Steady Growth of an Amazon Company - Case Study Example

? Entrepreneurship Executive summary Since its establishment over fifteen years ago, Amazon.com has experienced a steady growth from an upcoming ‘dot-com’ start-up to a multinational company. It has currently emerged as a giant in the e-retail sector. The company has two main aims: to realize total customer satisfaction and to maintain efficient company growth. Its marketing strategies are cutting edge and most if not all companies in the sector need to learn from Amazon.com if they are to make any impact in this industry. John Bezos, who is the founder and CEO of Amazon.com, dreamt of books. In 1994, he founded Amazon.com, arguably the earth’s largest bookstore. Since then, the company has registered tremendous growth and has become a force to reckon with in its industry. The following is a report which traces the history of Bezos, events leading to the founding of the company, business strategies employed by the company, and finally it winds up with highlighting the company’s success factors. History of Jeff Bezos CEO and Founder Amazon.com Jeffrey P. Bezos was born in a place called Albuquerque, in New Mexico. At an early age, Bezos displayed an outstanding mechanical aptitude. He also developed passion for various technical fields. When he became a teenager, his family moved to Miami, Florida. In high school, Bezos became more interested in computers. He later joined Princeton University with plans to study physics. However, he abandoned this dream in pursuit of computer study. He later graduated from the university with an electrical engineering and computer science degree. Afterwards, he was employed by a firm on Wall Street, where computers were becoming increasingly in demand for use in studying emerging patterns in various industries (Brandt 2011, pp. 228). Thereafter, he was employed at Fitel, a new company that was designing a network to be used in the management of international trade. He then was hired by D.E. Shaw, a firm that specialized in computer science applications in the stock market. Here, he was hired mostly because of his general and conspicuous talent. It was also while working in this firm that he became a senior vice president, and was looking forward to a brighter future, when he made a finding that transformed his life as well as the course of the world history of business (Brandt 2011, pp. 228). His biggest test came in 1995 when he sought to raise a seed capital of $1 million in order to launch his firm. Over a period of six months in early 1995, he met with some 60 private investors. During this time, he was hiring programmers to design the firm’s website to market itself to the public. Bezos discovered that the use of Internet was increasing by 2300 percent each year. He quickly saw a chance for a new realm of business, and immediately started considering the potential (Hazleton 1998, pp. 56). Bezos later flew to Los Angeles to attend a convention of American Booksellers. While in attendance, he learnt all that he could with regard to the book business. He realized that the main book wholesalers had already composed electronic lists regarding their inventory. All that was required was to establish a single location for this important information on the Internet, from where the book-buying community could search the existing stock and then place orders directly. The employers of Bezos were not ready to proceed with such an undertaking. Bezos then realized that the only remaining way to seize the chance was to go into business as an individual. Nevertheless, this meant sacrificing a more secure job in New York. Despite the risk, Bezos together with his wife Mackenzie chose to take up the challenge (Hazleton 1998, pp. 58). In the year 1999, Bezos was declared Time magazine’s Person of the Year. Come 2008, he was selected by the U.S. News & World Report as one of the best leaders in America. In the same year, he also received an honorary doctorate degree in Science and Technology from the University of Carnegie Mellon. Furthermore, he is a member of the Bilderberg Group. Consequently, he attended a conference organized by the group dubbed the Swiss 2011 Bilderberg Conference, which took place in St. Moritz, Switzerland (Byers 2006, pp. 46). The character traits of Jeffry include the following: he carries an attitude of not giving up; he is a visionary; he is a down to earth person; he has a customer-centric focus; he has never gloated over his immense success, he always aspires for more; he has never focused all his attention on short term profits; he always stands by his word; he has a strong faith in the concept of low pricing; and he believes in building trust. Furthermore, Bezos is well known for his sharp and intelligent style of leadership, a quality that has seen him successfully set up Amazon.com, a successful contender to a well-established giant like Barnes & Noble (Byers 2006, pp. 47). History of Amazon.com Jeffrey Bezos set-up Amazon.com Company in 1994. This was after discovering that Internet usage had been growing at a pace of 2300 percent every year. Working from an office whose size was less than 400-square feet in Seattle, Bezos launched the Amazon.com Company on the Internet in July of 1995. The mission of Amazon.com is to utilize the Internet to undertake book buying transactions thereby transforming the process into a quicker, easier, and more enjoyable book-shopping experience. By the end of 1996, his company was rated one of the highly successful Web retailing ventures, with revenues hitting $ 15.6 million. Almost instantly Amazon.com developed into one of the world’s biggest e-tail bookstores (Spector 2000). Since the time of its founding, the company has undergone frequent and major changes to uphold its leadership place as an Internet venture. Among the most prominent developments were: In May 1997 – the company held its first public offering of common stock totaling 3 million. The money generated from this undertaking was spent in settling existing debts, while the remainder was invested (Spector 2000). In July 1997 – A multi-million dollar promotional and advertising agreement was finalized with Excite and America Online. Parallel agreements have been