Thursday 15 August, 2013

How Amazon Became the King of Ecommerce and What Small Ecommerce Sites Can Learn from It

Amazon is the ecommerce store that started off small selling books and grew to become the world’s number one online retailer. Today, the name Amazon is synonymous with ecommerce. Even the least internet and tech savvy among us has used it at one time or another to buy something.

So, why did Amazon rise to the top, surprising everyone including its CEO Jeff Bezos? Let’s take a look at what makes it so popular and see what we as ecommerce entrepreneurs can learn from it.

Looking at the Long-Term

When the bubble burst and all the dot coms became digital debris, Amazon actually saw an increase in its profits. Even Bezos was surprised when that happened. He said that at the time, it was not what he’d intended. He planned to spend a few more years working on the site before it would be profitable.

What this means is that Amazon wasn’t a speedy cash-in like so much of the internet business world. Bezos had a long-term plan for the company and knew that it would be profitable eventually if he set the groundwork right.

The Customer Is Always Right

The number one reason for Amazon’s success is how it treats its customers. It coddles its 150 million plus customers and bends over backward to solve their problems. It did this in its early days, when much of ecommerce was still the Wild West and online shopping was even more dangerous.

Amazon has always been happy to trade short-term profits for long-term loyalty and it worked. If you complain to the company and get a refund or replacement, you’re instantly converted to a loyal follower. Ecommerce stores that treat their customers like gold succeed.

Efficient Product Development

Amazon has a streamlined approach to product development that, like everything else the company does, is totally customer centered. It starts with the customer and his/her needs and then develops accordingly, rather than creating a technology and then trying to find a use for it.

It also keeps its development teams small and gives them total authority over one task or objective. This modular approach is what allowed the company to scale so easily when it began to grow.

Know Your Customers

Amazon has an incredible metrics system that takes into account a number of different algorithms, 80 percent of which are directly related to customer objectives. It knows what you want before you even reach the cash register. This is also why the site recommends things you’d like – and they’re usually spot-on.

Order Fulfillment

Finally, Amazon has 80 huge and efficient warehouses all over the world. The order fulfillment is done by hand with the help of handheld scanners. There is on automation and since warehouses are located locally, shipping costs are kept down.

Even the smallest ecommerce store has a lot to learn from the king of online retailers, Amazon. Focus on the customer, create a business that can scale, and keep your eyes on the long-term.

Bob Steele

Bob Steele is an entrepreneur, software developer, marketer, and author living in the Denver metropolitan area. He’s an avid outdoorsman who loves skiing, hiking, fishing, boating, and just plain having fun. His interests include games, space, technology, physics, cooking (well eating actually), economics, business, internationalism, and team sports. With over thirty years of professional consulting experience, Bob has been exposed to many diverse business models and has gained a sensible approach to life. Bob’s company, WaveCentric is focused on commerce, marketing, and entertainment related products.

More Posts - Website

Comments Off on How Amazon Became the King of Ecommerce and What Small Ecommerce Sites Can Learn from It   Posted In: Commerce   |    Written By: Bob Steele