The strategic Importance of

data in delivering superior

customer services, achieving
loyalty and supporting an
Effective marketing strategy.

A strategic Move

Nkwatoh Nenda Fidele

AMAZON

Amazon.com, Inc. (NASDAQ: AMZN), is an online retailer (though, of late, it has started
opening some brick-and-mortar stores). It is the largest e-commerce company by revenue in
the United States, which is the one of the earliest began to the e - commerce company. It
was opened on the World Wide Web in July 1995 and today offers Earth's Biggest Selection.
It also included three subsidiaries, they are Alexa Internet、a9.com and Internet Movie
Database，IMDB. Amazon.com and other sellers offer millions of unique new, refurbished
and used items (Amazon, 2011). Amazon bookstore (amazon.com) is one of the biggest
bookstores in the world. It provides 310 million books directory, more than the global any
bookstore of storing books to 15 times more above. To run the special business needs
neither large buildings nor great numbers of staff. Even though there are only 1600
employees in Amazon bookstore. The sales reach 37.5 million dollars per capita, which are 3
times those of Bames & Noble, the largest bookstore in the world, which has 27.000
employees (Hamiton, 2008).The commercial activities of Amazon bookstore focus on
marketing and the after service. That is, they aim at attracting customers, while building
good image for the company.

General, Amazon competes in three segments including; media, electronics, and other
merchandise. Its main competitors according to segments comprises of :

Media : eBay; Google with its Play Store ; Netflix; Time Warner Cable; Apple with iTunes; and

Merchandise : Amazon faces competition in its merchandise and electronics segment from
firms such as ; Walmart , Best Buy, Family Dollar, Staples, Target,. Online, competition in the
electronics and general merchandise segment comes from ; Alibaba Group , LightInTheBox
Holding Co., Overstock.com.

Amazon also competes with many of the world's largest companies including PC
Connection , CDW , Insight Enterprises , Oracle, salesforce.com just to name a few.

To become a customer- oriented company is the mission of Amazon.com (He & Zhang,
2003).The biggest online bookstore — Amazon began to profit in 2002. This is a piece of
good news to global electronic commerce development. However, in the following years,
electronic commerce suffered from loss. A survey conducted by the Temkin Group revealed
that Amazon has been at the highest rates of customer loyalty in America. Three factors
were taken into account in the chart of customer loyalty
, including hesitation to switch to other company, readiness to buy more goods from the
company and readiness to recommend it to others. The survey showed that customer loyalty
had fallen to a new low with just 17% companies getting to the 'very strong' mark for loyalty.
Thanks to its ability to attract repeat customers, Amazon ranks high on the list of customer
loyalty at the rate of 68%. The customers choose Amazon again because of its ability to get
them the right results. Amazon's performance in customer loyalty stands out when most
online companies r eceived significantly lower ratings (Grant, 2011).
INTRODUCTION
 1. Critical Analysis of the Importance of Measuring Service Quality at Amazon

Amazon’s unsurpassed success has been achieved primarily by being customer focused and
constantly striving to provide the highest customer satisfaction. When it first launched,
Amazon’s had a clear and ambitious mission. To offer: Earth’s biggest selection and to be
Earth’s most customer-centric company and 2 decades later, Amazon are still customer-
centric. Amazon has moved on to hold the same high standards with all sellers. Over the
years, Amazon has established a set of metrics by which it evaluates the level of service
quality delivered to consumers. The metrics serve a quality control for Amazon and all its
sellers and contribute to overall seller rating. The culture of measurement and metrics is so
enshrined in the Amazon philosophy of doing business that seller who consistently performs
on it could have their accounts suspended or terminated.
The 5 metrics by which Amazon measure service quality include; Order Defect Rate (ODR),
Cancellation Rate, Late Dispatch Rate, Policy Violations and Contact Response Time. We will
critically evaluate of each of this metric to see how they compare to the SERVQUAL model of
Parasuraman, Zeithalm and Berry and to understand in what way they add value to the
customer and Amazon.

i) Order Defect Rate (ODR)

Whenever customers make a purchase on Amazon, they are invited to leave their feedback
as it relates to the seller. Any order that incurs a negative feedback, an A-to-Z Guarantee
claim or a credit card chargeback is considered as having a defect. Amazon has established a
<1% target of failure for the ODR metric. It is calculated by dividing the number of defect
orders by the total number of order for a specified time period.

