Published on 08 April 2015

Amazon.com took the No.1 spot: "Top 100 retailers"

Best customer service, best online experience, best value for the price and best overall customer experience.

In the latest report “Top 100 retailers and brands” carried out by RetailCustomerExperience.com, to see which different retailers are excelling at which different aspects of the shopping experience, Amazon succeeded to achieve the top position.

In all four of the categories identified: best customer servicebest online experiencebest value for the price and best overall customer experience – Amazon took the No. 1 spot with RetailCustomerExperience.com readers.

Amazon.com has succeeded in rewriting the rules of retailing without opening a single store. Its projected $89 billion revenue for 2014 and its 20 % share of the entire e-commerce market (expected to exceed $300 billion in 2014) are impressive. But the real game-changer has come in the way Amazon is altering the practices of brick-and-mortar retailers and changing the way they do business.

In the Amazon world, it no longer is enough for a traditional retailer to have a website. The site must be funinformative and easy to navigate and shop. And the retailer’s backroom operations must be geared to deliver those orders quickly, accurately and inexpensively. Consumers must have confidence that their orders will be timely and that their personal information will be secure. They have that confidence in Amazon. In much the same way that Walmart sparked the demise of small mom-and-pop stores on Main Street, Amazon is threatening the dominance of large chain retailers in terms of price, convenience and service. “The only chance stores have is to become much more special than they are right now,” said Lee Peterson of the Columbus, Ohio-based WD Partners consulting firm. “The writing’s on the wall, and it’s time for retailers with stores to create much more compelling experiences than they have. Because after all, the soft underbelly of Amazon is: They don’t have stores!”.

When Bezos announced in 2013 that he was considering using drones for delivery, most people laughed and wrote it off as Bezos overreaching yet again. Nobody’s laughing anymore. What they’re doing instead is figuring out if they can master the delivery drone before he does. But, as consultant Dixon said, “the real thing is not drones, it’s the essential solution to making everyday things easier and better for people who don’t have time.

Amazon has found the sweet spot of converging what technology can do with people’s expectations of what the technology should be able to do. For Amazon, it’s delivering whatever, whenever and wherever.” Bezos wrote, in his 2014 letter to shareholders, “Failure comes part and parcel with invention. It’s not optional. We understand that and believe in failing early and iterating until we get it right. When this process works, it means our failures are relatively small in size (most experiments can start small), and when we hit on something that is really working for customers, we double-down on it with hopes to turn it into an even bigger success.” Those sentences could be considered a roadmap for the journey Bezos and Amazon have taken since the Wall Street whiz kid gave up his job with a New York investment-management firm in 1994 and moved into a garage in Seattle. (It was only for a few months, but the “started in a garage” legend endures nonetheless.) In the mid-1990s, the Internet was becoming an information and communications highway. Bezos was convinced it could become a commercial highway, too - a way to sell merchandise to people who were spending an increasing amount of their time surfing the Web and interfacing with commercial Web pages constantly. It wasn’t that nobody had thought of it before, but it was difficult to control and manage. Bezos wrote a business plan and called his new venture Cadabra. But he was talked out of the name because it sounded too much like “cadaver.” Instead, he chose the name Amazon, the largest channel of water in the world and also a name that likely would show up at or near the top of any Internet search. (Another name he toyed with and rejected was Relentless.com, which might have felt too close to the personality of the man himself.) Bezos chose to sell books, mostly because they were easy to handle, package and ship and also because he found he could negotiate with book distributors for sizable discounts, so he in turn could sell the books cheaply to the public. But from the beginning, he envisioned turning his experiment into way more than just books. If it all worked, he said, why couldn’t he sell anything? Everything? The frequent image of tech startups is young, quirky people in jeans and T-shirts playing darts and ping pong and bringing their dogs to work. That was never Amazon. Bezos insisted that employees spend long hours, work hard and give up good salaries for the benefits of participating in the unlimited future of the young venture. He ran a spartan operation. Employees were rewarded if they could come up with new ways to reduce costs and eliminate waste. In the book “The Everything Store: Jeff Bezos and the Age of Amazon,” author Brad Stone tells of Bezos coming upon a new television set mounted on a wall in the conference room and exploding in rage (apparently a frequent Bezos behavioral mode). He couldn’t see the value of something so wasteful. He ordered it removed, but kept the brackets in the wall as a reminder to his workers about why they had been hired and what they were, and weren’t, there for. He told everyone, from his initial group of investors in 1997 to the Wall Street community at large, that he likely wouldn’t turn a profit for five years. In fact, even in 2014, 17 years later, analysts expect Amazon to lose hundreds of millions despite those nearly $90 billion in sales. Why? Marketing and technology expenses have risen more than 40 percent a year. Total operating expenses were up more than 35 percent in 2014. Add in interest expenses and the company lost more than $450 million in the first nine months of 2014. “For Amazon, it’s not about profits, it’s about market share — all of it!” consultant Peterson said. “The only reason investors remain high on Amazon is because they’re betting on e-commerce to completely supplant brick endeavors.”  Part of the explanation for the heavy expenses is that Bezos keeps experimenting with his formula, tweaking and trying to improve or expand. He has thrown many ideas against the wall over the years, and many of them have failed spectacularly. But he keeps testing, experimenting and innovating. “I’ve made billions of dollars of failures at Amazon.com,” he said in a recent interview with Business Insider. “None of those things are fun, but they also don’t matter. Companies that don’t continue to experiment and don’t embrace failure, they eventually get in the desperate position where the only thing they can do is make a Hail Mary bet at the end of their corporate existence. Whereas companies that are making bets all along, even big bets - but not ‘bet-the-company’ bets, I don’t believe in ‘bet-the-company’ bets. That’s when you’re desperate. That’s the last thing you can do.”

