Amazon.com
Amazon began back in 1994, in a converted garage, and in 25 years has become the world's leading e-commerce retailer. At its inception, Amazon sold books and took on more established book stores like Barnes and Noble as a challenger brand. Amazon faced many critics claiming that the brand would quickly be squashed by the current industry leaders. CEO Jeff Bezos, however, maintained that Amazon would focus on meeting the needs of consumers and the growth potential of the internet (Hall, 2019). We know now that Bezos' plan would ultimately be a success.
Amazon has revolutionized e-commerce. The brand is now the gold standard for customer service and personalized recommendations. "Through trial and error, booms and busts, Amazon has evolved a set of guiding principles and cultural practices to keep its growth machine humming. These involve delighting customers, crushing competitors one by one, hollowing out retail sectors, and disrupting industry after industry, from bookselling to online retailing to personal electronics, and from web services and software to healthcare and beyond" (Tucker, 2018). Amazon has essentially become a e-commerce search engine where consumers can find nearly anything they're looking for. Consumers are overwhelmed with options on the site, so to connect customers with the right products, the brand is consumer driven and strives to meet the current and future wants and needs of consumers.
Amazon has become so wildly successful by focusing on the future and innovating to meet anticipated consumer demands. While this model isn't successful 100% of the time, Amazon uses big data to calculate the most likely market trajectory. Understanding that Amazon uses big data to make strategic plans, how exactly does Amazon collect and implement that data?
Using Web Analytics
Amazon collects massive amounts of consumer data. Amazon collects data from all of the users on its site. This includes basic demographic information, estimated income, and purchase history to name a few. "Amazon gathers data on every one of its customers while they use the site. As well as what you buy, the company monitors what you look at, your shipping address (Amazon can take a surprisingly good guess at your income level based on where you live), and whether you leave reviews/feedback.This mountain of data is used to build up a “360-degree view” of you as an individual customer. Amazon can then find other people who fit into the same precise customer niche (employed males between 18 and 45, living in a rented house with an income of over $30,000 who enjoy foreign films, for example) and make recommendations based on what those other customers like" (Marr, n.d.).
Amazon has implemented technology that can make personal recommendations while customers shop and book recommendations through Kindle. The brand has also used consumer data and web analytics to optimize its supply chains and anticipate when and where products are likely to be popular. The brand can, to some degree, predict sales and prepare for them in advance (Wills, 2018). "Amazon’s patented anticipatory shipping model uses big data for predicting the products you are likely to purchase, when you may buy them and where you might need the products. The items are sent to a local distribution center or warehouse so they will be ready for shipping once you order them. Amazon uses predictive analytics to increase its product sales and profit margins while decreasing its delivery time and overall expenses" (Wills, 2018). Using data in this way allows Amazon to ship items to the consumer more quickly and provide a better user experience while also reducing costs and increasing profit margins.
Amazon is able to make business decisions based off of the data and web analytics it collects. Using data to inform its business model Amazon has improved user experiences and disrupted the retail market forcing other brands to play catch up. Amazon's entire business model is based around collecting as much data as possible and then actually acting upon it.
Amazon Web Services
In addition to its consumer offerings, Amazon also offers Amazon Web Services. "Amazon Web Services (AWS) is the market leader in IaaS (Infrastructure-as-a-Service) and PaaS (Platform-as-a-Service) for cloud ecosystems, which can be combined to create a scalable cloud application without worrying about delays related to infrastructure provisioning (compute, storage, and network) and management" (AWS, 2019).
Amazon is essentially offering up its web management and infrastructure for other businesses to implement as well. This infrastructure includes analytics, databases and storage just to mention a few features.
Now not only does Amazon collect data to improve its own sites, it is offering its services and infrastructure to other businesses.
Cues for Other Businesses
Overall, what are the cues from Amazon to other businesses? Other businesses can take from Amazon the overwhelming power of data. Amazon leverages all of its consumers' data to make strategic decisions and optimize its site for an improved user experience. While not every business will have the resources to implement the kind of technology, analytics and machine learning tools that Amazon uses the point remains the same: there is value in data.
References
Amazon began back in 1994, in a converted garage, and in 25 years has become the world's leading e-commerce retailer. At its inception, Amazon sold books and took on more established book stores like Barnes and Noble as a challenger brand. Amazon faced many critics claiming that the brand would quickly be squashed by the current industry leaders. CEO Jeff Bezos, however, maintained that Amazon would focus on meeting the needs of consumers and the growth potential of the internet (Hall, 2019). We know now that Bezos' plan would ultimately be a success.
