also highly encouraged to join Amazon Prime, the fee based membership program of the company. This program was launched in 2005. In the beginning, its main advantage was that customers received free or discounted express shipping. However within years, Amazon developed this premium services and added other advantages for members as: More than 500 cities in US customers can receive unlimited Free Same Day Delivery on more than a million items. Prime now mobile app: it allows Prime members in cities across the U.S. and in London to receive a delivery on a selection of tens of thousands of everyday essentials within two hours. It also provides a streaming service which includes thousands of movies, TV shows and songs.

Amazon has been very successful in executing Prime loyalty program. Thanks to this program, average shopping had increased 40% more compared to time without Prime.

Nowadays, Prime has 78 Million members worldwide. Amazon Prime members spend an average of $1,500 a year whereas nonmembers spend $625 a year. There is a very high loyalty to the program. 70% of trial users continue using prime services. In 2014, the number of members increased by 50% globally.

c. Advanced Technical Abilities

One of Amazon’s strength to retain its customers is its technologies. As Jeff Bezos said “Technology infuses all of our teams, all of our processes, our decision making, and our approach to innovation in each of our businesses. It is deeply integrated into everything we do”, the company is technology driven.

Amazon great success in e-commerce has been driven by state of the art technology that has been developed over the years. The firm’s CRM sits on massive servers well integrated with analytics servers and data center which constitute the back end. The simplicity of amazon e-commerce platform with dynamic search and predictive ability that optimize customer experience has been attributed by the back end technology integration. Amazon CRM back end constitute of three main technological components Amazon Dynamo DB, Amazon RedShift and Amazon Elastic Map Reduce.

Amazon dynamo DB is a large scale database that allows storage and retrieval of large data in flexible formats, better than existing SQL databases.

Amazon Redshift is a data ware house where historical data on customer transaction and click stream information is backed up. It’s a stable platform with multiple flexible security levels to allow data access to authorized users. Redshifts organizes data in clusters that makes retrieval and analysis easier.

Amazon Elastic Map Reduce (EMR) is a big data processing engine. This platform processes vast amount of data through analytics business rules set and visualizes the results in format that CRM system can use to improve customer experience on the front end. Examples of analytical areas where EMR is used are; log analysis, web indexing, financial analysis, scientific simulation, genomics and bioinformatics among others.

Furthermore, these are some more tools that Amazon’s have utilized

SEO: Amazon has 248 Million pages stored in Google's index. Each of these pages has the opportunity to rank for any number of keywords in search engines.

Collaborative filtering: A method based on two main steps: 1) Search users who share the same rating patterns than the active user. 2) Use the ratings from those Likeminded users found in step 1 to calculate a prediction for the active use

4. Limits and Recommendations

a. An important number of competitors in several segments

As Amazon is increasing its activities, it leads to a higher number of competitors.

Amazon has to keep on focusing on customers in order to strengthen this competitive advantage and keep on growing. Amazon has different competitors on each segment:

Readers: Even is the company has improved the kindle hardware and dropped prices, it stays expensive and cheaper ones come from China and Korea. Besides eBook prices may decrease with Google, agreements with publishers etc...

Web services: The Company is also facing competitors as Dell, Microsoft or even Google

Merchant services: Amazon is in a competition with a host of Internet Payment Service Providers located across the world.

b. Difficulties to expand in some countries

Amazon’s model of development allows the company to keep on expanding especially in the markets where it is already settled. However it could also be a brake on its expansion in other countries. Indeed, its model might not be adapted for some countries especially developing countries where the logistic is completely different. For example in Africa, operate in Egypt, Morocco,