The ODR is the determining measure of a seller’s ability to deliver good customer experience
and ensures that customers will always receive first class services. The A-Z guarantee is
Amazon pledge to customers that all products purchases from Amazon and third party
sellers will be delivered in the time frame and conditions set by the seller. The ODR checks
that sellers are advertising the conditions of the inventory accurately and that they can
handle customer queries before become more serious.

ii) Cancellation Rate

The cancellation rate is measured by the number of orders cancelled by the seller prior to dispatch
confirmation, divided by the total number of orders for a specific time period. The target set for this
measure is < 2.5% and it is a measure of inventory management. Seller is required to know exactly
how many units of a product they have in stock and how many are listed on the Amazon website.

This measure is the reason why Amazon is considered reliable; which is according to the SERVQUAL
model is a major aspect considered buy customers when evaluating the service quality of an
organization.

iii) Late Dispatch Rate

Amazon states that “A late order is one whose shipment confirmation is overdue by 3 or
more days.” The number of orders dispatched 3 or more days late, divided by the total
number of orders for a specific time period measure the Late Dispatch Rate. Amazon has a
<5% target for this metric.

This measure will fall into the measure of responsiveness when considering the SERVQUAL
model and determines if sellers are prompt to deliver customer services.

iv) Policy Violations

Policy Violations deals with any communications on the Performance Notifications page needs to be
read and respected. A policy violation could be due to the item itself or the way it is listed. A green
tick indicates no unread notices; a yellow exclamation mark signals unread policy or performance
notices; and a red X indicates critical unread notices that must be addressed immediately to avoid
further action against your account.

v) Contact Response Time

The Contact Response Time measures the percentage of customer-initiated messages that
you have responded to in less than 24 hours. The demand to abide by this target extends
even to weekends; therefore sellers must check their accounts regularly. Amazon notifies
sellers of any customer messages with an email so there are no excuses for being
unresponsive.

Considering the SERVQUAL model, we can see that Amazon has successfully closed all the
gaps as shown below.

Amazon understands customers need

From the first purchase at Amazon’s online store, Amazon will attempt to understand the
customers’ expectations. From the customer’s product selection, Amazon establishes a
consumer profile and attempts to offer alternative goods and services that may delight the
consumer.

Amazon has clearly defines Customer Standards

Amazon has set standards for how quickly customers are informed when a product is
unavailable (immediately), how quickly customers are notified whether an out of print book
can be located (three weeks), how long customers are able to return items (30 days) and
whether they pay return shipping costs. These standards have been drawn for several
activities at Amazon from delivery to communication to service recovery.
Amazon Performs According to the Service Standards

Amazon delivers. It is not uncommon for orders to arrive ahead of the promised dates; in
excellent conditions because of careful shipping practice.

Amazon communicates clearly

Easily understood and user friendly is what Amazons website is. Every communication is
clear. For example, Amazon clearly communicates what can be returned and what cannot. It
even describes how to repack items and when refunds are given.
2. The role of CRM in achieving Customer Loyalty at Amazon.

Amazon is world famous for its excellent customer relationship management. It has been
ranked as the most trusted online shopping site in America, while Amazon Prime has been
ranked number #1 among all loyalty programs. The term 'the Amazon Effect,' has been
coined to describe how the company has successfully managed relations with millions of
customers worldwide without ever meeting them face-to-face. From simple and easy-to-use
interface, stored personal and card details, and one-click ordering; the entire process of
shopping at Amazon is very smooth and easy. Investigation into how Amazon manages to
achieve such a feat reveals that the clever and innovative use of customer data is at the
heart of such a prowess. Though its world class CRM strategy, Amazon is capable of making
its customers continue to feel valued while allowing it to keep coming up with new and
innovative ways of retaining and attracting customers.

