STUDI KASUS: AMAZON.

COM

OPENING CASE AMAZON.COM—E-COMMERCE INNOVATOR

The Problem In the early 1990s, entrepreneur Jeff Bezos saw an opportunity rather than a business
problem. He decided that books were the most logical product for selling online, because they were
the same product, regardless of how or where they were purchased. In July 1995, Bezos started
Amazon.com (amazon.com) and began selling books online. Over the years, the company has
continually improved, expanded, changed its business model, and expanded its product selection,
improving customer experience and adding new products and services and business alliances. The
company also recognized the importance of order fulfillment and warehousing early on. It has
invested billions of dollars building physical warehouses and distribution centers designed for
shipping packages to millions of customers. In 2012, the company started same-day delivery from its
new distribution center and in 2016 piloted the use of drones for this purpose. After 2000, the
company added information technology products and services, notably Kindle e-reader family, Fire
TV, Echo, and Web Services (cloud technologies). The company maintains a listing of its new and
innovative products and services at amazon.com/p/feature/ tv76jef8gz289rm.

In 2015, Amazon continued to heavily invest in Prime Video to actively compete with Netflix and
Hulu (Trefis 2015). Amazon.com’s challenge was, and still is, to profitably sell many consumer
products and services online. The Solution: Innovations and Reaching Out to Customers To meet the
goals of increasing sales and market penetration, Amazon must focus on making products easier to
buy for its existing customers, creating new customers and innovating new products and services for
all customers to purchase. All of these activities require different types of innovation, a concept that
is held in high regard at the company. For example, see this interesting talk from Jeff Bezos on the
importance of innovation and entrepreneurship in technology companies (youtu.be/_KEKkVrzeU8).
Making Buying Easier The company’s initial innovations were all based on the idea of making
products easy to search, select, purchase, and ship.

Amazon was a leader in the development of easy-to-use website searching, as well as accurate
keyword searches for products. Key features of Amazon.com are easy browsing, searching, and
ordering; useful product information, reviews, recommendations, and other personalization
techniques; a very large selection of products and the ability to compare prices; low prices; secure
payment system; efficient order fulfillment; and an easy product return arrangement. From this
foundation, the company added one-click ordering (amazon.com/p/feature/7smbfan9c84m7rd),
which made it easy for existing customers to quickly order products without the hassle of going
through multiple checkout screens. The company also created Amazon Prime
(amazon.com/p/feature/zh395rdnqt6b8ea), a service that allows free 2-day shipping on many
products for a small annual fee. A unique example of a product and service offered is Amazon Dash
Buttons (amazon.com/ddb/learn-more), a Wi-Fi-connected device that reorders products with the
press of a button. Each Dash Button is paired with a unique product and allows for easy repeat
ordering of often-used home products. Amazon.com is also recognized as an online leader in
providing personalized services and CRM. When a customer revisits Amazon.com, a cookie file
identifies the user and says, for example, “Welcome back, Sarah Shopper,” and then proceeds to
recommend new books on topics similar to past purchases. You may receive recommendations for
cheaper products. For example, a customer who buys printer toner for $30 a unit regularly might be
directed to a vendor that sells four units for a total of $65. Amazon also provides detailed product
descriptions and ratings to help consumers make informed purchase decisions. The site has an
efficient search engine and other shopping aids. Amazon.com has a state-of-the-art warehousing
system that gives the company an advantage over the competition. These and other innovations are
designed to streamline the shopping experience for customers and reduce any barriers that would
stop them from purchasing products. This strategy is designed to help increase total sales for
existing customers.

