Amazon's Secret to Online Dominance

There are actually many that work in concert, but two stand out.

According to Matt Pace at Compete.com, they are the company's dedication to customer service and its masterful use of consumers’ browsing and purchase data to tailor the site for each visitor. [hat tip to Jeffrey Eisenberg] In fact, I think their site has single-handedly redefined how we'd like to have an online purchasing experience - fast, interesting, and personal.

It's in the many micro-interactions that we have throughout the site that we end up spending time and eventually money. You go onto the page listing a book, find the description, dig into the reviews, and now you can even read the comments to the reviews. Most of the times, you may just stop at the cross references from customers who bought what you are looking for, but it's nice to have the option to keep reading and discovering new material.

Your level of vested interest increases when you become a member of anything - gym, professional association, buying club. At Compete.com, Pace analyzes how the Amazon Prime membership drove  higher traffic and buying patterns during the recent holiday season. He draws a direct correlation between the program and the company's better online performance as compared to other retailers.

The data speaks in support of both. There is correlation between site performance (execution) as tied to customer preference, and repeated purchases as tied to customer experience. In thinking about that, there are three practical ideas you could test in your online environment:

1. Present information on the basis of visitors' navigation pattens - how can you upgrade from looking at the traffic behind the scenes to allowing visitors to see what others have looked at?
2. Provide some form of interaction - how can you upgrade from chatting with you to allowing your customers to talk with each other?
3. Promote the benefits of frequent visits - how can you upgrade from occasional visits to vested interest in becoming a site's 'member'?

You can test these ideas even if you don't have a retail site. Adjust, and repeat for increasingly better results.

I remember reading an article about Jeff Bezos on Fast Company a couple of years back and being impressed by what it said about Amazon.com's founder.

Yes, he is described as the ultimate analytical guy, who will hone in the small improvements that will drive efficiencies and profit. Yet, he is also someone who's always driven by the belief that what's good for the customer will ultimately turn out to be in the company's enlightened self-interest. For this reason Bezos is constantly testing new ideas.

In other words, the company never takes its figurative eye off the ball. Today at Fast Company expert blog we talk about what to do when your company takes its eye off the ball.

Comments

[Steven Woods]

Valeria,
I think that this concept broadens out beyond retail very well. Even in longer sales cycle, considered purchase, B2B environments, creating a great experience is key.

Prospective buyers can get comfortable, learn, experience, and explore. When a buying event comes up in their business, they will have developed a brand affinity and comfort level that will draw them to that potential vendor.

One of my favourite examples of this, Exeros created their MDM University http://www.mdmuniversity.com/ that educates on all sorts of master data management topics. Prospective buyers might educate themselves on related topics for many months before showing purchase interest, but when they do, the brand affinity that has been created is valuable.

[Neil Anuskiewicz]

Customer experience is key. I never have had buyer's remorse from something I have purchased on Amazon. Somehow, the recommendations average out to being correct, and their use of their database is outstanding.

If you purchase, say, historical non-fiction books or lawn furniture they will not give you recommendations for romance novels.

Another thing that I like about Amazon is that they are not limited by shelf space to the most popular of anything. You can usually find that obscure novel, even if you are actually buying it (through Amazon) from a small bookstore in Harrisburg, PA.

[chris faron]

As a buyer of Amazon I find their recommendations make me stay longer than I otherwise would of. Also I find that new features are implemented slowly without too many surprises.

[Valeria Maltoni]

@Steven - I've been enjoying your insights - thank you! What a great example for B2B as well. Especially when the sales cycle is long in a more complex sale, and the competition is there, educating, helping out, illuminating issues one would have not thought about are all excellent ways to build a relationship and make a good (brand) impression.

@Neil - I tend to buy in bulk to give books to others as thank yous, etc. Once I had received an order at work, but because the company was closed, the package did not make it to my desk. I wrote to Amazon and explained the situation and they replaced the order. Chris Anderson used Amazon in his book "The Long Tail" as an example of an aggregator and filter of content/items. I buy my Italian music there. Still prefer to have the package to just digital.

@Chris - isn't it interesting how we start reading something and we keep discovering new material. And you're right, they allow visitors to get used to new features.

[Neil Anuskiewicz]

Your idea of bulk books as thank you gifts is fantastic and your example of excellent service is great. I really like Amazon.

BTW, I am curious, when you say Italian music do you mean opera? :-)

[B7]

Yes, constant incremental improvement is definitely one of Amazon's success strategies. And, they do not do too much. The look and feel is the same as when it went online back in the day.

The main driver of Amazon's growth is its recommendation engine. This technology allows you to find the items that you are most likely to enjoy, out of tens of millions of items available!

There are several discussions of Amazon success strategies here:
http://www.onlineinvestingai.com/blog/tag/amazon.com/

[Nathan Ketsdever]

Great article. So true + on point. I checked out what Read/Write Web has to say on the issue of "content recommendation":

http://www.readwriteweb.com/archives/recommender_systems.php

McManus divides content recommendation up into 4 parts. It seems a tug of war between content based + personalization based solutions. I think having options in both directions is good. Because "intent" or "location" based changes in searches can skew personalization. For instance, if you were searching on vacation vs. at home. I'm sure algos can be written to take these into account.

In my short research, I also noticed My Blog Log started a personalization service sometime last year (I believe the story is also on Read/Write Web)

[Nathan Ketsdever]

Valeria,

I would be remiss not to mention the folks at Hyve Up who seem to cover the recommendation market pretty well, including posts which examine music recommenders like Pandora (not included in this post):

http://hyveup.tv/2008/10/introducing-aggregate-knowledge.html

I think this a real place where social media and usability can really mutually enforce each other and add tons of value to both users and corporations.

Take care,
Nathan

[Valeria Maltoni]

I love it when people get into it with a post and share their own learnings. Thank you so much for the links and for building on the ideas, Nathan. Bookmarking right now!