Customer Relationship Management (CRM) is the power behind all of these innovative
features offered by Amazon. It runs its own CRM software, in-house, which enables it to
customize to its own exact requirements and needs. Their software enable Amazon to
capture customer data, such as past purchases and location, and use that to instantly modify
and customize a user's overall on-site experience.

Personal data storage

One way in which creating an Amazon account benefits the customer is ease of purchase.
With an account all payment, personal, and address details can be stored- allowing for quick
and easy future purchases.

Recommendations

Amazon was the first to introduce the recommended products feature. Whenever customers
are logged into their account, Amazon will recommend products they may be interested in
based on past buying habits. Round (2004) describes how Amazon relies on acquiring and
then crunching a massive amount of data. What makes Amazon product recommendations
to stand-out is that they are not generic but each email is relevant because it is driven by my
interests and activities. Recently, Amazon introduced the 'customers who bought this item
also bought' feature. These recommendations are perfect for boosting sales without the
customer feeling pressured into buying. They also have a system codenamed ‘Goldbox’
which is a cross-sell and awareness raising tool. Items are discounted to encourage
purchases in new categories!

Customer support

Amazon’s returns process is dealt with entirely online through a customer’s account. If there
is an issue that does require a customer to speak with a customer service assistant over the
phone, they will have access to the customer’s account and order details, meaning that any
issues can be dealt with quickly and efficiently.

Customers feel appreciated and important due to the frequent notificationof relevant
information they receive from Amazon. Amazon knows this well. As soon as the customer
buys, Amazon allows brands to send messages to complete orders and handle customer
service inquiries. And generally, loyalty is impossible to achieve without this feeling of value.

Data Collection

Amazon encourages all users to create accounts to make it easier for them to make future
purchases. These accounts also give Amazon a targeted marketing method as customers can
be emailed with offers and promotions based on their past purchases.

. But it demands deep analysis of the behavior of those third party buyers. Amazon can help
brands to know the best third party sellers in specific product categories. Brands can also
drill down to look at customer reviews to better understand which product features
customers appreciate. However, Amazon usually doesn’t provide much data to its sellers and
brands. That’s why the Receipt Data Aggregator is so helpful. Brands just have to include it
into their loyalty programs to get information about third-party purchases at their fingertips.

Amazon Helps In Deciding a Product’s Pricing

The irony with customer loyalty is that it makes people less sensitive towards cost, but
product prices play a significant role in making them loyal in the first place. For many people,
cost is a deciding factor that facilitates their entry into the economic spectrum of the brand.
The research done by Romaniuk and Dawes has shown that one of the vital product
attributes that affects customer loyalty and repurchase behavior is products’ price.
Customers are sensitive to a product’s price and often make the buying decision based
on that.

It’s then obvious that setting the correct product price has a lot to do with your brand loyalty
prospects… and it’s often difficult to decide what the right price is for your products in a new
market, as factors such as taxes, duties, currency exchange, cost of shipping, returns, and
customer support need to be evaluated. But with the help of Fulfillment by Amazon (FBA),
brands can easily and accurately calculate the fulfillment fees, including storage, picking,
packing, shipping, and returns. By adding these costs to product cost and comparing
estimated price to similar products in the target market, brands can gauge the possibility of
repurchase. It can be very helpful when trying to build brand loyalty through Amazon.

The Amazon Dash Button Helps Guarantee Repeat Purchases

The Amazon Dash Button is a key-fob-sized device, which can be placed anywhere in a user’s
home. It sticks near the user’s washing machine, dishwasher or even toilet and through Wi-Fi
and the Amazon Mobile App, reorders the user’s product of choice at the touch of the
button. In short, it is helping customers in replenishing those items on which they are
running low. Take a note that loyalty’s actual finalization is in generating more and more
reorders. Dash Buttons act as a catalyst in achieving this kind of brand loyalty through
Amazon. Moreover, they are super easy use. According to Amazon, orders placed via Dash
Buttons have grown fivefold over the past year. That’s precisely why brands including Cheez-
It, Coca-Cola, and Philips Sonicare have been signing to launch their own Dash Buttons.
Looking at the staggering results, Amazon now offers over 200 different Dash Buttons.

