E- commerce in the past decade has emerged as a growing platform for selling and buying of products and services on the Internet. During times of financial crunch throughout the world recently there was an immense effect on the growth and success of the electronic alternatives like Amazon (Solomon et al, 4th ed, Consumer Behavior: A European Perspective pp. 73-74). Therefore, in this report I consider the leader in e-retailing Amazon. com, Inc. (Amazon. com).
So if for example Amazon’s 66 million customers lived in the same country, then it would have been the 19th largest country in the world in terms of population, with more citizens than every European country except Germany (http://www. wikinvest. com/stock/Amazon. com_(AMZN)). The company started its expansion in the 90s to offer the “Earth’s Biggest Selection” of books, apparel, electronics products and home improvement products through its online website, www. amazon. com to consumers, sellers as well as developers (http://www. referenceforbusiness. com/history2/35/Amazon-com-Inc. tml). Amazon also operates through various international websites. The company’s main operation is in North America. Its current headquarters are in Seattle, Washington and employs approximately 24 000 people (Datamonitor). Amazon. com was one of the pioneers in manufacturing and selling of device specialized at reading e-books and documents also known as the Kindle e-reader. The company also provides developers with access to technology infrastructure that can be helpful for the establishment of business. This is done through the Amazon Web Services.
In addition, the Company has co-branded credit card agreements and utilizes variety of promotional strategies such as e-advertising, that consistently brings revenue back. The North America and International organization of operations are the main structure for the online retailer . According to Thomson Reuters in February 2010, Amazon acquired Touchco, a touch screen technology company (REUTERS Amazon. com report October 2010). From a report by Reuters it can clearly be noted that for the six months ended June 2010, Amazon. com, Inc. ‘s revenues increased to with about 40% to $13. billion. Net income also increased with approximately 60% to $505 million. North American division sales are shown to increase in revenue due cut in prices for the customers and higher income from International division. Expenses in other operations and net show decrease due to net income of the company. Further, the report reflects increase in interest income and decrease in interest expenses (REUTERS). If we look back in the financial year ended December 2009, an increase was also seen of 27. 9% over 2008. The operating profit of Amazon. com Inc. as $1,129 million in 2009, which is an increase of 34. 1% over 2008.
The net profit was $902 million in 2009, an approximate increase of 40% over 2008 (Datamonitor Amazon. com, Inc. , Company Profile, 9 Apr 2010). What all this data imply is that however difficult it was for most companies due to the financial downfall, the Fortune 500 company had seen a steady increase in profits (income). We can further look three years back when the recession had just started and see not much of problem for the e-retailer. This is portrayed by the financial data available on Wikiinvest. om which lucidly explains the increase in net income to $476 million for the year 2007 compared to $190 million in 2006 (http://www. wikinvest. com/stock/Amazon. com_(AMZN)). Following from this, we can conclude that Amazon. com is not only immune to the recession but also grows in times when other companies and countries struggle to stay on the surface. Amazon seems to compete with various physical and electronic enterprises. One of these are the physical-world retailers, catalog retailers and retailers who have strong brand awareness, sales volume and also sell through the internet (e. g. Staples in the US). Other online e-commerce sites such as the auctioneer EBay, which are greatly diversified in the products and services they provide. There are also number of indirect competitors, which include media companies, web portals and web search engines (e. g. Google acts as reference point and partners with book sellers). In the following sections I am going to discuss various theoretical frameworks related to consumer behavior and how they apply to e-retailers such as Amazon. com, and how this frameworks help the company be so successful.
Consumer Behavior Theories
The Buying Process in Amazon.
We are all consumer s and when faced with a desire to satisfy a need or want we go through various stages of decision-making process whether consciously or unconsciously. And these decision stages have started evolving even before we learned to speak. Therefore we have reached to a point where we make systematic ways in which we choose among substitutes. However this does not mean we all act the same in the buying decision-making process (http://www. web-books. com/eLibrary/NC/B0/B64/018MB64. html). The chance we are at one of the stages of decision-making at any given moment in time are obvious.
By understanding the flow of decision making through the stages customers engage in while at Amazon’s web page could explain why it has been so determinedly on top of the economic avalanche in the past few years. Due to the variance of the number of stages different customers go through, we will concentrate only on the most basic and common stages customers go through. The stages include a need recognition stage which is the realization of need a person feels it has to be satisfied. If it is put in simple words, a student recognizes the need of textbooks in order to pass its marketing courses. What Amazon. om does for this specific target is to provide section for textbooks where they are separated by topic of interest. After the need has been recognized the student will search for information on the text books, however the student could have previous experience with purchasing books on the internet and so go back to the website that was used before. This is where Amazon scores a point against other retailers as it records your purchase and will send you personalized information on to relative products directly to you and have a profile of your purchases so it is easier for you to navigate through related searches easier.
