Karen Pelletier Intro to E-Marketing

Company Overview Amazon.com was originally created to sell books online from the founder, Jeff Bezo’s Seattle garage Amazon.com was originally created to sell books online from the founder, Jeff Bezo’s Seattle garage First book sold was “Fluid Concepts & Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought” First book sold was “Fluid Concepts & Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought” Originally named Cadabra.com Originally named Cadabra.com Originally B2C Originally B2C Mission is to be Earth's most customer-centric company where people can find and discover anything they want to buy online Mission is to be Earth's most customer-centric company where people can find and discover anything they want to buy online

Ever since the creation in 1994 it has been continuing to grow and evolve as a world-class e-commerce platform and appealing to many if not all market segments Ever since the creation in 1994 it has been continuing to grow and evolve as a world-class e-commerce platform and appealing to many if not all market segments Amazons focus is to keep the customers loyal by giving them more of what they want; low prices, a large selection, and convenience Amazons focus is to keep the customers loyal by giving them more of what they want; low prices, a large selection, and convenience During first 30 days of business the company showed potential, Amazon.com fulfilled orders for customers in 50 states and 45 countries During first 30 days of business the company showed potential, Amazon.com fulfilled orders for customers in 50 states and 45 countries

Change In Plan It was at the surprise of many that Amazon now wants to run businesses; at least the technical and logistical parts of it It was at the surprise of many that Amazon now wants to run businesses; at least the technical and logistical parts of it Amazon is now expanding their strategies from B2C to include B2B Amazon is now expanding their strategies from B2C to include B2B The plan is using what they know and making it available to others for a cost The plan is using what they know and making it available to others for a cost Amazon will be offering their massive computer system and physical-distribution network that powers its retail business for businesses Amazon will be offering their massive computer system and physical-distribution network that powers its retail business for businesses

Win-Win Situation Amazon charges the merchants a commission on their sales and in some cases, rent for selling on its site. Amazon charges the merchants a commission on their sales and in some cases, rent for selling on its site. It is a win-win situation for both Amazon and the merchant It is a win-win situation for both Amazon and the merchant Amazon gets a cut of the sales Amazon gets a cut of the sales Helps expand Amazon into different businesses without making a large investment in inventory Helps expand Amazon into different businesses without making a large investment in inventory The retailers receive access to Amazon’s important assets which include their customer traffic, the large investment in technology, and the Internet know-how. The retailers receive access to Amazon’s important assets which include their customer traffic, the large investment in technology, and the Internet know-how. Over the last couple years sales related to third-party merchants, or retailers selling through Amazon’s site has become an increasing part of Amazon’s business Over the last couple years sales related to third-party merchants, or retailers selling through Amazon’s site has become an increasing part of Amazon’s business

Challenges Amazon has been described as being like the United Nations since it has increasing pressure to manage relationships with hundreds of retailers Amazon has been described as being like the United Nations since it has increasing pressure to manage relationships with hundreds of retailers Each of these retailers has their own demands and it is a challenge to have to maintain relationships with each Each of these retailers has their own demands and it is a challenge to have to maintain relationships with each Amazon’s reputation is placed at risk when other companies are using their reputable name and website to sell their products Amazon’s reputation is placed at risk when other companies are using their reputable name and website to sell their products Amazon is the first one to be blamed if a customer is unhappy since a product was bought on their website Amazon is the first one to be blamed if a customer is unhappy since a product was bought on their website Nike In. and Callaway Golf Co. asked retailers not to sell their products on Amazon.com; they did not want their products being sold on Amazon to cheapen their brand Nike In. and Callaway Golf Co. asked retailers not to sell their products on Amazon.com; they did not want their products being sold on Amazon to cheapen their brand The efforts of these brands have failed and their products remained on Amazon.com The efforts of these brands have failed and their products remained on Amazon.com

