Amazon Company Retention Strategies

Amazon Company

Amazon is an American electronic commerce and cloud computing company, founded in 1994 by Jeff Bezos, who named the company after the Amazon river, one of the largest rivers in the world. The company started as an online bookstore, later became largest internet-based retailer in the world with an annual revenue of US $107 billion. Amazon is one of the leaders in the customer relationship management through its customer centric business model, where customer centricity became defining point of company’s culture and proposition. The company uses many strategies to meet its customer expectations.

Customer Retention in Amazon

Customer retention can be costly and time-consuming attempt but as per Harvard Business School, even a 5% increase in customer satisfaction increases profits by 25-95%.

Commitment from the Top

Companies often claim that they are customer focused. But, in real they first give profits priority, operational efficiency next and then perhaps customer service. The focus on the customer service from the top of the organization made Amazon successful in retaining its customers.

Corporate Strategy:

Amazon’s corporate strategy can be described as concentric diversification. “This strategy is based on leveraging technological capabilities for business success and following a cost leadership strategy aimed at offering the maximum value for its customers at the lowest price in addition to wrapping its business around the customers wherein they find Amazon to be the go-to portal for their online shopping needs”. Apart from this, Amazon strategy is driven by its sources of competitive advantage where in its focus on technology, actualizing the benefits of economies of scale and Big data to predict the customer behaviour. Also, the company built its strategy around the customer convenience aspect to make their experience seamless.

Basic Service Strategy

The basic service program in any company is in terms of product availability, lead-time performance and service reliability.

Product Availability:

To meet the huge demand of the customers, Amazon developed sophisticated systems of supply chain and inventory management to fill the orders from one of its dozens of fulfilment centers. For years, unloading the products from trucks and filling the orders in Amazon included enormous employee hours of walking, searching, and selecting. The company’s move towards the automation is part of a change in the supply chain management toward automated warehouses. This automation made the plants run around the clock increasing efficiency, improve inventory control which avoids the stock outs and increases level of service provided. Amazon’s Kiva Robots in their warehouses selects, scans, packages the products into the orders and ensures the inventory levels of the products by automatically updating and replenishing from the backroom. This reduced their order filing time from 90 minutes to about 15 minutes. Also, the company uses hybrid data gathering methodology, which helps to keep up with its peak demand, during which a truck will leave one of its fulfilment centers every 105 seconds. Amazon tries its best to stock enough items, but sometimes due to the increased demand, the number of items available may not serve the demand. To ensure customer satisfaction, the company website has an Alert Me box, if the customer sign up for this, an email will be sent to the customer immediately once the item is made available.