It’s then aptly clear that signing on to Dash button is a win-win scenario for businesses
looking to build brand loyalty through Amazon. This is because if observed closely, this Dash
button proves that loyalty can in effect be sold. Remember that customers have to buy Dash
buttons at a cost of about $5 per button. Dash bonds customers to products by making
people habitual repurchasers; thereby boosting the share of wallet. If executed well by
understanding customers’ needs, it can hold a key in inculcating brand loyalty through
Amazon.

However, a study conducted in 2011 by research company Brand Keys revealed that while
Apple was doing a great job in keeping customers loyal, online retailer Amazon beat them
and stole first place. In 2014, Amazon continues to impress with a 93% level of customer
engagement vis a vis expectations.

But there are challenges if promotions are too successful if inventory isn’t available.

The main challenges though are the massive data size arising from millions of customers,
millions of items and recommendations made in real time.

3) MARKETING STRATEGY IMPLEMENTATION AND HOW COMMUNICATING EFFECTIVELY

WITH EMPLOYEES CONTRIBUTE TO IT.

a) Internal Factors that determine the Success or Failure of A Marketing Team Ability to
Implement its Marketing Strategy

Strategy implementation is the process by which the business or marketing strategy form is
put into action. It considers the design and management of organizational systems to obtain
the optimum configuration of people, structure, resources and decision processes to achieve
organizational objectives.

Strategy implementation is an iterative process of implementing strategies, policies,

programs and action plans that allows a firm to utilize its resources to take advantage of
opportunities in the competitive environment (Harrington, 2006).

Pierce and Robinson note that "to effectively direct and control the use of the firm's
resources, mechanisms such as organizational structure, information systems, leadership
styles, assignment of key managers, budgeting, rewards, and control systems are essential
strategy implementation ingredients".

terative, dynamic and a complex process, which comprises of series of decisions and
activities by the management and the administration those affected by many interrelated
internal and external factors, to turn strategic plans into reality in order to achieve the
objectives of the firm.
Formulation of an effective strategy, making the strategy work and implementing it
throughout the company is a difficult task (Hrebiniak, 2006). Many factors potentially affect
the process by which strategic plans are turned into organizational action. Unlike strategy
formulation, strategy implementation is more of a craft, rather than a science. After
successful formulation of the business strategy, difficulties usually arise during the
subsequent implementation process

Corporate objectives

As with all the functional areas, corporate objectives are the most important internal
influence. A marketing objective should not conflict with a corporate objective

Finance

The financial position of the business (profitability, cash flow, liquidity) directly affects the
scope and scale or marketing activities.

Human resources

For a services business in particular, the quality and capacity of the workforce is a key factor
in affecting marketing objectives. A motivated and well-trained workforce can deliver
market-leading customer service and productivity to create a competitive marketing
advantage

Communication

Many researchers have emphasized the importance of adequate communication channels

for the process of strategy implementation. Alexander (1985) notes that communication is
mentioned more frequently than any other single item that promotes successful strategy
implementation. Communication includes explaining what new responsibilities, tasks, and
duties need to be performed by the employees in order to implement the strategy. It
answers the why behind the changed job activities, and explains the reasons why the new
strategic decision was made. Rapert and Wren (1998) find that organizations where
employees have easy access to management through open and supportive communication
channels outperform those with more restrictive communication environments.

Effective communication is a fundamental requirement for any effective strategy

implementation. Organizational communication plays an important role in training,
knowledge acquisition and applied learning during the process of implementation. In fact,
communication is vital in every aspect of strategy implementation, as it relates in to the
organizational context, organizing processes and the implementation objectives.

Organisational Structure
The type of strategy adopted could differ in many ways and have different requirements
regarding an adequate organizational structure. Factors relating to the organizational
structure are the second most important implementation barrier according to Heide &
Grønhaug & Johannessen's (2002) study. Drazin and Howard (1984) stipulate that a proper
alignment of the strategy with the organisational structure is an important pre-requisite for
successful implementation of a corporate business strategy (Noble, 1999b). They note that
changes in the competitive environment require adjustments to the organizational structure.
If an organisation's realignment strategies are lacking, it may exhibit poor performance and
be at a major competitive disadvantage.

