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Amazon: Marketing Tools, Strategy and Customer Service

Describe the marketing tools and strategy by Amazon.com. Include an evaluation of the apparent customer service provided by Amazon.

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Amazon.com, Inc. (NASDAQ: AMZN) is an American electronic commerce company based in Seattle, Washington. It was one of the first major companies to sell goods over the Internet. Amazon also owns Alexa Internet, a9.com, and the Internet Movie Database (IMDb). Amazon assigns a unique identifier, the Amazon Standard Identification Number (ASIN), to each item it sells. (For books, the ASIN is the same as the item's ISBN, if it has one.) Amazon offers access to its catalog via web services, much as Google does to its search engine. In addition, a9.com provides search engine services directly on the Amazon.com site. Launched in 1995, Amazon.com began as an online book-selling company but has now branched off into many other areas, including DVDs, music CDs, computer software, video games, electronics, apparel, furniture, and more.

Business Model

Founded as Cadabra.com by Jeff Bezos in 1994, the early days of the mainstream Internet, the company began as an online bookstore. Bezos saw the potential of the Internet; while the largest brick-and-mortar bookstore might sell upwards of 200,000 titles, an online bookstore could sell many times more. Bezos renamed his company "Amazon" in reference to the world's most voluminous river, the Amazon. Amazon.com began service in July 1995.

The company was originally incorporated in 1994 in the state of Washington and was reincorporated in 1996 in Delaware. Amazon.com had its initial public offering on May 15, 1997, trading on the NASDAQ stock exchange under the symbol AMZN at an IPO price of $18.00 per share (equivalent to $1.50 today due to stock splits).

Amazon's initial business plan was unique, in that the company did not expect to turn a profit for a good four to five years after it was founded. This strategy proved to be a sound one in the wake of the dotcom collapse of 2000. Amazon grew at a steady pace in the late 1990s while other Internet companies appeared out of nowhere and grew at a blindingly fast pace. Amazon's "slow" growth caused a number of its stockholders to complain, saying that the company was not reaching profitability fast enough. When the Internet "bubble" burst and many e-companies began going out of business, Amazon persevered and finally turned its first-ever profit in the fourth quarter of 2002. It totaled a meager $5 million, just 1 cent per share, on revenues of over $1 billion, but it was extremely important symbolically for a company that kept promising profitability but wasn't delivering. It has since remained profitable and maintained revenues of over $1 billion per fiscal quarter. In January 2004 Amazon posted its first full-year net profit (for calendar year 2003). Its profits were $35.3 million on revenues of $5.65 billion. Much of the growth of the company was due to its international division. Recognizing the website's success in popularizing online shopping, Time Magazine named Bezos its 1999 Man of the Year.

Partnerships and locations

Amazon.com operates retail websites not only for the United States, but also for Canada, the United Kingdom, Germany, Austria, France, China and Japan. In addition, the Web sites of Borders.com, Waldenbooks.com, Virginmega.com, Virginmega.co.jp, Waterstones.co.uk, CDNOW.com, and HMV.com now redirect to Amazon's site for the country in question, for which these companies are paid referral fees. Typing ToysRUs.com into one's browser will similarly bring up Amazon.com's Toys & Games tab. Amazon.com also operates retail Web sites for Target, the NBA, and Bombay ...

Solution Summary

This solution describes the marketing tools and strategy by Amazon.com, including an evaluation of the apparent customer service provided by Amazon.