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Read the amazon.com case study on page 443 and answer the three questions at the end of the study on page 444. Each question should be 400 words and
with 2 source no more than five years old.
Questions
1. Why has Amazon.com succeeded online when so
many other companies have failed?
2. Will the Kindle revolutionize the book industry? Why
or why not?
3. What’s next for Amazon.com? Is cloud computing
the right direction for the company? Where else can it
grow?
Excellence
DESIGNING AND MANAGING INTEGRATED MARKETING CHANNELS CHAPTER 15 443
Founded by Jeff Bezos, Amazon.com started as the
“world’s largest bookstore” in July 1995. A virtual book-store that physically owned no books, Amazon.com
promised to revolutionize retailing. Although some may
debate whether it accomplished that, Bezos clearly
blazed a trail of e-commerce innovations that many have
studied and followed.
Amazon.com set out to create personalized store-fronts for each customer by providing more useful infor-mation and more choices than could be found
in your
typical neighborhood bookstore. Readers can review
books and evaluate them on a one- to five-star rating
scale, and browsers can rate the reviews for helpfulness.
Amazon.com’s personal recommendation service aggre-gates data on buying patterns to infer who might like
which book. The site offers peeks into books’ contents,
index, and beginning pages with a “search inside the
book” feature that also lets customers search the entire
text of 120,000 books—about as many titles as are in a
Barnes & Noble bookstore. Amazon.com’s one-click
shopping lets buyers make purchases with one click.
Over the years, Amazon.com has diversified its
product lines into DVDs, music CDs, computer soft-ware, video games, electronics, apparel, furniture, food,
toys, and more. In addition, it has established separate
Web sites in Canada, the United Kingdom, Germany,
France, China, and Japan. Amazon.com continued to
expand its product offerings with the 2007 launch of
Amazon Video On Demand, allowing consumers to rent
or purchase films and television shows on their comput-ers or televisions. Later that year, Amazon.com intro-duced Amazon MP3, which competes
directly with
Apple’s iTunes and has participation from all the major
music labels. The company’s most successful recent
product launch was the Amazon-branded Kindle, an
electronic book reader that can deliver hundreds of
thousands of books, magazines, blogs, and newspa-pers wirelessly in a matter of seconds. As thin as a
magazine and light as a paperback, the device was
Amazon.com’s number one selling product in 2009.
To overcome the lag between purchase and delivery
of product, Amazon.com offers fast, inexpensive ship-ping. For a $79 annual fee, Amazon.com Prime provides
unlimited free express shipping for most items. While free
shipping and price cuts are sometimes unpopular with in-vestors, Bezos believes it builds customer satisfaction,
loyalty, and frequency of purchase orders.
Amazon.com has established itself as an electronic
marketplace by enabling merchants of all kinds to dell
items on the site. It powers and operates retail Web sites
for Target, the NBA, Timex, and Marks & Spencer.
Amazon.com derives about 40 percent of its sales from
its million-plus affiliates called “Associates,” independent
sellers or businesses that receive commissions for refer-ring customers who then make a purchase at the
Amazon.com site. Associates can refer consumers to
Amazon.com through a variety of ways, including direct
links and banner ads as well as Amazon Widgets, mini-applications that feature Amazon.com’s wide selection of
products.
Amazon.com also launched an affiliate product
called aStore, which gives Associates the ability to cre-ate an Amazon-operated online store easily and without
any programming knowledge. Amazon.com then sup-ports these merchants by providing new tools for their
Web site, offering access to Amazon.com’s catalog of
products, and handling all payments and payment secu-rity through its Web Services. Amazon.com can also
“pick, pack and ship the products to the merchant’s
customers anytime and to any place” through its
Fulfillment by Amazon (FBA). This essentially creates a
virtual store for the third-party merchants with low risk
and no additional cost.
One key to Amazon.com’s success in all these differ-ent ventures was a willingness to invest in the latest
Internet technology to make shopping online faster, eas-ier, and more personally rewarding for its customers and
third-party merchants. The company continues to invest
in technology, is focused on the long-term, and has suc-cessfully positioned itself as a technology company with
its wide range of Amazon Web Services. This growing
collection of infrastructure services meets the retailing
needs of companies of virtually all sizes.
From the beginning, Bezos stated that even though
he started as an online bookstore, he eventually wanted
to sell everything through Amazon.com. Now, with more
than 600 million annual visitors, the company continues to
get closer to that goal with revolutionary products like the
Kindle and cloud computing Web services.
additional freight, and handling. At the warehouse, s
ments are often taken directly to the floor, unwr ed,
and left on the pallet, ready to sell.
has expanded products
• IS
Costco’s mission is “to
ally provide our members with quality goods and s
at the lowest possible prices.” With nearly 60 million c
carrying members and over $71 billion in sales, Costco
now the largest warehouse club chain in the Unit
States, the third largest retailer in the United States, a
the ninth largest retailer in the world. Costco’s suc
comes from years of building consumer loyalty thr
dedicated merchandisi
with no-fr’ ting policies.
Costco’s merchandising strategy
a broad range of brand name and pri
dise at extremely low prices. But
that carries 40,000 SKUs or a
to 150,000, Costco carries •
only the fastest-selling fl
from a single vendor in
uct sourcing results
sales, rapid inven
better product
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