Relationships among different departments and different strategy levels

Many studies in the concerned field have stressed that the institutional relationships among
different units/departments and different strategy levels play a major role in the outcome of
strategy implementation (Walker & Ruekert, 1987; Gupta, 1987; Slater & Olson, 2001;
Chimhanzi, 2004; Chimhanzi & Morgan, 2005). Walker & Ruekert note that marketing
policies, inter-functional structures and processes, corporate-business unit relationships and
processes are a major influence on business strategy implementation. In addition, allocation
of resources, functional competencies, inter-functional conflict, decision-making
participation and influence, and coordination also have different effects on the
implementation of various kinds of business strategies. Implementation effectiveness is
negatively affected by conflict and positively affected by interpersonal communication and
not written. Such interdepartmental dynamics are affected by senior management support
informal integration and joint reward systems. Other relationships that have received
attention to a lesser extent include finance, manufacturing, engineering, quality, marketing,
accounting, and sales.

Operational issues

Operations has a key role to play in enabling the business to compete on cost (efficiency /
productivity) and quality. Effective capacity management also plays a part in determining
whether a business can achieve its revenue objectives

Business culture

E.g. a marketing-orientated business is constantly looking for ways to meet customer needs.
A production-orientated culture may result in management setting unrealistic or irrelevant
marketing objectives.
b)Usefulnes of various communication tools in motivating Amazon’s employees to
improve successful planning implaementations.

4. Critical Analysis of the three C’s framework in building an Effective marketing strategy at
Amazon

From its eary days when its website had a rudimentary search engine, Amazon has emerge
into an online behemoth. In those beginnings, many were concern about using their credit
card details over the website, while book orders took a few days to arrive ; even weeks for
scarce title. Today, more than 20 years down the road, Amazon has morphed into an
insurmountable giant of online retailing. Many are its co retain its leading position. At the
helm of the companny is Jeff Bezos who founded the company, but even more important is
the implementation of a unique strtategy that has seen Amazon grow and thrive in a fast
paced industry. Its seems to have been able to build a unique and sustainable competitive
advantage.
Amazon started small by targeting a niche market that was unserved and from there grew
over time. Building on delivering great custmer services and low prices, Amazon grew rapidly
to what it is today. However, an investigation of Amazon’s marketing strategy reveals that tit
has invested huge resources into ensuring that its continues to innovate in veach aspect of
the three C’s framework – Customers, Competition and Company. We will critical examine
how it has develop each of these elements of the framework.

a) Customers

Jeff Bezos is famously know for his obsession with satisfying customer expectations. The
customer truly reigns in the Amazon universe as exemplied by the empty ascribed to her in
the Amazon board room. A lot of time has gone into establishing Amazon as the
undisputable leader in service quality in the online business. Amazon has continued to listen
and lear from customer feedback and today has tapped into the power of the vast amounts
of data at its disposal to continue to raise the bar in delivering great customer experiences.
Some of the iconic ways in which Amazon has won customer trust and loyalty over the years
are discussed below.

i) Customer Personalisation

For a huge business, Amazon has been exceptional in still offering customer personalised
services. Unheard of at the time, the introductoion of the recommendation based on past
purchases revolutionised online buying. Building on computer algorithm, customers were
proposed books and product they otherwise would not have found. With time , its has
developed even more complex algorithm which dig into the tons of data it holds to deliver
truly unique and personalised customer experiences.

ii) Low Prices

One of the pillars of Amazon’s success has has been the guarantee of low prices for
products its sells. Its positions as a price leader is one that it guards ferocciously and always
considering new avenues to make prices lower. Amazon is decides not only the price of its
products but is also involved in pricing decisions of all its third part sellers. Choosing to profit
from sales volume rather price premiums, Amazon has build a sort of online Walmart or
Tesco.

iii) Easy To Return Policy

Beginning from its early days, Amazon made it effortless and quick to return a product. The
Return & Replacements menu was easy to find, including easy to read and understand
return & refunds terms. Anwers to FAQ were provided ensuring that even first time users
could navigate the website.

