Marketing Strategy in Action

[Link]

I
n 1994 Jeff Bezos, a young senior vice president at a Wall Street Another unique feature the company offers readers who have
investment firm, decided to become a part of the Internet revolu- their own Web sites is the opportunity to set up their own specialized
tion. He decided to try to sell books via the World Wide Web. Why bookstores. For example, an expert on investing can list several
books? Because about 1.3 million books were in print at the time. investment strategy books on his or her Web site and then link them
Also, Bezos thought he would be able to provide the customer with from the site directly into the [Link] catalog. The company is
discounted prices, the opportunity to get any book wanted, and con- able to track books that are purchased in this manner and gives the
venience. Bezos initially came up with a list of possible items to sell individual a commission on all sales.
online, including books, music, PC hardware and software, and mag- What else can customers expect when purchasing a book from
azines. After eliminating all but books and music, he realized that only [Link]? Discounts. Roughly 30 percent of the book titles are
250,000 music CDs were available at any one time compared to 1.5 discounted by 10 to 30 percent. The others are sold at list price.
million English book titles (3 million titles if all languages were consid- The company’s strategy of providing customers with a sense
ered). So Bezos decided to go with books and drew up a business of community within its Web site seems to be working. While
plan as he and his wife drove westward in search of their new home. many e-tailers went out of business and many others were barely
He subsequently decided to start his new business in Seattle and surviving, [Link]’s revenues were growing at 20 percent
sold his first book in July 1995. And with that, [Link] began its per year and reached $14.8 billion in 2007. Its operating profit
rapid ascent toward becoming one of the most recognized busi- margin at 5 percent beat most retailers’ and approached
nesses in the world. Walmart’s 6 percent.
[Link] has succeeded while many other fledgling Internet The mammoth bookseller has branched into other areas. You can
companies failed. Bezos, who was named Time magazine’s “Person now purchase CDs, toys, home improvement products, software, vid-
of the Year” and Advertising Age’s “Marketer of the Year,” is the first to eos and DVDs, and small appliances at [Link] as well as other
admit that first-mover advantage was instrumental in the growth of his products. With this push into selling other products, the company
company. He also credits the company’s success to the comprehen- faces increasing competition from traditional retailers and e-com-
sive selection of books available. “There’s no way to have a physical merce startups. Some believe the company risks diluting its brand
bookstore with 1.1 million titles,” he says. “Our catalog, if you were to name by expanding its business to too many lines, too quickly. But
print it, would be the size of seven New York City phone books.” In Bezos begs to differ. He says, “I get asked a lot, ‘Are you trying to be
addition, [Link] is known for its ability to fulfill and deliver, the Walmart of the Web?’ The truth is, we’re not trying to be the Any-
thanks to large investments in nationwide warehouse distribution thing of the Web. We’re genetically pioneers.” The company’s former
centers. UK managing director, Simon Murdoch, adds, “It’s a great name.
If you are worried that your local Barnes & Noble bookstore might ‘Amazon’ is not tied to any product category. The brand is extendible;
be forced out of business any time soon, however, don’t be. Amazon. it stands for delivery.”
com cannot compete when customers want the physical presence of a Time will tell if the company will continue to deliver. For now, Ama-
bookstore. The online book behemoth cannot provide soft, comfortable [Link] is recognized around the world. It is the most frequented
couches, music, and gourmet coffee. Nor does it allow consumers the Web site in America and one of the top few in France, Britain,
opportunity to page through a book before purchasing it, savoring the Germany, and Japan. Jeff Bezos’s vision has certainly become one of
crisp new pages and the creaking of the binding when first opened. the great entrepreneurial success stories.
The company does, however, offer several advantages in the way of
customer-to-customer and customer-to-author interaction. Customers
Discussion Questions
1. Why did books and CDs sell successfully online immediately
can log on to the site, post a review of any book they have read, and
while many other products took some time to sell online?
have it permanently associated with that book’s entry in the online cata-
2. Do you think consumers who buy from [Link] also shop at
log. Also, authors are able to answer a variety of stock interview ques-
other Web sites for books and CDs and buy from the site that
tions, which are then posted on the site associated with all of their
offers the lowest price?
books. Authors can also leave their e-mail addresses so readers may
3. What aspects of customer service have contributed to Amazon.
e-mail their own opinions or comments. Bezos believes that his is the
com’s success?
world’s most “customer-centric” company.

488

pet04764_ch19_461-[Link] 488 11/16/09 6:42:46 PM

4. What are the differences in the purchasing experience between 5. What problems arose when [Link] expanded its offerings
buying a book at [Link] and at a Barnes & Noble brick- to products other than books?
and-mortar store?

Sources: [Link], October 30, 2008; Elizabeth M. Gillespie, “Amazon Has Nothing to Fear but Success,” Wisconsin
State Journal, July 6, 2005, pp. C10+; Fred Vogelstein, “Mighty Amazon,” Fortune, May 26, 2003, pp. 60–74; K. J. Bannan, “Book
Battle,” Adweek, February 28, 2000, pp. 90–94; “Survey: E-Commerce: Amazon’s Amazing Ambition,” The Economist, February 26,
2000, p. S24; B. Rosier, “Amazon Leads Race to Expand Web Services,” Marketing, February 24, 2000, pp. 19–20; D. A. William-
son, “Marketer of the Year: [Link]—Dot-Commerce: World’s Biggest E-tail Brand Writes Book on Marketing Savvy,” Advertis-
ing Age, December 13, 1999, pp. 1, 36–40; K. Brooker, “Amazon vs. Everybody,” Fortune, November 8, 1999, pp. 120–128; M. H.
Martin, “The Next Big Thing: A Bookstore?” Fortune, December 9, 1996, pp. 168–170; K. Southwick, “An Interview: Jeff Bezos,
[Link],” Upside, October 1996, pp. 29–33. [Link] © 2006 [Link], Inc. or its affiliates. All Rights
Reserved. Amazon, [Link] and the [Link] logo are registered trademarks of [Link], Inc. or its affiliates
Microsoft Internet Explorer¯ screen shot reprinted with permission from Microsoft Corporation.

pet04764_ch19_461-[Link] 489 11/16/09 6:42:46 PM