Amazon has revolutionized e-commerce. The brand is now the gold standard for customer service and personalized recommendations. "Through trial and error, booms and busts, Amazon has evolved a set of guiding principles and cultural practices to keep its growth machine humming. These involve delighting customers, crushing competitors one by one, hollowing out retail sectors, and disrupting industry after industry, from bookselling to online retailing to personal electronics, and from web services and software to healthcare and beyond" (Tucker, 2018). Amazon has essentially become a e-commerce search engine where consumers can find nearly anything they're looking for. Consumers are overwhelmed with options on the site, so to connect customers with the right products, the brand is consumer driven and strives to meet the current and future wants and needs of consumers.
Amazon has become so wildly successful by focusing on the future and innovating to meet anticipated consumer demands. While this model isn't successful 100% of the time, Amazon uses big data to calculate the most likely market trajectory. Understanding that Amazon uses big data to make strategic plans, how exactly does Amazon collect and implement that data?
Using Web Analytics
Amazon collects massive amounts of consumer data. Amazon collects data from all of the users on its site. This includes basic demographic information, estimated income, and purchase history to name a few. "Amazon gathers data on every one of its customers while they use the site. As well as what you buy, the company monitors what you look at, your shipping address (Amazon can take a surprisingly good guess at your income level based on where you live), and whether you leave reviews/feedback.This mountain of data is used to build up a “360-degree view” of you as an individual customer. Amazon can then find other people who fit into the same precise customer niche (employed males between 18 and 45, living in a rented house with an income of over $30,000 who enjoy foreign films, for example) and make recommendations based on what those other customers like" (Marr, n.d.).
Amazon has implemented technology that can make personal recommendations while customers shop and book recommendations through Kindle. The brand has also used consumer data and web analytics to optimize its supply chains and anticipate when and where products are likely to be popular. The brand can, to some degree, predict sales and prepare for them in advance (Wills, 2018). "Amazon’s patented anticipatory shipping model uses big data for predicting the products you are likely to purchase, when you may buy them and where you might need the products. The items are sent to a local distribution center or warehouse so they will be ready for shipping once you order them. Amazon uses predictive analytics to increase its product sales and profit margins while decreasing its delivery time and overall expenses" (Wills, 2018). Using data in this way allows Amazon to ship items to the consumer more quickly and provide a better user experience while also reducing costs and increasing profit margins.
Amazon is able to make business decisions based off of the data and web analytics it collects. Using data to inform its business model Amazon has improved user experiences and disrupted the retail market forcing other brands to play catch up. Amazon's entire business model is based around collecting as much data as possible and then actually acting upon it.
Amazon Web Services
In addition to its consumer offerings, Amazon also offers Amazon Web Services. "Amazon Web Services (AWS) is the market leader in IaaS (Infrastructure-as-a-Service) and PaaS (Platform-as-a-Service) for cloud ecosystems, which can be combined to create a scalable cloud application without worrying about delays related to infrastructure provisioning (compute, storage, and network) and management" (AWS, 2019).
Amazon is essentially offering up its web management and infrastructure for other businesses to implement as well. This infrastructure includes analytics, databases and storage just to mention a few features.
Figure 1.
Now not only does Amazon collect data to improve its own sites, it is offering its services and infrastructure to other businesses.
Cues for Other Businesses
Overall, what are the cues from Amazon to other businesses? Other businesses can take from Amazon the overwhelming power of data. Amazon leverages all of its consumers' data to make strategic decisions and optimize its site for an improved user experience. While not every business will have the resources to implement the kind of technology, analytics and machine learning tools that Amazon uses the point remains the same: there is value in data.
References
AWS 101: Overview of Amazon Web Services. (2019,
May 21). Retrieved from https://www.sumologic.com/insight/aws/.
Figure 1. Retrieved from https://www.guru99.com/what-is-aws.html
Hall, M. (2019,
October 17). Amazon.com. Retrieved from
https://www.britannica.com/topic/Amazoncom.
Marr, B. (n.d.).
Amazon: Using Big Data to understand customers. Retrieved from
https://www.bernardmarr.com/default.asp?contentID=712.
Tucker, R. B.
(2018, November 1). How Does Amazon Do It? Five Critical Factors That Explain
Amazon's Incredible Success. Retrieved from https://www.forbes.com/sites/robertbtucker/2018/11/01/how-does-amazon-do-it-five-critical-factors-that-explain-amazons-incredible-success/#32dab60241b9.
What is AWS?
Amazon Cloud Services Tutorial. (n.d.). Retrieved from
https://www.guru99.com/what-is-aws.html.
Wills, J. (2018,
October 20). 7 Ways Amazon Uses Big Data to Stalk You. Retrieved from
https://www.investopedia.com/articles/insights/090716/7-ways-amazon-uses-big-data-stalk-you-amzn.asp.
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