case study one

The basis of this over-view is e-commerce. e-business opportunities are very different:

While I know of no single formula to guarantee prosperity in Internet retailing, I can share with you the rules we've applied at Amazon.com that have contributed enormously to our efforts.

• Obsess over your customers.

• Remember that the Web is an infant.

• If you make one customer unhappy, he won't tell five friends- he'll tell 5,000 on newsgroups, listservs, and so on.

At Amazon.com we work hard to keep these principles in mind. At their heart is a single question that can help you predict the success of any Net-based enterprise: Does the Web site harness the unique characteristics of the Internet to create a strong value proposition for customers, one that could not be easily duplicated in the physical world? If the answer is "yes," the Website may do well. If not, it will almost certainly turn out to he a hobby.

We try to answer "yes" by assembling a package of three things, none of which would be practical offline, and all of which provide genuine value to customers:

1. vast selection,



2. extreme convenience, and



3. low prices.

Here's how we apply this value proposition. - Back to top

Starting with number one, vast selection, we offer more than 2.5 million book titles. There are more than three million books in print at any time worldwide, but the largest physical book superstores can only carry about 175,000 of them. Keep in mind that these are huge stores, often converted from movie theatres and bowling alleys. Even in the largest metropolitan areas, it's just not economically practical to build larger bookstores. Like-wise, selling via a traditional paper catalogue could never work for us. If we were to print the Amazon.com catalogue, it would be the size of more than 40 New York City phone books-not something we'd want to mail out several times a year.

Because we exist exclusively in cyberspace, we offer a convenience factor that physical stores and catalogues cannot. Amazon.com doesn't require you to get in a car, find parking, or search in multiple stores.

This inherent convenience of the Web also means Amazon.com isn't encumbered by expenses compulsory to maintaining a physical presence, like rent, construction costs, and building maintenance. This is why we can offer such extreme discounts. We can give money back to our customers, which we do by offering savings up to 40%.

Assembling a strong customer value proposition is important in any business, but it's especially important online. Since the Web is an infant technology there are many innate inconveniences associated with it. Modem lines disconnect; call waiting interferes; browsers crash. This means you must create overwhelming value in order to compensate for the inconveniences your visitors will suffer at the hands of this wonderful but immature technology.

Perhaps the most important reason to build an unusually strong value proposition is the wondrous "word of mouth" factor that is amplified on the Net. Every customer can be his or her own ombudsman. Disappoint customers and any one of them can tell thousands of people. This shifts the balance of power away from the business and toward the customer. In my opinion, that's a great thing for both the customer and the merchant. But only if the merchant recognises it. If you create real value for customers, they will become evangelists, using the Internet as their megaphone.

If you've found something you believe people really want and the Web can deliver this product or service better than any other medium, then you probably have a winner. And with that I wish for you profound success.