A STUDY ON AMAZON: INFORMATION SYSTEMS, BUSINESSSTRATEGIES AND e-

CRM

Background:
For the last two decade Amazon.com has been serving customer worldwide.
Amazon.com was founded by Jeff Bezos back in 1995.The founders vision was
to build a virtual shopping place for book lovers. Amazon.com brings the world
largest book store to the door step of the people around the world. All people
has to do is search and select the desired book. It took 30 day to deliver books
to the customers of 50 states and 45 countries. Amazon.com was a huge
success in nineties.Amazon.com became a platform for the retailer and
individuals in 2000.Amazon.com offers their services towards four types of
customers, consumers, sellers, enterprises and content creators. (Annual
report 2013) Amazon serves customer through the popular web site
www.amazon.com. Now a day customers can access through mobile
technology.Amazon.com apps are also available for the customers.

I. Part 1: Information Systems utilized for internet activity

1. Information System:
In 1995 Amazon used website system and order fulfilment system separately in
order to improve security. By 1995 Amazon has huge database running on
Digital Alpha Servers. Amazon renovated the entire system in the year of 2000.
Company spent $200 million on the new system. These systems include
analysis software from “Epiphany”, logistics from “manugistics” and new DBMS
from oracle. (Gerald, 2012) For communication with supplies Amazon seal deal
with Excelon for business-to-business integration system. Amazon Web Service
(AWS) and Simple Storage Service (SS) are the main system developed by
amazon. Through this system amazon can maintain its vast number of products
and millions of active customers. Amazon web service has become a global
platform for individual to retailers to sell their products. Through reliable,
Scalable, and robust web service amazon creates a global domination. The
challenges of amazon.com web services are very prominent. Every second
thousands of customers are searching. For products and ordering products, the
systems have to 4 be fast, reliable and secured. Every second CRM (Customer
Relation Management) system is taking customer information though their
searching, data mining, wish list and so on. Whatever customer buys or not
they are providing information about them. Systems are smart enough to
analysis the information and provide service accordingly. For tracking
fraudsters amazon.com built a system known as SAS( Smart Analysis
Search).This system decrease and detect fraud in the web site by analyzing
behavioral pattern. SAS allows amazon.com to measure and personalize
customer and help to serve customer effectively. Amazon.com is information
system based on Service Oriented Architecture (SOA). SOA is fully distributed
and decentralized service platform enables amazon’s information system to be
robust and scalable. SOA concentrates in multiple application rather than
bigger process.

2. Transaction Processing System:

Every customer has his profile in amazon.com or must have a profile in order
to order any product. Amazon offer many features to personalize their profile
with web tools like shopping cart, wish list.
2.1. 1-click purchase:
Amazon brings 1 click ordering, personalized shopping services and easy to use
card transaction, e-mail communication with customers and direct shipping
around the world. (1999 Annual report) Customer with previously activated
functionality can order items clicking only one button without fulfilling order
form. Amazon„s secured server automatically provide the information required
for the registered customer.
2.2. Secure Credit/debit card payment:
For secure transaction amazon.com use secured server software. Customer’s
personal information, credit card number and everything is encrypted in order
to secure information over internet.
3. Recommendation System:
Amazon developed an intelligent recommendation system which recommends
items by customer’s past purchases and searching data. This system store
every order made by customer. For example if a customer buy a fiction book
then the recommender system will recommend related books to the customer.
The system is basically based on “linking” and “Data mining”.
Every movement or search queries are noticed and tracked down to provide
the best possible recommendation. This enhances the browsing experiences of
the customers because this acts as an interactive platform between website
and customers which help maximum customer satisfaction.
3.1. Interactive searching System:
Amazon provides interactive searching option to the customers. Customer can
select desired items catalogs to find the item. Millions of items can be gained
by searching tools.
4. Supply Chain Management (SCM):
For the huge success by 2004 the “Supply Chain System” played a huge role. In
2000 amazon spent good amount in order to build automated warehouse and
automated supply chain management. All the supply chain activities are
controlled by CRM system.
4.1. Enterprise Resource Management (ERP System):
Amazon uses oracle as the ERP. It has huge database which hold information
related to customer. Customer’s ordering process is automated as the order is
taken as it automatically find the nearest distributing center for the delivery.
This system fastens the order fulfillment process with the order tracking and
reduces any distribution mistakes. By this system the company reduced 50% of
its customer service contacts since 1999 because of fewer mistakes.
4.2. Customer Relation Management (CRM):
In order to gain customer satisfaction and loyalty amazon use Customer
Relationship Management system (CRM). CRM system follows the following
application to collect information of the customer. All personal information of
customers their credit card record, transaction record, order record, profile,
their past purchase history are collected in the database. The order processing
system takes care of the transaction record with secured transaction method
and it delivers instruction to the delivery system for the execution of shipment.
Through customer feedback, customer interest, wish list, product reviews web
page system collect customer information.
6 Automated communication is ensured with customers through e-mail and
massage systems and order information systems With the CRM system amazon
successfully integrates customer sales, services and communication.

