Amazon.com-Not Your Average Bookstore Jeffrey Bezos, CEO and founder of Amazon.com, is running what some people refer to as the "world's biggest bookstore." The story of Bezos' virtual bookstore teaches many lessons about online business. Out of nowhere, this digital bookstore turned an industry upside down. What happened here was more than just creating a website. Bezos conceived and implemented an intelligent, global digital business.
Its business is its technology; its technology is its business. Shocking traditional value chains in the bookselling industry, Amazon opened thousands of virtual bookstores in its first few months of operation. Bezos graduated from Princeton and was the youngest vice president at Banker's Trust in New York. He had to decide if he would stay and receive his 1994 Wall Street bonus or leave and start a business on the Internet. "I tried to imagine being 80 years old, looking back on my life. I knew that I would hardly regret having missed the 1994 Wall Street bonus. But having missed being part of the Internet boom-that would have really hurt," stated Bezos. One evening he compiled a list of 20 products he believed would sell on the Internet. Books, being small-ticket items that are easy and inexpensive to ship, were on the top of the list.
It was also apparent that no bookstore could conceivably stock more than a fraction of the 5 million books published annually. Bezos, who had never sold a book in his life, developed a strategic plan for selling books on the Internet. Amazon launched three years later. In the fall of 1994, Amazon filled its first book order-personally packaged by Bezos and his wife. Amazon's Ebusiness Strategy Amazon is a pure-play business and does not operate any physical stores. All of its sales occur through its website. It is consistently pushing the technological envelope in its search to provide a satisfying, personalized experience for its customers. What started as a human-edited list of product suggestions morphed into a sophisticated computer-generated recommendation engine.
The company captures the comments and recommendations of buyers for site visitors to read-similar to the friendly salesperson in a store offering advice on which books to buy. The website tracks customer traffic, the number of visitors who access the site, how long they stay, what pages they click on, and so forth. The company uses the information to evaluate buying and selling patterns and the success of promotions. Amazon has quickly become a model success story for ebusinesses around the globe. Amazon retains customers with website features such as personalized recommendations, online customer reviews, and "1-click ordering"-the creation of a true one-stop shopping establishment where customers can find anything they want to buy online.
Through the Amazon.com Auctions, zShops (independent third-party sellers), and more recently the Amazon.com Marketplace (where customers can sell used items), the company is able to offer its customers almost everything. Shaping Amazon's Future Amazon released a free web service that enables its business partners (whom Amazon calls "associates") to interact with its website. More specifically, this service allows its partners to access catalog data, to create and populate an Amazon.com shopping cart, and even to initiate the checkout process. In 16 months, the company has inspired 30,000 associates to invent new ways to extend Amazon's visibility on the Internet. With over 30 million customers, Amazon has become a household brand. Amazon is always looking for new ways to take advantage of ebusiness.
Here are a few of its creations:
• Amazon S3: Amazon launched an online storage service called Amazon Simple Storage Service (Amazon S3). Any type of data, from 1 byte to 5 gigabytes in size, can be stored on the service and the customer is charged monthly fees for data stored and transferred.
• Amazon MP3: The online music store sells downloadable MP3s. Amazon MP3 is selling music from the top four record labels-EMI, Universal, Warner Music, and Sony BMG-as well as many independents.
• Vine: Amazon launched Amazon Vine, which rewards top product reviewers by providing them with free access to products from vendors participating in the program.
• Kindle: Amazon launched Amazon Kindle, an ebook reader that downloads content over "Whispernet," a free wireless service on the Sprint Nextel network. Initial offerings included approximately 90,000 books, newspapers, magazines, and blogs. The screen uses E Ink technology to reduce battery consumption. Mobile Amazon Amazon.com has collaborated with Nokia to pioneer a new territory. With the launch of its Amazon. com Any-where service, it has become one of the first major online retailers to recognize and do something about the potential of Internet-enabled wireless devices.
As content delivery over wireless devices becomes faster, more secure, and scalable, mcommerce will surpass landline ebusiness (traditional telephony) as the method of choice for digital commerce transactions. According to the research firm Strategy Analytics, the global mcommerce market was expected to be worth more than $200 billion by 2005, with some 350 million customers generating almost 14 billion transactions annually. Additionally, information activities such as email, news, and stock quotes will progress to personalized transactions, "one-click" travel reservations, online auctions, and videoconferencing.
Questions
1. How has Amazon used technology to revamp the bookselling industry?
2. Is Amazon using disruptive or sustaining technology to run its business?
3. How is Amazon using personalization to keep customers loyal?
4. What is Amazon's ebusiness model?
5. How can Amazon use mbusiness to increase sales?
6. What are the Web 1.0 characteristics of Amazon.com?
7. What are the Web 2.0 characteristics of Amazon.com?
8. How can Amazon.com use Web 3.0 to create the future bookstore?