Million Dollar Web Presence: Leverage The Web to Build Your Brand and Transform Your Business
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Join over , savvy marketers using Smart Insights to develop their marketing skills. Get ahead in your career with more than expert and actionable Guides, Templates and Quick Win courses. I aim to keep this case study up-to-date for readers of the books and Smart Insights readers who may be interested. In it we look at Amazon's background, revenue model and sources for the latest business results. Amazon has come a long way since it launched in Amazon performs exceptionally efficiently measured against revenue per visitor, which is one of the key measures for any commercial website, whether it's a media site, search engine, social network or a transactional retailer or offers travel or financial services.
Of course profit per user would be quite different due to the significantly lower costs of other. Note: SEC is the Securities and Exchange Commission SEC which is a government agency for which companies have to submit an open evaluation of their business models and marketplace conditions. Today, with business users of its Amazon Web Service representing a new type of customer, Amazon says:.
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Each of these groups has different needs, and we always work to meet those needs, by innovating new solutions to make things easier, faster, better, and more cost-effective. There are many ways to center a business. You can be competitor focused, you can be product focused, you can be technology focused, you can be business model focused, and there are more.
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But in my view, obsessive customer fo-cus is by far the most important. The annual filings to give a great summary of eBay business and revenue models. Amazon explain:. We will continue to learn from both our successes and our failures". The latest example of innovation in their business model is the launch of Amazon Go, a new kind of store with no checkout required. More recently,there have been a range of business model innovations focussed on hardware and new services: Kindle e-readers, Fire Tablet, smartphone and TV, Echo using the Alexa Artificial Intelligence voice-assistant , grocery delivery, Amazon Fashion and expansion to the business-oriented Amazon Web Services AWS.
Amazon Prime, an annual membership program that includes unlimited free shipping and then involved diversification to a media service with access to unlimited instant streaming of thousands of movies and TV episodes. AWS is less well-known outside of tech people, but Amazon is still pursuing this cloud service aggressively.
The vision is still to Consider how these core marketing messages summarising the Amazon online value proposition are communicated both on-site and through offline communications. Many dot-coms failed because they succeeded in achieving awareness, but not loyalty. Amazon achieved both. In their SEC filing they stress how they seek to achieve this. They say:. Our community of online customers also creates feature-rich content, including product reviews, online recommendation lists, wish lists, buying guides, and wedding and baby registries.
In practice, as is the practice for many online retailers, the lowest prices are for the most popular products, with less popular products commanding higher prices and a greater margin for Amazon. Free shipping offers are used to encourage increase in basket size since customers have to spend over a certain amount to receive free shipping.
The level at which free-shipping is set is critical to profitability and Amazon has changed it as competition has changed and for promotional reasons. Amazon communicate the fulfillment promise in several ways including presentation of latest inventory availability information, delivery date estimates, and options for expedited delivery, as well as delivery shipment notifications and update facilities. This focus on customer has translated to excellence in service with the American Customer Satisfaction Index giving Amazon.
Round notes that Amazon focuses on customer satisfaction metrics. Each site is closely monitored with standard service availability monitoring for example, using Keynote or Mercury Interactive site availability and download speed. According to founder and CEO, Jeff Bezos, technology is very important to supporting this focus on the customer. In their Annual Report Amazon, he said:. We use high-performance transactions systems, complex rendering and object caching, workflow and queuing systems, business intelligence and data analytics, machine learning and pattern recognition, neural networks and probabilistic decision making, and a wide variety of other techniques.
Technology infuses all of our teams, all of our processes, our decision-making, and our approach to innovation in each of our businesses. The quote shows how applying new technologies is used to give Amazon a competitive edge. Amazon reported in that Amazon. For every paperback books Amazon has sold, the Company sold Kindle books.
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Some of the more recent applications of AI at Amazon are highly visible, for example, the Amazon Echo assistant and technology in the Amazon Go convenience store that uses machine vision to eliminate checkout lines. Machine learning drives our algorithms for demand forecasting, product search ranking, product and deals recommendations, merchandising placements, fraud detection, translations, and much more. Though less visible, much of the impact of machine learning will be of this type — quietly but meaningfully improving core operations".
Amazon defines what it refers to as three consumer sets customers, seller customers and developer customers. There are over 76 million customer accounts, but just 1. Members are also encouraged to join a loyalty programme, Amazon Prime, a fee-based membership program in which members receive free or discounted express shipping, in the United States, the United Kingdom, Germany and Japan.
It views its main current and potential competitors as:. For services offered to business and individual sellers, additional competitive factors include the quality of our services and tools, their ability to generate sales for third parties we serve, and the speed of performance for our services.
Amazon auctions known as zShops were launched in March , in large part as a response to the success of eBay. They were promoted heavily from the home page, category pages and individual product pages. Despite this, a year after its launch it had only achieved a 3.
The strategy to offer such an auction facility was initially driven by the need to compete with eBay, but now the strategy has been adjusted such that Amazon describe it as part of the approach of low-pricing. Although it might be thought that Amazon would lose out on enabling its merchants to sell products at lower prices, in fact Amazon makes greater margin on these sales since merchants are charged a commission on each sale and it is the merchant who bears the cost of storing inventory and fulfilling the product to customers.
As with eBay, Amazon is just facilitating the exchange of bits and bytes between buyers and sellers without the need to distribute physical products. You may have noticed that unlike some retailers, Amazon displays relevant Google text ads and banner ads from brands. This seems in conflict with the strategy of focus on experience since it leads to a more cluttered store. Amazon does not reveal much about its marketing approach in its annual reports, but there seems to be a focus on online marketing channels.
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These other initiatives may include outdoor and TV advertising, but they are not mentioned specifically. In this statement they also highlight the importance of customer loyalty tools. A company like Amazon could and did record every move a visitor made, every last click and twitch of the mouse.
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As the data piled up into virtual heaps, hummocks and mountain ranges, you could draw all sorts of conclusions about their chimerical nature, the consumer. In this sense, Amazon was not merely a store, but an immense repository of facts. James Marcus then goes on to give a fascinating insight into a breakout group discussion of how Amazon could better use measures to improve its performance. Often people starting businesses go years without even paying themselves salaries.
And getting rich is no guarantee. Many people cite other justifications. Personal freedom is one. Owning your own business means controlling your own time. It means being your own boss. Financial freedom, too, inspires entrepreneurs. You might eventually become a millionaire. You might not. What you really want, presumably, is a better life, and entrepreneurship can give you a certain level of control over your finances that can make that possible.
An hour of your time generates X number of dollars, but your money-making efforts are ultimately flowing upstream to your boss.