iv) User Reviews

Also, Amazon solved consumers problem when it intriduced the user review feature to its
website. This was a major solution to the problem of customers having inadequate
information about products the sought to buy. The user review feature offers reviews from
past users and has been instrumental in helping new buyers in the decision to buy a product.
Many custmers credit this feature for helping them make their purchase on the company’s
website.

b) Competition

In its 2017 SEC filing Amazon describes the environment for our products and services as
‘intensely competitive’. It views its main current and potential competitors as:

 1) online, offline, and multichannel retailers, publishers, vendors, distributors,

manufacturers, and producers of the products we offer and sell to consumers and
businesses;
 (2) publishers, producers, and distributors of physical, digital, and interactive media
of all types and all distribution channels;
 (3) web search engines, comparison shopping websites, social networks, web portals,
and other online and app-based means of discovering, using, or acquiring goods and
services, either directly or in collaboration with other retailers;
 (4) companies that provide e-commerce services, including website development,
advertising, fulfillment, customer service, and payment processing;
 (5) companies that provide fulfillment and logistics services for themselves or for
third parties, whether online or offline;
 (6) companies that provide information technology services or products, including
on- premises or cloud-based infrastructure and other services; and
  (7) companies that design, manufacture, market, or sell consumer electronics,
telecommunication, and electronic devices.

Amazon has grown very fast in very few years. The brand’s growth is build on several several
important strengths. It has successful leveraged its high level of technology, brand image
and lcustomer base as important strengths to provide it with sustainable competitive
advantage. Continued investmest in improvements has seen the brand foraging into making
its own products. The success of its Kindle and Echo are also an important source of
competitive advantage. Five factors constitute Amazon competitive edge and are examined
below.

i) Competitive Pricing

A key advantage driving its Marketplace program and multiple supplier options is
aggressively lower pricing. Amazon has always placed growth and “customer value” over
short-term profits. It’s also helped by economies of scale and investments in infrastructure
and logistics that have helped it offer, not just two-day delivery capabilities, but one-hour
delivery on an important subset of 25,000 items in 30 cities with Prime Now. It’s highly
profitable $10 Billion AWS business could also help it subsidize growth into attractive but
lower margin areas like on-line grocery.

ii) Broader Product Assortments Via A Marketplace

For the last 15 years, Amazon has positioned itself as a market-place. To quote Jeff Bezos’
annual 2015 shareholder letter, “Today, close to 50 percent of units sold on Amazon are sold
by third-party sellers. Marketplace is great for consumers because it adds unique selection,
and it’s great for sellers – there are over 70,000 entrepreneurs with sales of more than
$100,000 a year selling on Amazon.”

This puts traditional brick-and-mortar retailers at a huge disadvantage versus Amazon. In

covering the toy category Profitero wrote, “Even when Amazon curates its massive
assortment to a more manageable list of products for its holiday promotions, other retailers
have difficulty matching the breadth of Amazon’s listings.” Here’s how category leaders
fared as a percentage of Amazon’s Holiday Toy List: Toys “R” Us: 69 percent, Jet.com: 63
percent. Wal-Mart and Target at 59 percent and 57 percent, respectively.”

Simply put, if you’re offering consumers a more limited selection of toys because of your
limited supplier on-boarding and product data management capabilities – you will end up
with lower sales too.

iii) Supply And Distribution Chain:

Amazon also has one of the largest supply and distribution channels. Several million throd
party sellers sell from its website and items are shipped to several nations through an
international distribution network. It has opened several fulfilment centres worldwide and
this large fulfilment network aids the shipment of items bought by customers. Moreover, it
is opening new ones in the fast growing Asian markets. A well managed distribution and
supplier network is major source of competitive advantage and serves as the backbone of a
business.

iv) Financial strength:

The revenue of Amazon has continued to grow from 2014 to 2016. From 88.9 Billion dollars
in 2014, it has grown to 135.9 billion dollars in 2016. Financial strength becomes a major
advantage due to several reasons. It allows the brand to make investments in several areas
including technology and HR and grow faster. Apart from that financial strength also helps
with introduction of new products and grow new sales and distribution channels. Amazon
also makes Kindle E-readers, Fire tablets, Fire televisions, Echo as well as produces media
content.

