The institutional affiliation
Amazon.com, Inc. is considered as the leading e-commerce retailer in the United States possessing over $70 billion revenue in 2015. The company maintains a lean focus on increasing its operating income by constantly raising its revenue and managing its working capital and expenditures. Thus, the Amazon’s customer base demonstrates a constant increase, mainly because of the low costs; however, prices are not the sole contributor to its success (Becker, Uhr, Vering, & Ehlers, 2001).
Amazon pursues a concentration strategy in which it uses the Internet as the major distribution channel. Well-organized product information and sophisticated algorithms make the shopping experience more personalized. Basically, Amazon operates with the modern digital technologies by harnessing the power of its users to create even more value. The customers’ satisfaction allows redeploying active resources and concentrating delivery efforts on prime subscribers. Hence, it helps identify the customers’ needs and desires, what generates useful data flows from which Amazon can extrapolate larger market trends: reach higher volumes, unlock its potential, and increase its market power over suppliers (Becker, Uhr, Vering, & Ehlers, 2001).
Furthermore, Amazon applies a metric modification in order to measure its customer base. This technical update can potentially put accounts at risk of suspension, so it is crucial for sellers to understand what resources are available in order to prevent negative feedback ratings and possible suspension. Thus, Amazon makes customer service an even bigger priority and encourages top sellers to move in that direction as well (Kennon, 2016).
One of the Amazon’s strategic objectives is to create an amazing experience that attracts potential customers and encourages the existing ones to stay loyal. In order to differentiate itself from its closest competitors, the company acquired a wide range of IT and e-commerce innovative start-ups like audible.com, IMBD.com, Woot etc., which can help provide high value to its customers by using existing technologies of the acquired partners at low cost. Being named one of the most trusted companies by the Harris Poll magazine, Amazon reinvests its inner profits to enhance communication with customers, improve service and find modern delivery options. By focusing on long-term growth strategies over immediate profitability, Amazon has managed to gain an extremely loyal customer base. Amazon attracts new customers by means of personalized emails and special offer emails adjusted to a customer’s interest, proficient self-service support, fast site performance and usability, as well as constant product modifications. For example, the Amazon’s mobile-first approach provides with super easy navigation and broad functionality with an auto-fill on the search engine and 1-click orderings. By delivering the more convenient experience for customers, the company creates a sense of loyalty. So, the customers can remember that easy experience and next time they decide to buy a product with Amazon (Beard, 2014).
Amazon primarily follows demographic and psychographics segmentations to divide the markets. The Amazon’s micro-level segmentation has an individual approach to each customer, allowing converting visitors into constant, high-value customers. Amazon is aimed mainly at the middle and upper class individuals who have already got experience with internet and basic technologies, but prefer convenience over shopping from the physical outlets. The company has successfully positioned itself as a Glocal e-commerce giant where one can find anything and get it delivered at any remote locations within the shortest deadlines. Amazon developed an extensive global distribution network in order to make its goods available at multiple locations worldwide that are free of delivery charges up to certain limits (McAllister, 2012).
Recently, Amazon took the decision to expand its presence in the emerging global markets; thus, it needs to keep up with and stay ahead of global competitors that are expanding their businesses as well. Furthermore, the Internet is getting more accessible to the ‘lower classed’ people, which means they are also becoming potential customers of Amazon. Already owning a large market share in many of the more developed Western countries, Amazon should focus its expansion strategy on the emerging countries (Brazil, India and China). Next to the fact that these countries have huge potential by themselves, they could also operate as a gateway to that entire geographical region. However, the difficulty of breaching those particular markets and securing a strong foothold should not be underestimated. Strategically, it would be wiser for Amazon to expand their core business in countries where market coverage is not present yet instead of diversifying into other businesses.
References
Beard, R. (2014). Learning from Amazon: how to improve the E-commerce customer experience. Retrieved June 18, 2016 from http://blog.clientheartbeat.com/ecommerce-customer-experience/
Becker, J., Uhr, W., Vering, O., & Ehlers, L. (2001). Retail information systems based on SAP products. Berlin: Springer.
McAllister, I. (2012). Amazon (company): What is Amazon's approach to product development and product management? - Quora. Retrieved 18 June 2016, from https://www.quora.com/Amazon-company-What-is-Amazons-approach-to-product-development-and-product-management
Kanary, S. (2014). Marketing/Tech: the Amazon effects of segmenting consumers. Retrieved June 18, 2016 from http://landscapemanagement.net/marketingtech-the-amazon-effect-of-segmenting-consumers/
Kennon, J. (2016). Amazon customer dissatisfaction metric update. Retrieved June 18, 2016 from https://www.sellerlabs.com/blog/amazon-customer-dissatisfaction-metric-update