That is not so much different from what Bezos was saying in 1997, in his first letter to shareholders: “We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership advantages. Some of these investments will pay off, others will not, and we will have learned another valuable lesson in either case.” The one inviolable rule he had, though, for himself and for his employees, was that if the consumer wasn’t completely satisfied with the experience, the experiment would never work. Everything he developed, from the pricing and delivery policies to the user-friendliness of the Amazon site, had the consumer mentality in mind. That is why he worked so hard — and eventually succeeded — in eliminating late deliveries, damaged merchandise, wrong merchandise, incorrect addresses and billing glitches that would make people think twice about placing an order on a website. Though the Amazon strategy isn’t based only on price, it certainly has been a key element in getting early adopters to take a chance on an online supplier. Even today, Amazon drives retail competitors crazy by changing and dropping prices over and over during a single day. The practice robs slower-moving stores of the chance to promise the lowest possible prices, since “showroomers” are scouring stores like Best Buy with their mobile devices in hand, comparing online prices to what the retailer has marked on its shelf. Internet Retailer Magazine reported that in mid-2013 Amazon changed prices on about 40 million products several times during a single day. On Cyber Monday 2013, Amazon had 3,300 price changes — in one day — in competitive, low-margin merchandise categories such as electronics, toys and housewares. (By comparison, Walmart had 977 price changes, Best Buy just 374.) And, of course, it’s much easier to make on-the-fly price adjustments on the Internet than in the store.

After Bezos had perfected the infrastructure for delivering books, Amazon began adding more and more merchandise sectors. Even as it was veering into items that were not quite so geometric and easy to package as books, Amazon was developing a sophisticated package handling system and a network of large fulfilment hubs around the country. Its list of merchandise sectors now includes consumer electronics, digital music, movies and games, home and garden tools, household products, beauty and health, groceries, sports and outdoors, toys, automotive and industrial, clothes and shoes and jewellery. Art and wine were added in 2012 and 2013. Amazon now carries 230 million items for sale.

Source: http://www.retailcustomerexperience.com/

“Most people shop for either convenience or value, and Amazon has mastered both, said Peter Dixon of Prophet, a New York-based retail consulting firm. Everybody’s trying to find the sweet spot, but Amazon executes. It has become a simple one-click process, and your goods are at your doorstep the next day.”

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