Amazon.com

Amazon.com
A CASE BY UNIVERSITY OF
WASHINGTON
SubmittedBy-
Shreyash Falke
Sourav Chakraborty
Pulak Agarwal

Introduction
• Gives its buyers a new buying experience , as they could choose the product(books) they
wanted to buy .
• Was convenient for the to customers to choose their Product they needed and find the
product in need.
• Book sales were also increased with the advent of amazon.com.
• Projection of 700million internet users in the year 2000.
• Year 1996 were termed as the “Internet gold rush “year , due to the increasing affluent
and young users of internet.
11/2/2014 2

Continued….
• With the increasing WWW audiences amazon focused on a virtual bookselling
market , since the consumers buying patterns were changing for products and
service.
• Founder JEFF BEZOS created an interactive medium for the customers wherein
they could interact ,meet, share their reviews and discuss on the books.
• Electronic library were being introduced wherein the bibliophiles spend hours
reading reviews and orderings.
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Comparative agreement
• Growth in the internet market in the year 1995 to 2300 percent a year.
• After leaving his job Jeff Bezos drew up a list for the products that could be sold
over the use of internet .He made his choices to music and books because the
have many title that are not possible for a single store to stock.
• Barnes & Noble and Border group inc were the two sellers prior to this and
contributed to the 12% of total sales in US.
• Moved to a place called seattle which was known for their technical talent and
happened to be near a place with large number of books
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The book publishing company
• U S the worlds largest market for books, with the retail sales accounting to $ 25.5
million in the year 1995.
• The US book industry is fragmented into:
 Publishers.
Wholeseller.
 Retail stores.
Book Clubs and mail orders.
Libraries and institutions.
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Publishers
• They accept returns on unsold books guarantying their distributors a 100 percent
refund.
• It distributes about 25% of the books to the wholesalers are being returned and
at times 40%.
• According to experts 20-30% of the book returned are okay,30-50% are
considered high and anything above 50% are considered disastrous.
• They reduce the prices after a certain period in a process known as remaindering
.
• The three big publishers were Warner Books, Simon & Schuster and Pearson.
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Wholesaler
• They were of two types –dependent and independent
• They supply to the Retailers available across different stores .
• Contributes to the 30% of the publishers sales.
• Ingram Book co the market leader contributes to the 50% of the Market share of
the industry.
• Their competition differs with the delivery of the items and the number of items
stocked.
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Retail book store
• Retail bookstores , independents and general retailers accounted for 35-40 % of
revenue.
• Retail bookstore increased in 1992 -1994 from 11,990 to 17,340.
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CHALLENGES FACED BY BOOK SELLERS & ASSISTED
BY ONLINE BOOK STORES
 Physically distributing the right number of books to
bookstores.
 Getting the feedback of the serious books circulated out to
the potential readers.

Emergence of virtual bookstore via Amazon.com
How it works on Amazon.com –
 No traditional book shelves. The web-page and e-mails are best to interact for all.
 Customers can search for a specific book, topic, or author, or they can browse their way
through a book catalog featuring 40 subjects.
 Visitors can also read book reviews from other customers, The New York Times, Atlantic
Monthly and Amazon.com staff.
 Customers can browse, fill up a virtual shopping basket, and then complete the sale by
entering their credit card information or by placing their order online and then phoning in
their credit card information.
 Customer orders are processed immediately.
 Books in stocks (mostly best-sellers) are packaged and mailed the same day. When their
order has been shipped, customers are notified immediately by e-mail.

 When a customer select a book, Amazon is programmed to flash other related titles
they might also want to buy and if customers provide information about their favorite
authors and topics, Amazon send an electronic mail recommending all streams
constantly.
 Additionally, the firm offers space for readers to post their own reviews and then steps
out of the way and lets its customers sell to each other.
 Amazon tries to make the shopping experience just as fun as going to the bookstore.
 Orders for non-best-sellers are placed immediately with the appropriate book
publisher by Amazon.com.
 Amazon.com loads its customers with information. For many featured books, it offers
capsule descriptions, snippets of reviews and “self-administered” interviews posted by
the authors.
Bill gates laid it out in magazine interview. He said, “I buy all my books at
Amazon.com because I’m busy and it’s convenient. They have a big selection and they
have been reliable.”

