This case study analysis serves the purpose to evaluate Amazon’s unique approach to service marketing which creates satisfied and loyal customer base and to estimate its international expansion. Amazon is one of the most customer oriented companies in the world, which is essential for e-tailor business as the competitor is only one click away. With its main focus on customer experience, it offers wide variety of merchandise, lowest price and convenience. This three ‘customer experience pillars’ supported by a foundation of innovation build the center of Amazon main strategy (Figure 1).
Innovation
Figure1: Amazon’s Customer Experience Pillars [5] Let’s have a closer look at each item: ...view middle of the document...
A core reason for providing such a wide variety of customer services is a constant innovation based on customer satisfaction metrics. Each site is closely monitored with standard service monitoring system, recording every move a visitor makes and afterwards analyzed. This information served as a background for such innovations as a customized recommendation service, "Customers Who bought X" feature, automated optimization system etc. This focus on innovation and on customer itself has translated to excellence in service with the highest American Customer Satisfaction Index over a decade.[7] The importance of customer satisfaction cannot be underestimated. Especially in e-business it has a big influence on success of Web site. Following main benefits from high customer satisfaction come forth: 1) Positive word-of-mouth generated from existing customers often translates into new customers. 2) Satisfied customers often purchase products more frequently and are less likely to be lost to competitors than are dissatisfied customers.
3) Companies with high customer satisfaction scores proved to be more secured against competitive pressure, especially price competition. Customers are willing to pay more and remain with the company that meets their requirements than take a risk by switching to a lower-price service offering 4) Customer oriented companies generally provide better working environments and attract the best and most talented employees. [3] High customer satisfaction ultimately leads to achieving customer loyalty and repeat purchases, which is a key to Amazon’s success. Customer needs are highly differentiated among different countries and have a big influence on international expansion strategy. As many other companies, Amazon is using a hybrid strategy in its globalization approach. Interesting to mention that it follows a typical US online retailer expansion path. Of the top 50 online retailers in the US, some 19 operate dedicated transactional Web sites for the UK, 14 operate sites for Germany, 12 for France and 14 in Italy [4]. Overall Amazon has expanded its geographic footprint into the world’s major e-commerce markets (Figure 2)
Market entry 1995 USA UK Germany France Japan Canada China Italy 1998 2000 2002 2004 2010
Figure 2: Combined waterfall-sprinkler strategy
The first entry was to a so called “old Europe countries”, which included Germany and UK in 1998. In this case a sprinkler strategy was applicable due to such similarities, as existing internet platforms for book selling, as well as being the largest book markets in Europe. The common strategy was to start with book selling and then expand by adding new product lines. This led to a significant reduction of shipping costs and time for thousands of U.S. titles, thanks to a large supply of the most popular U.S. titles ready for immediate shipment from the U.K. and Germany. After a successful conquering of both markets, Amazon launched a French and Japanese website...
