From Source to Shore an Amazon Success Story Essay

From Source to Shore An amazon Success legend By Ankit Shah amazon is one of the first games that set out to badger the potential of web for re traverse commercial enterprise. Its hard to believe that a business that started out of founder Jeff Bezos garage in 1994 has r correctues of over $32 billion today. What is even harder to believe is that the comp any(prenominal) didnt make any net profit for first 5 years of its conception. Looking back, many leading(p) business analysts see viragos business plan as one of the soundest yet simple business plans, or virtuous musical rhythm as it is more popularly known, of that era. Figure 1 Amazons Business Plan.A sharp customer focus was the key cope away of the business plan. While the general market trend during the decimal point com boom was of aggressively fending off competition, Amazon remained faithful towards the simplest principle of the industry, Its a Customers Market. Driven by his willing to increase customer satisf action, Bezos made hefty investments in research and engineering which was besides new to the market. Consistent upgrades to the web portal made it progressively easy to use and opened up the market by introducing its customers to wares that were non available at a regular retail store.Features like individualised recommendations, search inside a book, wish lists were gamyly customer centralal and quickly caught the attention of the e-shoppers. The high variety offered by Amazon enticed even more customers after the features like rating a result, reviews and discussions were added. Figure 2 shows the current customer satisfaction standing of Amazon and its competitors. Figure 2 American Customer Satisfaction Index (Internet Retailers). Feb 2011. Recognizing the importance of the long tail market has similarly played a part in Amazons increasing customer satisfaction scores.Being an online retailer, Amazon has the tractableness to offer obscure products to its customers. Th e ease of obtaining products and items, which are rarely available at regular stores, is a key USP of Amazon. It is to a fault a major profit maker for Amazon. Figure 3 The Long Tail Phenomenon Consistent high scores on the customer satisfaction index and the sound business strategy reaped its first profit in 2001, by which time Amazon had become a househ overage name. Customer satisfaction is identified as a leading contributor to a companys meshing by many leading industry experts.Figure 4 percentage of various Business Performance Factors to Shareholder Value Cost of attracting a new customer is almost 4 times the cost of retaining an old one is a statistic that is widely accepted in the industry. This translates to huge savings in Figure 5 Reason for customers to stop dealing with vendors in operation(p) costs as Amazon stands at over 81 cardinal registered users today. As Amazon concentrated on building deeper customer descents, it also came up with innovative ways to leve rage these relationships to increase sales.Bill me later(prenominal) on was introduced to increase the buying power of the existing customers. It allowed customers to buy a product instantly but be billed at a later date. Amazon Market holding is a service that allows users to buy and sell employ items. It is also a great example of how Amazon has leveraged its customer relationship to create new opportunities as the supremacy of such a venture depends greatly on the customer relationships. The Brand Value of Amazon has also seen an upward movement similar to the customer satisfaction index.This has also helped Amazon attract more customers and increase its market presence. 2006 2007 2008 2009 2010 36 Amazon 65 62 58 43 Brand Index Figure 6 Amazons Increasing Brand Value 5 The increasing print value and the saturating market in United States have urged Amazon to open into inter solid groundal markets. Amazon began its European expansion by acquiring Bookpages. co. uk in 1997. The international market growth of Amazon has been steadily increasing in the new markets and off late has come at power with the US market in terms of contribution to the revenue stream.Figure 7 International Sales vs US Sales The categorical waterfall get to international expansion coupled with religious adherence to the customer centric business model is the major contributor to Amazons success in international markets. The international expansion time line under shows that Amazon favors American market to introduce its new product lines and features. Also, the American market quiet remains Amazons favorite in terms of wide product line. Figure 8 International involution Timeline for Amazon.Amazon is now moving towards establishing itself as a global attracter in e-tailing. In keeping with its sound business model, Amazon is still focused towards innovating customer centric features and targeting customer satisfaction as a primary goal. With an increasing presence in interna tional markets, Amazon also faces increasing competition from local e-tailers. Entering a market by acquiring an existing player is a strategy that has worked for Amazon. Country Acquired grade UK Bookpages. co. uk 1998 Germany Telebuch. e in 1998 China Joyo. com 2004 Figure 9 Amazons International Acquisitions.Amazon also offers many country specific features and variations to its product line. This differentiation approach towards international markets plays a key role in building a market value and capturing market share. Country Canada Features option of language between French and English on the web portal. Canadian website Amazon. ca which is fully managed from the USA and on which Canadian customers can place their orders.To avoid expensive exporting from the USA, Amazon has entered partnerships with publishers and wholesalers from which customers are directly supplied. Offers a separate UK product selection. Provision to deport through postal orders. The German subsi diary is also responsible for serving the Austrian market. Provision to pay using cheques. Pays a small fine for ignoring the 5% limit for subtraction on books. Reduced its French staff and outsourced some of its administrative functions to the UK. apply the existing delivery system established by joyo. com instead of nation wide couriers.