Paper on Amazon

Amazon.com, Inc. is an American e-commerce company. It is the largest Internet-based retailer in the United States. In 2015, Amazon surpassed Walmart as the most valuable retailer in the United States by market capitalization. Amazon.com started as an online bookstore, but soon diversified, selling DVDs, Blu-rays, CDs, video downloads/streaming, MP3 downloads/streaming, software, video games, electronics, apparel, furniture, food, toys and jewellery. The company also produces consumer electronics—notably, Amazon Kindle e-book readers, Fire tablets, Fire TV and Fire Phone—and is the world's largest provider of cloud infrastructure services. Amazon also sells certain low-end products like USB cables under its in-house brand AmazonBasics. Over the years Amazon has also made acquisitions (like IMDb, Zappos.com) and is presently placed well on its way towards creating an online ecosystem.

In the words of CEO Jeff Bezos: “We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or short-term Wall Street reactions”. Amazon’s initial business plan was unusual: the company did not expect a profit for four to five years but their strategy was straightforward- “Relentless focus on customer experience by offering customers low prices, convenience, and a wide selection of merchandise.” This strategy is what has led Amazon to what it is today, with 2/3rd of the sales coming from returning customers. Low prices, large selection and convenience were brought to customers by harnessing the advantages of the digital space. Amazon began with books. This came with several advantages, like the fact that this market was large and fragmented. Also books were easy to organize, list and search for. Hence Amazon made sure it was appearing in the search results. Also, Amazon offered an unlimited listing of books and soon with the large volume, they was able to negotiate lower prices. Hence the three biggest attributes that built the foundation for Amazon was: Large selection, Convenience and Low prices. Apart from this, as Amazon grew, it kept adding more and more product categories to its offering. It also bought out smaller companies (like Quidsi) and partnered with others (Toys r us). Also, this has enabled Amazon to offer a large inventory and transition into an online behemoth.

Amazon’s marketing approach was, and remains, put together with just one goal in mind – to make the customer happy. Amazon was a first mover for most of e-commerce’s now ubiquitous best-practices. Most of these solutions came with working backwards keeping customer satisfaction in mind. Free shipping was one of the initial marketing moves. In a presentation to analysts in 2009, Thomas J. Szkutak, Amazon’s Chief Financial Officer, claimed that they lose 600 million dollars a year as foregone shipping revenue. What Amazon essentially did was to divert advertising budget into the free shipping feature with the idea that customer satisfaction leading to word-of-mouth will be a much better marketing strategy. And it was a masterstroke. Amazon made their customers the marketers.