Virtual Customer Service
 According to the firm about 44 percent of the book orders come from repeat customers.
• .
 To keep customers interested in Amazon.com, the firm offers two forms of e-mail-based
service to its registered customers.
•
1.“Eyes" is a personal notification service in which, customers can register their interests in a
particular author or topic. Once registered, they are notified each time a new book by
their favourite author or topic is published.
2.“Editor's service” provides editorial comments about featured books via e-mail. Three full-time
editors read book reviews, pour over customer orders, and survey current events to select
the featured books. These services are automated and are available free of charge.
•
3.Customer service is a critical success factor in any retail business. If you make them really
happy, they can tell 6,000 people about that.
•
4.Additionally, the firm’s employees compile a weekly list of the 20 most obscure titles on order,
and Bezos awards a prize for the most amusing.

Associates Program
 According to Mark Breier, vice president of marketing at Amazon.com, the firm was
currently growing at the rate of 20-30 percent a month.
 An associates Web site, such as Starchefs -- which features cookbook authors --
recommends •
books and makes a link from its Web page to Amazon’s catalog page for
the books.
•
 The associates program was designed to increase traffic to Amazon.com by creating a
referral service from other Web sites to amazon.com.
 More than 7000 sites had already signed up under this program and earned a
commission of 8% of the value of books bought by the referred customer.
 The associated web site then earns referral fees for sales generated by these links.

Operating Philosophy
 Unlike traditional bookstores, there were no salespeople at Amazon.com. Moreover, the
firm is open for business 24 hours a day and has a global presence. Customers from 125
countries had purchased books from the firm.
 Although the firm advertised in print, it spent a substantial amount on Web advertising.
Because Amazon.com is an Internet-only retailer.
 The decision to locate Amazon.com in Seattle appeared to be paying off. The firm had
been able to attract some Microsoft veterans.
 Amazon had 110 employees in October 1996. Of these, 14 employees manage customer
support and seven employees attend to marketing. In addition, a few employees managed
“content” on the firm’sWeb site.
 Hours were typically 8 to 8 and many people worked weekends.

Explosive Growth
 Since July 1995 Amazon had doubled in size every 2.4 months.
 By August 1996, sales were growing at 34% a month.
 The firm attracted $8 million from Kleiner, Perkins, Caufield & Byers, a venture-capital
firm based in Silicon Valley that has funded firms such as Sun Microsystems and
Netscape.
 They believed that they were expanding the market for books.With this new way of
selling books on theWeb they can expose people to far more books than before. People
bought books from them that they won’t find in bookstores. And they were growing
rapidly in this stagnant market.

Company’s Organisational Structure
And Top Management

Ideas Explored to Attract Customers –
 Convenience
 Selection
 Services
 Cutting off price through offering Discounts.
These value propositions are interrelated and they all relate to the Web.

Types of Books Sold on Amazon
 Trade (for adults and juveniles)
 Professional Books (medical, legal, scientific, business)
Mass Market Books (best sellers)
 El-Hi Textbooks (Elementary and High school books)
 College Textbooks

CHALLENGES FACED BY AMAZON
 Find innovative ways to fruitfully use the massive database about their
customers.
 Threat from emerging copycat ventures offering books on the internet.
 Make their website available for everyone around the world.
 A looming price war.
 Retaining customers.

Demographics of Internet during those days
• More than half of internet users were spread across US only.
• Each day approximately 150 new businesses come onto internet, and the
total number at hat time as around 40,000.
• Average age of a computer user was 39.
• In 1996, around 27 million people used internet for shopping or to obtain
commercial services such as banking or travelling info.
• Amazon led the sales figures in book selling.

Current Status of Amazon.com in World
• Topmost e-commerce site in world.
• The Company operates in two segments: North America and International.
• Now it has diversified itself into sale of
DVDs, VHSs and MP3 downloads/streaming, software, video games, electronics, apparel,
furniture, food, toys, and jewelry.
• The company also produces consumer electronics—notably, Amazon Kindle e-book
readers, Kindle Fire tablets, Fire TV and Fire Phone — and is a major provider of cloud
computing services.
• Amazon has separate retail websites for United States, United Kingdom & Ireland, France,
Canada, Germany, Italy, Spain, Australia, Brazil, Japan, China, India and Mexico.
• Current Revenues US $74.45 billion.

Amazon.com

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Amazon.com