entered into with Yahoo!, GeoCities, Netscape, @Home, and AltaVista (Spector 2000). In June 1998 – The Company embarked on product line expansion in order to include music. Amazon.com currently offers beyond 125,000 CD titles. Through its website, customers are able to listen to samples of songs before buying (Spector 2000). In August 1998 – Amazon.com purchased the Junglee Corporation as well as PlanetAll, which was not only an address book but also a scheduler program for clients, for $ 270 million (Spector 2000). In September 1998 – the company established a local Internet presence in the UK and Germany through the purchase of two existing online book-selling companies. Within three months, Amazon.com became the foremost online book-seller in these new markets (Spector 2000). Currently, Amazon.com is the only location where one can find anything they want to buy online. The company offers the planet’s biggest selection of products to over 29 million people living in more than 160 countries across the globe. This has made them the principal online shopping website that can be accessed through the World Wide Web. Over the past few years Amazon.com has grown very rapidly (Spector 2000). Amazon.com business strategies Amazon.com’s mission statement is that the venture seeks to be planet earth’s main customer-centred company regarding three sets of customers: the seller customer; the consumer customer; and the developer customer. Despite its massive expansion, it remains unremittingly alert on the consumer. Of the 452 company goals in year 2009, 360 of them are directly related to the customer experience. There exist six core values which focus Amazon.com’s strategies of operation, that is, innovation; customer obsession; bias for action; high hiring bar; ownership; and frugality. Amazon.com bases its strategy of marketing on six main pillars including: free proffer of services and products; use of consumer friendly interface; easy scaling from small to large; exploit of its affiliate’s resources and products; use of existing systems of communication; and the utilization of universal mentalities and behaviours (Quelch & Klein 1996, pp. 62). Pay-pack Advertising The Pay Per Click (PPC) promotion or advertising approach was for quite some time been the black sheep of the company’s marketing campaign. Their initial PPC campaign effort, spawned by their auxiliary company A9, was the average ClickRiver, which was a middling PPC application program which kept its head just above the waters but certainly never swam to great channels. Consequently, ProductAds replaced ClickRiver in 2008. The new application allows any web trader to buy PPC ads on Amazon.com’s site. This has led some pundits to sarcastically comment about Amazon.com’s launching a possible pursuit of the Google’s search engine crown (Quelch & Klein 1996, pp. 62). Continual website improvement In today’s Internet traffic, a simple, easy to use and engaging website is a necessity. Amazon.com spends millions of dollars and a lot of man-hours to spot problems, craft solutions, and further augment the consumer’s online experience (Fleckenstein & Preibusch 2005). Offline Advertisement Billboard and TV ads are about 10 times less effective as compared to online or direct marketing when considering the costs of acquiring customers. Amazon.com has acted on this fact by dropping their offline marketing strategy, mostly during holidays. In 1999, the company spent a massive $ 80 million in this kind of advertisements in the fourth quarter of the year. Thus, the company boasts the highest sales of online retailers in holidays, mostly during the Black Friday holiday. Amazon’s strategy is simple: that is, since clients shop online, then online is where Amazon.com will be operate from (Pavlou & Gefen 2004, pp. 38). Streamlined ordering process Easy ordering for goods is Amazon.com’s creed. It eagerly exploits technology in order to allow clients to better explore and navigate their online trade mall. When one visits the company’s website, he or she can utilize it to locate just about any product on the market at an affordable price. Amazon.com has simplified the customers’ purchase process using a single click of the mouse. Once the customer has located everything they need, they just make one payment and then the orders are immediately processed. This simple application is the same whether the client makes direct purchases from Amazon.com or from one of the company’s associates (Pavlou & Gefen 2004, pp. 42). Partnerships & Web Services Amazon.com signed contracts with a couple of partners. The company currently hosts manager’s retail sites for a variety of other retailers that include Marks Spencer, Sears Canada, Target, Bebe Stores, and Timex Corporation. The simplicity that encompasses Amazon.com’s clients check-out has been extended to its partner services and relations, of which no shortage exists. The company also hosts more than twelve kinds of web services thereby creating a scalable, reliable, and an inexpensive computing stage which can transform the online presence of any small business (Fleckenstein & Preibusch 2005). Affiliate marketing Keeping in line with the company’s fourth marketing stratagem, Amazon.com has sponsored a very successful program known as Affiliate Marketing. Using Amazon.com’s Web Services, Associates, XML service, and third-party sellers, an agreement has been reached to place links on these companies’ websites that connect to Amazon.com’s site (Fleckenstein & Preibusch 2005). The customer’s opinions Amazon.com does extra than just paying lip service to its clients. Each service/product is available for client reviews. The customers may therefore rate services or products on a scale of 1-5 stars. The members of Amazon.com may also comment on the reviews of other members. However, this shortens commentary as well as accessibility, a prime concern for the company (Fleckenstein & Preibusch 2005). E-mail Marketing For such a money mind-full company as Amazon.com, the appeal of free and also accessible e-mail is one charming temptation that is quite potent to resist. Amazon.com undertakes permission marketing, whereby the clients give the company the permission to send them mails that detail product