v) Technology:

Technology is another critical strength in the world of e-retail that has helped Amazon
manage a higher degree of customer convenience. The brand continuously invests in
modern and digital technology to up the level of customer experience. Technologies like AI
have helped it better serve its customers. It has also patented several technologies. In this
era digital technology is one of the most important requirements for growth of a brand.
Without investing in technology, it is impossible to give your customers the best experience
and service.  Its ‘Amazon Web Services’ serves developers and businesses of various sizes.
Moreover, Amazon has remained engaged in the practical application of machine learning
for quite some years. From the use of Prime autonomous air delivery drones to the use of
machine vision at the Amazon go convenience store for eliminating checkout lines and Alexa
its cloud based AI assistant, the brand is quite innovative in terms of use of technology for
improved customer convenience.

vi) Brand Image

Brand image is a crucial factor and a critical strength that helps brands grow their influence
and find a leadership status in the industry. It is also a critical strength in terms of acquiring
new customers as well as retaining the old ones. Amazon is a brand built on trust and it is
the most important reason the brand grew so fast. Even now when it says millions of
products to millions of buyers worldwide it ensures that it sells only good quality products.
To maintain its customers’ trust, the brand has also established a review system where the
customers can review and comment upon a product and seller. Another important strength
of the brand is its extraordinary customer service in which regard it is hailed as one of the
best. It continually focused on remaining customer centric and in this regard Jeff Bezos is
considered not any less obsessed than Steve Jobs himself. Several stories are famous in the
media with regard to Jeff Bezos and Amazon’s extraordinary focus on customer service.
These things have helped continuously strengthen its brand image and grow its influence
worldwide. Today, it is the number one brand in e-retail and the number one challenger for
established retail brands like Walmart.
c) COMPANY

Amazon’s management team has embraced Bezos’ emphasis on the customer experience,
and
this focus has allowed the company to improve its market share in comparison to
conventional retailers.17 The company pays top executives minimal cash compensation to
encourage enhancement of shareholder value by tying most of their compensation to
ownership in the company.

i) Management

Bezos himself collects a small salary, receives no bonus, and owns 20% of the
company. His salary in 2011 was $81,840, although his total compensation was higher due to
perquisites he receives and “security arrangements at business facilities".20
Bezos has been Chairman of the Board of Amazon since he founded the company in 1994.
He
has also been CEO since May of 1996. Bezos has been the guiding force in Amazon, and he
has led the company based on his three notable ideas regarding the digital interface: it
allows
Amazon to have a limitless stock on hand at all times, it enables Amazon to collect high
margins while providing low prices, and it advances customer care.21 Fortune named Bezos
the #2 businessperson of the year for 2011 based on his engagement and shareholder-
friendly
management style.22
The top management team at Amazon is fairly stable, perhaps a function both of the
company’s success and Bezos’ loyalty to those around him. Thomas J. Szkutak has served as
Senior Vice President and CFO since he joined Amazon in October of 2002, and Michele
Wilson has served as Senior Vice President and General Counsel since July of 2003. The rest
of the top management team assumed their positions in 2006 or 2007. 23 In addition to
Bezos, the board of directors is comprised of eight members (see Exhibit 2).