Problems & Solutions Some customers find it confusing to tell if they are buying a product directly from Amazon or another retailer that sells through the web site Some customers find it confusing to tell if they are buying a product directly from Amazon or another retailer that sells through the web site Amazon is trying to clear up the confusion by differentiating their product pages so shoppers are able to tell the difference Amazon is trying to clear up the confusion by differentiating their product pages so shoppers are able to tell the difference Amazon is implementing a policy that if there are any problems the customer and merchant has to make an effort to resolve their dispute. If the customers are unhappy 30 days after their purchase they can submit a claim to Amazon that includes an explanation of the situation. After the claim is received Amazon decides whether it will issue a refund and if there is a refund it reverses the electronic payment which is made to the seller for the product. Amazon is implementing a policy that if there are any problems the customer and merchant has to make an effort to resolve their dispute. If the customers are unhappy 30 days after their purchase they can submit a claim to Amazon that includes an explanation of the situation. After the claim is received Amazon decides whether it will issue a refund and if there is a refund it reverses the electronic payment which is made to the seller for the product. Amazon also monitors complaints and return rates among sellers and they will ban sellers with unusually high rates Amazon also monitors complaints and return rates among sellers and they will ban sellers with unusually high rates

Competition Amazon is referred to as being an online mall while having a very different online approach than other online retail partnerships. Few can compare to Amazon’s incoporation of products of other big retailers into their own websites but many are trying to compete numerous competition mostly in their music, video, book and entertainment departments numerous competition mostly in their music, video, book and entertainment departments Barnes & Noble, Columbia House, and eBay Barnes & Noble, Columbia House, and eBay Both eBay and Yahoo are two internet marketplaces for independent sellers Both eBay and Yahoo are two internet marketplaces for independent sellers Although eBay and Amazon are structurally very different, eBay is a large competitior of Amazon. EBay is a well known for their online auction web site which has been used by many globally Although eBay and Amazon are structurally very different, eBay is a large competitior of Amazon. EBay is a well known for their online auction web site which has been used by many globally

Competition Cont. Yahoo Inc., AOL Time Warner Inc.’s America Online and other web portals operate shopping sites that send visitors to online retailer’s websites Yahoo Inc., AOL Time Warner Inc.’s America Online and other web portals operate shopping sites that send visitors to online retailer’s websites Amazon faces numerous competition from online retailers who are growing rapidly and appearing in various forms Amazon faces numerous competition from online retailers who are growing rapidly and appearing in various forms Traditional retailers are focusing more energy and investments on their online presence Traditional retailers are focusing more energy and investments on their online presence Google is adding more shopping-type services such as Froogle Google is adding more shopping-type services such as Froogle Buy.com guarantees that all of the books available on its web site will be at least 10% below Amazon’s prices Buy.com guarantees that all of the books available on its web site will be at least 10% below Amazon’s prices

Response to Competition July 2006 Amazon reported a steep drop in its quarterly profit while its sales continued to rise. The results of the drop in profit and increased expenses are due to the action Amazon is taking to retain customers while competition is increasing. Amazon is offering free shipping and lower prices to stay competitive. Amazon also invested in new technology, hired technology employees, and the promotions it offers Amazon Prime offers free shipping. Although it is an expensive investment, it will benefit the company in the long run because it will lead to more sales. Amazon Prime offers free shipping. Although it is an expensive investment, it will benefit the company in the long run because it will lead to more sales. Amazon has had little choice but to continue investing and growing due to the competitive online climate Amazon has had little choice but to continue investing and growing due to the competitive online climate

Marketing Strategy Amazon’s current marketing strategy combines serving their customers as well as serving businesses. Amazon uses various tools and services to serve both customers and businesses. Amazon’s current marketing strategy combines serving their customers as well as serving businesses. Amazon uses various tools and services to serve both customers and businesses. Amazon relies on third parties to offer their products to get the largest and most diverse inventory to serve customer needs. By allowing third parties to offer their products on Amazon’s web site is also meeting the needs of third parties by allowing them to take advantage of their e-commerce platform, and their important assets which include their customer traffic, the large investment in technology, and the Internet know-how. Amazon relies on third parties to offer their products to get the largest and most diverse inventory to serve customer needs. By allowing third parties to offer their products on Amazon’s web site is also meeting the needs of third parties by allowing them to take advantage of their e-commerce platform, and their important assets which include their customer traffic, the large investment in technology, and the Internet know-how.