Amazon Case Study

Amazon 1

(Q1) Books and CD's have been so successful in regards to online buying because there needs to be no interaction with the product to know what the customer is getting when the product arrives at their home. McGee states "There are many specific answers when it comes to this question but probably the best answer is people buy products online that they don't need to smell, touch or examine. They want products that they are fairly familiar with or products that don't carry an element of surprise upon receiving them. In other words, they have a pretty good idea of what it is they are getting.

For example, Amazon.com does very well because there's no more mystery to buying a book online than if they were in the book store purchasing the book. You can't feel or touch a book online but the internet might even be better because it offers reviews and ratings that you may not get in a bookstore. Also, shipping is generally fast and easy. This concept also holds true for music, videos and CD's. They all sell very well online" (McGee, 2010).

Another reason for customers purchasing their CD's and books online more frequently than other items is availability. As stated in our text " There's no way to have a physical bookstore with 1.1 million titles available"(Peter & Olson, 2008). It goes on further to advise " Our catalog, if you were to print it, would be the size of seven New York City phone books"(Peter & Olson, 2008).

Amazon 2

(Q2) Consumers will shop online as they do in a retail store. If the consumer normally will look for sale prices before purchasing a product in the store the consumer is in when they initially see the item, they will perform the same when looking for an item online. Fenske states, "The Internet has significantly increased the bargaining power of consumers. Many online shopping search engines allow consumers to find most retailers that sell a specific product, compare product prices, and review detailed store ratings. With competition just a click away, online retailers have little control over where consumers would shop. Offering the lowest price alone does not always guarantee that consumers will come and buy at your site. Other non-price attributes, such as service quality and a merchant's brand recognition, also play important roles in helping online retailers to build competitive advantages "(Didier G R Soopramanien, 2007).

(Q3) Amazon has many great aspects of their customer service that has ensured and contributes to their success. As noted in the New York Times today by Joe Nocera, Jeff Bezos has an unceasing attention to customer service and prides himself on the "the customer experience" provided at Amazon...

"Just a few months ago, for instance, he appeared on Charlie Rose's talk show to tout Amazon's new e-book device, the Kindle. Toward the end of the program, Mr. Rose asked the chief executive an open-ended question about how he spent his time, and Mr. Bezos responded with a soliloquy about his "obsession" with customers.

Amazon 3

"They care about having the lowest prices, having vast selection, so they have choice, and getting the products to customers fast," he said. "And the reason I'm so obsessed with these drivers of the customer experience is that I believe that the success we have had over the past 12 years has been driven exclusively by that customer experience. We are not great advertisers. So we start with customers, figure out what they want, and figure out how to get it to them"(Mthree, 2010). Amazon alerts their customers when an items price increases or decreases. If the item is in the consumers "shopping cart" the consumer is notified of the price fluctuation. Amazon also displays on the products page, the discounted price from Amazon, in conjunction with "More buying choices" that allows the customer to window shop from other Amazon sellers via Amazon's payment system. Amazon provides their customers with "real" customer reviews