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Accelerate revenue and growth using your data like Amazon.com did
Category: Blogs | Monday, October 18th, 2010
Sources of Competitive Advantage
Maintaining and improving operational efficiencies is the key to sustainable competitive advantage of Amazon.com. The ability to offer shopping convenience, ease of purchase, speed, decision-enabling information, a wide selection, discounted pricing, and reliability of order fulfillment are all tied directly to the company’s logistical competencies.
By purchasing large volumes of products directly from publishers the company offers a wide selection to customers and receives great discounts from suppliers.
Amazon.com aims to ship 95% of products on the day they are ordered. Direct model enables Amazon.com to shorten shipping times. The company invested also heavily in warehousing and material handling systems to achieve multifold improvement in throughput.
Building Brand Equity
Amazon.com has steadily increased its spending on advertising and promotion to make its brand stronger and build brand equity. By 2003, the brand of Amazon.com was worth US$ 22 billion. “A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well,” says Jeff Bezos, the founder of Amazon.com.
Value Added Information Services
Amazon.com works hard to achieve value-added differentiation through customer-focused information services. Amazon.com’s site retains customer preferences and provides automated customization for users.
Jeff Bezos has a vivid vision for how this technology will be used: “Personalization is like retreating to the time when you have small-town merchants who got to know you, and they could help get the right products. The right products can improve your life, and the wrong products detract from it. Before the era of mass merchandizing, it used to be that most things were personalized. The purpose of … customization is … you get the economies of mass merchandising and the individuality of 100-years-ago merchandising.”
Amazon.com’s market success depends on its ability to maintain and grow its customer base by knowing and serving its customers better than its competitors and providing a higher level of value-added differentiation in customer service. Due to high level of customer satisfaction, repeat customers account for approximately 60% of Amazon.com’s orders.