ii) Human Resources

Amazon has made an effort to hire talented and adaptable employees and has extended its
strategic plan of tying compensation to ownership in the company to its employees.24 This
plan motivates employees to think like owners because they are, in fact, owners in the
company. While Amazon asks its employees to perform at a high level, it also knows that the
relationship
with its employees is very important. Amazon has created programs to enhance employee
satisfaction. The recent launch of the Amazon Career Choice Program occurred in July of
2012.
Amazon will pay “95% of the cost of courses such as aircraft mechanics, computer-aided
design,
and medical laboratory technologies” through this tuition assistance program. Amazon
designed
this program to fund education in high-demand as well as high-paying industries, even if the
skills are not applicable to a career at Amazon. When discussing the tuition assistance
program
offered, Bezos said, “The program is unusual. Unlike traditional tuition reimbursement
programs, we exclusively fund education only in areas that are well-paying and in high
demand
according to sources like the U.S. Bureau of Labor Statistics, and we fund those areas
regardless
of whether those skills are relevant to a career at Amazon.”25
Having a strategy predicated on distribution channel efficiency and customer service,
Amazon
puts enormous emphasis on its human resource department. The company attracts the best
talent
5
and only hires a small fraction of those who apply for employment, given the vast amount of
job
applications received every day. The hiring process is cumbersome. For example, a recent
hire
with significant technical experience first participated in an informal interview at a job fair,
followed by an extensive project given to him by one of Amazon’s senior technology people.
Despite impressing the senior employee, the candidate had two additional three-hour long
phone
interviews, followed by a trip to Seattle for a round of eight interviews lasting seven and a
half
hours.26 Needless to say, Amazon felt he fit the job description, and the recruit knew what
he
needed to do from day one. Although a tough organization to squeeze into, Amazon has
increased its total workforce 59% over the past year putting the total count at approximately
56,200 employees.27

iii) Marketing

The most effective marketing strategies for many companies in this digital age come from
websites and mobile apps. This gives online retailers a distinct edge over their brick-and-
mortar
competitors because many customers go online regardless of the marketing efforts of a
particular
company. For Amazon, marketing success comes from capitalizing on this traffic and
ensuring
the customer feels special and engaged during their visit. Amazon is the eighth most visited
website, so a comprehensive web marketing strategy is paramount.28 The common
denominator
for Amazon’s marketing theme is effectiveness over design.29 Its web strategy incorporates
seven elements: continuous website improvement, partnerships and web-services,
streamlined
ordering, alliance marketing, customer opinion, email marketing, and high customer
service.30
Many people are now using Amazon for product research. Research shows that prior to
making a
purchase, 30% of consumers conducted their research using Amazon, while only 13% utilized
Google to research information prior to a purchase. Of course, many consumers also
complete
their research with a purchase through Amazon.com. In 2011, Amazon accounted for 19% of
ecommerce revenue in the United States. 31

iv) Financial Status

Amazon has enjoyed steady increases in sales, with a 39.6% increase in net sales between
2009
and 2010 and a 40.6% increase in net sales between 2010 and 2011. Kindles and electronic
book
sales contributed to the net sales increase in 2010, although Amazon chooses not to reveal
the
Kindle and Kindle-related content sales.32 While net sales have increased, profit margin has
decreased over the same three-year period. The profit margin decreased from 3.7% in 2009
to
3.4% in 2010 and even further to 1.3% in 2011. Amazon has chosen to strive for market-
share
gains and high sales volume rather than high profit margins.33 Amazon reported a net loss
for
the third quarter of 2012, which is the first time it had reported a loss in over five years.34
For
detailed financial statements, see Exhibit 3.

Grant, C. (Apr, 2011) “Amazon Tops Customer Loyalty Charts in The Us”, wilshirepr- com,
website source from:
Customer Loyalty & Retention Blog [online],
Available at:
http://www.wilshirepr.com/28573756/
amazon_tops_customer_loyalty_charts_in_the_us.php (accessed 18 May 2011)

https://www.annexcloud.com/blog/building-brand-loyalty-through-amazon/

Round, M. (2004) Presentation to E-metrics, London, May 2005. www.emetrics.org.

Marcus, J. (2004) Amazonia. Five years at the epicentre of the dot-com juggernaut, The New
Press, New York, NY.

https://www.forbes.com/sites/georgeanders/2012/04/04/inside-amazon/#11081c576199

Round (2004) 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. Interestingly it also monitors
per minute site revenue upper/lower bounds – Round describes an alarm system rather like
a power plant where if revenue on a site falls below $10,000 per minute, alarms go off!
There are also internal performance service-level-agreements for web services where T% of
the time, different pages must return in X seconds.

Round, M. (2004) Presentation to E-metrics, London, May 2005. www.emetrics.org.