Creating New Customers Other innovations are meant to help drive additional market share in the
form of new customers. In addition to all the features that make shopping easy for existing
customers, Amazon has attempted to entice customers that would have otherwise shopped at other
retailers to shop with them. These features are primarily focused on increasing the diversity and
types of products available at the site. In addition to selling products sourced by Amazon, the
company works with affiliates that can 3 Retailing in Electronic Commerce: Products and Services 81
provide a more diverse array of products in more niche areas; this can include items such as unique
home decor, clothing, and jewelry. Amazon has also embraced the idea of supporting new and
unique products through Amazon Launchpad (amazon.com/p/feature/kzwyhyjs7ore8d6), a service
that allows customers to purchase goods and services from start-up companies, many of which can
be found nowhere else. New Products and Services The company’s final set of innovations is the
creation of new goods and services that are either wholly unique or Amazonbranded products that
compete with others. Some unique goods include the Amazon Echo
(amazon.com/p/feature/ofoyqn7wjy2p39a), a voice recognition device that is also linked to multiple
applications on the Web.

Other offerings are meant to both compete with other brands in the space and drive the utilization
of Amazon products. One example is the Kindle Fire tablet line that both competes with other
tablets, for example, Apple and Samsung, and also drives the use of Amazon products such as e-
books and digital video. Another example is the Fire TV (amazon.com/p/feature/7n5tkm4ugzff7bo),
a Wi-Fi-based streaming device that easily allows users to access both subscription and paid content
through Amazon Prime.

The Results Since he started Amazon, Jeff Bezos has received numerous recognitions including the
1999 Time magazine “Person of the Year” and the “Businessperson of The Year” by Forbes in 2012
(seecontent.time.com/time/specials/packages/0,28757,2023311,00.htmland
fortune.com/2012/11/16/business-person-of-the-year.fortune/2.html).

In January 2002, Amazon.com declared its first profit—for the 2001 fourth quarter. Since then, the
company has remained profitable despite its huge investments in distribution centers and other
initiatives. Amazon.com reported that despite adverse US and global economic conditions, its annual
revenue for 2015 had increased 721% from 2007, and in the third quarter of 2016, the company
posted a $252 million profit. The company can boast of having over 230,000 employees, 304 million
accounts, and 186 million unique monthly visitors; 81% of US Internet users have an account, and
the Kindle has 74% market share for e-book readers (see statista.com/topics/846/amazon). But
Amazon and Jeff Bezos cannot afford to rest on their laurels. There is major competition in the
marketplace, and everyone has their eyes set on Amazon. Many new and existing companies want
to expand their market share in online retailing, and one of the ways that they can do this is by
competing with Amazon. One example is Walmart (walmart.com). While Walmart does not have the
same online presence that Amazon does, they may be able to leverage their brick-and-mortar
locations to their advantage. One way they might do this is through ship-to-store services or local
customer support (Petro 2016). Amazon is also at a disadvantage because of its wide product
breadth. This means that niche retailers may be able to target particular markets and possibly serve
them better than Amazon could.

Another example is Newegg (see newegg.com). This site specializes in computers, computer
hardware, and technology. Because they serve a specific niche market, they may be able to provide
more specific services and support than a large, multifaceted company like Amazon. Amazon’s
financial performance has also started to dip. While still very profitable, the company missed its
earnings estimate in the third quarter of 2016. Instead of returning a profit of $0.78 a share, the
company only returns to profit of $0.52 a share. While the company is still very financially sound,
this was enough to decrease the stock price (Fiegerman 2016). Even with these challenges, Amazon
is poised to continue its growth into the future. By continuing to leverage its strong customer base,
unique technologies, and spirit of invention, Jeff Bezos’ company has proved to be a true innovator
in e-commerce. Sources: Based on Fiegerman (2016), Trefis (2015), and amazon.com (accessed
January 2017).

PERTANYAAN :

1. Menurut anda, apa yang membuat Amazon.com menjadi salah satu perusahaan online
terkemuka di dunia?
2. Apa yang membedakan amazon.com dengan perusahaan e tailing lainnya?
3. Menurut anda, akankah Amazon.com dapat bertahan di tengah padatnya persaingan bisnis
online sekarang ini? Jelaskan.