Organization: Amazon
Industry: eCommerce
Web references: Wikipedia, Forbes, Amazon, Youtube, Slideshare – Hidden Empire, Slideshare – case study, CMUSCM.
Company overview
Amazon, founded by Jeff Bezos in 1996, is the largest internet based retailer in the United States. Founded under Bezos’s ‘regret minimization framework‘, Amazon started off as an online bookstore, but soon diversified into not only selling almost anything a buyer could think of, but also manufacturing consumer electronics such as Kindle e-readers and Fire Tablets. Operating in North America and internationally, Amazon strives to be the ‘Earth’s most customer-centric company where people can find and discover virtually anything they want to buy online.’ In 2000, Amazon began to offer its industry leading e-commerce platform to both individuals and other retailers – which is used by more than two million businesses to connect with new customers and increase sales (1)
Customer Centric Plan
Jeff Bezos realized the importance of keeping the customer happy. Satisfied customers will pass on praise for a company they’ve had a positive experience with to their social circles, just the same as dissatisfied customers will voice their complaints. With this in mind, Amazon takes a unique customer centric focus they describe as starting with the customer and working back – every decision is driven by consumer needs.
Jeff Bezos had 3 big ideas when it came to operating an online as opposed to store fron operation: Digital enables limitless inventory, Digital boosts customer care, Digital allows high margins and low prices. He used these principals to create a digital driven supply chain, creating some controversy when he hired Walmart executives to establish Amazon’s computerized supply chain. With this, Amazon was able to grow from a garage distribution center to the multinational conglomerate we know today.
Amazon owes a large part of its popularity to its excellent customer service, which was due to its superior inventory management and supply chain management. In order to increase their revenue, they begun to add new products approximately every 6 weeks – creating alliances with several companies to increase the range of products. In order to strengthen its Customer Fulfilment Network, Amazon began to obtain product directly from distributors. Meaning that instead of having to stock and store all these products in their warehouses, distributors would ship to customers directly from the Amazon website.
Amazon gained its positive reputation among its customers for delivering products on time, leading to satisfied customers and repeat buyers. By the end of 2002, Amazon had 22.3 million registered users on its site. By 2003, Amazon became the biggest book, music and video retailer on the Internet and offered more than 4.7 million books, videos, music CDs, DVDs, computer games and other products.
Amazon continued to grow its inventory by acquiring companies leading to more choice for customers and higher levels of satisfaction.
Lessons
I believe that biggest lesson we can learn is their simplicity. Although the company is enormous with 170 million physical products in virtual stores, their focus remains costumer driven – give them what they want, at a great price, in the shortest amount of time. They have modeled both their business plan and their supply chain management around this simple premise, and have continued to grow exponentially.
Submitted by: Caitlin Brookbanks
To contact the author of this entry please email: caitlinbrookbanks@gmail.com
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