II. Part 2: Business strategies applied for internet activity

In early stage of the amazon.com’s journey, the business strategy of
amazon.com was very simple and forward. Their one and only strategy was to
sell books to the customer through online. They invested to the customer and
offer them a huge collection of books through online. “From the beginning our
focus has been on offering our customers compelling value. We realized that
the web was and still is the World Wide Web. Amazon.com attracted
customers by offering 1-click shopping, low price and increasing customer’s
value. Creating easy to use and easy to learn customer interfaces was a key
aspect of Amazon’s strategy.
1. Smart Innovation Strategy:
The main reason of the successful journey of amazon.com so far is the
innovation strategy of the company. Amazon.com started the business
by offering DVDs and CDs alongside books. In the following year they
brought auction theme to the customer. Their strategy was to provide
customer better experience of auction by protection from the fraud to
the bidder though this strategy did not bring success to the company.
Amazon followed B2C (Business to Customer) model. But it again
changed its strategy and transformed from direct sales business model
to sales and service model. Through this model amazon’s target group
was customers and other business group. Amazon.com offered small
business group to use amazon web service and platform to offer their
product to the customers. Amazon took commission on each sell of
other retailer’s product. Through this service amazon created eco
system in the market. Through “Amazon Associates Program‟ amazon
created and developed partnership with customers and businessman.
The primary goal of the program was to acquire new customers to boost
the sales on Amazon.com. Amazon instead gave them its affiliates a
revenue share. (ISCKIA and LESCOP) This allowed amazon to extend it
market place into a broad section from a single product. There was a
change in model in Amazon business strategy. It was a cyber- book store
 and with the 7 affiliates and association of the other retailer and being a
platform to the others it became a cyber-market.

2. Customer Relation Management Strategy: When a customer first enter

into Amazon.com he/she is provided „ Featured Product‟ by the
website, But when the customer visit for the second time the
recommender system automatically provide products by studying
customer interests and personality. Customer acquisition and retention
has been the most priority to Amazon.com‟s strategy. Through web site
Amazon maintain sophisticated communication that automates the
process of creating value for the customer.

big idea –
1. Limitless inventory
2. Customer Care
3. High margin, lowest price.

3. Limitless Inventory:

When amazon started offered books to the customers. But over the
period it increased its products from books to music, movie, cloud
storage, gaming and many more.
4. Customer Care:
“If you do build a great experience, customer tells each other about that.
Word to mouth is very powerful” - One of the success factors of
amazon.com is word of mouth. Because of excellent customer service
customers trusted Amazon. They used to talk about Amazon.com to
other. This spread rapidly by creating increasing traffic on the web site.

5. High Margin, Lowest Price:

Amazon.com provides products significantly cheaper than its
competitors. One of the main visions of Amazon.com is based on the
long term plan. This makes easier for amazon to take risk of low profit in
order to succeed in future. An estimate shows how it is possible for
amazon to become profitable with lowest price. A product on average
 gets sold in 33 days through amazon.com. On the other side it
competitors like best buy took 70 day to sell the product. Amazon keeps
the best-selling product to its own stock and longer tail items to third
party sellers stock. This gives an advantage to the company.

6. Marketing and Promotion Strategy:

Amazon‟s marketing strategy remains as strategy brand name,
increasing customer traffic, customer loyalty. To gain so amazon.com
undergone various promotional method. Public relation activities, online
and traditional advertising including radio, television and print media are
the prominent.
7. Associate Program:
To boost the customer traffic and rate of sale amazon.com started a
associate program with customers and small businessman.
Approximately 200,000 websites have enrolled in the associate program.

III. Part 3: e-CRM cycle Conducted for internet Activity:

Customer Relationship Management In today‟s business world CRM is

no longer considered as a trend rather as a standard requirement. For
competitive advantage and increased revenue, in most of the case with
effective CRM every company have resulted increasing revenue and
profit as well as greater customer loyalty. “Customer Relationship
Management is to identify a company‟s best customer and maximizing
the value from them by satisfying and retaining them.