promotions (Fleckenstein & Preibusch 2005). Customer Service Bezos would dispute that customer service is not an appendage to a corporate goal – but instead, he considers it to be the corporate goal. He calls his company the most consumer centered venture in the planet. This is because it majorly focuses on the experience of the customer. The company wants its customers to have quick access to their hearts’ desire and get the same without hassle. Amazon.com spends billions developing and enhancing its websites’ interface together with customer relations. There are many methods that the company uses to help the customer. All clients may send e-mails to the company requesting clarification concerning purchasing or any other kind of information. In addition, not all of its responses are automated. Furthermore, Amazon.com engages most of its staff in providing responses to customer queries either by phone or e-mail (Reichheld & Schefter 2000, pp. 105). Amazon.com’s success story The key processes that have contributed to the success of Amazon.com are convenience, service, selection, and price. Convenience can better be understood through the words of Bill Gates concerning Amazon.com. Gates states that he purchases all his books from Amazon.com because being the busy person that he is the company provides a very convenient means of purchasing the stuff he needs. According to Gates, the company also has a huge selection of stuff a buyer can choose from and is very reliable. With well over 106 million customers purchasing books every other quarter, Amazon has taken advantage regarding the convenience of the online-ordering application. The next key feature that explains Amazon.com’s success is its selection. The company currently offers its customers the world’s largest selection thanks to their e-tailer business orientation as well as vast virtual product directories. Furthermore, the company only keeps latest publications in their stock for fast filling of orders (Fleckenstein & Preibusch 2005). The third key success factor for the company is the type of service offered to the customer. Amazon offers their customers everything, that is, from email alerts when their orders have been filled, to chat rooms that enable the clients to discuss as well as recommend books. The business also allows potential customers to explore for books that have similar titles or even subject matter. Today, about 63% of the company’s business arises from repeat customers (Reichheld & Schefter 2000, pp. 105). The last key reason explaining Amazon.com’s success is its pricing strategy. At Amazon.com, virtually all books have a discount. Bestsellers are normally sold at 30-40% discount while all other books are offered at a 10% discount. The company is able to offer such discounts given that they have a lower cost structure as compared to physical stores, and they in addition turn their stock over 150 times every year (Torkzadeh & Dhillon 2002, pp. 188). The incorporation of more items in the company’s virtual directories, other than books, has seen the company earn more revenue from their sale. For instance, in 1998, Amazon.com started to sell music CDs as well as videotapes. The website’s application can track a client’s purchases and thereafter recommend a similar CD, or video titles. In fact, the site can also recommend similar products in an assortment of product categories being sold on Amazon.com. These product categories may include consumer electronics, toys, computers, clothing, tools, hardware, software, art, car parts as well as house-ware and furniture (Sullivian & Walstrom 2001, pp. 10). Conclusion Jeffrey P. Bezos was born in a place called Albuquerque, in New Mexico. His entrepreneurial skills started showing while he was still young. The passion did not die into his adulthood when he founded the Amazon.com Company. His character of never giving up has seen him excel in corporate and leadership matters. This has earned worldwide recognition and respect as a committed entrepreneur. Since its inception to present times, Amazon has registered immense growth thanks to its focus on well-conceived goals and objectives. Its focus on the customer has made it continuously adjust to meet the ever dynamic needs of the market. In addition, its concern for the planet has led the company to receive worldwide recognition thanks to its effective CSR – corporate social responsibility program. Amazon.com’s strategies include: pay-pack Advertising, continual website improvement offline advertisement, streamlined ordering process, partnerships & web services, affiliate marketing, the customer’s opinions, e-mail marketing, customer service. These are the strategies that have enabled the company to experience such tremendous growth. Finally, the key success factors that have kept the company competitive over the years include convenience, service, selection and price. Reference List Brandt, RL 2011, One Click: Jeff Bezos and the rise of Amazon.com, Penguin Publishing. 228 Byers, A 2006, Jeff Bezos: the founder of Amazon.com, the Rosen Publishing Group, 46-47. Fleckenstein, M & Preibusch, S 2005, Strategies to achieve market leadership: the example of Amazon, Seminar paper, viewed on 15 May 2013. Retrieved from Hazleton, L 1998, ‘Jeff Bezos: how he built a billion dollar net worth before his company even turned a profit’, Success, pp. 55-60. Pavlou, PA & Gefen, D 2004, Building effective online marketplaces with institution-based trust, Information Systems Research, vol. 15, (1), pp. 37-59. Quelch, JA & Klein, LR 1996, The Internet and international marketing, MIT Sloan Management Review, vol. 37, (3), pp. 60-75. Reichheld, FF & Schefter, P 2000, E-Loyalty: your secret weapon on the web, Harvard Business Review, vol. 78, (4), pp. 105-113. Spector, R 2000, Amazon.com: get big fast: inside the revolutionary business model that changed the world, Harper Collins Publishers. Sullivian, JR & Walstrom, KA 2001, ‘Consumer perspectives on service quality of electronic commerce websites’, The Journal of Computer Information System, vol. 41, (3), pp. 8-14. Torkzadeh, R & Dhillon, G 2002, ‘Measuring factors that influence success of Internet commerce’, Information System Research, vol. 13, (2), pp. 187-204. Read More