But if the student has never bought textbooks over the internet might use various information channels. Internet shopping sites such as Amazon. com have become a common source of information about products. Amazon. com also offers product reviews written by consumers. People prefer “independent” sources such as this when they are looking for product information. And after you found the right information it is also available to purchase the product from Amazon. Interestingly, there might be good number of different textbooks that conceptualize on the same topic and so this is when it becomes slightly more complicated for a decision to be made.
So what the student might want to do is to evaluate these choices. Once again Amazon is a step further by as earlier mention giving reviews by other people that have read or purchased the book and share their opinions. Moreover the website allows the university student to get a sneak peak of the contents of each book so it is less time consuming for the customer to evaluate which textbook is suitable for his or her studies. Perception () Attitude (Consumer Trust in Internet Store by Sirkka) Loyalty/Retention/enjoyment (Applying the technology acceptance model… by M. Koufaris)
It has been noted that is of great importance to understand how a e-commerce website such as Amazon. com are being perceived by customers as most of them have different profile in relation to traditional retail shoppers. (N. Donthu, A. Garcia, The Internet shopper, Journal of Advertising Research 39(3), 1999, pp. 52-58. ) from C. Ranganathan, S. Ganapathy (2002). Key dimensions of business-to-consumer web sites. Information and Management. 39. 457-465. The contents of a business-to-consumer website is an important factor that can alter the decision making process of a consumer.
Before a consumers decide to carry out a purchasing behavior for a product, they search for information about it. Such information could be regarding brands, variety, price and quality. However due to the fact that consumers have different information needs, websites can do that through hyperlinks, where consumers can go in to more detailed information about the product. And this is what Amazon. com is doing by providing hyperlinks to book reviews and testimonials. This can further enhance the experience of the consumers during and after purchase decision.
The consumer buying process is divided in various stages, where the information search and evaluation stages are significant preliminary steps. (F. Brassington, S. Pettit, Principles of Marketing, Pitman, London, 1997. / J. F. Engel, R. D. Blackwell, P. W. Miniard, Consumer Behavior, Dryden, Hinsdale, IL, 1990. ) from C. Ranganathan…. And since low cost of information search is of benefit to the e-market place (Y. Bakos, A strategic analysis of electronic market, MIS Quarterly (1991) 295-310. From C…) Amazon. om that uses a navigation tool to ease search for information on specific product is more effective than other web sites in the same area (J. Alba, J. Lynch, B. Weitz, C. Janiszewski, Interactive home shopping: consumer, retailer, and manufacturer incentive to participate in electronic marketplaces, Journal of Marketing, 61(3), 1997, 38-54. from C… ). Caring for the environment Amazon for long time now has been working towards sustainable environment (Edwards et al. 2009).
Since the internet has been considered to be more environmentally friendly platform to shop as the disadvantages of the physical form of a retailer have been avoided (e. . getting to the shop, the powering of the shop etc. ). Therefore what Amazon. com does is it uses the right packaging for every single one of their products by customizing it to the size and shape. This further affects the efficiency, space and transportation costs for the company and consequently for the customer. Moreover the Packaging Feedback Program introduced by Amazon in 2009, gives the customers the chance to provide feedback on the quality of the package of the purchased item and also upload photos of that item on the website.
In this way Amazon. com can use the feedback to improve the wrapping of their products, which directly translates to their every intention to retain and create satisfied customer (http://www. amazon. com/b/? &node=13786321). The community, as for most of the successful companies now days, is also a central focus of Amazon. What they are striving for is to be one of the most consumer-centered enterprises with great consideration not only of the core customers of the company but also the merchants, distributers, developers, artists and authors.
By pleasing all their stakeholders, Amazon successfully maintains its leadership in the e-commerce (http://www. amazon. com/b/? &node=13786321). To further explain the commitment of the e-retailer, Amazon have involved their employees in various charitable initiatives (e. g. donating toys to local children’s charities and or help build houses for people in need in the US). All those seem to portray the free will of the employees by identifying them self’s with the company to give to the community, and thus send message to all of its stakeholders (http://www. mazon.com/b/ref=amb_link_84598971_4? ie=UTF8&node=13786411&pf_rd_m=ATVPDKIKX0DER&pf_rd_s=center5&pf_rd_r=15WC4RFGE2VXGY5NMV4N&pf_rd_t=101&pf_rd_p=1274757802&pf_rd_i 13786321).
Amazon’s evolution from Web site to e-commerce partner to development platform is driven by the spirit of innovation that is part of the company’s DNA. The world’s brightest technology minds come to Amazon. com to research and develop technology that improves the lives of shoppers and sellers