1. Electronic Customer Relationship Management:

The application of CRM to internet based e-commerce business is the

basic concept of electronic CRM (E-CRM). provides the ability to capture,
integrate and distribute data gained at the organization’s website
throughout the enterprise.” In today’s world e-commerce platform does
not bind itself in single channel rather expanded toward multichannel
using internet, web browser, e-mail, PDA, smart phones etc. e-CRM
solution supports marketing, sales and service of the rapid growing
online based business. A recent study revealed that a 10% gain in repeat
customer arise 10% to the revenue of the company. Amazon innovated
number of approach to gain and satisfy customer through the
implementation of electronic customer relationship management. No
one in the world better understand to their customer better then
amazon. This yields maximum revenue to amazon.com over the
competitive world and kept always 1-step ahead of its competitor like e-
bay, best-buy.

2. How amazon implement CRM:

Amazon has extensive implementation of customer relationship
management. Each and every customers are taken in account in
amazon.com.
2.1 Customer Selection:
Customer selection part through Amazon.com website has given amazon
a extra benefit in order to boost their business. Amazon uses numerous
methods to select customer by knowing their customer behavior.
Amazon‟s early target was people who love books. But days its target
market is vast and challenging. Amazon through their website, PR
strategy target people to motivate them to use amazon.com.
2.2 Customer Acquisition:

2.2.1 Customer account:

Every customer buying through amazon.com has his/her profile in
amazon website. Amazon.com creates a database to store the account,
information of the customer, credit/debit account. Through the
customer account amazon knows about the customer, their personality
and last of all can satisfy them.
2.2.2 Wish List, review system:
Amazon always encourage customer to add favorite items to the wish
list. This helps amazon to know better about the customer. Product
review by customer not only be help customers to find and select
product but also acts as direct marketing event for amazon.com.
Amazon allows making connection in between the customer,
communicating and viewing their interest help to amazon to gain
customer trust and initiate world of mouth. In the first 3 month of 2000,
amazon acquired 3 million new customers without any investment. To
satisfy customer amazon uses information acquired through customer
account, wish list etc. Amazon brought number of system to satisfy
customer. 1-click ordering has been an excellent system innovated by
amazon which revenue less than 20 sec to enable purchase. (Jenkison
and sain)
2.3 Customer Retention:
Amazon.com emphasizes customer retention over just acquisition. An
analysis shows 40% of amazon’s customers are frequent users. This
indicates customer always come back to purchase product in
amazon.com. Amazon does retain customer very smartly and sincerely
by satisfying its best buyer through good service and effective about it.

2.4 Customer Extension:

The market place is very competitive even for amazon.com with

competitor like e-Bay, best buy breathing very behind amazon.
Customers now days get every single distraction through other
competitor’s service and brand value. It is very challenging to every
retain customers When people ask me if our customer are loyal I say,
“Absolutely right up to the second somebody else offer them a better
service .The comment explains how challenging the market is. But even
though Amazon’s better customer service, trust factor, brand value
initiate them rapid and growing customer popularity. About 70% of
Amazon’s customer trust Amazon and recommend Amazon to their
friend. Amazon integrated communication in between customers. This
helped Amazon to retain even extends their customers. Customer’s
reviews of products trusted by other customer and motivate them to
buy.

IV. Part 4-Recommendation for Amazon.com:

Amazon.com is the ultimate online retailer around the world. Its nearest
but not even close competitors are e-bay and best buy. But the
competition is growing day by day.
1. Competing in the market:
 Like past, amazon in future will have to come up with special
something. The global market is changing day by day. Business
competitors are investing large to take amazon down. There is no
room for relaxation. It is very challenging and has to be consistent in
the market to be number one retailer shop.
2. Innovation of new Product:
It is essential for amazon to think out of the box and bring new
products to satisfy and retain customer to be loyal to amazon.com.
Amazon always offered its customer better quality and better service.
But in future it may not be the same. People in today‟s world ask for
more. Amazon has to be smart enough to understand the customer
need before even customers know about it.
3. Integration of New Technology:
Technology is making progress like the spread of light. Company like
„amazon‟ needs to be adaptive and technology friendly to retain its
domination in the market. Amazon‟s new technology of Drone
delivery system indicates it is planning and investing significant
amount of money in technology for near future.
4. Customer Loyalty:
For a upward revenue stream customer loyalty is essential. Amazon’s
most of the buyers are its repeat customers who are loyal to Amazon.
But growing competition can be a risk to Amazon’s loyal customer.
5. Global Expansion:
Amazon is expanding its business around the world. But this may
cause significant strain in number of sectors like management,
inventory, supply system and more over to amazon‟s market place.

“We may not be successful in our efforts to expand into international

market segment International market is very challenging because of
political and economic conditions. Upgrading e-CRM and investing
more towards customer information for better understanding the
customer needs and behavior is essential.